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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SECURITY FIRST TECHNOLOGIES CORPORATION,
SAHARA STRATEGY CORPORATION
AND
EDIFY CORPORATION
DATED AS OF
MAY 16, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER.......................................................................1
1.1 The Merger........................................................................1
1.2 Effective Time....................................................................1
1.3 Effects of the Merger.............................................................1
1.4 Conversion of Edify Common Stock..................................................2
1.5 Conversion of Merger Sub Common Stock.............................................2
1.6 Options...........................................................................3
1.7 Certificate of Incorporation......................................................3
1.8 By-Laws...........................................................................3
1.9 Directors and Officers............................................................3
1.10 Tax Consequences.................................................................3
ARTICLE II EXCHANGE OF SHARES..............................................................4
2.1 S1 to Make Shares Available.......................................................4
2.2 Exchange of Shares................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF EDIFY........................................5
3.1 Corporate Organization............................................................5
3.2 Capitalization....................................................................6
3.3 Authority; No Violation...........................................................6
3.4 Consents and Approvals............................................................7
3.5 Financial Statements; Exchange Act Filings; Books and Records.....................8
3.6 Broker's Fees.....................................................................8
3.7 Absence of Certain Changes or Events..............................................8
3.8 Legal Proceedings.................................................................9
3.9 Taxes and Tax Returns.............................................................9
3.10 Employee Plans..................................................................10
3.11 Certain Contracts...............................................................11
3.12 Agreements with Regulatory Agencies.............................................12
3.13 Certificate of Incorporation....................................................12
3.14 Environmental Matters...........................................................12
3.15 Properties and Assets...........................................................13
3.16 Insurance.......................................................................13
3.17 Compliance with Applicable Laws.................................................14
3.18 Affiliates......................................................................14
3.19 Ownership of S1 Common Stock....................................................14
3.20 Fairness Opinion................................................................14
3.21 Change of Control Payments......................................................14
3.22 Disclosure......................................................................14
3.23 Board Approval.................................................................15
3.24 Section 203 of the Delaware General Corporation Law and Edify
Rights Plan Not Applicable...................................................15
3.25 Intellectual Property...........................................................15
3.26 Additional Information..........................................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF S1...........................................17
4.1 Corporate Organization...........................................................17
4.2 Capitalization...................................................................18
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4.3 Authority; No Violation..........................................................18
4.4 Consents and Approvals...........................................................19
4.5 Financial Statements; Exchange Act Filings; Books and Records....................20
4.6 Broker's Fees....................................................................20
4.7 Absence of Certain Changes or Events.............................................20
4.8 Legal Proceedings................................................................21
4.9 Taxes and Tax Returns............................................................21
4.10 Employee Plans..................................................................22
4.11 Certain Contracts...............................................................23
4.12 Environmental Matters...........................................................24
4.13 Properties and Assets...........................................................24
4.14 Insurance.......................................................................25
4.15 Compliance with Applicable Laws.................................................25
4.16 S1 Information..................................................................25
4.17 Intellectual Property...........................................................25
4.18 BBRS Fairness Opinion...........................................................27
4.19 Merger Sub Board Approval.......................................................27
4.20 S1 Board Approval...............................................................27
4.21 Agreements with Regulatory Agencies.............................................27
4.22 Certificate of Incorporation....................................................28
4.23 Affiliates......................................................................28
4.24 Additional Information..........................................................28
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.......................................28
5.1 Covenants of Edify...............................................................28
5.2 Covenants of S1..................................................................30
5.3 Compliance with Antitrust Laws...................................................31
ARTICLE VI ADDITIONAL AGREEMENTS..........................................................31
6.1 Regulatory Matters...............................................................31
6.2 Access to Information............................................................32
6.3 Stockholder Meetings.............................................................33
6.4 Legal Conditions to Merger.......................................................33
6.5 Stock Exchange Listing...........................................................33
6.6 Employees........................................................................33
6.7 Indemnification..................................................................34
6.8 Subsequent Interim and Annual Financial Statements...............................35
6.9 Additional Agreements............................................................35
6.10 Advice of Changes...............................................................35
6.11 Current Information.............................................................35
6.12 Transaction Expenses of Edify...................................................35
6.13 Form S-8........................................................................36
6.14 Edify ESPP......................................................................36
6.15 Board of Directors..............................................................36
6.16 Bylaws..........................................................................36
ARTICLE VII CONDITIONS PRECEDENT..........................................................36
7.1 Conditions to Each Party's Obligation To Effect the Merger.......................36
7.2 Conditions to Obligations of S1 and Merger Sub...................................37
7.3 Conditions to Obligations of Edify...............................................38
ARTICLE VIII TERMINATION AND AMENDMENT....................................................39
8.1 Termination......................................................................39
8.2 Effect of Termination............................................................40
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8.3 Amendment........................................................................40
8.4 Extension; Waiver................................................................40
ARTICLE IX GENERAL PROVISIONS.............................................................41
9.1 Closing..........................................................................41
9.2 Nonsurvival of Representations, Warranties and Agreements........................41
9.3 Expenses; Breakup Fee............................................................41
9.4 Notices..........................................................................41
9.5 Interpretation...................................................................42
9.6 Counterparts.....................................................................42
9.7 Entire Agreement.................................................................42
9.8 Governing Law....................................................................43
9.9 Enforcement of Agreement.........................................................43
9.10 Severability....................................................................43
9.11 Publicity.......................................................................43
9.12 Assignment; Limitation of Benefits..............................................43
9.13 Additional Definitions..........................................................43
EXHIBITS
A Option Agreement
B Certificate of Merger
C Edify Stockholder Agreement
D S1 Stockholder Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1999 (this
"Agreement"), is entered into by and among Security First Technologies
Corporation, a Delaware corporation ("S1"), Sahara Strategy Corporation, a
Delaware corporation and wholly owned subsidiary of S1 ("Merger Sub"), and Edify
Corporation, a Delaware corporation ("Edify").
WHEREAS, the Boards of Directors of S1, Merger Sub and Edify have
determined that it is in the best interests of their respective companies and
stockholders to consummate the business combination transaction provided for
herein in which Merger Sub will, subject to the terms and conditions set forth
herein, merge with and into Edify, with Edify being the Surviving Corporation
(as defined) and a wholly owned subsidiary of S1 (the "Merger");
WHEREAS, as an inducement to S1 to enter into this Agreement, Edify will
enter into an option agreement, in the form attached hereto as Exhibit A (the
"Option Agreement"), with S1 immediately following the execution of this
Agreement pursuant to which Edify will grant S1 an option to purchase, under
certain circumstances, newly issued shares of common stock, par value $0.001 per
share, of Edify (including the associated Rights (as defined in that certain
Rights Agreement (the "Edify Rights Plan") dated as of August 10, 1998 between
Edify and BankBoston, N.A.) ("Edify Common Stock"), representing up to 19.9% of
the issued and outstanding shares of Edify Common Stock as of the first date, if
any, that the option becomes exercisable, at an exercise price of $17.87 per
share, upon the terms and conditions therein contained, and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance
with the Delaware General Corporation Law (the "DGCL"), at the Effective Time
(as defined in Section 1.2 hereof), Merger Sub shall merge into Edify, with
Edify being the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger. Upon consummation of the Merger, the
corporate existence of Merger Sub shall cease and the Surviving Corporation
shall continue to exist as a Delaware corporation, and a wholly owned subsidiary
of S1.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), upon the filing of the certificate of merger (the
"Certificate of Merger") in the form attached as Exhibit B hereto with the
Secretary of State of the State of Delaware (or at such later time as may be
agreed by Edify and S1 in writing and specified in the Certificate of Merger).
The term "Effective Time" shall be the date and time when the Merger becomes
effective as set forth in the Certificate of Merger.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL.
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1.4 CONVERSION OF EDIFY COMMON STOCK.
(a) At the Effective Time, subject to Section 1.4(b) hereof, each
share of Edify Common Stock issued and outstanding prior to the Effective Time
shall, by virtue of this Agreement and without any action on the part of the
holder thereof, be converted into the right to receive, and be exchangeable for,
0.330969 shares of S1 common stock, par value $0.01 per share ("S1 Common
Stock"). The number of shares of S1 Common Stock issuable with respect to each
share of Edify Common Stock, as determined and adjusted as set forth herein, is
called the "Exchange Ratio."
(b) At the Effective Time, all of the shares of Edify Common Stock
converted into S1 Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each certificate (each a "Certificate") previously representing any such shares
of Edify Common Stock shall thereafter represent the right to receive (i) the
number of whole shares of S1 Common Stock and (ii) cash in lieu of fractional
shares of S1 Common Stock into which the shares of Edify Common Stock
represented by such Certificate have been converted pursuant to Section 1.4(a)
hereof. Certificates previously representing shares of Edify Common Stock shall
be exchanged for certificates representing whole shares of S1 Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If prior to the Effective Time, S1 should split or combine
its common stock, or pay a dividend or other distribution in such common stock,
then the Exchange Ratio shall be appropriately adjusted to fully reflect such
split, combination, dividend or distribution.
(c) At the Effective Time, all shares of Edify Common Stock that are
owned by Edify as treasury stock and all shares of Edify Common Stock that are
owned directly or indirectly by S1 or Edify or any of their respective
Subsidiaries shall be canceled and shall cease to exist and no stock of S1 or
other consideration shall be delivered in exchange therefor. All shares of S1
Common Stock that are owned by Edify or any of its Subsidiaries shall become
treasury stock of S1.
(d) Certificates for fractions of shares of S1 Common Stock will not
be issued. In lieu of a fraction of a share of S1 Common Stock, each holder of
Edify Common Stock otherwise entitled to a fraction of a share of S1 Common
Stock shall be entitled to receive an amount of cash equal to (i) the fraction
of a share of the S1 Common Stock to which such holder would otherwise be
entitled, multiplied by (ii) the actual market value of the S1 Common Stock,
which shall be deemed to be the average of the daily closing prices per share
for S1 Common Stock for the twenty consecutive trading days on which shares of
S1 Common Stock are actually traded (as reported on the Nasdaq Stock Market
National Market System) ending on the third trading day preceding the Closing
Date. Following consummation of the Merger, no holder of Edify Common Stock
shall be entitled to dividends or any other rights in respect of any such
fraction.
(e) If any shares of Edify Common Stock outstanding immediately prior
to the Effective Time are subject to a repurchase option, risk of forfeiture or
other condition under any applicable restricted stock purchase agreement or
other agreement with Edify, then the shares of S1 Common Stock issued in
exchange for such shares of Edify Common Stock will also be unvested and subject
to the same repurchase option, risk of forfeiture or other condition, and the
certificates representing such shares of S1 Common Stock accordingly may be
marked with appropriate legends. Edify shall take all action that may be
necessary to ensure that, from and after the Effective Time, S1 is entitled to
exercise any such repurchase option or other right set forth in any such
restricted stock purchase agreement or other agreement.
1.5 CONVERSION OF MERGER SUB COMMON STOCK.
Each of the shares of the common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
become shares of the Surviving Corporation after the Merger and shall thereupon
constitute all of the issued and outstanding shares of the Surviving
Corporation.
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1.6 OPTIONS.
At the Effective Time, each option granted by Edify to purchase shares
of Edify Common Stock which is outstanding and unexercised immediately prior
thereto, whether or not vested, shall be converted automatically into an option
to purchase shares of S1 Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms of the 1996
Equity Incentive Plan (the "1996 Equity Plan"), the 1996 Directors Stock Option
Plan (the "Directors Plan"), or the 1990 Stock Option Plan (the "1990 Option
Plan"), as the case may be, (the 1996 Equity Plan, the Directors Plan and the
1990 Option Plan, collectively, the "Edify Stock Plans")):
(1) The number of shares of S1 Common Stock to be subject to
the option immediately after the Effective Time shall be equal to
the product of the number of shares of Edify Common Stock subject
to the option immediately before the Effective Time, multiplied
by the Exchange Ratio, provided that any fractional shares of S1
Common Stock resulting from such multiplication shall be rounded
down to the nearest share; and
(2) The exercise price per share of S1 Common Stock under the
option immediately after the Effective Time shall be equal to the
exercise price per share of Edify Common Stock under the option
immediately before the Effective Time divided by the Exchange
Ratio, provided that such exercise price shall be rounded up to
the nearest cent.
The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The duration, vesting schedule, exercisability
and other terms of the option immediately after the Effective Time shall be the
same as the corresponding terms in effect immediately before the Effective Time,
except that all references to Edify in the Edify Stock Plans (and the
corresponding references in the option agreement documenting such option) shall
be deemed to be references to S1. Except as set forth in Section 1.6 of the
Edify Disclosure Schedule, vesting of stock options under the Edify stock plans
shall not be accelerated as a result of the Merger. Continuous employment with
Edify or its subsidiaries shall be credited to the optionee for purposes of
determining the vesting of all assumed Edify options after the Effective Time.
It is intended that Edify options assumed by S1 shall qualify following the
Effective Time as incentive stock options are defined in Section 422 of the Code
to the extent such options qualified as such prior to the Effective Time and the
provisions of this Section 1.6 shall be applied consistently with such intent.
As soon as reasonably practicable, but in no event more than 30 days after the
Effective Time, S1 will issue to each holder of an assumed option notice of the
foregoing assumption by S1 of such Edify option.
1.7 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of Edify, as the
Surviving Corporation, shall be amended to be the same form of Certificate of
Incorporation as Merger Sub.
1.8 BY-LAWS.
At the Effective Time, the By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
1.9 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation.
1.10 TAX CONSEQUENCES.
It is intended that the Merger shall constitute a reorganization within
the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "plan of reorganization" for the purposes of the Code.
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ARTICLE II
EXCHANGE OF SHARES
2.1 S1 TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, S1 shall deposit, or shall cause to
be deposited, with S1's transfer agent, American Stock Transfer & Trust Company,
or such other bank, trust company or transfer agent as S1 may select and is
reasonably acceptable to Edify (the "Exchange Agent"), for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of S1 Common Stock, the cash in lieu of
fractional shares and any dividends or distributions pursuant to Section 2.2(b)
(such cash, dividends and certificates for shares of S1 Common Stock, being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
1.4 and paid pursuant to Section 2.2(a) hereof in exchange for outstanding
shares of Edify Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (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 the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing the
shares of S1 Common Stock, the cash in lieu of fractional shares into which the
shares of Edify Common Stock represented by such Certificate or Certificates
shall have been converted and any dividends or distributions pursuant to Section
2.2(b) pursuant to this Agreement. Edify shall have the right to review both the
letter of transmittal and the instructions prior to such documents being
finalized. Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of S1 Common Stock to
which such holder of Edify Common Stock shall have become entitled pursuant to
the provisions of Article I hereof (with such legends as may be required
pursuant to Section 1.4(e) hereof), (y) a check representing the amount of cash
in lieu of fractional shares, if any, which such holder has the right to receive
in respect of the Certificate surrendered pursuant to the provisions of this
Article II and any dividends or distributions pursuant to Section 2.2(b), and
the Certificate so surrendered shall forthwith be canceled. No interest will be
paid or accrued on the cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to S1 Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance with this Article
II. After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of S1 Common Stock represented by such
Certificate. No holder of an unsurrendered Certificate shall be entitled, until
the surrender of such Certificate, to vote the shares of S1 Common Stock into
which his Edify Common Stock shall have been converted.
(c) If any certificate representing shares of S1 Common Stock is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of S1 Common Stock in any name other than
that of the registered holder of the Certificate surrendered, or shall establish
to the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the close of business on the day immediately prior to the
Effective Time, there shall be no transfers on the stock transfer books of Edify
of the shares of Edify Common Stock which were issued and outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates representing such shares are presented
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for transfer to the Exchange Agent, they shall be canceled and exchanged for
certificates representing shares of S1 Common Stock as provided in this Article
II.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Edify for six months after the Effective Time may be returned to
S1. Any stockholders of Edify who have not complied with this Article II prior
to such return shall thereafter look only to S1 for payment of their shares of
S1 Common Stock, cash in lieu of fractional shares and unpaid dividends and
distributions on S1 Common Stock deliverable in respect of each share of Edify
Common Stock such stockholder holds as determined pursuant to this Agreement, in
each case, without any interest thereon. Notwithstanding the foregoing, none of
S1, Edify, the Exchange Agent or any other person shall be liable to any former
holder of shares of Edify Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by S1, the
posting by such person of a bond in such amount as S1 may reasonably direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of S1 Common Stock, cash in lieu of fractional
shares deliverable in respect thereof and any dividends or distributions
pursuant to Section 2.2(b) pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EDIFY
Edify hereby makes the following representations and warranties to S1
and Merger Sub as set forth in this Article III, subject to the exceptions
disclosed in writing in the Edify Disclosure Schedule as of the date hereof,
each of which is being relied upon by S1 and Merger Sub as a material inducement
to enter into and perform this Agreement. All of the disclosure schedules of
Edify referenced below or otherwise required pursuant to this Agreement are
referred to herein as the "Edify Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) Edify is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Except as set forth in
Section 3.1 of the Edify Disclosure Schedule, Edify has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of any material business
conducted by it or the character or location of any material properties or
assets owned or leased by it makes such licensing or qualification necessary.
The Certificate of Incorporation and By-Laws of Edify, copies of which have
previously been made available to S1, are true, correct and complete copies of
such documents as in effect as of the date of this Agreement.
(b) No subsidiary of Edify is a "Significant Subsidiary" as such term
is defined in Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC"). Edify EMEA Ltd. and each other subsidiary of Edify
(each, an "Edify Subsidiary") has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of any material business conducted by it or the
character or the location of any material properties or assets owned or leased
by it makes such licensing or qualification necessary. The Certificate of
Incorporation and By-Laws or other corporate governance documents of each Edify
Subsidiary, copies of which have previously been made available to S1, are true,
correct and complete copies of such documents as in effect as of the date of
this Agreement.
(c) Neither Edify nor any Edify Subsidiary has agreed or is obligated
to make, or is bound by any written, oral or other agreement, contract,
subcontract, lease, binding understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or
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undertaking of any nature, as in effect as of the date hereof or as may
hereinafter be in effect (each, a "Contract") under which Contract it may become
obligated to make, any future investment in or capital contribution to any other
entity. Neither Edify nor any Edify Subsidiary has, at any time, been a general
partner of any general partnership, limited partnership or other entity.
3.2 CAPITALIZATION.
(a) The authorized capital stock of Edify consists of 55,000,000
shares of Edify Common Stock and 5,000,000 shares of preferred stock, $0.001 par
value per share (the "Edify Preferred Stock"). Except as set forth in Section
3.2(a) of the Edify Disclosure Schedule, as of the date hereof, there are (x)
17,696,952 shares of Edify Common Stock issued and outstanding and no shares of
Edify Common Stock held in Edify's treasury, (y) no shares of Edify Common Stock
reserved for issuance upon exercise of outstanding stock options or otherwise,
except for 5,146,790 shares of Edify Common Stock reserved for issuance pursuant
to the Edify Stock Plans (of which options for 5,027,283 shares are currently
outstanding), (ii) the shares of Edify Common Stock reserved for issuance upon
exercise of the option to be issued to S1 pursuant to the Option Agreement, and
(iii) 296,885 shares of Edify Common Stock reserved for issuance pursuant to the
Edify 1996 Employee Stock Purchase Plan (the "Edify ESPP"), and (z) no shares of
Edify Preferred Stock issued or outstanding, held in Edify's treasury or
reserved for issuance upon exercise of outstanding stock options or otherwise,
other than 500,000 shares of Edify Preferred Stock designated as Series A Junior
Participating Preferred Stock pursuant to the Edify Rights Plan. Upon
consummation of the Merger, (A) the shares of S1 Common Stock issued in exchange
for any shares of Edify Common Stock that are subject to a Contract pursuant to
which Edify has the right to repurchase, redeem or otherwise reacquire any
shares of Edify Common Stock will, without any further act of S1, Edify or any
other person, become subject to the restrictions, conditions and other
provisions contained in such Contract, and (B) S1 will automatically succeed to
and become entitled to exercise Edify's rights and remedies under any such
Contract. All of the issued and outstanding shares of Edify Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof. Except for the Option Agreement, the Edify Rights Plan, the Edify ESPP,
the Edify Stock Plans and as disclosed in Section 3.2 of the Edify Disclosure
Schedule, Edify does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Edify Common Stock or Edify Preferred
Stock or any other equity security of Edify or any securities representing the
right to purchase or otherwise receive any shares of Edify Common Stock or any
other equity security of Edify. The names of the optionees, the date of each
option to purchase Edify Common Stock granted, the number of shares subject to
each such option, the expiration date of each such option, and the price at
which each such option may be exercised under the Edify Stock Plans are set
forth in Section 3.2(a) of the Edify Disclosure Schedule. Since December 31,
1998, Edify has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other than
(i) pursuant to the exercise of director or employee stock options granted prior
to December 31, 1998 under the Edify Stock Plans and (ii) pursuant to the Edify
ESPP.
(b) Section 3.2(b) of the Edify Disclosure Schedule sets forth a
true, correct and complete list of all Subsidiaries of Edify and their
respective jurisdictions of incorporation or organization as of the date of this
Agreement. Except as set forth in Section 3.2(b) of the Edify Disclosure
Schedule, Edify owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of its Subsidiaries, free and clear of all
liens, charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. No Edify Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) Edify has full corporate power and authority to execute and
deliver this Agreement and the Option Agreement and, subject to the adoption of
this Agreement by a majority of the outstanding shares of Edify Common
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Stock, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of Edify. The Board of Directors
of Edify has declared this Agreement advisable and directed that this Agreement
and the transactions contemplated hereby be submitted to Edify's stockholders
for approval at a special meeting of such stockholders and, except for the
adoption of this Agreement by the requisite vote of Edify's stockholders, no
other corporate proceedings on the part of Edify (except for matters related to
setting the date, time, place and record date for the special meeting) are
necessary to approve this Agreement or the Option Agreement or to consummate the
transactions contemplated hereby or thereby. This Agreement and the Option
Agreement have been duly and validly executed and delivered by Edify and
(assuming due authorization, execution and delivery by S1 and Merger Sub of this
Agreement and by S1 of the Option Agreement) constitute valid and binding
obligations of Edify, enforceable against Edify in accordance with their terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth at Section 3.3(b) of the Edify Disclosure
Schedule, none of the execution and delivery of this Agreement and the Option
Agreement by Edify, the consummation by Edify of the transactions contemplated
hereby and thereby, or compliance by Edify with any of the terms or provisions
hereof and thereof, will (i) violate any provision of the Certificate of
Incorporation or By-Laws of Edify, or (ii) assuming that the consents and
approvals referred to in Sections 3.3(a) and 3.4 hereof are duly obtained, (x)
violate any Laws (as defined in Section 9.13) applicable to Edify or any of its
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
properties or assets of Edify under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Edify is a party, or by which it or
any of its properties or assets may be bound or affected, except, in each case,
where such violation, conflict, breach, loss, default, termination, cancellation
or acceleration would not have a Material Adverse Effect on Edify or the
Surviving Corporation.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the effectiveness of a registration statement on
Form S-4 to register the shares of S1 Common Stock to be issued in connection
with the Merger (including the shares of S1 Common Stock that may be issued upon
the exercise of the options referred to in Section 1.6 hereof), and the filing
of the joint proxy statement/prospectus to be used in soliciting the approval of
Edify's and S1's stockholders at a special meeting to be held in connection with
this Agreement and the transactions contemplated hereby (the "Proxy
Statement/Prospectus"), (ii) the approval of this Agreement by the requisite
vote of the stockholders of Edify, (iii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware pursuant to the DGCL, (iv)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal, foreign and state
securities (or related) laws and, if applicable, the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the securities or
antitrust laws of any foreign country, and (v) such filings, authorizations or
approvals as may be set forth in Section 3.4 of the Edify Disclosure Schedule,
no consents or approvals of or filings or registrations with any court,
administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity"), or with any third party are
necessary in connection with (1) the execution and delivery by Edify of this
Agreement and the Option Agreement, (2) the consummation by Edify of the Merger
and the other transactions contemplated hereby, and (3) the consummation by
Edify of the Option Agreement and the transactions contemplated thereby, except,
in each case, for such consents, approvals or filings, the failure of which to
obtain will not have (x) a material adverse effect on the ability of S1 to
consummate the transactions contemplated hereby or (y) a Material Adverse Effect
on Edify, S1 or the Surviving Corporation following the Effective Time.
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(b) Except as set forth in Section 3.4(b) of the Edify Disclosure
Schedule, Edify hereby represents to S1 that it has no knowledge of any reason
why approval or effectiveness of any of the applications, notices or filings
referred to in Section 3.4(a) cannot be obtained or granted on a timely basis.
3.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Edify has previously made available to S1 true, correct and complete
copies of the consolidated balance sheets of Edify and its Subsidiary as of
December 31 for the fiscal years 1997 and 1998 and the related consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
years 1996 through 1998, inclusive, as reported in Edify's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case
accompanied by the audit report of KPMG LLP, independent public accountants with
respect to Edify, and the interim financial statements of Edify as of and for
the three months ended March 31, 1998 and 1999, as included in the Edify
quarterly report on Form 10-Q for the period ended March 31, 1999 as filed with
the SEC. The financial statements referred to in this Section 3.5 (including the
related notes, where applicable) fairly present, and the financial statements
referred to in Section 6.8 hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
condition of Edify and its Subsidiary for the respective fiscal periods or as of
the respective dates therein set forth; each of such statements (including the
related notes, where applicable) comply, and the financial statements referred
to in Section 6.8 hereof will comply, with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto and
each of such statements (including the related notes, where applicable) has
been, and the financial statements referred to in Section 6.8 hereof will be
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except in each case as
indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q or any successor form. Edify's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and all
reports filed under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act since
December 31, 1996 comply in all material respects with the appropriate
requirements for such reports under the Exchange Act, and Edify has previously
made available to S1 true, correct and complete copies of such reports. The
books and records of Edify have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting
requirements.
3.6 BROKER'S FEES.
Neither Edify nor any Edify Subsidiary nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement or the Option Agreement,
except that Edify has engaged, and will pay a fee or commission to Xxxxxxx,
Sachs & Co. ("Goldman") in accordance with the terms of a letter agreement
between Goldman and Edify, dated March 19, 1999, a true, complete and correct
copy of which has been previously delivered by Edify to S1.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Edify's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, or any other report filed since December
31, 1998 under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, true and
correct copies of which have been made available to S1, since December 31, 1998
(i) neither Edify nor any Edify Subsidiary has incurred any material liability,
except as contemplated by the Agreement or in the ordinary course of their
business consistent with their past practices, and (ii) no event has occurred
which has had, or would have, individually or in the aggregate, a Material
Adverse Effect (as defined in Section 9.13) on Edify.
(b) Since December 31, 1998, Edify and its Subsidiaries have carried
on their respective businesses in the ordinary and usual course consistent with
their past practices.
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3.8 LEGAL PROCEEDINGS.
(a) Except as disclosed on Schedule 3.8 to the Edify Disclosure
Schedule, neither Edify nor any of its Subsidiaries is a party to any, and there
are no pending or threatened, legal, administrative, arbitration or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against Edify or any of its Subsidiaries.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Edify, any of its Subsidiaries or the assets of Edify
or any of its Subsidiaries.
(c) No Governmental Entity has at any time challenged or questioned
in a writing delivered to Edify the legal right of Edify to design, manufacture,
offer or sell any of its products or services in the present manner or style
thereof. As of the date hereof, to the knowledge of Edify, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that would reasonably be expected to, cause or provide a bona fide
basis for a director or executive officer of Edify to seek indemnification from
Edify.
3.9 TAXES AND TAX RETURNS.
(a) For purposes of this Section 3.9, Edify shall include Edify and
each Edify Subsidiary and any other affiliated or related corporation or entity
if Edify or any Edify Subsidiary has or could have any material liability for
the Taxes of such corporation or entity. Edify has duly filed all Tax Returns
required to be filed by it on or before the date hereof (all such returns being
accurate and complete in all material respects) and has duly paid or made
provision in the financial statements referred to in Sections 3.5 and 6.8 hereof
in accordance with GAAP for the payment of all material Taxes that have been
incurred or are due or claimed to be due from it by Taxing Authorities on or
before the date hereof other than Taxes (a) that (x) are not yet delinquent or
(y) are being contested in good faith and set forth in Section 3.9 of the Edify
Disclosure Schedule and (b) that have not been finally determined. The charges,
accruals, and reserves with respect to Taxes in the financial statements
referred to in Sections 3.5 and 6.8 are adequate (determined in accordance with
GAAP) and are at least equal to its liability for Taxes. There exists no
proposed tax assessment against Edify except as disclosed in the financial
statements referred to in Sections 3.5 and 6.8 hereof in accordance with GAAP.
No consent to the application of Section 341(f)(2) of the Code has been filed
with respect to any property or assets held, acquired, or to be acquired by
Edify. All Taxes that Edify is or was required to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to the
proper Taxing Authority. All liability with respect to the Tax Returns of Edify
has been satisfied for all years to and including 1998. No Taxing Authority has
notified Edify of, or otherwise asserted, that there are any material
deficiencies with respect to the Tax Returns of Edify subsequent to 1994. There
are no material disputes pending, or claims asserted, for Taxes or assessments
of Edify, nor has Edify given or been requested to give any currently effective
waiver extending the statutory period of limitation applicable to any Tax
Return. In addition, Tax Returns that are accurate and complete in all material
respects have been filed by Edify for all periods for which returns were due
with respect to income and employment tax withholding with respect to wages and
other income and the amounts shown on such Tax Returns to be due and payable
have been paid in full or adequate provision therefor in accordance with GAAP
has been included by Edify in the financial statements referred to in Sections
3.5 and 6.8 hereto. All Edify Tax Returns have been examined by the relevant
Taxing Authorities, or closed without audit by applicable statutes of
limitations, and all deficiencies proposed as a result of such examinations have
been paid or settled, for all periods before and including the taxable year
ended December 31, 1994. Edify has provided or made available to S1 complete and
correct copies of its Tax Returns and all material correspondence and documents,
if any, relating directly or indirectly to Taxes for each taxable year or other
relevant period as to which the applicable statute of limitations has not run on
the date hereof. For this purpose, "correspondence and documents" include,
without limitation, amended Tax Returns, pending claims for refunds, notices
from Taxing Authorities of proposed changes or adjustments to Taxes or Tax
Returns that have not been finally resolved, consents to assessment or
collection of Taxes, acceptances of proposed adjustments, closing agreements,
rulings and determination letters and requests therefor, and all other written
communications to or from Taxing Authorities relating to any material Tax
liability of Edify.
(b) For purposes of this Agreement:
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"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Taxing Authority in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any law, regulation or other legal
requirement relating to any Tax.
"Taxing Authority" means any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
3.10 EMPLOYEE PLANS.
(a) For purposes of this Section 3.10, Edify shall include
each of its Subsidiaries and any other entity that together with Edify would be
deemed a "single employer" for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (determined without regard to whether
such entity conducts business in the United States). Section 3.10(a) of the
Edify Disclosure Schedule sets forth a true and complete list of each employee
benefit plan (within the meaning of Section 3(3) of ERISA) ("ERISA Plan") and
each other plan, arrangement or agreement providing benefits to the current or
former employees of Edify that as of the date of this Agreement Edify maintains,
to which Edify contributes or under which Edify has any liability, or within the
last six years that Edify has maintained, to which Edify has contributed or
under which Edify has had any liability (collectively, the "Edify Plans"). Each
Edify Plan that is an ERISA Plan is referred to as a "Edify ERISA Plan."
(b) Edify has heretofore made available to S1 true, correct
and complete copies of each of the Edify Plans and all related documents,
including but not limited to (i) the actuarial report for such Edify Plan (if
applicable) for each of the last five years, (ii) the most recent determination
letter from the Internal Revenue Service ("IRS"), if applicable, for each Edify
ERISA Plan, (iii) the current summary plan description and any summaries of
material modification for each Edify ERISA Plan and any corresponding document
for each other Edify Plan which have not been incorporated into the current
summary plan description, (iv) all annual reports for each Edify ERISA Plan
filed for the preceding five plan years and any annual or other periodical
financial information concerning any other Edify Plan filed with any
governmental agency, (v) all agreements with fiduciaries and service providers
relating to the Edify Plan, (vi) all substantive correspondence relating to any
such Edify Plan addressed to or received from any governmental agency or
authority, (vii) all personnel, payroll, and employment manuals and policies,
and (viii) a written description of any Edify Plan that is not otherwise in
writing.
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(c) Edify has performed all of its obligations under all Edify Plans.
Edify has made appropriate entries in the financial statements referred to in
Sections 3.5 and 6.8 hereof in accordance with GAAP for all obligations and
liabilities under the Edify Plans. No statement, either written or oral, has
been made by Edify with regard to any Edify Plan that was not in accordance with
the Edify Plan and that could have a Material Adverse Effect on S1. Edify has no
liability to the IRS, the U.S. Pension Benefit Guaranty Corporation or to any
other governmental or quasi-governmental agency or authority with respect to any
Edify Plan. No Edify ERISA Plan is subject to title IV of ERISA.
(d) Except as set forth at Section 3.10(d) of the Edify Disclosure
Schedule, (i) each of the Edify Plans has been operated and administered in all
material respects in compliance with applicable Laws, including, but not
limited, in the case of each Edify ERISA Plan, to ERISA and the Code, (ii) each
of the Edify ERISA Plans intended to be "qualified" within the meaning of
Section 401 of the Code is so qualified and Edify has received a determination
letter or opinion letter from the IRS to such effect, which letter remains in
full force and effect, (iii) with respect to each Edify ERISA Plan that is
subject to the funding requirements of ERISA and the Code, the present value of
accrued benefits under such Edify Plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by such
Edify Plan's actuary with respect to such Edify Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such Edify Plan
allocable to such accrued benefits, (iv) no Edify Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of Edify beyond their
retirement or other termination of service, other than (a) coverage mandated by
applicable Law, (b) death benefits or retirement benefits under an Edify Plan
that also provides post-retirement income, annuity or pension benefits
(including an "employee pension plan" as that term is defined in ERISA), (c)
deferred compensation benefits under an Edify Plan that are accrued as
liabilities in the financial statements referred to in Sections 3.5 and 6.8
hereof in accordance with GAAP, or (d) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) no liability under
Title IV of ERISA has been incurred by Edify that has not been satisfied in
full, and no condition exists that presents a material risk of Edify incurring a
material liability thereunder, (vi) no Edify ERISA Plan is a "multiemployer
pension plan," as such term is defined in ERISA and no other Edify Plan is
maintained pursuant to any collective bargaining agreement or other agreement
with a labor union or other authorized representative of labor, (vii) all
contributions or other amounts payable by Edify with respect to each Edify Plan
and all other liabilities of each such entity with respect to each Edify Plan,
in respect of current or prior plan years have been paid or accrued in the
financial statements referred to in Sections 3.5 and 6.8 hereof in accordance
with GAAP and, in the case of an Edify ERISA Plan, ERISA and the Code, (viii)
Edify has not engaged in a "prohibited transaction" as defined in ERISA or the
Code in connection with which Edify could be subject to either any material
excise tax or civil penalty assessed pursuant to ERISA or the Code, (ix) to the
knowledge of Edify, there are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of the
Edify Plans or any trusts related thereto, (x) all Edify Plans could be
terminated as of the Closing without material liability in excess of the amount
accrued therefor in the financial statements referred to in Sections 3.5 and 6.8
hereof in accordance with GAAP; (xi) no Edify Plan, either individually or
collectively, provides for any material payment by Edify that would not be
deductible for U.S. federal income tax purposes; (xii) no "accumulated funding
deficiency" as defined in ERISA or the Code, whether or not waived, and no
"unfunded current liability" as determined under the Code exists with respect to
any Edify ERISA Plan; (xiii) no Edify ERISA Plan has experienced a "reportable
event" (as such term is defined in ERISA and regulations thereunder) that is not
subject to an administrative or statutory waiver from the reporting requirement.
3.11 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.11 of the Edify Disclosure
Schedule, neither Edify nor any of its Subsidiaries is a party to or bound by
any contract, arrangement or commitment (i) with respect to the employment of
any directors, officers, employees or consultants (other than standard offer
letters which provide for no more than at-will employment), (ii) which, upon
execution of this Agreement or the consummation of the transactions contemplated
by this Agreement, will (either alone or upon the occurrence of any additional
acts or events) result in any payment (whether of severance pay or otherwise)
becoming due from S1, Edify, the Surviving Corporation or any of their
respective Subsidiaries to any director, officer or employee thereof, (iii) with
or to a labor union or guild (including any collective bargaining agreement),
(iv) (including any stock option plan, stock appreciation rights plan,
restricted stock
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plan or stock purchase plan) any of the benefits of which will be increased, or
the vesting of the 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, (v) containing any covenant materially limiting
the right of Edify or any of its Subsidiaries to engage in any line of business
or to compete with any person or granting any exclusive distribution rights,
(vi) relating to the disposition or acquisition by Edify or any of its
Subsidiaries after the date of this Agreement of a material amount of assets not
in the ordinary course of business or pursuant to which Edify or any of its
Subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Edify's
Subsidiaries that is material to Edify's business as currently conducted, or
(vii) to provide source code to any third party for any product or technology
that is material to Edify and its Subsidiaries taken as a whole. Edify has
previously made available to S1 true, correct and complete copies of all
employment, consulting and deferred compensation agreements to which Edify or
any of its Subsidiaries is a party. Section 3.11(a) of the Edify Disclosure
Schedule sets forth a list of all material contracts (as defined in Item
601(b)(10) of Regulation S-K) of Edify. Each contract, arrangement or commitment
of the type described in this Section 3.11(a), whether or not set forth in
Section 3.11(a) of the Edify Disclosure Schedule, is referred to herein as a
"Edify Contract," and neither Edify nor any of its Subsidiaries has received
written notice of, nor do any executive officers of such entities know of, any
violation of any Edify Contract.
(b) (i) Except as set forth in Section 3.11 of the Edify Disclosure
Schedule, each Edify Contract is valid and binding and in full force and effect
as to the obligations of Edify thereunder, and, to the knowledge of Edify, is
valid and binding and in full force and effect as to the obligations by the
third parties thereto, (ii) Edify and each of its Subsidiaries has, and to the
knowledge of Edify, each third party has, in all material respects performed all
obligations required to be performed by it to date under each Edify Contract,
and (iii) no event or condition exists which constitutes or, after notice or
lapse of time or both, would constitute, a material default on the part of Edify
or any of its Subsidiaries under any such Edify Contract or, to the knowledge of
Edify, any third party thereto.
3.12 AGREEMENTS WITH REGULATORY AGENCIES.
Edify (i) is not subject to any cease-and-desist or other order issued
by, (ii) is not a party to any written agreement, consent agreement or
memorandum of understanding with, and (iii) has not adopted any board
resolutions at the request of (each, whether or not set forth on Section 3.12 of
the Edify Disclosure Schedule, a "Regulatory Agreement"), any Governmental
Entity that restricts the conduct of its business or that in any manner relates
to its management or its business, nor has Edify been advised by any
Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
3.13 CERTIFICATE OF INCORPORATION.
The Board of Directors of Edify has approved the offer of S1 to enter
into this Agreement and the Option Agreement, and has approved Edify's entering
into this Agreement and the Option Agreement, and the transactions contemplated
thereby, such that under Edify's Certificate of Incorporation the only vote of
Edify stockholders necessary to consummate the transactions contemplated hereby
(including the Merger and issuance under the Option Agreement) is the approval
of at least a majority of the outstanding shares of Edify Common Stock.
3.14 ENVIRONMENTAL MATTERS.
(a) Each of Edify and the Edify Subsidiaries is in compliance in all
material respects with all applicable federal and state laws and regulations
relating to pollution or protection of the environment (including without
limitation, laws and regulations relating to emissions, discharges, releases and
threatened releases of Hazardous Material (as hereinafter defined), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or to the knowledge of Edify's directors and executive officers
threatened (or past or present actions or events that could form the basis of
any such suit, claim, action, proceeding, investigation or notice), in which
Edify or any Edify Subsidiary has been or, with
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respect to threatened suits, claims, actions, proceedings, investigations or
notices may be, named as a defendant (x) for alleged material noncompliance
(including by any predecessor), with any environmental law, rule or regulation
or (y) relating to any material release or threatened release into the
environment of any Hazardous Material, whether or not occurring at or on a site
owned, leased or operated by Edify or any Edify Subsidiary;
(c) To the knowledge of Edify's directors and executive officers,
during the period of Edify's or any Edify Subsidiary's ownership or operation of
any of its properties, there has not been any material release of Hazardous
Materials in, on, under or affecting any such property.
(d) For purposes of this Section 3.14, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
3.15 PROPERTIES AND ASSETS.
Section 3.15 of the Edify Disclosure Schedule lists (i) all real
property owned by Edify and each Edify Subsidiary; (ii) each real property
lease, sublease or installment purchase arrangement to which Edify or any Edify
Subsidiary is a party; (iii) a description of each contract for the purchase,
sale, or development of real estate to which Edify or any Edify Subsidiary is a
party; and (iv) all items of Edify's or any Edify Subsidiary's tangible personal
property and equipment with a book value of $25,000 or more or having any annual
lease payment of $25,000 or more. Except for (a) items reflected in Edify's
consolidated financial statements as of December 31, 1998 referred to in Section
3.5 hereof, (b) exceptions to title that do not interfere materially with
Edify's or any Edify Subsidiary's use and enjoyment of owned or leased real
property, (c) liens for current real estate taxes not yet delinquent, or being
contested in good faith, properly reserved against (and reflected on the
financial statements referred to in Section 3.5 above), (d) properties and
assets sold or transferred in the ordinary course of business consistent with
past practices since December 31, 1998, and (e) items listed in Section 3.15 of
the Edify Disclosure Schedule, Edify and each Edify Subsidiary have good and, as
to owned real property, marketable and insurable title to all their properties
and assets, reflected in its consolidated financial statements of Edify as of
December 31, 1998, free and clear of all liens, claims, charges and other
encumbrances. Edify and each Edify Subsidiary, as lessees, have the right under
valid and subsisting leases to occupy, use and possess all property leased by
them, and there has not occurred under any such lease any material breach,
violation or default by Edify, and neither Edify nor any Edify Subsidiary has
experienced any material uninsured damage or destruction with respect to such
properties since December 31, 1998. All properties and assets used by Edify and
each Edify Subsidiary are in good operating condition and repair (subject to
ordinary wear and tear) and comply in all material respects with all Laws
relating thereto now in effect. Edify and each Edify Subsidiary enjoy peaceful
and undisturbed possession under all leases for the use of all property under
which they are the lessees, and all leases to which Edify or any Edify
Subsidiary is a party are valid and binding obligations of Edify, and to the
knowledge of Edify with respect to the respective third parties thereto,
enforceable, in accordance with the terms thereof. Neither Edify nor any Edify
Subsidiary is in material default with respect to any such lease, and there has
occurred no default by Edify or event which with the lapse of time or the giving
of notice, or both, would constitute a material default under any such lease.
There are no Laws, conditions of record, or other impediments which interfere
with the intended use by Edify or any Edify Subsidiary of any of the property
owned, leased, or occupied by them.
3.16 INSURANCE.
Section 3.16 of the Edify Disclosure Schedule contains a true, correct
and complete list of all insurance policies and bonds maintained by Edify and
any Edify Subsidiary, including the name of the insurer, the policy number, the
type of policy and any applicable deductibles, and all such insurance policies
and bonds (or other insurance policies and bonds that have, from time to time,
in respect of the nature of the risks insured against and amount of coverage
provided, been substantially similar in kind and amount to that customarily
carried by parties similarly situated who own properties and engage in
businesses substantially similar to that of Edify and any Edify Subsidiary) are
in full force and effect and have been in full force and effect. As of the date
hereof, neither Edify nor any Edify Subsidiary has
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received any notice of cancellation or amendment of any such policy or bond or
is in default under any such policy or bond, no coverage thereunder is being
disputed and all material claims thereunder have been filed in a timely fashion.
The existing insurance carried by Edify and Edify Subsidiaries is, in respect of
the nature of the risks insured against and the amount of coverage provided,
substantially similar in kind and amount to that customarily carried by parties
similarly situated who own properties and engage in businesses substantially
similar to that of Edify and the Edify Subsidiaries, and is sufficient for
compliance by Edify and the Edify Subsidiaries with all requirements of Law and
agreements to which Edify or any of the Edify Subsidiaries is subject or is
party. True, correct and complete copies of all such policies and bonds
reflected at Section 3.16 of the Edify Disclosure Schedule, as in effect on the
date hereof, have been made available to S1.
3.17 COMPLIANCE WITH APPLICABLE LAWS.
Each of Edify and any Edify Subsidiary has complied in all material
respects with all Laws applicable to it or to the operation of its business.
Neither Edify nor any Edify Subsidiary has received any written notice or to
Edify's knowledge, any other notice, of any material alleged or threatened
claim, violation, or liability under any such Laws that has not heretofore been
cured and for which there is no remaining liability.
3.18 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act")) of Edify is listed at Section 3.18 of the Edify Disclosure
Schedule, and except as indicated thereon, each such person has delivered to S1,
concurrently with the execution of this Agreement, a stockholder agreement in
the form of Exhibit C hereto (the "Edify Stockholder Agreement").
3.19 OWNERSHIP OF S1 COMMON STOCK.
Except as set forth at Section 3.19 of the Edify Disclosure Schedule,
neither Edify nor to Edify's knowledge any of its directors or officers (i)
beneficially own, directly or indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, more than 1% of shares of the outstanding capital
stock of S1 (other than those agreements, arrangements or understandings
specifically contemplated hereby).
3.20 FAIRNESS OPINION.
Edify has received an opinion from Xxxxxxx to the effect that, in its
opinion, the consideration to be paid to stockholders of Edify hereunder is fair
to such stockholders from a financial point of view ("Fairness Opinion"), and,
except as set forth in Section 3.20 of the Edify Disclosure Schedule, Xxxxxxx
has consented to the inclusion of the Fairness Opinion in the Registration
Statement (defined below).
3.21 CHANGE OF CONTROL PAYMENTS.
Section 3.21 of the Edify Disclosure Schedule sets forth each plan or
agreement pursuant to which any amounts may become payable (whether currently or
in the future) to current or former employees and directors of Edify or any of
its Subsidiaries as a result of or in connection with the Merger.
3.22 DISCLOSURE.
None of the information supplied or to be supplied by or on behalf of
Edify for inclusion or incorporation by reference in the Registration Statement
will, at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by Edify
with respect to statements made or incorporated by reference therein about S1 or
Merger Sub supplied by S1 for inclusion or incorporation by
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reference in the Registration Statement. None of the information supplied or to
be supplied by or on behalf of Edify for inclusion or incorporation by reference
in the Proxy Statement/Prospectus will, at the time the Proxy
Statement/Prospectus is mailed to the stockholders of Edify or S1, at the time
of Edify stockholders' meeting or S1 stockholders' meeting or as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. The Proxy Statement/Prospectus will comply as to form in
all material respects with the provisions of the Securities Act and the Exchange
Act and the rules and regulations promulgated by the SEC thereunder, except that
no representation or warranty is made by Edify with respect to statements made
or incorporated by reference therein about S1 or Merger Sub supplied by S1 for
inclusion or incorporation by reference in the Proxy Statement/Prospectus.
3.23 BOARD APPROVAL.
The Board of Directors of Edify (including any required committee or
subgroup of the Board of Directors of Edify) has, as of the date of this
Agreement, declared this Agreement advisable and determined (i) that the Merger
is fair to, and in the best interests of Edify and its stockholders, and (ii) to
recommend that the stockholders of Edify approve and adopt this Agreement and
approve the Merger.
3.24 SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW AND EDIFY
RIGHTS PLAN NOT APPLICABLE.
The Board of Directors of Edify has taken all actions so that (a) the
restrictions contained in Section 203 of the Delaware General Corporation Law
applicable to a "business combination" (as defined in such Section 203) will not
apply to the execution, delivery or performance of this Agreement or the Option
Agreement or to the consummation of the Merger or the other transactions
contemplated by this Agreement and the Option Agreement and (b) the execution,
delivery and performance of this Agreement and the Option Agreement and the
consummation of the Merger will not cause any change, effect or result under the
Edify Rights Plan which is adverse to the interests of S1. Without limiting the
generality of the foregoing, if necessary to accomplish the foregoing, the Edify
Rights Plan has been amended to (i) render the Edify Rights Plan inapplicable to
the Merger and the other transactions contemplated by this Agreement, (ii)
ensure that (x) none of S1 or its Subsidiaries is an Acquiring Person (as
defined in the Edify Rights Plan) pursuant to the Edify Rights Plan by virtue of
the execution of this Agreement or the Option Agreement or the consummation of
the Merger or the other transactions contemplated hereby and thereby and (y) a
Distribution Date or Shares Acquisition Date (as such terms are defined in the
Edify Rights Plan) does not occur by reason of the execution of this Agreement
or the Option Agreement, the consummation of the Merger, or the consummation of
the transactions contemplated hereby or thereby, and such amendment may not be
further amended by Edify without the prior consent of S1 in its sole discretion.
3.25 INTELLECTUAL PROPERTY.
Except, in each case, as set forth in Section 3.25 of the Edify
Disclosure Schedule:
(a) (i) Edify and each Edify Subsidiary owns, free and clear
of liens, orders and arbitration awards, or are licensed or otherwise possess
valid and enforceable rights to use all patents, trademarks, trade names,
service marks, copyrights and any applications therefor, schematics, technology,
know-how, trade secrets, ideas, algorithms, processes, Software (as defined
below), and tangible or intangible proprietary information or material
("Intellectual Property") that are used in the business of Edify and the Edify
Subsidiaries. "Software" means any and all (i) computer programs and
applications, including any and all software implementations of algorithms,
models and methodologies, whether in source code or object code, (ii) databases
and compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, (iv)
the technology supporting any Internet site(s) operated by or on behalf of Edify
or any Edify Subsidiary, and (v) all documentation, including user manuals and
training materials, relating to any of the foregoing.
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(ii) Except as would not be materially adverse to the
business of Edify or any Edify Subsidiary, Edify and the Edify Subsidiaries have
taken reasonable steps to protect their Intellectual Property. There is no
litigation pending or, to the knowledge of Edify and the Edify Subsidiaries,
threatened or any written claim from any person challenging the ownership, use,
validity or enforceability of any Intellectual Property, nor is there any basis
for the assertion of any such claim or challenge.
(iii) No material patent, trademark, service xxxx,
copyright, trade secret, computer software or other intellectual property right
other than the Intellectual Property set forth on Schedule 3.25 is necessary to
conduct the businesses of Edify and its Subsidiaries as presently conducted.
(b) Schedule 3.25(b) lists all (i) patents, patent applications,
registered and unregistered trademarks, trade names and service marks, and
registered copyrights owned by Edify included in the Intellectual Property,
including the jurisdictions in which each such item of Intellectual Property
right has been issued or registered or in which any application for such
issuance and registration has been filed, (ii) Electronic Banking System
software licenses and value added reseller agreements, and (iii) licenses,
sublicenses and other agreements as to which Edify and any Edify Subsidiary are
a party and pursuant to which Edify and its Subsidiaries are 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 Edify or Edify Subsidiary product.
(c) (i) To the knowledge of Edify and the Edify Subsidiaries,
there is no unauthorized use, disclosure, infringement or misappropriation of
any Intellectual Property rights of Edify or any Edify Subsidiary, any trade
secret material to Edify or its Subsidiaries, or any Intellectual Property right
of any third party to the extent licensed by or through Edify or its
Subsidiaries, by any employee of Edify or any Edify subsidiary or third party
for whom Edify is responsible. Except as set forth in Schedule 3.25(c), there
are no royalties, fees or other payments payable by Edify or its Subsidiaries to
any person by reason of the ownership, use, sale or disposition of Intellectual
Property.
(ii) To the knowledge of Edify and its Subsidiaries, there
has been no prior use of Edify's registered trademarks by any third party which
would confer upon said third party superior rights in such trademarks. Edify and
its Subsidiaries have taken reasonable steps to adequately police the trademarks
against third party infringement, and the material trademarks registered in the
United States and in other jurisdictions where Edify or its Subsidiaries are
doing business have been continuously used in the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or any amendment, supplement or office action related thereto.
(d) Edify and its Subsidiaries are not, nor will they be as a
result of the execution and delivery of this Agreement or the performance of
their obligations under this Agreement, in breach of any material license,
sublicense or other agreement relating to the Intellectual Property or Third
Party Intellectual Property Rights, and the execution and delivery of this
Agreement or the performance of the obligations under this Agreement by Edify
and its Subsidiaries will not result in the loss or impairment of, or give rise
to any right of any third party to terminate, any of Edify's or any of its
Subsidiaries' rights to own any of its Intellectual Property or their respective
rights under any material license agreements, nor require the consent of any
Governmental Entity or third party in respect of any such Intellectual Property.
(e) Edify and its Subsidiaries (i) have no knowledge
(including knowledge of any litigation pending or threatened or any written
claim from any person) or reason to believe that the conduct of their businesses
infringe any patent, trademark, service xxxx, copyright, trade secret or other
proprietary right of any third party; and (ii) have not advised any third party
that such third party may be infringing any Intellectual Property or breaching
any license or agreement involving Intellectual Property and have not brought or
threatened any claim against such third party for such conduct.
(f) The Software owned or purported to be owned by Edify or
any of its Subsidiaries, was either (i) developed by employees of Edify or any
of its Subsidiaries within the scope of their employment; (ii)
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developed by independent contractors or consultants who have assigned their
rights to Edify or any of its Subsidiaries pursuant to written agreements; or
(iii) otherwise acquired by Edify or its Subsidiary from a third party.
(g) All employees and independent contractors and consultants
of Edify and its Subsidiaries have executed and delivered to Edify or its
Subsidiaries, as the case may be, agreements regarding the protection of
proprietary information and the assignment to Edify or its Subsidiaries of any
Intellectual Property arising from services performed for Edify or its
Subsidiaries by such persons.
(h) Edify and its Subsidiaries have obtained or entered into
written agreements with their employees and with third parties, in transactions
deemed appropriate, in connection with the disclosure to or use or appropriation
by, employees and third parties, of trade secret or proprietary information
owned by Edify and its Subsidiaries and not otherwise protected by a patent, a
patent application, copyright, trademark, or other registration or legal scheme
("Edify Confidential Information"), and do not know of any situation involving
such employee or third party use, disclosure or appropriation of Edify
Confidential Information where the lack of such a written agreement is likely to
result in any Material Adverse Effect. Except as set forth in Schedule 3.25(h),
neither Edify nor any of its Subsidiaries has furnished the source code of any
of their Software products to any third party, deposited any such source code in
escrow or otherwise provided access to such source code to any third party.
(i) Except as would not be materially adverse to the business
of Edify or its Subsidiaries, Edify and its Subsidiaries have taken reasonable
steps with the intent of ensuring that their products (including existing
products and technology and products and technology currently under development)
will, when used in accordance with associated documentation on a specified
platform or platforms, be capable upon installation of accurately processing,
providing, and receiving date data from, into, and between the twentieth and
twenty-first centuries, including the years 1999 and 2000, and making leap-year
calculations, provided that all other non-Edify or Edify Subsidiary products
(e.g., hardware, software and firmware) used in or in combination with Edify's
or its Subsidiaries' products, properly exchange data with Edify's and its
Subsidiaries products.
3.26 ADDITIONAL INFORMATION.
The information contained in Edify's registration statement on Form 8-A
relating to the Edify Common Stock, as filed with the SEC, and all other reports
filed subsequent thereto through the date hereof pursuant to Section 13(a) or
15(d) of the Exchange Act did not at the respective dates of filing with the SEC
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF S1
S1 hereby makes the following representations and warranties to Edify
and each Seller as set forth in this Article IV, subject to the exceptions
disclosed in writing in the S1 Disclosure Schedule as of the date hereof, each
of which is being relied upon by Edify as a material inducement to enter into
and perform this Agreement. All of the disclosure schedules of S1 referenced
below or otherwise required of S1 pursuant to this Agreement, which disclosure
schedules shall be cross-referenced to the specific sections and subsections of
this Agreement and delivered herewith, are referred to herein as the "S1
Disclosure Schedule."
4.1 CORPORATE ORGANIZATION.
(a) S1 is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. S1 has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. The Amended and Restated
Certificate of Incorporation and Amended
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and Restated Bylaws of S1, copies of which have previously been made available
to Edify, are true, correct and complete copies of such documents as in effect
as of the date of this Agreement.
(b) Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each Subsidiary of S1
(each, a "S1 Subsidiary") and the jurisdiction of its organization is set forth
at Section 4.1(b) of the S1 Disclosure Schedule. Each S1 Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Each S1 Subsidiary has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of any
material business conducted by it or the character or location of any material
properties or assets owned or leased by it makes such licensing or qualification
necessary. The chartering and other corporate governance documents of each S1
Subsidiary, copies of which have previously been made available to Edify, are
true, correct and complete copies of such documents as in effect as of the date
of this Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of S1 consists of (i) 60,000,000
shares of S1 Common Stock, of which 25,428,778 shares were outstanding at May
10, 1999 and (ii) 5,000,000 shares of serial preferred stock, par value $.01 per
share ("S1 Preferred Stock"), 1,637,832 shares of which were designated as
"Series A Convertible Preferred Stock," 749,604 of which were designated as
"Series B Redeemable Convertible Preferred Stock" and 215,000 shares of which
were designated as "Series C Redeemable Convertible Preferred Stock." At May 10,
1999, 466,450 shares of Series A Convertible Preferred Stock, 749,604 shares of
Series B Redeemable Convertible Preferred Stock and 215,000 shares of Series C
Redeemable Convertible Preferred Stock were outstanding. At such date, there
were 12,353,798 shares of S1 Common Stock reserved for issuance pursuant to
employee stock options (of which options for 9,607,750 shares are currently
outstanding). All of the issued and outstanding shares of S1 Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof, and upon issuance in accordance with the terms hereof, the shares of S1
Common Stock to be issued in the Merger (including, without limitation, upon
exercise of options to purchase Edify Common Stock) are duly authorized and upon
issuance in accordance with the terms hereof, will be validly issued, and fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except as
set forth above, S1 does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of S1 Common Stock
or S1 Preferred Stock or any other equity securities of S1 or any securities
presenting the right to purchase or otherwise receive any shares of S1 Common
Stock or S1 Preferred Stock, other than as set forth at Section 4.2(a) of the S1
Disclosure Schedule.
(b) Except as set forth at Section 4.2(b) of the S1 Disclosure
Schedule, S1 owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of the S1 Subsidiaries, free and clear of all
liens, charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. No S1 Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
4.3 AUTHORITY; NO VIOLATION.
(a) S1 has full corporate power and authority to execute and deliver
this Agreement, and, subject to approval by the holders of a majority of the
shares of S1 Common Stock represented in person or by proxy at the meeting of S1
stockholders at which the issuance of the shares of S1 Common Stock in the
Merger contemplated hereby (the "X0 Xxxxxxxx") is considered, to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of S1. The Board of
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Directors of S1 has declared the S1 Issuance and this Agreement advisable and
directed that S1 Issuance be submitted to S1's stockholders for approval at a
special meeting of such stockholders and, except for the approval of such
matters by the requisite vote of S1's stockholders, no other corporate
proceedings on the part of S1 (except for matters related to setting the date,
time, place and record date for the special meeting) are necessary to approve
this Agreement or to consummate the transactions contemplated hereby. This
Agreement and the Option Agreement have been duly and validly executed and
delivered by S1 and (assuming due authorization, execution and delivery by
Merger Sub and Edify) constitute valid and binding obligations of S1,
enforceable against S1 in accordance with their terms, except as enforcement may
be limited by general principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and similar law affecting
creditors' rights and remedies generally.
(b) Merger Sub has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly approved by
the Board of Directors of Merger Sub. The Board of Directors of Merger Sub has
declared this Agreement advisable and directed that approval of this Agreement
and the Merger be submitted to Merger Sub's stockholder for approval by such
stockholder and, except for the approval of such matters by the required vote of
Merger Sub's stockholder, no other corporate proceedings on the part of Merger
Sub (except for matters related to setting the date, time, place and record date
for the special meeting, if applicable) are necessary to approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Merger Sub and (assuming due
authorization, execution and delivery by S1 and Edify) constitutes valid and
binding obligations of Merger Sub, enforceable against Merger Sub in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar law affecting creditors' rights and remedies generally.
All of the outstanding shares of Merger Sub common stock, par value $.01 per
share, have been duly authorized, validly issued and are fully paid and
non-assessable and are owned by S1. Merger Sub was formed for the purpose of
consummating the Merger and has no material liabilities.
(c) Neither the execution and delivery of this Agreement by S1 or
Merger Sub nor the consummation by S1 or Merger Sub of the transactions
contemplated hereby or thereby, nor compliance by S1 or Merger Sub with any of
the terms or provisions hereof or thereof, will (i) violate any provision of (x)
the Amended and Restated Certificate of Incorporation or Amended and Restated
Bylaws of S1 or (y) the Certificate of Incorporation or Bylaws of Merger Sub, or
(ii) assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any Laws applicable to S1 or Merger Sub or any of
their properties or assets, or (y) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of S1 or Merger Sub under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which S1 or
Merger Sub is a party, or by which S1 or Merger Sub or any of their properties
or assets may be bound or affected, except, in each case, where such violation,
conflict, breach, loss, default, termination, cancellation or acceleration would
not have a Material Adverse Effect on S1.
4.4 CONSENTS AND APPROVALS.
(a) Except for (i) the effectiveness of the Registration Statement
containing the Proxy Statement/Prospectus in connection with obtaining
stockholder approval of the S1 Issuance by the requisite vote of stockholders of
S1, (ii) the approval of this Agreement and the issuance of S1 Common Stock in
the Merger by the requisite vote of the stockholders of S1 and Merger Sub,
respectively, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (iv) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws and, if
applicable, the HSR Act, and the securities or antitrust laws of any foreign
country, (v) such filings and approvals as are required to be made or obtained
with Nasdaq (or such other exchange as may be applicable) in connection with the
issuance of the shares of S1 Common Stock pursuant to this Agreement, and (vi)
such other consents and approvals as may be set forth in Section 4.4(a) of the
S1 Disclosure Schedule, no consents or approvals of
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or filings or registrations with any Governmental Entity or with any third party
are necessary in connection with (1) the execution and delivery by S1 of this
Agreement and the Option Agreement, and (2) the consummation by S1 of the Merger
and the other transactions contemplated hereby, except for such consents,
approvals or filings the failure of which to obtain will not have (x) a material
adverse effect on the ability of S1 or Merger Sub to consummate the transactions
contemplated hereby or (y) a Material Adverse Effect on Edify, S1 or the
Surviving Corporation following the Effective Time.
(b) S1 hereby represents to Edify that it has no knowledge of any
reason why approval or effectiveness of any of the applications, notices or
filings referred to in Section 4.4(a) cannot be obtained or granted on a timely
basis.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
S1 has previously made available to Edify true, correct and complete
copies of the consolidated balance sheets of S1 and its Subsidiaries as of
December 31 for the fiscal years 1998 and 1997 and the related consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
years 1996 through 1998, inclusive, as reported in S1's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, filed with the SEC under the
Exchange Act, in each case accompanied by the audit report of KPMG LLP,
independent public accountants with respect to S1, and the interim financial
statements of S1 as of and for the three months ended March 31, 1998 and 1997,
as included in S1's quarterly report on Form 10-Q for the quarter ended March
31, 1999, as filed with the SEC. The financial statements referred to in this
Section 4.5 (including the related notes, where applicable) fairly present, and
the financial statements referred to in Section 6.8 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of S1 and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable) comply,
and the financial statements referred to in Section 6.8 hereof will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements referred
to in Section 6.8 hereof will be, prepared in accordance with GAAP consistently
applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q or any
successor form. S1's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 and all subsequently filed reports under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act comply in all material respects with the
appropriate requirements for such reports under the Exchange Act, and S1 has
previously made available to Edify true, correct and complete copies of such
reports. The books and records of S1 and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements.
4.6 BROKER'S FEES.
Neither S1 nor any S1 Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement or the Option Agreement, except that
S1 has engaged, and will pay a fee or commission to BancBoston Xxxxxxxxx
Xxxxxxxx, Inc. ("BBRS") in accordance with the terms of a letter agreement
between BBRS and S1, dated April 9, 1999, a true, complete and correct copy of
which has been provided to Edify.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in S1's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, or any other report filed since December
31, 1998, under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, true,
correct and complete copies of which have previously been made available to
Edify, since December 31, 1998, (i) neither S1 nor any S1 Subsidiary has
incurred any material liability, except as contemplated by this Agreement, in
the ordinary course of their businesses consistent with their past practices, or
as contemplated by that certain share exchange agreement by and among S1, FICS
Group N.V. and the shareholders of FICS Group N.V., dated as of even date
herewith, and (ii) no event has occurred which has had, or would have,
individually or in the aggregate, a Material Adverse Effect on S1.
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(b) Since December 31, 1998, S1 and each S1 Subsidiary has carried on
its respective businesses in the ordinary and usual course consistent with past
practices.
4.8 LEGAL PROCEEDINGS.
(a) Except as set forth at Section 4.8 of the S1 Disclosure Schedule,
neither S1 nor any of its Subsidiaries is a party to any, and there are no
pending or, to S1's knowledge, threatened, legal, administrative, arbitration or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature against S1 or any of its Subsidiaries or which challenge the
validity or propriety of the transactions contemplated by this Agreement or the
Option Agreement as to which there is a reasonable probability of success.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon S1, any of its Subsidiaries or the assets of S1 or any
of its Subsidiaries.
(c) No Governmental Entity has at any time challenged in a writing
delivered to S1 the legal right of S1 to design, manufacture, offer or sell any
of its products or services in the present manner or style thereof. As of the
date hereof, to the knowledge of S1, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that would
reasonably be expected to, cause or provide a bona fide basis for a director or
executive officer of S1 to seek indemnification from S1.
4.9 TAXES AND TAX RETURNS.
For purposes of this Section 4.9, S1 shall include S1 and each S1
Subsidiary and each other affiliated or related corporation or entity if S1 or
any S1 Subsidiary has or could have any material liability for the Taxes of such
corporation or entity. S1 has duly filed all Tax Returns required to be filed by
it on or before the date hereof (all such returns being accurate and complete in
all material respects) and has duly paid or made provision in the financial
statements referred to in Sections 4.5 and 6.8 hereof in accordance with GAAP
for the payment of all material Taxes that have been incurred or are due or
claimed to be due from it by Taxing Authorities on or before the date hereof
other than Taxes (a) that (x) are not yet delinquent or (y) are being contested
in good faith and set forth in Section 4.9 of the S1 Disclosure Schedule and (b)
that have not been finally determined. The charges, accruals, and reserves with
respect to Taxes in the financial statements referred to in Sections 4.5 and 6.8
are adequate (determined in accordance with GAAP) and are at least equal to its
liability for Taxes. There exists no proposed tax assessment against S1 except
as disclosed in the financial statements referred to in Sections 3.5 and 6.8
hereof in accordance with GAAP. No consent to the application of Section
341(f)(2) of the Code has been filed with respect to any property or assets
held, acquired, or to be acquired by S1. All Taxes that S1 is or was required to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Taxing Authority. All liability with
respect to the Tax Returns of S1 has been satisfied for all years to and
including 1998. No Taxing Authority has notified S1 of, or otherwise asserted,
that there are any material deficiencies with respect to the Tax Returns of S1
subsequent to 1994. There are no material disputes pending, or claims asserted
for, Taxes or assessments of S1, nor has S1 given or been requested to give any
currently effective waiver extending the statutory period of limitation
applicable to any Tax Return. In addition, Tax Returns that are accurate and
complete in all material respects have been filed by S1 for all periods for
which returns were due with respect to income and employment tax withholding
with respect to wages and other income and the amounts shown on such Tax Returns
to be due and payable have been paid in full or adequate provision therefor in
accordance with GAAP has been included by S1 in the financial statements
referred to in Sections 4.5 and 6.8 hereto. All S1 Tax Returns have been
examined by the relevant Taxing Authorities, or closed without audit by
applicable statutes of limitations, and all deficiencies proposed as a result of
such examinations have been paid or settled, for all periods before and
including the taxable year ended December 31, 1994. S1 has provided or made
available to Edify complete and correct copies of its Tax Returns and all
material correspondence and documents, if any, relating directly or indirectly
to Taxes for each taxable year or other relevant period as to which the
applicable statute of limitations has not run on the date hereof. For this
purpose, "correspondence and documents" include, without limitation, amended Tax
Returns, pending claims for refunds, notices from Taxing Authorities of proposed
changes or adjustments to Taxes or Tax Returns that have not been finally
resolved, consents to assessment or collection of Taxes, acceptances of proposed
adjustments, closing agreements, rulings and
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determination letters and requests therefor, and all other written
communications to or from Taxing Authorities relating to any material Tax
liability of S1.
4.10 EMPLOYEE PLANS.
(a) For purposes of this Section 4.10, S1 shall include each of its
Subsidiaries and any other entity that together with S1 would be deemed a
"single employer" for purposes of ERISA (determined without regard to whether
such entity conducts business in the United States). Section 4.10(a) of the S1
Disclosure Schedule sets forth a true and complete list of each ERISA Plan and
each other plan, arrangement or agreement providing benefits to the current or
former employees of S1 that as of the date of this Agreement S1 maintains, to
which S1 contributes or under which S1 has any liability, or within the last six
years that S1 has maintained, to which S1 has contributed or under which S1 has
had any liability (collectively, the "S1 Plans"). Each S1 Plan that is an ERISA
Plan is referred to as a "S1 ERISA Plan."
(b) S1 has heretofore made available to S1 true, correct and complete
copies of each of the S1 Plans and all related documents, including but not
limited to (i) the actuarial report for such S1 Plan (if applicable) for each of
the last five years, (ii) the most recent determination letter from the IRS (if
applicable) for each S1 ERISA Plan, (iii) the current summary plan description
and any summaries of material modification for each S1 ERISA Plan and any
corresponding document for each other S1 Plan, (iv) all annual reports for each
S1 ERISA Plan filed for the preceding five plan years and any annual or other
periodical financial information concerning any other S1 Plan filed with any
governmental agency, (v) all agreements with fiduciaries and service providers
relating to the S1 Plan, (vi) all substantive correspondence relating to any
such S1 Plan addressed to or received from any governmental agency or authority,
(vii) all personnel, payroll, and employment manuals and policies, and (viii) a
written description of any S1 Plan that is not otherwise in writing.
(c) S1 has performed all of its obligations under all S1 Plans. S1
has made appropriate entries in the financial statements referred to in Sections
4.5 and 6.8 hereof in accordance with GAAP for all obligations and liabilities
under the S1 Plans. No statement, either written or oral, has been made by S1
with regard to any S1 Plan that was not in accordance with the S1 Plan and that
could have an Material Adverse Effect on S1. S1 has no liability to the IRS, the
U.S. Pension Benefit Guaranty Corporation or to any other governmental or
quasi-governmental agency or authority with respect to any S1 Plan. No S1 ERISA
Plan is subject to title IV of ERISA.
(d) Except as set forth at Section 4.10(d) of the S1 Disclosure
Schedule, (i) each of the S1 Plans has been operated and administered in all
material respects in compliance with applicable Laws, including, but not
limited, in the case of each S1 ERISA Plan, to ERISA and the Code, (ii) each of
the S1 ERISA Plans intended to be "qualified" within the meaning of Section 401
of the Code is so qualified and S1 has received a determination letter or
opinion letter from the IRS to such effect, which letter remains in full force
and effect, (iii) with respect to each S1 ERISA Plan that is subject to the
funding requirements of ERISA and the Code, the present value of accrued
benefits under such S1 Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such S1 Plan's
actuary with respect to such S1 Plan, did not, as of its latest valuation date,
exceed the then current value of the assets of such S1 Plan allocable to such
accrued benefits, (iv) no S1 Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect to
current or former employees of S1 beyond their retirement or other termination
of service, other than (a) coverage mandated by applicable Law, (b) death
benefits or retirement benefits under an S1 Plan that also provides
post-retirement income, annuity or pension benefits (including an "employee
pension plan" as that term is defined in ERISA), (c) deferred compensation
benefits under an S1 Plan that are accrued as liabilities in the financial
statements referred to in Sections 4.5 and 6.8 hereof in accordance with GAAP,
or (d) benefits the full cost of which is borne by the current or former
employee (or his beneficiary), (v) no liability under Title IV of ERISA has been
incurred by S1 that has not been satisfied in full, and no condition exists that
presents a material risk of S1 incurring a material liability thereunder, (vi)
no S1 ERISA Plan is a "multiemployer pension plan," as such term is defined in
ERISA and no other S1 Plan is maintained pursuant to any collective bargaining
agreement or other agreement with a labor union or other authorized
representative of labor, (vii) all contributions or other amounts payable by S1
with respect to each S1 Plan and all other liabilities of each such entity with
respect to each S1 Plan, in respect of current or prior plan years have been
paid or accrued in the financial
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statements referred to in Sections 4.5 and 6.8 hereof in accordance with GAAP
and, in the case of a S1 ERISA Plan, ERISA and the Code, (viii) S1 has not
engaged in a "prohibited transaction" as defined in ERISA or the Code in
connection with which S1 could be subject to either any material excise tax or
civil penalty assessed pursuant to ERISA or the Code, (ix) to the knowledge of
S1, there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the S1 Plans or any
trusts related thereto, (x) all S1 Plans could be terminated as of the Closing
without material liability in excess of the amount accrued therefor in the
financial statements referred to in Sections 4.5 and 6.8 hereof in accordance
with GAAP; (xi) except with respect to nonqualified stock options granted to
employees, no S1 Plan, either individually or collectively, provides for any
material payment by S1 that would not be deductible for U.S. federal income tax
purposes; (xii) no "accumulated funding deficiency" as defined in ERISA or the
Code, whether or not waived, and no "unfunded current liability" as determined
under the Code exists with respect to any S1 ERISA Plan; (xiii) no S1 ERISA Plan
has experienced a "reportable event" (as such term is defined in ERISA and
regulations thereunder) that is not subject to an administrative or statutory
waiver from the reporting requirement.
4.11 CERTAIN CONTRACTS.
(a) Except as set forth at Section 4.11 of the S1 Disclosure
Schedule, neither S1 nor any of its Subsidiaries is a party to or bound by any
contract, arrangement or commitment (i) with respect to the employment of any
directors, officers, employees or consultants (other than standard offer letters
which provide for not more than at-will employment), (ii) which, upon execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement will (either alone or upon the occurrence of any additional acts or
events) result in any payment (whether of severance pay or otherwise) becoming
due from S1, Edify or any of their respective Subsidiaries to any director,
officer or employee thereof, (iii) with or to a labor union or guild (including
any collective bargaining agreement), (iv) except as set forth on Section
4.11(a)(iv) of the S1 Disclosure Schedule, any of the benefits of which will be
increased, or the vesting of the 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 (including as to this clause
(iv), any stock option plan, stock appreciation rights plan, restricted stock
plan or stock purchase plan), (v) containing any covenant materially limiting
the right of S1 or any of its Subsidiaries to engage in any line of business or
to compete with any person or granting any exclusive distribution rights, (vi)
relating to the disposition or acquisition by S1 or any of its Subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which S1 or any of its Subsidiaries
has any material ownership interest in any corporation, partnership, joint
venture or other business enterprise other than S1's Subsidiaries that is
material to S1's business as currently conducted, or (vii) to provide source
code to any third party for any product or technology that is material to S1 and
its Subsidiaries taken as a whole. Except as set forth at Section 4.11 of the S1
Disclosure Schedule, there are no employment, consulting and deferred
compensation agreements to which S1 or any of its Subsidiaries is a party.
Section 4.11(a) of the S1 Disclosure Schedule sets forth a list of all material
contracts (as defined in Item 601(b)(10) of Regulation S-K) of S1 and its
Subsidiaries. Each contract, arrangement or commitment of the type described in
this Section 4.11(a), whether or not set forth in Section 4.11(a) of the S1
Disclosure Schedule, is referred to herein as a "S1 Contract," and neither S1
nor any of its Subsidiaries has received notice of, nor do any executive
officers of such entities know of, any violation of any S1 Contract.
(b) (i) Each S1 Contract is valid and binding and in full force and
effect as to the obligations of S1 thereunder, and to the knowledge of S1, is
valid and binding and in full force and effect as to the obligations by the
third parties thereto, (ii) S1 and each of its Subsidiaries has, and to the
knowledge of S1, each third party has, in all material respects performed all
obligations required to be performed by it to date under each S1 Contract, and
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a material default on the part of S1 or any
of its Subsidiaries under any such S1 Contract or, to the knowledge of S1, any
third party thereto.
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4.12 ENVIRONMENTAL MATTERS.
(a) Each of S1 and the S1 Subsidiaries is in compliance in all
material respects with all applicable laws and regulations relating to pollution
or protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Materials (as hereinafter defined), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or, to the knowledge of S1 and its Subsidiaries threatened (or
past or present actions or events that could form the basis of any such suit,
claim, action, proceeding, investigation or notice), in which S1 or any S1
Subsidiary has been or, with respect to threatened suits, claims, actions,
proceedings, investigations or notices may be, named as a defendant (x) for
alleged material noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (y) relating to any material release or
threatened release into the environment of any Hazardous Material, occurring at
or on a site owned, leased or operated by S1 or any S1 Subsidiary, or to the
knowledge of S1, relating to any material release or threatened release into the
environment of any Hazardous Material, occurring at or on a site not owned,
leased or operated by S1 or any S1 Subsidiary;
(c) To the knowledge of S1 and its Subsidiaries, during the period of
S1's or any S1 Subsidiary's ownership or operation of any of its properties,
there has not been any material release of Hazardous Materials in, on, under or
affecting any such property.
(d) For purposes of this Section 4.12, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
4.13 PROPERTIES AND ASSETS.
Except for (a) items reflected in S1's consolidated financial statements
as of December 31, 1998 referred to in Section 4.5 hereof, (b) exceptions to
title that do not interfere materially with S1's or any S1 Subsidiary's use and
enjoyment of owned or leased real property, (c) liens for current real estate
taxes not yet delinquent, or being contested in good faith, properly reserved
against (and reflected on the financial statements referred to in Section 4.5
above), (d) properties and assets sold or transferred in the ordinary course of
business consistent with past practices since December 31, 1998, and (e) items
listed in Section 4.13 of the S1 Disclosure Schedule, S1 and each S1 Subsidiary
have good and, as to owned real property, marketable and insurable title to all
their properties and assets, free and clear of all liens, claims, charges and
other encumbrances. S1 and each S1 Subsidiary, as lessees, have the right under
valid and subsisting leases to occupy, use and possess all property leased by
them, and neither S1 nor any S1 Subsidiary has experienced any material
uninsured damage or destruction with respect to such properties since December
31, 1998. All properties and assets used by S1 and each S1 Subsidiary are in
good operating condition and repair (subject to ordinary wear and tear) and
comply in all material respects with all Laws relating thereto now in effect or
scheduled to come into effect. S1 and each S1 Subsidiary enjoy peaceful and
undisturbed possession under all leases for the use of all property under which
they are the lessees, and all leases to which S1 or any S1 Subsidiary is a party
are valid and binding obligations of S1, and to the knowledge of S1, with
respect to the respective third parties thereto, enforceable in accordance with
the terms thereof. Neither S1 nor any S1 Subsidiary is in material default with
respect to any such lease, and there has occurred no default by S1 or any S1
Subsidiary or event which with the lapse of time or the giving of notice, or
both, would constitute a material default under any such lease. There are no
Laws, conditions of record, or other impediments which interfere with the
intended use by S1 or any S1 Subsidiary of any of the property owned, leased, or
occupied by them.
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4.14 INSURANCE.
The existing insurance carried by S1 and S1 Subsidiaries is and will
continue to be, in respect of the nature of the risks insured against and the
amount of coverage provided, substantially similar in kind and amount to that
customarily carried by parties similarly situated who own properties and engage
in businesses substantially similar to that of S1 and the S1 Subsidiaries, and
is sufficient for compliance by S1 and the S1 Subsidiaries with all requirements
of Law and agreements to which S1 or any of the S1 Subsidiaries is subject or is
party.
4.15 COMPLIANCE WITH APPLICABLE LAWS.
Each of S1 and any S1 Subsidiary has complied in all material respects
with all Laws applicable to it or to the operation of its business. Neither S1
nor any S1 Subsidiary has received any written notice of any material alleged or
threatened claim, violation, or liability under any such Laws that has not
heretofore been cured and for which there is no remaining liability.
4.16 S1 INFORMATION.
None of the information supplied or to be supplied by or on behalf of S1
for inclusion or incorporation by reference in the Registration Statement will,
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading, except that no representation or warranty is made by S1 with
respect to statements made or incorporated by reference therein about Edify
supplied by Edify for inclusion or incorporation by reference in the
Registration Statement. None of the information supplied or to be supplied by or
on behalf of S1 for inclusion or incorporation by reference in the Proxy
Statement/Prospectus will, at the time the Proxy Statement/Prospectus is mailed
to the stockholders of Edify or S1, at the time of Edify stockholders' meeting
or S1 stockholders' meeting or as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. The
Registration Statement and the Proxy Statement/Prospectus will comply as to form
in all material respects with the provisions of the Securities Act and the
Exchange Act and the rules and regulations promulgated by the SEC thereunder,
except that no representation or warranty is made by S1 with respect to
statements made or incorporated by reference therein about Edify supplied by
Edify for inclusion or incorporation by reference in the Proxy
Statement/Prospectus.
4.17 INTELLECTUAL PROPERTY.
Except, in each case, as set forth in Section 4.17 of the Edify
Disclosure Schedule:
(a) (i) S1 and its Subsidiaries own, free and clear of liens,
orders and arbitration awards, or are licensed or otherwise possess valid and
enforceable rights to use all patents, trademarks, trade names, service marks,
copyrights and any applications therefor, schematics, technology, know-how,
trade secrets, ideas, algorithms, processes, Software (as defined below), and
tangible or intangible proprietary information or material ("Intellectual
Property") that are used in the business of S1 and its Subsidiaries. "Software"
means any and all (i) computer programs and applications, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, (iv) the technology supporting any Internet
site(s) operated by or on behalf of S1 or any of its Subsidiaries, and (v) all
documentation, including user manuals and training materials, relating to any of
the foregoing.
(ii) Except as would not be materially adverse to the
business of S1 or its Subsidiaries, S1 and its Subsidiaries have taken
reasonable steps to protect their Intellectual Property. There is no litigation
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pending or, to the knowledge of S1 and its Subsidiaries, threatened or any
written claim from any person challenging the ownership, use, validity or
enforceability of any Intellectual Property.
(iii) No material patent, trademark, service xxxx,
copyright, trade secret, computer software or other intellectual property right
other than the Intellectual Property set forth on Schedule 4.17 is necessary to
conduct the businesses of S1 and its Subsidiaries as presently conducted.
(b) Schedule 4.17 lists all (i) patents, patent applications,
registered and unregistered trademarks, trade names and service marks and
registered copyrights owned by S1 included in the Intellectual Property,
including the jurisdictions in which each such item of Intellectual Property
right has been issued or registered or in which any application for such
issuance and registration has been filed, (ii) material licenses, sublicenses
and other agreements as to which S1 and its Subsidiaries are a party and
pursuant to which any person is authorized to use any Intellectual Property, and
(iii) licenses, sublicenses and other agreements as to which S1 and its
Subsidiaries are a party and pursuant to which S1 and its Subsidiaries are
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 S1 or Subsidiary product.
(c) (i) To the knowledge of S1 and its Subsidiaries, there is
no unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of S1 or its Subsidiaries, any trade secret
material to S1 or its Subsidiaries, or any Intellectual Property right of any
third party to the extent licensed by or through S1 or its Subsidiaries, by any
employee of S1 or S1 Subsidiary or third party for whom S1 is responsible.
Except as set forth in Schedule 4.17, there are no royalties, fees or other
payments payable by S1 or its Subsidiaries to any person by reason of the
ownership, use, sale or disposition of Intellectual Property.
(ii) To the knowledge of S1 and its Subsidiaries, there
has been no prior use of S1's registered trademarks by any third party which
would confer upon said third party superior rights in such trademarks. S1 and
its Subsidiaries have taken reasonable steps to adequately police the trademarks
against third party infringement, and the material trademarks registered in the
United States have been continuously used in the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or any amendment, supplement or office action related thereto.
(d) S1 and its Subsidiaries are not, nor will they be as a
result of the execution and delivery of this Agreement or the performance of
their obligations under this Agreement, in breach of any material license,
sublicense or other agreement relating to the Intellectual Property or Third
Party Intellectual Property Rights, and the execution and delivery of this
Agreement or the performance of the obligations under this Agreement by S1 and
its Subsidiaries will not result in the loss or impairment of, or give rise to
any right of any third party to terminate, any of S1's or any of its
Subsidiaries' rights to own any of its Intellectual Property or their respective
rights under any material license agreements, nor require the consent of any
Governmental Entity or third party in respect of any such Intellectual Property.
(e) S1 and its Subsidiaries (i) have no knowledge (including
knowledge of any litigation pending or threatened or any written claim from any
person) or reason to believe that the conduct of their businesses infringe any
patent, trademark, service xxxx, copyright, trade secret or other proprietary
right of any third party; and (ii) have not advised any third party that such
third party may be infringing any Intellectual Property or breaching any license
or agreement involving Intellectual Property and have not brought or threatened
any claim against such third party for such conduct.
(f) The Software owned or purported to be owned by S1 or any
of its Subsidiaries, was either (i) developed by employees of S1 or any of its
Subsidiaries within the scope of their employment; (ii) developed by independent
contractors or consultants who have assigned their rights to S1 or any of its
Subsidiaries pursuant to written agreements; or (iii) otherwise acquired by S1
or its Subsidiary from a third party.
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(g) All employees and independent contractors and consultants
of S1 and its Subsidiaries have executed and delivered to S1 or its
Subsidiaries, as the case may be, agreements regarding the protection of
proprietary information and the assignment to S1 or its Subsidiaries of any
Intellectual Property arising from services performed for S1 or its Subsidiaries
by such persons.
(h) S1 and its Subsidiaries have obtained or entered into
written agreements with their employees and with third parties, in transactions
deemed appropriate, in connection with the disclosure to, or use or
appropriation by, employees and third parties, of trade secret or proprietary
information owned by S1 and its Subsidiaries and not otherwise protected by a
patent, a patent application, copyright, trademark, or other registration or
legal scheme ("S1 Confidential Information"), and do not know of any situation
involving such employee or third party use, disclosure or appropriation of S1
Confidential Information where the lack of such a written agreement is likely to
result in any Material Adverse Effect. Except as set forth in Schedule 4.17,
neither S1 nor any of its Subsidiaries have furnished the source code of any of
their Software products to any third party, deposited any such source code in
escrow, or otherwise provided access to such source code to any third party.
(i) Except as would not be materially adverse to the business
of S1 or its Subsidiaries, S1 and its Subsidiaries have taken reasonable steps
with the intent of ensuring that their products (including existing products and
technology and products and technology currently under development) will, when
used in accordance with associated documentation on a specified platform or
platforms, be capable upon installation of accurately processing, providing, and
receiving date data from, into, and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and making leap-year calculations,
provided that all other non-S1 or S1 Subsidiary products (e.g., hardware,
software and firmware) used in or in combination with S1's or its Subsidiaries'
products, properly exchange data with S1's and its Subsidiaries products.
4.18 BBRS FAIRNESS OPINION.
S1 has received an opinion from BancBoston Xxxxxxxxx Xxxxxxxx, Inc. to
the effect that, in its opinion, the consideration to be paid to by S1 to the
stockholders of Edify hereunder is fair to such stockholders from a financial
point of view (the "BBRS Fairness Opinion"), and, except as set forth in
Schedule 4.18 of the S1 Disclosure Schedule, BancBoston Xxxxxxxxx Xxxxxxxx, Inc.
has consented to the inclusion of the BBRS Fairness Opinion in the Registration
Statement.
4.19 MERGER SUB BOARD APPROVAL.
The Board of Directors of Merger Sub (including any required committee
or subgroup of the Board of Directors of Merger Sub) has, as of the date of this
Agreement, determined (i) that the Merger is fair to, and in the best interests
of Merger Sub and its stockholders and (ii) to recommend that the stockholders
of Merger Sub approve and adopt this Agreement and approve the Merger.
4.20 S1 BOARD APPROVAL.
The Board of Directors of S1 (including any required committee or
subgroup of the Board of Directors of S1) has, as of the date of this Agreement,
determined that it is in the best interests of S1 and its stockholders to
approve the issuance of shares of S1 Common Stock in the Merger pursuant to the
terms and conditions of this Agreement.
4.21 AGREEMENTS WITH REGULATORY AGENCIES.
S1 (i) is not subject to any cease-and-desist or other order issued by,
(ii) is not a party to any Regulatory Agreement with, and (iii) has not adopted
any board resolutions at the request of, any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its management or
its business, nor has S1 been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
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4.22 CERTIFICATE OF INCORPORATION.
The Board of Directors of S1 has approved S1's entering into this
Agreement and the Option Agreement, and the transactions contemplated thereby,
such that under S1's Certificate of Incorporation the only vote of S1
stockholders necessary to consummate the transactions contemplated hereby
(including the Merger and the S1 Issuance) is the approval of the S1 Issuance by
the holders of a majority of the shares of S1 Common Stock represented in person
or by proxy at a meeting of S1 stockholders held for such purpose.
4.23 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act) of S1 is listed at Section
4.23 of the S1 Disclosure Schedule, and except as indicated thereon each such
person has delivered to S1, concurrently with the execution of this Agreement, a
stockholder agreement in the form of Exhibit D hereto (the "S1 Stockholder
Agreement").
4.24 ADDITIONAL INFORMATION.
The information contained in S1's registration statement on Form
8-A, as filed with the SEC on September 30, 1998, and all other reports filed
subsequent thereto through the date hereof pursuant to Section 13(a) or 15(d) of
the Exchange Act, did not at the respective dates of filing with the SEC contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF EDIFY.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, except
as expressly contemplated or permitted by this Agreement or the Option Agreement
or with the prior written consent of S1, Edify and each Edify Subsidiary shall
carry on their respective businesses in the ordinary course consistent with past
practices. Edify will use its reasonable efforts to (x) preserve its business
organization and that of each Edify Subsidiary intact, (y) keep available to
itself and S1 the present services of the employees of Edify and each Edify
Subsidiary and (z) preserve for itself and S1 the goodwill of the customers of
Edify and each Edify Subsidiary and others with whom business relationships
exist. Without limiting the generality of the foregoing, and except as set forth
in the Edify Disclosure Schedule or as otherwise contemplated by this Agreement
or consented to by S1 in writing, Edify shall not, and shall not permit any
Edify Subsidiary to:
(a) declare or pay any dividends on, or make other distributions in
respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares of its capital stock
or, except as permitted by Section 5.1(c), issue, authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock except upon the exercise or fulfillment of
rights or options issued or existing pursuant to the Edify Stock Plans in
accordance with their present terms, all to the extent outstanding and in
existence on the date of this Agreement, or pursuant to the Option Agreement, or
(ii) repurchase, redeem or otherwise acquire (except repurchases of unvested
shares at cost in connection with the termination of the employee relationship
with any employee pursuant to stock option or purchase agreements in effect on
the date of this Agreement), any shares of the capital stock of Edify or any
Edify Subsidiary, or any securities convertible into or exercisable for any
shares of the capital stock of Edify or any Edify Subsidiary;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or, except as provided in
Section 5.1(k)(ii) hereof, any securities convertible into or exercisable for,
or any rights,
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warrants or options to acquire, any such shares, or enter into any agreement
with respect to any of the foregoing, other than (i) the grant of options under
the 1996 Equity Plan, not to exceed 420,000 shares in the aggregate, to purchase
Edify Common Stock to newly hired employees in amounts and on terms consistent
with prior practice and at a price not less than the market price on the date of
the grant, (ii) the issuance of Edify Common Stock pursuant to stock options or
similar rights to acquire Edify Common Stock granted pursuant to the Edify Stock
Plans outstanding prior to the date of this Agreement or granted under Section
5.1(c)(i) hereof and the Edify ESPP, in each case in accordance with their
present terms and (iii) pursuant to the Option Agreement;
(d) amend its Certificate of Incorporation, By-Laws or other similar
governing documents;
(e) authorize or permit any of its officers, directors, employees or
agents to, directly or indirectly, solicit, initiate or knowingly encourage any
inquiries relating to, or the making of any proposal for, hold substantive
discussions or negotiations with, knowingly provide any information to, any
person, entity or group (other than S1) concerning any Acquisition Transaction
(as defined below), or approve, endorse or recommend any such proposal or enter
into any letter of intent or similar document or any contract, agreement or
commitment relating to any Acquisition Transaction. Notwithstanding the
foregoing, Edify may enter into discussions or negotiations or knowingly provide
information in connection with a possible Acquisition Transaction if the Board
of Directors of Edify, after consultation with counsel, reasonably determines in
the exercise of its fiduciary duty that such discussions or negotiations should
be commenced or such information should be furnished. Edify shall promptly
advise S1 of any discussions or negotiations concerning any Acquisition
Transaction and communicate to S1 the material terms of any proposal, whether
written or oral, which it may receive in respect of any such Acquisition
Transaction and whether it is having discussions or negotiations with a third
party about an Acquisition Transaction with or providing information in
connection with, or which may lead to, an Acquisition Transaction with a third
party. Edify will promptly cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any parties
other than S1 with respect to any of the foregoing. As used in this Agreement,
Acquisition Transaction shall mean any offer, proposal or expression of interest
relating to (i) any tender or exchange offer, (ii) merger (other than the
Merger), consolidation or other business combination involving Edify or any
Edify Subsidiary, or (iii) the acquisition in any manner of a substantial equity
interest in, or a substantial portion of the assets of Edify other than the
transactions contemplated or permitted by this Agreement and the Option
Agreement, involving or contemplating the acquisition or purchase of more than
20%, in the case of any class or series of capital stock or 20% in the case of
the assets of Edify, as well as any lease or sale transaction out of the
ordinary course of business of more than 20% of the assets of Edify or any
liquidation or dissolution of Edify;
(f) make capital expenditures aggregating in excess of $75,000;
(g) enter into any new line of business or, except in the ordinary
course of business, (i) enter into any material contract (as defined in Item
601(b)(10) of Regulation S-K), or other contract requiring aggregate payments
exceeding $100,000, or (ii) modify, amend or transfer in any material respect,
or terminate, any material contract to which Edify or any of its Subsidiaries is
a party or waive, release, or assign any material rights thereunder;
(h) acquire or agree to acquire, by merging or consolidating with, or
by purchasing an equity interest in or a material amount of assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any material
amount of assets, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings, or in the ordinary
course of business;
(i) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue or in any of the conditions to the Merger set forth in
Article VII not being satisfied, or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable law;
(j) change its methods of accounting in effect at December 31, 1998
except as required by changes in GAAP as concurred to by S1's independent
auditors;
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(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Edify
Plan or any agreement, arrangement, plan or policy between Edify or any Edify
Subsidiary and one or more of its current or former directors or officers, (ii)
except as permitted by Section 5.1(c), increase in any manner the compensation
of any employee or director or pay any benefit not required by any plan or
agreement as in effect as of the date hereof (including, without limitation, the
granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares), (iii) enter into, modify
or renew any contract, agreement, commitment or arrangement providing for the
payment to any director, officer or employee of compensation or benefits, other
than normal annual increases in pay, consistent with past practice, (iv) hire
any new employee at a level of director or above at an annual base salary
compensation in excess of $125,000, (v) pay expenses of any employees or
directors for attending conventions or similar meetings which conventions or
meetings are held after the date hereof, other than in the ordinary course of
business consistent with past practice, (vi) promote to a rank of director or
more senior any employee, or (vii) pay any retention or other bonuses to any
employees;
(l) except for short-term borrowings with a maturity of one year or
less in the ordinary course of business consistent with past practices, incur
any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other individual,
corporation or other entity;
(m) sell, purchase, enter into a lease, relocate, open or close any
office;
(n) make any equity investment or commitment to make such an
investment in any entity or real estate;
(o) make any investment, other than in the ordinary course of
business consistent with past practices;
(p) sell, purchase or lease any real property;
(q) waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of any options or restricted stock, 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;
(r) transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to material Intellectual
Property other than in the ordinary course of business, or enter into grants to
future patent rights, other than as may be required by applicable Laws;
(s) take any action (including any action by its Board of Directors)
to amend the terms of the Edify Rights Plan or otherwise to cause Edify's
representation set forth in Section 3.24 hereof to be untrue in any respect; or
(t) agree or commit to do any of the actions set forth in (a) - (s)
above.
The consent of S1 to any action by Edify or any Edify Subsidiary that is not
permitted by any of the preceding paragraphs shall be evidenced by a writing
signed by the President or any Executive Vice President of S1.
5.2 COVENANTS OF S1.
During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement or with Edify's prior written consent, S1 shall not (i) take any
action that would materially adversely affect S1's or Merger Sub's ability to
consummate the transactions contemplated by this Agreement or materially delay
consummation of the transaction contemplated by this Agreement or (ii) take any
action that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue or in any of the conditions to the Merger set forth in Article VII not
being satisfied, or in a violation of any provision of this Agreement, except,
in every case, as may be required by applicable law.
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5.3 COMPLIANCE WITH ANTITRUST LAWS.
Each of S1 and Edify shall use its reasonable best efforts to resolve
objections, if any, which may be asserted with respect to the Merger under
antitrust laws, including, without limitation and if applicable, the HSR Act. In
the event a suit is threatened or instituted challenging the Merger as violative
of antitrust laws, each of S1 and Edify shall use its reasonable best efforts to
avoid the filing of, or resist or resolve such suit. S1 and Edify shall use
their reasonable best efforts to take such action as may be required by: (a) the
Antitrust Division of the Department of Justice or the Federal Trade Commission
in order to resolve such objections as either of them may have to the Merger
under antitrust laws, or (b) any federal or state court of the United States, in
any suit brought by a private party or Governmental Entity challenging the
Merger as violative of antitrust laws, in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining order, or other
order which has the effect of preventing the consummation of the Merger.
Reasonable best efforts shall not include the willingness of S1 to accept an
order agreeing to the divestiture, or the holding separate, of any assets of S1
or Edify which S1 reasonably determines to be material to S1 or to benefits of
the transaction for which it has bargained for hereunder.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement, S1 and Edify
(as to information to be included therein pertaining to Edify) shall promptly
cause to be prepared and filed with the SEC a registration statement of S1 on
Form S-4, including the Proxy Statement/Prospectus (the "Registration
Statement") for the purpose of registering the S1 Common Stock to be issued in
the Merger, and for soliciting the approval of this Agreement and the Merger by
the stockholders of Edify and S1. S1 and Edify shall use their reasonable best
efforts to have the Registration Statement declared effective by the SEC as soon
as possible after the filing. The parties shall each promptly notify the other
upon the receipt of any comments from the SEC or its staff, or any other
governmental officials, supply each other with all such correspondence with any
Governmental Entity other than confidential information, and cooperate in
responding to and considering any questions or comments from the SEC staff
regarding the information contained in the Registration Statement. If at any
time after the Registration Statement is filed with the SEC, and prior to the
Closing Date, any event relating to S1 or Edify is discovered by such party
which should be set forth in an amendment of, or a supplement to, the
Registration Statement, including the Prospectus/Proxy Statement (including,
without limitation, any change in the Fairness Opinion), such party shall
promptly inform the other, and shall furnish all necessary information relating
to such event whereupon the appropriate party shall promptly cause an
appropriate amendment to the Registration Statement or supplement to the
Prospectus/Proxy Statement to be filed with the SEC. Upon the effectiveness of
such amendment or supplement, the parties (if prior to the meetings of
stockholders pursuant to Section 6.3 hereof) will take all necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to their stockholders entitled to vote at such meetings. S1 shall
also use reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Each party shall furnish all information as may
be reasonably requested by the other in connection with any such action.
(b) As promptly as practicable following the execution and delivery
of this Agreement, if applicable, each of Edify and S1 will prepare and file
with the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "DOJ") Notification and
Report Forms relating to the transactions contemplated herein and by the Option
Agreement if and as required by the HSR Act, as well as comparable pre-merger
notification forms required by the merger notification or control laws and
regulations of any applicable jurisdiction, as agreed by the parties (the
"Antitrust Filings"). The parties will comply with any requests for additional
information relating to the Antitrust Filings and will use their reasonable best
efforts to secure all required approvals of the Antitrust Filings.
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(c) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings (which
shall include the Antitrust Filings), and to obtain as promptly as practicable
all permits, consents, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement (including without limitation the
Merger). Edify and S1 shall have the right to review in advance, and to the
extent practicable each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to Edify or S1 and Merger Sub, as the case may be, which appears in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement and will promptly notify each other of any communication with any
Governmental Entity and provide the other with an opportunity to participate in
any meetings with a Governmental Entity relating thereto; provided, however,
that nothing contained herein shall be deemed to provide either party with a
right to review any information provided to any Governmental Entity on a
confidential basis in connection with the transactions contemplated hereby. In
exercising the foregoing right, each of the parties hereto shall act reasonably
and as promptly as practicable. The parties hereto agree that they will consult
with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to contemplation of the transactions contemplated herein.
(d) S1 and Edify shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is required
for consummation of the transactions contemplated by this Agreement which causes
such party to believe that there is a reasonable likelihood that any Requisite
Regulatory Approval (defined in Section 7.1(c) hereof) will not be obtained or
that the receipt of any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Edify shall provide to the officers, employees,
accountants, counsel and other representatives of S1 and Merger Sub, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during such
period, Edify shall make available to S1 (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws or other federal
or state Laws and (ii) all other information concerning its business, properties
and personnel as S1 may reasonably request (except as to information which is
confidential or competitively sensitive ("Confidential Matters")). S1 will hold
all such information in confidence to the extent required by, and in accordance
with, the provisions of the Confidential Information and Non-disclosure
Agreement between the parties dated April 12, 1999 (the "Confidentiality
Agreement"). The parties agree and acknowledge that the Confidentiality
Agreement will continue in full force and effect in accordance with its terms.
(b) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, S1 shall, and shall cause Merger Sub to, provide to
the officers, employees, accountants, counsel and other representatives of
Edify, access, during normal business hours during the period prior to the
Effective Time, to such information regarding S1 (except as to Confidential
Matters), as shall be reasonably necessary for Edify to fulfill its obligations
pursuant to this Agreement or which may be reasonably necessary for Edify to
confirm that the representations and warranties of S1 contained herein are true
and correct and that the covenants of S1 contained herein have been performed in
all material respects. S1 also will provide a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws or other federal
or state banking Laws and all other information concerning its business as Edify
may reasonably request (except Confidential Matters). Edify will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
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(d) Edify shall provide S1 with true, correct and complete copies of
all financial information provided to directors of Edify in connection with
meetings of its Boards of Directors or committees thereof, except as to
Confidential Matters.
6.3 STOCKHOLDER MEETINGS.
(a) Edify shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its stockholders within 45 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger (the "Edify Special Meeting"). The
Board of Directors of Edify shall recommend to Edify's stockholders approval of
this Agreement, including the Merger, and the transactions contemplated hereby,
together with any matters incident thereto, and shall oppose any third party
proposal or other action that is inconsistent with this Agreement or the
consummation of the transactions contemplated hereby, unless the Board of
Directors of Edify reasonably determines, following consultation with Edify's
legal counsel, that to withdraw such recommendation or opposition, as the case
may be, would be required in the exercise of its fiduciary duties.
(b) S1 shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its stockholders within 45 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of the S1 Issuance (the "S1 Special Meeting"). The Board of Directors
of S1 shall recommend to S1's stockholders approval of the S1 Issuance.
(c) Edify and S1 will coordinate and cooperate with respect to
the timing of, calling, mailing notice and convening the Edify Special Meeting
and the S1 Special Meeting.
6.4 LEGAL CONDITIONS TO MERGER.
Each of S1 and Edify shall use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party with
respect to the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by Edify or S1
in connection with the Merger and the other transactions contemplated by this
Agreement.
6.5 STOCK EXCHANGE LISTING.
S1 shall cause the shares of S1 Common Stock to be issued in the Merger
and pursuant to options referred to herein to be approved for quotation on the
Nasdaq Stock Market National Market System (or such other national securities
exchange on which the S1 Common Stock has become listed, or approved for
listing) prior to the Closing.
6.6 EMPLOYEES.
(a) S1 agrees that, at the Effective Time, it will grant options
pursuant to one or more of the S1 stock option plans existing as of the date
hereof to the individuals (provided, in each case, that such person is an
officer of the rank of director or more senior at Edify immediately prior to the
Effective Time) at such price and in such amounts as are specified in Section
6.6(a) of the Edify Disclosure Schedule. Such options will vest no less than 25%
per year, will have no performance criteria (other than as to employment with S1
or any of its Subsidiaries) and otherwise be subject to the terms and conditions
of the S1 stock option plan under which they are granted.
(b) S1 will have no obligation to retain any employee or group of
employees of Edify following the Effective Time. As soon as practicable after
the execution of this Agreement, Edify and S1 shall confer and work together in
good faith to agree upon mutually acceptable employee benefit and compensation
arrangements (and terminate Edify employee plans immediately prior to the
Effective Time, if appropriate) so as to provide benefits to Edify employees
initially upon the Merger which are generally equivalent to those being provided
to employees of
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Edify immediately preceding the Effective Time, as well as to determine
appropriate termination benefits for Edify employees generally and certain
members of Edify management in particular in addition to any and all severance,
separation, retention and salary continuation plans, programs or arrangements
disclosed on the Edify Disclosure Schedule. Continuous employment with Edify or
its subsidiaries shall be credited to Edify employees who become S1 employees
for all purposes of eligibility and vesting of benefits but not for purposes of
accrual of benefits.
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Edify (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
Edify or any of their respective predecessors or (ii) this Agreement or any of
the transactions contemplated hereby, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto to the extent
permitted by applicable law and the Certificate of Incorporation and By-Laws of
Edify. It is understood and agreed that after the Effective Time, S1 shall
indemnify and hold harmless, as and to the fullest extent permitted by
applicable law and the Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of S1 or the Certificate of Incorporation and Bylaws
of Merger Sub, as may be the case, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to S1;
provided, however, that (1) S1 shall have the right to assume the defense
thereof and upon such assumption S1 shall not be liable to any Indemnified Party
for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if S1 elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues which
raise conflicts of interest between S1 and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to S1, and S1
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) S1 shall be obligated pursuant to this paragraph to pay for only
one firm of counsel for each Indemnified Party and one firm of local counsel,
and (3) S1 shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld or delayed).
S1 shall have no obligation to advance expenses incurred in connection with a
threatened or pending action, suit or preceding in advance of final disposition
of such action, suit or proceeding, unless (i) S1 would be permitted to advance
such expenses pursuant to the DGCL and S1's Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws, and (ii) S1 receives an
undertaking by the Indemnified Party to repay such amount if it is determined
that such party is not entitled to be indemnified by S1 pursuant to the DGCL and
S1's Amended and Restated Certificate of Incorporation or Amended and Restated
Bylaws, Edify's Certificate of Incorporation or Bylaws, or this Agreement. Any
Indemnified Party wishing to claim indemnification under this Section 6.7, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify S1 thereof; provided, however, that the failure to so notify shall not
affect the obligations of S1 under this Section 6.7 except to the extent such
failure to notify materially prejudices S1. S1's obligations under this Section
6.7 continue in full force and effect for a period of six years from the
Effective Time; provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the final
disposition of such claim.
(b) S1 shall use commercially reasonable efforts to cause the persons
serving as officers and directors of Edify immediately prior to the Effective
Time to be covered by a directors' and officers' liability insurance policy
("Tail Insurance") of substantially the same coverage and amounts containing
terms and conditions which are generally not less advantageous than Edify's
current policy with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and directors in their
capacity as such for an aggregate premium cost for the Tail Insurance of not
more than 120% of premium for current coverage, and for a period not less than
two years.
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(c) In the event S1 or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of S1 assume
the obligations set forth in this section.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days after
the end of each fiscal quarter (other than the fourth fiscal quarter), S1 will
deliver to Edify and Edify will deliver to S1 their respective Quarterly Reports
on Form 10-Q, as filed with the SEC under the Exchange Act. Each party shall
deliver to the other any Current Reports on Form 8-K promptly after filing such
reports with the SEC.
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger, the
proper officers and directors of each party to this Agreement and S1's and
Edify's Subsidiaries shall take all such necessary action as may be reasonably
requested by either party or any such person. S1 shall cause Merger Sub to
perform all of its obligations under this Agreement and the transactions
contemplated hereby.
6.10 ADVICE OF CHANGES.
S1 and Edify shall promptly advise the other party of any change or
event that, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect on it or to cause or constitute a material
breach of any of its representations, warranties or covenants contained herein.
From time to time prior to the Closing Date, each party will promptly supplement
or amend its disclosure schedule delivered in connection with the execution of
this Agreement to reflect any matter which, if existing, occurring or known at
the date of this Agreement, would have been required to be set forth or
described in such disclosure schedule or which is necessary to correct any
information in such disclosure schedule which has been rendered inaccurate
thereby. No supplement or amendment to such disclosure schedule shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Sections 7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by
Edify or S1, as the case may be, with the respective covenants set forth in
Sections 5.1 and 5.2 hereof.
6.11 CURRENT INFORMATION.
Each party will promptly notify the other of any material change in the
normal course of its business or in the operation of its properties and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of litigation involving it, and will keep the other fully informed of such
events.
6.12 TRANSACTION EXPENSES OF EDIFY.
(a) For planning purposes, Edify shall, within 15 days from
the date hereof, provide S1 with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by Edify in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. Edify shall promptly notify S1 if or when it
determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, Edify
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. Edify shall accrue
and/or pay all of such amounts promptly thereafter.
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(c) S1, in reasonable consultation with Edify, shall make all
arrangements with respect to the printing and mailing of the Joint Proxy
Statement/Prospectus. S1, if it deems necessary, also shall engage (at S1's
expense) a proxy solicitation firm to assist in the solicitation of proxies for
the special meetings of S1's and/or Edify's stockholders. Edify agrees to
cooperate as to such matters.
6.13 FORM S-8.
S1 agrees to file a registration statement on Form S-8 for the shares of
S1 Common Stock issuable with respect to assumed Edify stock options, as
described in Section 1.6 of this Agreement as soon as reasonably practicable
after the Effective Time and shall maintain the effectiveness of such
registration statement thereafter for so long as any of such options or other
rights remain outstanding.
6.14 EDIFY ESPP.
At the Effective Time, each outstanding purchase right with respect to
all open Offering Periods under the Edify ESPP (each an "Assumed Purchase
Right") shall be assumed by S1. Each Assumed Purchase Right shall continue to
have, and be subject to, the terms and conditions set forth in the Edify ESPP
and the documents governing the Assumed Purchase Right, except that the purchase
price of such shares of S1 Common Stock for each respective Purchase Date under
each Assumed Purchase Right shall be the lower of (i) the quotient determined by
dividing eighty-five percent (85%) of the fair market value of Edify Common
Stock on the Offering Date of each assumed Offering Period by the Exchange Ratio
or (ii) eighty-five percent (85%) of the fair market value of the S1 Common
Stock on each Purchase Date of each assumed Offering Period occurring after the
Effective Time (with the number of shares rounded down to the nearest whole
share and the purchase price rounded up to the nearest whole cent). The Assumed
Purchase Rights shall be exercised at such times following the Effective Time as
set forth in the Edify ESPP, and each participant shall, accordingly, be issued
shares of S1 Common Stock at such times. The Edify ESPP shall terminate with the
exercise of the last Assumed Purchase Right, and no additional purchase rights
shall be granted under the Edify ESPP following the Effective Time. S1 agrees
that from and after the Effective Time, employees of Edify may participate in
S1's employee stock purchase plan, subject to the terms and conditions of such
plan. Capitalized terms in this Section 6.14 if not otherwise defined in this
Agreement, have the meanings ascribed to them in the Edify ESPP.
6.15 BOARD OF DIRECTORS.
Promptly following the Effective Time, the Board of Directors of S1 will
take all actions necessary in order for Xxxxxxx X. Xxxxx to be appointed
promptly to S1's Board of Directors for a three-year term; provided, however,
that S1 shall have no obligation to invite Xx. Xxxxx to serve on S1's Board of
Directors if Xx. Xxxxx is not both Chief Executive Officer and a member in good
standing of Edify's Board of Directors immediately prior to the Effective Time.
6.16 BYLAWS.
Prior to the Effective Time, S1 shall amend its Bylaws to create an
office of Vice Chairman, the holder of which shall report directly to the Chief
Executive Officer of S1.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
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(a) STOCKHOLDER APPROVALS.
This Agreement, including the Certificate of Merger and the Merger shall
have been approved and adopted at the Edify Special Meeting by the affirmative
vote of the holders of at least a majority of the outstanding shares of Edify
Common Stock entitled to vote thereon. The S1 Issuance shall have been approved
by the holders of a majority of the outstanding Shares of S1 Common Stock
represented at the S1 Special Meeting in person or by proxy.
(b) STOCK EXCHANGE LISTING.
The shares of S1 Common Stock which shall be issued in the Merger
(including the S1 Common Stock that may be issued upon exercise of the options
referred to in Section 1.6 hereof) upon consummation of the Merger shall have
been authorized for quotation on the Nasdaq Stock Market National Market System
(or such other national securities exchange on which the S1 Common Stock may
become listed).
(c) REGISTRATION STATEMENT.
The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY; HSR ACT.
No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger or any of the other transactions
contemplated by this Agreement or the Certificate of Merger shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger. All waiting
periods, if any, under the HSR Act or foreign merger notification requirements,
if applicable, relating to the transactions contemplated hereby will have
expired or been terminated early and all material foreign antitrust approvals
required to be obtained prior to the Merger in connection with the transactions
contemplated hereby shall have been obtained.
(e) FEDERAL TAX OPINION.
S1 and Edify shall each have received from Xxxxx & Xxxxxxx L.L.P., S1's
special counsel, an opinion to S1 and Edify, in form and substance reasonably
satisfactory to them, substantially to the effect that on the basis of facts,
representations, and assumptions set forth in such opinion which are consistent
with the state of facts existing at the time of such opinion, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. In rendering such opinion, such counsel may
require and, to the extent such counsel deems necessary or appropriate, may rely
upon representations made in certificates of officers of Edify, S1, Merger Sub,
their respective affiliates and others. If Xxxxx & Xxxxxxx L.L.P. does not
render such opinion, this condition may be satisfied if Fenwick & West LLP
renders such opinion, relying upon such representations.
7.2 CONDITIONS TO OBLIGATIONS OF S1 AND MERGER SUB.
The obligation of S1 and Merger Sub to effect the Merger is also subject
to the satisfaction or waiver by S1 at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Edify set forth in this Agreement
shall be true and correct as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such
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representations and warranties to be so true and correct, individually or in the
aggregate, would have a Material Adverse Effect on Edify. Such determination of
aggregate Material Adverse Effect shall be made as if there were no materiality
qualifications in such representations and warranties. S1 shall have received a
certificate signed on behalf of Edify by each of the President and Chief
Executive Officer and the Chief Financial Officer of Edify to the foregoing
effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF EDIFY.
Edify shall have performed in all material respects all covenants and
agreements required to be performed by it under this Agreement at or prior to
the Closing Date, except in each case where such nonperformance does not or
would not have a Material Adverse Effect on any of Edify, S1 or the Surviving
Corporation. S1 shall have received a certificate signed on behalf of Edify by
each of the President and Chief Executive Officer and the Chief Financial
Officer of Edify to such effect.
(c) CONSENTS UNDER AGREEMENTS.
The consent, approval or waiver of each person whose consent or approval
shall be required in order to permit the succession by S1, to the extent
applicable, to any obligation, right or interest of Edify under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument shall have been obtained except for those, the failure of which to
obtain, will not result in a Material Adverse Effect on S1 or Edify.
(d) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an Injunction
preventing consummation of the Merger shall be pending or shall have been
threatened in writing.
(e) NO MATERIAL ADVERSE CHANGE.
There shall have been no Material Adverse Effect with respect to Edify,
which is continuing.
(f) ACCOUNTANT'S COMFORT LETTER.
Edify shall have caused to be delivered on the respective dates thereof
to S1 "comfort letters" from KPMG LLP, Edify's independent public accountants,
dated the date on which the Registration Statement or last amendment thereto
shall become effective, and dated the date of the Closing (defined in Section
9.1 hereof), and addressed to S1 and Edify, with respect to Edify's financial
data presented in the Proxy Statement/Prospectus, which letters shall be based
upon Statements on Auditing Standards Nos. 72 and 76.
7.3 CONDITIONS TO OBLIGATIONS OF EDIFY.
The obligation of Edify to effect the Merger is also subject to the
satisfaction or waiver by Edify at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of S1 and Merger Sub set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on S1.
Such determination of aggregate Material Adverse Effect shall be made as if
there were no materiality qualifications in such representations and warranties.
Edify shall have received a certificate signed on
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behalf of S1 by each of the President and Chief Executive Officer and the Chief
Financial Officer of S1 to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF S1.
S1 and Merger Sub shall have each performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date, except in each case where such nonperformance does
not or would not have a Material Adverse Effect on any of Edify, S1 or the
Surviving Corporation. Edify shall have received a certificate signed on behalf
of S1 by each of the President and Chief Executive Officer and the Chief
Financial Officer of S1 to such effect.
(c) NO MATERIAL ADVERSE EFFECT.
There shall have been no Material Adverse Effect with respect to S1,
which is continuing.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by the stockholders of Edify or S1, if applicable:
(a) by mutual consent of S1 and Edify in a written instrument, if the
Board of Directors of each so determines by a vote of a majority of the members
of its entire Board;
(b) by either S1 or Edify if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger, which
order, decree, ruling or other action is final and nonappealable;
(c) by either S1 or Edify if the Merger shall not have been
consummated on or before March 31, 2000, unless the failure of the Closing to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such party
set forth herein;
(d) by either S1 or Edify (provided that the terminating party is not
in breach of its obligations under Section 6.3 hereof) if the approval of the
stockholders of either party required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the required vote at a
duly held meeting of stockholders or at any adjournment or postponement thereof,
respectively;
(e) by either S1 or Edify (provided that the terminating party is not
then in breach of any representation, warranty, covenant or other agreement
contained herein that, individually or in the aggregate, would give the other
party the right to terminate this Agreement) if there shall have been a breach
of any of the representations or warranties set forth in this Agreement on the
part of the other party, if such breach, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect on the breaching
party, and such breach shall not have been cured within 30 days following
receipt by the breaching party of written notice of such breach from the other
party hereto or such breach, by its nature, cannot be cured prior to the Closing
or within 30 days, whichever is longer;
(f) by either S1 or Edify (provided that the terminating party is not
then in breach of any representation, warranty, covenant or other agreement
contained herein that, individually or in the aggregate, would give the other
party the right to terminate this Agreement) if there shall have been a material
breach of any of the covenants or agreements set forth in this Agreement on the
part of the other party, and such breach shall not have been cured within 30
days following receipt by the breaching party of written notice of such breach
from the other party hereto or such
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breach, by its nature, cannot be cured prior to the Closing or within 30 days,
whichever is longer, except in each case where such breach does not or would not
have a Material Adverse Effect on any of Edify, S1 or the Surviving Corporation;
(g) by S1, if Edify's Board of Directors, for any reason, (i) fails
to call and hold within 45 days of the effectiveness of the Registration
Statement a special meeting of Edify's stockholders to consider and approve this
Agreement and the transactions contemplated hereby, (ii) withdraws or amends or
modifies in a manner adverse to S1 or fails to recommend to stockholders the
approval of this Agreement and the transactions contemplated hereby, (iii)
approves or recommends any third party proposal for an Acquisition Transaction
that is inconsistent with the transactions contemplated by this Agreement, (iv)
fails to recommend rejection of a tender or exchange offer relating to Edify's
securities which is commenced by a third party not affiliated with S1, within
ten business days from the date the tender or exchange offer commenced, or (v)
violates Section 5.1(e) of this Agreement;
(h) by Edify, if S1's Board of Directors, for any reason, (i) fails
to call and hold within 45 days of the effectiveness of the Registration
Statement a special meeting of S1's stockholders to consider and approve the
issuance of shares of S1 Common Stock in the Merger, or (ii) withdraws or amends
or modifies in a manner adverse to Edify or fails to recommend to stockholders
the approval of the issuance of shares of S1 Common Stock in the Merger; and
(i) by Edify, on or after December 1, 1999, if, (1) Edify's Board of
Directors authorizes Edify to enter into an agreement concerning an Acquisition
Transaction on terms that Edify's Board of Directors reasonably determines,
after consultation with its financial advisor, to be more favorable to Edify's
stockholders than the Merger (a "Superior Proposal") and Edify notifies S1 in
writing that it intends to enter into such an agreement, attaching the agreement
so authorized to such notice, (2) S1 does not make, within five business days
after receipt of such notice, a written offer that Edify's Board of Directors
reasonably determines, after consultation with its financial advisor, to be at
least as favorable to Edify's stockholders as the Superior Proposal, it being
understood that Edify may not enter into any such agreement during such five
business day period, and (3) Edify pays the applicable break-up fee under
Section 9.3 hereof.
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either S1 or Edify as
provided in Section 8.1 hereof, this Agreement shall forthwith become void and
have no effect except (i) the last sentence of Sections 6.2(a) and Sections 8.2
and 9.3 hereof shall survive any termination of this Agreement, and (ii)
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
willful or intentional breach of any provision of this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Board
of Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Edify or S1; provided,
however, that after any approval of the transactions contemplated by this
Agreement by Edify's stockholders, there may not be, without further approval of
such stockholders, any amendment of this Agreement which (i) alters or changes
the amount or kind of shares, securities, cash, property and/or rights to be
received in exchange for or on conversion of all or any of the shares of any
class or series thereof of Edify, (ii) alters or changes any term of the
Certificate of Incorporation of the Surviving Corporation to be effected by the
Merger, or (iii) alters or changes any of the terms and conditions of this
Agreement if such alteration or change would adversely affect the holders of any
class or series thereof of Edify. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
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obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions 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 a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the Merger (the "Closing") will take place at 10:00 a.m. at the main offices of
S1 on (i) the fifth business day following the receipt of the last Requisite
Regulatory Approval or stockholder approval after all applicable waiting periods
have expired or been terminated or (ii) such other date, place and time as the
parties may agree in writing (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement (other
than pursuant to the Option Agreement, which shall terminate in accordance with
its terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 EXPENSES; BREAKUP FEE.
Except as provided below, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense, provided that all filing and other fees paid
to the SEC shall be borne by S1. If this Agreement is terminated by S1 (1) under
Section 8.1(d) due to the failure of the Edify stockholders to give their
required approval at the Edify Special Meeting, or (2) under Sections 8.1(e) or
8.1(f) by reason of a breach of Edify's representations or warranties or failure
of Edify to perform its covenants under this Agreement, or (3) under Section
8.1(g), Edify shall pay all documented, reasonable costs and expenses up to
$500,000 incurred by S1 in connection with this Agreement and the transactions
contemplated hereby, plus a breakup fee of (x) $1,000,000, in the case of a
termination under clause (1) of this sentence, or (y) $5,000,000, in the case of
a termination under clause (2) or (3) of this sentence. If this Agreement is
terminated by Edify under Section 8.1(i), Edify shall pay all documented,
reasonable costs and expenses up to $500,000 incurred by S1 in connection with
this Agreement and the transactions contemplated hereby, plus a breakup fee of
$5,000,000. If this Agreement shall be terminated by Edify (1) under Section
8.1(d) due to the failure of S1 stockholders to give their required approval at
the S1 Special Meeting, (2) under Sections 8.1(e) or (f) by reason of a breach
of S1's representations or warranties or failure of S1 to perform its covenants
under this Agreement, or (3) under Section 8.1(h), S1 shall pay all documented,
reasonable costs and expenses up to $500,000 incurred by Edify in connection
with this Agreement and the transactions contemplated hereby, plus a breakup fee
of (x) $1,000,000, in the case of a termination under clause (1) of this
sentence, or (y) $5,000,000, in the case of a termination under clause (2) or
(3) of this sentence.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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(a) if to S1, to:
Security First Technologies Corporation
0000 Xxxxxxxxx Xxxx, XX
Xxxxx 0000
Xxxxxxx, XX 00000
Attn.: Xxxxxx X. Xxxxxxxxx
Chief Financial Officer
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn.: Xxxxxx X. Xxxxx, Esq.
and
(b) if to Edify, to:
Edify Corporation
0000 Xxx Xxxxx Xxxxxxxxxx
Xxxxx Xxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxx
President and Chief Executive Officer
with a copy (which shall not constitute notice) to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn.: Xxxxxx X. Xxxxxxxx, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. 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. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Certificate of Merger, the Option Agreement, the
Edify Stockholder Agreement and the S1 Stockholder Agreement.
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9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the
event that the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
thereof 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.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of The Nasdaq Stock
Market (or such other exchange on which the S1 Common Stock may become listed),
so long as this Agreement is in effect, neither S1 nor Edify shall, or shall
permit any of S1's or Edify's Subsidiaries to, issue or cause the publication of
any press release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated by this
Agreement, the Certificate of Merger, the Option Agreement, the Edify
Stockholder Agreement or the S1 Stockholder Agreement without the consent of the
other party, which consent shall not be unreasonably withheld. S1 and Edify
agree that the joint press release announcing the signing of this Agreement
shall contain a statement regarding the use of Edify's technology in such form
and content as the parties shall mutually agree in their sole and absolute
discretion.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater stockholder,
spouse or other person living in the same household of such director, officer or
stockholder, or any company, partnership or trust in which any of the foregoing
persons is an officer, 5% or greater stockholder, general partner or 5% or
greater trust beneficiary.
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"knowledge" or "know" means with respect to a party hereto, with respect
to a matter in question, that the directors or any executive officer of such
party has actual knowledge of such matter.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to S1 or Edify, as the case may
be, means a condition, event, change or occurrence that has had or would have a
material adverse effect upon Edify and its Subsidiaries, taken as a whole, or S1
and its Subsidiaries, taken as a whole, as the case may be, taking into account
(A) the business, customers, assets, capitalization, financial condition and
results of operations of S1 or Edify and their respective Subsidiaries (in each
case, taken as a whole), other than as a result primarily of (i) the direct
effect of the public announcement, pendency or consummation of the Merger, (ii)
changes in general economic conditions or changes affecting the industry
generally in which such entity operates, or (iii) changes in the respective
trading prices for S1 Common Stock or Edify Common Stock, or (B) the ability of
S1 or Edify to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement, the Certificate of Merger and, in the case of
Edify, the Option Agreement.
"Subsidiary": with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
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IN WITNESS WHEREOF, S1, Merger Sub and Edify have caused this Agreement
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
SECURITY FIRST TECHNOLOGIES CORPORATION
By: /s/ Xxxxx X. Xxxxx III
-------------------------------------
Xxxxx X. Xxxxx III
Chairman and Chief Executive Officer
SAHARA STRATEGY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxx
President
EDIFY CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
50
Exhibit A
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED BY THIS
AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This OPTION AGREEMENT, dated as of May 16, 1999 (this
"Agreement"), is entered into between Edify Corporation, a Delaware corporation
("Issuer"), and Security First Technologies Corporation, a Delaware corporation
("Grantee").
WITNESSETH:
WHEREAS, Grantee, Sahara Strategy Corporation, a Delaware
corporation, and Issuer have entered into an Agreement and Plan of Merger, dated
as of May 16, 1999 (the "Plan"), which was executed by the parties thereto prior
to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering into
the Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to a number of fully paid
and nonassessable shares of common stock, par value $.001 per share of Issuer
("Issuer Common Stock") equal to 19.9% of the total of the number of outstanding
shares of Issuer Common Stock as of the first date that the Option becomes
exercisable, at a price per share equal to $17.87 (the "Option Price").
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at any
time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase
Event;
(iii) 12 months after the termination of the Plan following
the occurrence of a Preliminary Purchase Event (as defined below);
(iv) upon the termination of the Plan, if no Purchase Event
or Preliminary Purchase Event has occurred prior to such termination, by
Issuer pursuant to Sections 8.1(e), (f) or (h) of the Plan, both parties
pursuant to Section 8.1(a) of the Plan, or by either party pursuant to
Section 8.1(b) or (c) of the Plan;
(v) upon termination of the Plan, by either party pursuant
to Section 8.1(d) of the Plan based on (A) the required vote of
Grantee's stockholders not being obtained for any reason at the S1
Special Meeting or (B) the required vote of Issuer's stockholders not
being received at the Edify Special Meeting, if
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no Purchase Event or Preliminary Purchase Event has occurred prior to
the meeting of Issuer's stockholders (or any adjournment or postponement
thereof) held to vote on the Plan; or
(vi) 12 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a breach by
Issuer, by Grantee pursuant to Section 8.1(g) of the Plan, or by Issuer
pursuant to Section 8.1(i) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior written
consent, shall have entered into any letter of intent or definitive
agreement to engage in an Acquisition Transaction (as defined below)
with any person (as defined below) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the stockholders of Issuer approve or
accept any Acquisition Transaction with any Person (as the term "person"
is defined in Section 3(a)9 and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder) other than Grantee or any Grantee
Subsidiary. For purposes of this Agreement "Acquisition Transaction"
shall mean (x) a merger, consolidation or other business combination
involving Issuer, (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer, (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of Beneficial Ownership (as the term "beneficial
ownership" is defined in Regulation 13d-3(a) of the Exchange Act) of
securities representing 20% or more of the voting power of Issuer;
provided, however, that "Acquisition Transaction" shall not include a
transaction entered into after the termination of the Plan in which the
Issuer is the surviving entity, if in connection with such transaction,
no person acquires Beneficial Ownership of 20% or more of the total
voting power of the Issuer to be outstanding after giving effect to such
transaction and in which the aggregate voting power of Issuer acquired
by all persons is less than 33% of the total voting power of Issuer;
(ii) Any Person (other than Grantee, any Grantee Subsidiary
or any current affiliate of Issuer) shall have acquired Beneficial
Ownership of 20% or more of the outstanding shares of Issuer Common
Stock;
(iii) (a) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a bona fide proposal to Issuer or, by a
public announcement or written communication that is or becomes the
subject of public disclosure, to Issuer's stockholders prior to the
Edify Special Meeting to engage in an Acquisition Transaction
(including, without limitation, any situation in which any Person other
than Grantee or any Grantee Subsidiary shall have commenced (as such
term is defined in Rule 14d-2 under the Exchange Act of 1934, as amended
(the "Exchange Act"), or shall have filled a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to a tender offer or exchange offer to purchase any shares
of Issuer Common Stock such that, upon consummation of such offer, such
person would have Beneficial Ownership of 20% or more of the then
outstanding shares of Issuer Common Stock (such an offer being referred
to herein as a "Tender Offer" or an "Exchange Offer", respectively) and
(b) the stockholders of Issuer do not approve the Merger, as defined in
the Plan, at the Edify Special Meeting, as defined in the Plan;
(iv) There shall exist a willful or intentional breach under
the Plan by Issuer and such breach would entitle Grantee to terminate
the Plan; or
(v) The special meeting of Issuers' stockholders held for
the purpose of voting on the Plan shall not have been held pursuant to
the Plan or shall have been canceled prior to termination of the Plan,
or for any reason whatsoever Issuer's Board of Directors shall have
failed to recommend, or shall have withdrawn or modified in a manner
adverse to Grantee the recommendation of Issuer's Board of Directors,
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that Issuer's stockholders approve the Plan, or if Issuer or Issuer's
Board of Directors fails to oppose any proposal of the type described at
Section 2(b)(iii)(a) above by any Person (other than Grantee or any
Grantee Subsidiary).
(c) The term "Purchase Event" shall mean any of the following
events or transactions occurring on or after the date hereof and prior to an
Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee or any
Grantee Subsidiary) of Beneficial Ownership (other than on behalf of the
Issuer) of 20% or more of the then outstanding Issuer Common Stock;
(ii) The occurrence of a Preliminary Purchase Event described
in Section 2(b)(i); or
(iii) The termination of the Plan by Grantee pursuant to
Section 8.1(e) or (f) thereof as a result of a willful or intentional
breach by Issuer, by Grantee pursuant to Section 8.1(g) of the Plan, or
by Issuer pursuant to Section 8.1(i) of the Plan.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event known to Issuer;
provided, however, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice," the date of which being hereinafter referred to as the "Notice Date")
specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than 10 business days from the
Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, however, that, if prior notification to or approval of the
Federal Trade Commission (the "FTC"), the Antitrust Division of the Department
of Justice ("DOJ") or any other Governmental Authority is required in connection
with such purchase (each, a "Notification" or an "Approval," as the case may
be), at Grantee's sole expense, (a) Grantee shall promptly file the required
notice or application for approval ("Notice/Application"), (b) Grantee shall
expeditiously process the Notice/Application and (c) for the purpose of
determining the Closing Date pursuant to clause (ii) of this sentence, the
period of time that otherwise would run from the Notice Date shall instead run
from the later of (x) in connection with any Notification, the date on which any
required notification periods have expired or been terminated and (y) in
connection with any Approval, the date on which such approval has been obtained
and any requisite waiting period or periods shall have expired. For purposes of
Section 2(a) hereof, any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto. On or prior to the Closing Date, Grantee shall
have the right to revoke its exercise of the Option by written notice to the
Issuer given not less than three business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee
shall pay to Issuer the aggregate purchase price for the number of shares of
Issuer Common Stock specified in the Option Notice in immediately available
funds by wire transfer to a bank account designated by Issuer; provided,
however, that failure or refusal of Issuer to designate such a bank account
shall not preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f) hereof, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock specified in the Option Notice and, if the Option
should be exercised in part only, a new Option evidencing the rights of Grantee
thereof to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder.
(h) Certificates for Issuer Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend substantially as
follows:
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The transfer of the shares represented by this certificate
is subject to resale restrictions arising under the Securities
Act of 1933, as amended, and applicable state securities laws and
to certain provisions of an agreement between Edify Corporation
and Security First Technologies Corporation dated as of May 16,
1999. A copy of such agreement is on file at the principal office
of Edify, and will be provided to the holder hereof without
charge upon receipt by Edify of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC") or Governmental Authority responsible for administering
any applicable state securities laws or an opinion of counsel, in form and
substance satisfactory to Issuer's counsel, to the effect that such legend is
not required for purposes of the Securities Act or applicable state securities
laws; (ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In addition
such certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, unless prohibited by applicable law, Grantee shall be
deemed to be the holder of record of the number of shares of Issuer Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Issuer Common Stock shall not then actually be delivered to Grantee. Issuer
shall pay all expenses and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee.
(j) Promptly following any sale or other disposition of Issuer
Common Stock acquired pursuant to the Option, or the Option or any portion
thereof, Grantee shall promptly remit in cash to Issuer, the amount, if any, by
which (x) the sum of (A) the amount of the "breakup fee" received by Grantee
pursuant to Section 9.3 of the Plan plus (B) all proceeds received by Grantee in
connection with any and all sales or other dispositions of (1) Issuer Common
Stock acquired pursuant to the Option, and (2) the Option or any portion
thereof, plus (C) any dividends received by Grantee declared on Issuer Common
Stock acquired pursuant to the Option, exceeds (y) the sum of (X) $18.2 million
plus (Y) the Option Price multiplied by the number of shares of Issuer Common
Stock purchased by Grantee pursuant to the Option.
SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and reserved shares of Issuer Common Stock
equal to the maximum number of shares of Issuer Common Stock at any time and
from time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid, non-assessable,
and delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all reasonable action as may from time to time be
requested by Grantee, at Grantee's expense (including (x) complying with all
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. Section 18a and regulations promulgated thereunder and (y) in the
event prior approval of or notice to the FTC, DOJ or any other Governmental
Authority, under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, or any other applicable federal or state law, is necessary before the
Option may be exercised), cooperating with Grantee in preparing such
applications or notices and providing such information to each such Governmental
Authority as it may require in order to permit Grantee to exercise the
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Option and Issuer duly and effectively to issue shares of Issuer Common Stock
pursuant hereto; and (iv) to take all action provided herein to protect the
rights of Grantee against dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any agreements and related options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the type or number of shares
of Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer Common Stock
are to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the prior partial
exercise of the Option (as adjusted on account of any of the foregoing changes
in the Issuer Common Stock), such number of shares shall equal the sum of 19.9%
of the total of the number of shares of Issuer Common Stock issued and
outstanding on the date the Option first becomes exercisable.
(b) Whenever the number of shares of Issuer Common Stock
purchasable upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of shares of Issuer Common
Stock purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Issuer Common Stock purchasable after the
adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
with the SEC, under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its reasonable best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period not in excess of 90 days from the day such registration statement
first becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall have the right to demand two such registrations, which
demand right shall be transferable but in no event shall Issuer be required to
effect more than two registrations in the aggregate pursuant to this Option or
any subdivision hereof. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. In connection with any such registration statement, Issuer and
Grantee shall provide each other with representations, warranties, indemnities
and other agreements customarily given in connection with such registration. If
requested by Grantee in connection with such registration, Issuer and Grantee
shall become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating themselves in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements
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and reasonably acceptable to Issuer. Notwithstanding the foregoing, if Grantee
revokes any exercise notice or fails to exercise any Option with respect to any
exercise notice pursuant to Section 2(e) hereof, Issuer shall not be obligated
to continue any registration process with respect to the sale of Option Shares
issuable upon the exercise of such Option and Grantee shall not be deemed to
have demanded registration of Option Shares. If Issuer withdraws a registration
statement which has been declared effective at the request of Grantee, or any
subsequent holder, then such filing shall be deemed an effective registration
for all purposes hereunder. The Issuer will not be required to file any such
registration statement during any period of time (not to exceed 30 days in the
case of clauses (A) or (C) below or 45 days in the case of clause (B) below)
when (A) the Issuer is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time and such
information would have to be disclosed if a registration statement were filed at
that time; (B) the Issuer is required under the Securities Act and the rules and
regulations thereunder to include audited financial statements for any period in
such registration statement and such financial statements are not yet available
for inclusion in such registration statement; or (C) the Issuer reasonably
determines that such registration would interfere with any financing,
acquisition or material transaction involving the Issuer. The registration
rights set forth in this Section 6 are subject to the condition that the Grantee
or subsequent holder shall provide the Issuer with such information with respect
to the holder's securities, the plan for distribution thereof, and such other
information with respect to the holder that is required under applicable
securities laws to enable the Issuer to include in a registration statement all
material facts required to be disclosed with respect to a registration
thereunder, including the identity of the holder and the holder's plan of
distribution. The Grantee shall not be able to exercise its registration rights
hereunder if Grantee can rely on Rule 144 promulgated under the Securities Act
to sell such number of shares of Issuer Common Stock that the Grantee otherwise
would seek to register.
(b) Concurrently with the preparation and filing of a
registration statement under Section 6(a) hereof, Issuer shall also make all
filings required to comply with state securities laws in such number of states
as Grantee may reasonably request; provided, that Issuer shall not be required
to qualify to do business in, or consent to service of process in, any
jurisdiction by reason of this provision.
SECTION 7. Notwithstanding Sections 2 and 6 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the FTC, DOJ
or any other Governmental Authority despite the reasonable best efforts of
Grantee and Issuer to obtain such approvals, the exercise of the rights shall be
deemed to have been rescinded as of the related notice date. In the event (a)
Grantee receives official notice that an approval of the FTC, DOJ or any other
Governmental Authority required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a closing date has not occurred within 12
months after the related notice date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise the Option in
connection with the concurrent resale of the Option Shares pursuant to a
registration statement as provided in Section 6 hereof.
SECTION 8. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
SECTION 9. (a) Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the beginning
thereof substantially as follows:
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising under
the Securities Act of 1933, as amended, and applicable state securities
laws and to certain provisions of an agreement between Edify Corporation
and Security First Technologies Corporation, dated as of May 16, 1999. A
copy of such agreement is on file at the principal office of Edify
Corporation, and will be provided to any permitted assignee of the
Option without charge upon receipt of a written request therefor.
SECTION 10. Each of Grantee and Issuer will use its reasonable efforts
to make all filings with, and to obtain consents of, all third parties
including, if applicable, the FTC, DOJ and other Governmental Authorities
necessary to the consummation of the transactions contemplated by this
Agreement.
SECTION 11. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
SECTION 12. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 13. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
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SECTION 14. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 15. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement and shall be effective at the time of execution and
delivery.
SECTION 16. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
SECTION 17. Except as otherwise expressly provided herein or in the
Plan, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
SECTION 18. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned therein.
SECTION 19. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 20. In the event that any selection or determination is to be
made by Grantee or a subsequent holder hereunder and at the time of such
selection or determination there is more than one Grantee or holders, such
selection shall be made by a majority in interest of such Grantees or holders.
SECTION 21. In the event of any exercise of the option by Grantee,
Issuer and such Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
SECTION 22. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties has caused this Option Agreement
to be executed and delivered on its behalf by their respective officers
thereunto duly authorized, all as of the date first above written.
EDIFY CORPORATION
By: _____________________________________
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
SECURITY FIRST TECHNOLOGIES CORPORATION
By: _____________________________________
Xxxxx X. Xxxxx III
Chairman and Chief Executive Officer
59
Exhibit B
CERTIFICATE OF MERGER
SAHARA STRATEGY CORPORATION
into
EDIFY CORPORATION
Pursuant to Title 8, Section 251 of the General Corporation Law
of the State of Delaware, Sahara Strategy Corporation, a corporation organized
and existing under the law of the State of Delaware ("Sahara"), and Edify
Corporation, a corporation organized and existing under the law of the State of
Delaware ("Edify"), do hereby certify to the following facts relating to the
merger of Sahara Sub with and into Edify:
FIRST: The name and state of incorporation of each constituent
entity that is a party to the Merger is as follows:
Name State of Incorporation
---- ----------------------
Sahara Strategy Corporation Delaware
Edify Corporation Delaware
SECOND: An Agreement and Plan of Merger, dated as of May 16,
1999, by and among Security First Technologies Corporation, Sahara and Edify
(the "Agreement and Plan of Merger"), has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations in accordance
with the requirements of Section 251 of the General Corporation Law of the State
of Delaware.
THIRD: Pursuant to the Agreement and Plan of Merger, the
surviving corporation of the Merger is Edify, a Delaware corporation (the
"Surviving Corporation"). The Surviving Corporation shall continue its existence
under its present name pursuant to the provisions of the General Corporation Law
of the State of Delaware.
FOURTH:At the "Effective Time" of the Merger, as defined in and
pursuant to the Agreement and Plan of Merger, the certificate of incorporation,
as amended, of the Surviving Corporation shall be amended to read in its
entirety as set forth in Exhibit I hereto.
FIFTH: The executed Agreement and Plan of Merger is on file at
the office of the Surviving Corporation at the following address:
60
0000 Xxxxxxxxx Xxxx, XX
Xxxxx 0000
Xxxxxxx, XX 00000
SIXTH: A copy of the Agreement and Plan of Merger will be
furnished by the Surviving Corporation, on request and without cost, to any
shareholder of any constituent corporation.
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IN WITNESS WHEREOF, Sahara and Edify have caused this Certificate
of Merger to be duly executed as of this ___ day of ______, 1999 to be effective
upon filing.
EDIFY CORPORATION
By: ____________________________________
Name:
Title:
3
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Exhibit C
EDIFY
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of May 16, 1999, is entered into by
and among Security First Technologies Corporation, a Delaware corporation
("S1"), and the stockholders of Edify Corporation, a Delaware corporation
("Edify"), named on Schedule I hereto (collectively, the "Stockholders") who are
directors, executive officers or other affiliates of Edify (for purposes of Rule
145 under the Securities Act of 1933, as amended).
WHEREAS, S1, Sahara Strategy Corporation, a Delaware corporation ("S1
Sub"), and Edify have entered into an Agreement and Plan of Merger, dated as of
May 16, 1999 (the "Agreement"), which is conditioned upon, and requires, the
execution of this Stockholder Agreement and which provides for, among other
things, the acquisition of Edify by S1, to be effected by the merger of S1 Sub
with and into Edify, in a stock-for-stock transaction (the "Merger"); and
WHEREAS, in order to induce S1 to enter into or proceed with the
Agreement, the Stockholders represent and warrant as to that the facts provided
herein are accurate as to each of the Stockholders set forth herein, and each of
the Stockholders agrees to, among other things, vote in favor of the Agreement,
the Merger and the other transactions contemplated by the Agreement in his/her
capacity as a stockholder of Edify;
NOW, THEREFORE in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. OWNERSHIP OF EDIFY COMMON STOCK. Each Stockholder represents and
warrants that the number of shares of Edify common stock, par value $.001 per
share ("Edify Common Stock"), set forth opposite such Stockholder's name on
Schedule I hereto is the total number of shares of Edify Common Stock over which
such person has "beneficial ownership" within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, except that the provisions of
Rule 13d-3(d)(1)(i) shall be considered without any limit as to time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and
agrees that:
(a) Such Stockholder shall, at any meeting of the holders of Edify
Common Stock called for the purpose, vote or cause to be voted all shares of
Edify Common Stock with respect to which such Stockholder has the right to vote
(whether owned as of the date hereof or hereafter acquired) (i) in favor of the
Agreement, the Merger and the other transactions contemplated by the Agreement
and (ii) against any Acquisition Transaction (as defined in the Agreement) with
any party other than S1 or one of its Subsidiaries (as defined in the Agreement)
or affiliates, or any other transaction inconsistent with the Agreement or the
transactions contemplated thereby.
(b) Prior to the Effective Time (as defined in the Agreement), except
as otherwise expressly permitted hereby, such Stockholder shall not, sell,
pledge, transfer or otherwise dispose of his/her shares of Edify Common Stock;
provided, however, that this Section 2(b) shall not apply to a pledge existing
as of the date hereof; and provided further that each Stockholder shall be
permitted to sell prior to the Effective Time up to 25% of the aggregate amount
of (i) all shares of Edify Common Stock owned by such Stockholder on the date
hereof, plus (ii) all shares which may be purchased by such Stockholder pursuant
to such Stockholder's then vested and exercisable options to purchase shares of
Edify Common Stock. For each Stockholder who is an officer of Edify, during the
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period beginning on the Effective Time and ending on the earlier of (x) the date
which is 180 days after the Effective Time and (y) the date such Stockholder is
no longer employed by any of Edify, S1 or any of their respective subsidiaries
(the "Restricted Period"), no such Stockholder shall sell, pledge (other than as
required by a pledge of Edify Common Stock existing as of the date hereof),
transfer or otherwise dispose of the shares of S1 common stock, par value $.01
per share (the "S1 Common Stock"), to be received by such Stockholder for such
Stockholder's shares of Edify Common Stock upon consummation of the Merger.
Notwithstanding the foregoing, if during the Restricted Period a registration
statement of S1 shall be declared effective by the U.S. Securities and Exchange
Commission for the registration of S1 Common Stock, each Stockholder shall be
permitted to sell under such registration statement a percentage of such
Stockholder's S1 Common Stock equal to the maximum percentage of S1 Common Stock
beneficially owned and being sold by any executive officer of S1 in such
registration (including all shares subject to options without regard to whether
such options are vested) on the same terms and conditions permitted to the
executive officers of S1.
(c) Except to the same extent Edify is permitted to do so pursuant to
Section 5.1(e) of the Agreement, such Stockholder shall not in his/her capacity
as a stockholder of Edify directly or indirectly knowingly encourage or solicit
or hold discussions or negotiations with, or knowingly provide any information
to, any person, entity or group (other than S1 or an affiliate thereof)
concerning any merger, sale of all or substantially all of the assets or
liabilities not in the ordinary course of business, sale of shares of capital
stock or similar transaction involving Edify or any other transaction
inconsistent with the Agreement or the transactions contemplated thereby.
Nothing herein shall impair (i) such Stockholder's fiduciary obligations as a
director of Edify, or (ii) the ability of such Stockholder to perform his/her
obligations as an officer of Edify.
(d) Such Stockholder shall comply with all applicable federal and
state securities laws in connection with any sale of S1 Common Stock received in
exchange for Edify Common Stock in the Merger, including the trading and volume
limitations as to sales by affiliates contained in Rule 145 under the Securities
Act of 1933, as amended.
(e) If, in the reasonable opinion of Fenwick & West LLP, counsel to
Edify, the Stockholders are not, due to the public unavailability of material
information regarding Edify or S1 (including, without limitation, information
regarding the Merger, any other transaction or event, or financial information
regarding any of them), able to sell shares of Edify Common Stock, as would
otherwise be permitted by Section 2(b) above, for at least 15 trading days
between the third day following Edify's public release of its financial results
for the second fiscal quarter of 1999 and August 31, 1999 (or such fewer days as
there may actually be between the release of such earnings and August 31, 1999)
(the "Trading Period"), then, at each Stockholder's irrevocable election by
written notice given to S1 no later than the last business day of the Trading
Period, S1, within 5 business days following the Effective Time, shall purchase
for cash the S1 Common Stock into which such number of shares of Edify Common
Stock, as is specified in such notice, were converted, at a per share price
equal to (x) the average of the closing prices of Edify Common Stock for each
trading day during the Trading Period multiplied by (y) the Exchange Ratio.
3. SUCCESSORS AND ASSIGNS. A Stockholder may sell, pledge, transfer
or otherwise dispose of his/her shares of Edify Common Stock, provided that such
Stockholder obtains the prior written consent of S1 and that any acquirer of
such Edify Common Stock agrees in writing to be bound by this Stockholder
Agreement.
4. SPECIFIC PERFORMANCE; TERMINATION. The parties agree and intend
that this Stockholder Agreement be a valid and binding agreement enforceable
against the parties hereto and that damages and other remedies at law for the
breach of this Stockholder Agreement are inadequate. The parties agree that
irreparable damage would occur in the event that the provisions of this
Stockholder Agreement were not performed in accordance with its specific terms
or were otherwise breached by any of the Stockholders or S1. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Stockholder Agreement by any of the Stockholders, or
S1, as the case may be, and to enforce specifically the terms and provisions
hereof in any court of the
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United States or any state having jurisdiction, this being in addition to any
other remedy to which S1 and the Stockholders are entitled at law or in equity.
This Stockholder Agreement may be terminated at any time prior to the
consummation of the Merger by the mutual written consent of the parties hereto
and shall be automatically terminated in the event that the Agreement is
terminated in accordance with its terms.
5. NOTICES. Notices may be provided to S1 and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by
the laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
7. COUNTERPARTS. This Stockholder Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same and each
of which shall be deemed an original.
8. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
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IN WITNESS WHEREOF, S1, by its respective duly authorized officer, and
each of the Stockholders have caused this Stockholder Agreement to be executed
and delivered as of the day and year first above written.
SECURITY FIRST TECHNOLOGIES CORPORATION
By: ___________________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
STOCKHOLDERS:
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
66
SCHEDULE I
Number of Shares of Edify Common
Name and Address of Stockholder Stock Beneficially Owned
------------------------------- ------------------------
67
Exhibit D
S1
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of May 16, 1999, is entered into by
and among Edify Corporation, a Delaware corporation ("Edify"), and the
stockholders of Security First Technologies Corporation, a Delaware corporation
("S1"), named on Schedule I hereto (collectively, the "Stockholders") who are
directors, executive officers or other affiliates of S1 (for purposes of Rule
145 under the Securities Act of 1933, as amended).
WHEREAS, S1, Sahara Strategy Corporation, a Delaware corporation ("S1
Sub"), and Edify have entered into an Agreement and Plan of Merger, dated as of
May 16, 1999 (the "Agreement"), which is conditioned upon, and requires, the
execution of this Stockholder Agreement and which provides for, among other
things, the acquisition of Edify by S1, to be effected by the merger of S1 Sub
with and into Edify, in a stock-for-stock transaction (the "Merger"); and
WHEREAS, in order to induce Edify to enter into or proceed with the
Agreement, the Stockholders represent and warrant as to that the facts provided
herein are accurate as to each of the Stockholders set forth herein, and each of
the Stockholders agrees to, among other things, vote in favor of the issuance of
S1 Common Stock (as defined below) in the Merger pursuant to the Agreement in
his/her capacity as a stockholder of S1;
NOW, THEREFORE in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. OWNERSHIP OF S1 COMMON STOCK. Each Stockholder represents and
warrants that the number of shares of S1 common stock, par value $.01 per share
("S1 Common Stock"), set forth opposite such Stockholder's name on Schedule I
hereto is the total number of shares of S1 Common Stock over which such person
has "beneficial ownership" within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, except that the provisions of Rule
13d-3(d)(1)(i) shall be considered without any limit as to time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and
agrees that such Stockholder shall, at any meeting of the holders of S1 Common
Stock called for the purpose, vote or cause to be voted all shares of S1 Common
Stock with respect to which such Stockholder has the right to vote (whether
owned as of the date hereof or hereafter acquired) in favor of the issuance of
S1 Common Stock in the Merger pursuant to the Agreement.
3. SUCCESSORS AND ASSIGNS. A Stockholder may sell, pledge, transfer
or otherwise dispose of his/her shares of S1 Common Stock, provided that such
Stockholder obtains the prior written consent of Edify and that any acquirer of
such S1 Common Stock agrees in writing to be bound by this Stockholder
Agreement.
4. SPECIFIC PERFORMANCE; TERMINATION. The parties agree and intend
that this Stockholder Agreement be a valid and binding agreement enforceable
against the parties hereto and that damages and other remedies at law for the
breach of this Stockholder Agreement are inadequate. Each of the Stockholders
agree that irreparable damage to Edify would occur in the event that the
provisions of this Stockholder Agreement were not performed in accordance with
its specific terms or were otherwise breached by any of the Stockholders. It is
accordingly agreed that Edify shall be entitled to an injunction or injunctions
to prevent breaches of this Stockholder Agreement by any of the Stockholders and
to enforce specifically the terms and provisions hereof in any court of the
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United States or any state having jurisdiction, this being in addition to any
other remedy to which Edify is entitled at law or in equity. This Stockholder
Agreement may be terminated at any time prior to the consummation of the Merger
by the mutual written consent of the parties hereto and shall be automatically
terminated in the event that the Agreement is terminated in accordance with its
terms.
5. NOTICES. Notices may be provided to Edify and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by
the laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
7. COUNTERPARTS. This Stockholder Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same and each
of which shall be deemed an original.
8. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
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IN WITNESS WHEREOF, Edify, by its respective duly authorized officer,
and each of the Stockholders have caused this Stockholder Agreement to be
executed and delivered as of the day and year first above written.
EDIFY CORPORATION
By: _______________________________
Name: ________________________
Title: ________________________
STOCKHOLDERS:
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
70
SCHEDULE I
Number of Shares of S1 Common
Name and Address of Stockholder Stock Beneficially Owned
------------------------------- ------------------------
