EXHIBIT INDEX
Exhibit No. Description
------------ -----------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated January 11, 2001, by and
among Intelidata Technologies Corporation, InteliData Merger Sub,
Inc., Home Account Holdings, Inc., and Xxxxxx X. Xxxxxxxxxx and
Xxxxxx Xxxxx, each in his capacity as representative of the
stockholders of Home Account.
4.1 Registration Rights Agreement, dated January 11, 2001, by
and among Intelidata Technologies Corporation and the holders of
common stock listed on Exhibit A attached thereto.
10.1 Merger Consideration Escrow Agreement, dated January 11, 2001,
by and among InteliData Technologies Corporation, Home Account
Holdings, Inc., Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxx, each in his
capacity as representative of the stockholders of Home Account,
and SunTrust Bank, Richmond, Virginia, as Escrow Agent.
10.2 Indemnity Escrow Agreement, dated January 11, 2001, by and
among InteliData Technologies Corporation, Home Account Holdings,
Inc., Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxx, each in his capacity as
representative of the stockholders of Home Account, and SunTrust
Bank, Richmond, Virginia, as Escrow Agent.
10.3 Note and Fee Exchange Agreement, dated January 11, 2001, by and
among InteliData Technologies Corporation, Home Account Holdings,
Inc., U.S. Bancorp Xxxxx Xxxxxxx and the persons listed on
Exhibit A thereto.
99.1 Press Release dated January 12, 2001
EXHIBIT 2.1
-----------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INTELIDATA TECHNOLOGIES CORPORATION,
INTELIDATA MERGERSUB, INC.,
THE STOCKHOLDERS' REPRESENTATIVES
AND
HOME ACCOUNT HOLDINGS, INC.
Dated as of January 11, 2001
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.........................................................2
Section 1.1. Accounts...................................................2
Section 1.2. Affiliates.................................................2
Section 1.3. Aggregate Parent Shares....................................2
Section 1.4. Agreement..................................................2
Section 1.5. Cash Option................................................2
Section 1.6. Certificate................................................2
Section 1.7. Certificate of Merger......................................2
Section 1.8. Closing....................................................2
Section 1.9. Closing Date...............................................2
Section 1.10. Code......................................................2
Section 1.11. Common Cash Consideration.................................2
Section 1.12. Common Certificates.......................................3
Section 1.13. Confidentiality Agreement.................................3
Section 1.14. Contracts.................................................3
Section 1.15. Convertible Notes.........................................3
Section 1.16. Copyrights................................................3
Section 1.17. Debt Amount...............................................3
Section 1.18. Debt Escrow Shares........................................3
Section 1.19. DGCL......................................................3
Section 1.20. Dissenting Shares.........................................3
Section 1.21. DOL.......................................................3
Section 1.22. Effective Time............................................3
Section 1.23. Environmental Claim.......................................4
Section 1.24. Environmental Laws........................................4
Section 1.25. ERISA.....................................................4
Section 1.26. Escrow Agent..............................................4
Section 1.27. Fees and Termination Letter Agreement.....................4
Section 1.28. Funding Notice............................................4
Section 1.29. GAAP......................................................4
Section 1.30. Governmental Authority....................................4
Section 1.31. Home Account..............................................4
Section 1.32. Home Account 2000 Incentive Plan..........................4
Section 1.33. Home Account Affiliate....................................5
Section 1.34. Home Account Beneficiary..................................5
Section 1.35. Home Account Benefit Plans................................5
Section 1.36. Home Account Common Stock.................................5
Section 1.37. Home Account Contracts....................................5
Section 1.38. Home Account Disclosure Schedule..........................5
Section 1.39. Home Account Dissenting Holder............................5
Section 1.40. Home Account ERISA Affiliate..............................5
Section 1.41. Home Account Financial Statements.........................5
Section 1.42. Home Account Intellectual Property........................5
Section 1.43. Home Account License Agreements...........................5
Section 1.44. Home Account Notes........................................6
Section 1.45. Home Account Participant..................................6
Section 1.46. Home Account Preferred Stock..............................6
Section 1.47. Home Account Series A Stock...............................6
Section 1.48. Home Account Series B Stock...............................6
Section 1.49. Home Account Series C Stock...............................6
Section 1.50. Home Account Shares.......................................6
Section 1.51. Home Account Stockholder Approval.........................6
Section 1.52. Home Account Stockholders.................................6
Section 1.53. Home Account Stock Options................................7
Section 1.54. Home Network..............................................7
Section 1.55. Home Network Common Stock.................................7
Section 1.56. Home Network Convertible Preferred Stock..................7
Section 1.57. HSR Documents.............................................7
Section 1.58. Indemnity Escrow Agent....................................7
Section 1.59. Indemnity Escrow Agreement................................7
Section 1.60. Indemnity Escrow Shares...................................7
Section 1.61. IRS.......................................................7
Section 1.62. Knowledge of Home Account.................................7
Section 1.63. Knowledge of Parent.......................................8
Section 1.64. Law.......................................................8
Section 1.66. Material Adverse Effect...................................8
Section 1.67. Merger....................................................8
Section 1.68. Merger Consideration......................................8
Section 1.69. Merger Consideration Escrow Agent.........................8
Section 1.70. Merger Consideration Escrow Agreement.....................8
Section 1.71. Merger Consideration Escrow Shares........................8
Section 1.72. Merger Subsidiary.........................................9
Section 1.73. Merger Subsidiary Common Stock............................9
Section 1.74. Note and Fee Exchange Agreement...........................9
Section 1.75. Parent....................................................9
Section 1.76. Parent Common Stock.......................................9
Section 1.77. Parent Preferred Stock....................................9
Section 1.78. Parent SEC Documents......................................9
Section 1.80. Permits...................................................9
Section 1.81. Person....................................................9
Section 1.82. Preferred Certificates...................................10
Section 1.83. Promissory Notes.........................................10
Section 1.84. Reduced Stock Option.....................................10
Section 1.85. Registration Rights Agreement............................10
Section 1.86. Registration Statement...................................10
Section 1.87. Representatives..........................................10
Section 1.88. Requisite Cash Amount....................................10
Section 1.89. Restricted Period........................................10
Section 1.90. SEC......................................................10
Section 1.91. Securities Act...........................................10
Section 1.93. Stockholders' Representatives............................10
Section 1.94. Stock Option Notes.......................................11
Section 1.95. Subsidiary...............................................11
Section 1.96. Surviving Corporation....................................11
Section 1.97. Takeover Proposal........................................11
Section 1.98. Tax; Taxes...............................................11
Section 1.99. Tax Return...............................................11
Section 1.100. Termination Fee.........................................11
Section 1.101. Trade Secrets...........................................11
Section 1.102. Trademarks..............................................11
ARTICLE II THE MERGER........................................................12
Section 2.1. The Merger................................................12
Section 2.2. Certificate of Incorporation and Bylaws...................12
Section 2.3. Board of Directors........................................12
Section 2.4. Management................................................13
Section 2.5. Effect on Capital Stock...................................13
Section 2.6. Exchange of Certificates..................................15
Section 2.7. Escrow....................................................17
Section 2.8. Anti-Dilution Provisions..................................19
ARTICLE III EFFECTIVE TIME; CLOSING..........................................19
Section 3.1. Effective Time............................................19
Section 3.2. Time and Place of Closing.................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HOME ACCOUNT....................20
Section 4.1. Organization and Authority of Home Account................20
Section 4.2. Capitalization............................................20
Section 4.3. Authority Relative to this Agreement; Recommendation......21
Section 4.4. Consents and Approvals; No Violations.....................22
Section 4.5. Title to and Condition of Assets..........................22
Section 4.6. Absence of Certain Events.................................23
Section 4.7. Subsidiaries..............................................23
Section 4.8. Financial Statements......................................24
Section 4.9. Litigation................................................24
Section 4.10. Employee Benefit Plans Matters...........................24
Section 4.11. Labor Matters............................................27
Section 4.12. Tax Matters..............................................27
Section 4.13. Compliance with Law......................................29
Section 4.14. Transactions With Affiliates.............................30
Section 4.15. Fees and Expenses of Brokers and Others..................30
Section 4.16. Absence of Undisclosed Liabilities.......................31
Section 4.17. Environmental Laws and Regulations.......................31
Section 4.18. Intellectual Property....................................31
Section 4.19. Insurance................................................34
Section 4.20. State Takeover Statutes..................................35
Section 4.21. Minute Books.............................................35
Section 4.22. Books and Records........................................35
Section 4.23. Accounts.................................................35
Section 4.24. Material Contracts.......................................36
Section 4.25. Real Property............................................37
Section 4.26. Warranties...............................................37
Section 4.27. Certain Business Practices...............................37
Section 4.28. Vote Required............................................38
Section 4.29. First Data Services Agreement............................38
Section 4.30. Sales Commission Plan....................................38
Section 4.31. Termination of Contracts.................................38
Section 4.32. Indebtedness.............................................38
Section 4.33. Bank Accounts............................................39
Section 4.34. Full Disclosure..........................................39
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY.....39
Section 5.1. Organization and Authority of the Parent..................39
Section 5.2. Capitalization............................................40
Section 5.3. Authority Relative to this Agreement......................40
Section 5.4. Consents and Approvals; No Violations.....................40
Section 5.5. SEC Documents.............................................41
Section 5.6. Fees and Expenses of Brokers and Others...................41
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS.........................42
Section 6.1. Conduct of Business of Home Account and Home Network......42
ARTICLE VII ADDITIONAL AGREEMENTS............................................44
Section 7.1. Registration Statement....................................44
Section 7.2. Access to Information.....................................45
Section 7.3. Reasonable Efforts; Notification..........................45
Section 7.4. Fees and Expenses.........................................47
Section 7.5. Pre-Closing Funding of Home Account.......................47
Section 7.6. Public Announcements......................................48
Section 7.7. Employee Matters..........................................48
Section 7.8. Agreement to Defend.......................................49
Section 7.9. Amendment of Schedules....................................49
Section 7.10. Other Actions............................................49
ARTICLE VIII CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER..............49
Section 8.1. Conditions Precedent to Obligations of Parent and
Merger Subsidiary.......................................49
Section 8.2. Conditions Precedent to Obligations of Home Account.......53
ARTICLE IX SPECIAL PROVISIONS AS TO CERTAIN MATTERS..........................54
Section 9.1. No Solicitation...........................................54
Section 9.2. Parent Board..............................................55
ARTICLE X INDEMNIFICATION....................................................55
Section 10.1. Indemnification of Parent and the Surviving Corporation..55
Section 10.2. Notice and Control of Litigation.........................55
Section 10.3. Notice of Claim..........................................56
Section 10.4. Limitation of Liability..................................56
Section 10.5. Stockholders' Representatives............................56
Section 10.6. Survival of Representations and Warranties...............57
ARTICLE XI TERMINATION; AMENDMENT; WAIVER....................................57
Section 11.1. Termination..............................................57
Section 11.3. Effect of Termination....................................58
Section 11.4. Termination Fee..........................................59
Section 11.5. Amendment................................................59
Section 11.6. Extension; Waiver........................................59
Section 11.7. Procedure for Termination, Amendment,
Extension or Waiver....................................60
ARTICLE XII MISCELLANEOUS....................................................60
Section 12.1. Entire Agreement; Assignment.............................60
Section 12.2. Notices..................................................60
Section 12.3. Governing Law............................................62
Section 12.4. Descriptive Headings.....................................62
Section 12.5. Parties in Interest......................................62
Section 12.6. Counterparts.............................................62
Section 12.7. Specific Performance.....................................62
Section 12.8. Severability.............................................62
EXHIBITS AND SCHEDULES
EXHIBITS (Responsible Party)
Exhibit 1.27 Fees and Termination Letter Agreement (H&W)
Exhibit 1.59 Indemnity Escrow Agreement (H&W)
Exhibit 1.70 Merger Consideration Escrow Agreement (Home Account)
Exhibit 2.1 Certificate of Merger (H&W)
Exhibit 2.2(a) Certificate of Incorporation of Merger Subsidiary (H&W)
Exhibit 2.2(b) Bylaws of Merger Subsidiary (H&W)
Exhibit 4.29 First Data Letter Amendment (Home Account/Parent)
Exhibit 4.28 Persons Who Signed the Non-Unanimous Written Consent (H&W)
Exhibit 1.74 Note and Fee Exchange Agreement (H&W)
Exhibit 4.31 Terminated Contracts (H&W)
Exhibit 8.1(c)(i) Form of Opinion of Outside Counsel for Home Account (H&W)
Exhibit 8.1(c)(ii) Form of Opinion of In-House Counsel for Home Account (H&W)
Exhibit 8.1(n) Registration Rights Agreement (H&W)
Exhibit 8.1(v) Form of Payoff Letter (H&W)
Exhibit 8.2(c) Form of Opinion of Counsel for Parent (H&W)
Exhibit 10.1(a) Other Indemnifiable Claims (H&W)
SCHEDULES
HOME ACCOUNT DISCLOSURE SCHEDULE
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 11, 2001, by and among INTELIDATA TECHNOLOGIES CORPORATION, a Delaware
corporation ("Parent"), INTELIDATA MERGERSUB, INC., a Delaware corporation and a
subsidiary of Parent ("Merger Subsidiary"), HOME ACCOUNT HOLDINGS, INC., a
Delaware corporation ("Home Account"), and XXXXXX X. XXXXXXXXXX and XXXXXX
XXXXX, in their capacities as representatives of the stockholders of Home
Account for the limited purposes described herein (the "Stockholders'
Representatives"), recites and provides as follows:
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and Home Account have approved the merger of Merger Subsidiary with
and into Home Account (the "Merger") upon the terms and subject to the
conditions of this Agreement and whereby each issued and outstanding share of
Home Account's Series A Convertible Preferred Stock, par value $.001 per share
(the "Home Account Series A Stock"), Series B Convertible Preferred Stock, par
value $.001 per share (the "Home Account Series B Stock"), and Series C
Convertible Preferred Stock, par value $.001 per share (the "Home Account Series
C Stock"), not owned by Home Account, Parent or any of their respective
subsidiaries, will be converted into shares of Parent's common stock, par value
$.001 per share (the "Parent Common Stock"), as provided herein;
WHEREAS, Parent, Home Account, U.S. Bancorp Xxxxx Xxxxxxx and the
holders of certain outstanding promissory notes and warrants issued by Home
Account have entered into a Note and Fee Exchange Agreement to provide for the
exchange of such notes and warrants and the payment of certain fees of U.S.
Bancorp Xxxxx Xxxxxxx with shares of Parent Common Stock;
WHEREAS, the directors, executive officers and certain stockholders of
Home Account identified on Exhibit 4.28 have executed, in accordance with the
applicable provisions of the DGCL and the certificate of incorporation and
bylaws of Home Account, a non-unanimous written consent adopting and approving
this Agreement, the Merger and the transactions contemplated hereby and thereby;
WHEREAS, Home Account, Merger Subsidiary and Parent desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;
WHEREAS, for accounting purposes, it is intended that the Merger shall
constitute a "purchase" transaction; and
NOW, THEREFORE, in consideration of the premises, which are
incorporated into and made part of this Agreement, and of the mutual
representations, warranties, covenants, agreements and conditions set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Accounts.
--------
"Accounts" shall mean all accounts receivable, security deposits, notes
receivable, prepaids and associated rights owned by Home Account or Home Network
and arising in the ordinary course of Home Account's or Home Network's business
as of the Closing.
Section 1.2. Affiliates.
----------
"Affiliates" shall have the meaning set forth in Section 8.1((e))
hereof.
Section 1.3. Aggregate Parent Shares.
-----------------------
"Aggregate Parent Shares" shall mean (i) the shares of Parent Common
Stock constituting the Stock Consideration and (ii) the Debt Escrow Shares.
Section 1.4. Agreement.
---------
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
Section 1.5. Cash Option.
-----------
"Cash Option" shall have the meaning set forth in Section 2.5(b)
hereof.
Section 1.6. Certificate.
-----------
"Certificate" shall mean a Common Certificate or a Preferred
Certificate.
Section 1.7. Certificate of Merger.
---------------------
"Certificate of Merger" shall have the meaning set forth in Section 2.1
hereof.
Section 1.8. Closing.
-------
"Closing" shall have the meaning set forth in Section 3.2 hereof.
Section 1.9. Closing Date.
-------------
"Closing Date" shall mean the date on which the Closing occurs.
Section 1.10. Code.
----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.11. Common Cash Consideration.
-------------------------
"Common Cash Consideration" shall have the meaning set forth in Section
2.5(a) hereof.
Section 1.12. Common Certificates.
-------------------
"Common Certificates" shall have the meaning set forth in Section
2.6(a) hereof.
Section 1.13. Confidentiality Agreement.
-------------------------
"Confidentiality Agreement" shall have the meaning set forth in Section
7.2 hereof.
Section 1.14. Contracts.
---------
"Contracts" shall mean all contracts, agreements, leases, licenses,
arrangements, understandings, relationships and commitments, whether written or
oral (and all amendments, side letters, modifications and supplements thereto).
Section 1.15. Convertible Notes.
-----------------
"Convertible Notes" shall have the meaning set forth in Section 4.2
hereof.
Section 1.16. Copyrights.
----------
"Copyrights" shall have the meaning set forth in Section 4.18((a))
hereof.
Section 1.17. Debt Amount.
-----------
"Debt Amount" shall have the meaning set forth in Section 2.3(a) of the
Note and Fee Exchange Agreement.
Section 1.18. Debt Escrow Shares.
------------------
"Debt Escrow Shares" shall have the mean the number of shares of Parent
Common Stock required to be released to "Former Creditors," as set forth in the
Merger Consideration Escrow Agreement, which number of shares shall not be in
excess of 5,900,000.
Section 1.19. DGCL.
----
"DGCL" shall mean the Delaware General Corporation Law, as amended.
Section 1.20. Dissenting Shares.
-----------------
"Dissenting Shares" shall have the meaning set forth in Section
2.5((i)) hereof.
Section 1.21. DOL.
---
"DOL" shall have the meaning set forth in Section 4.10((b))((iii))
hereof.
Section 1.22. Effective Time.
--------------
"Effective Time" shall have the meaning set forth in Section 3.1
hereof.
Section 1.23. Environmental Claim.
-------------------
"Environmental Claim" shall have the meaning set forth in Section 4.17
hereof.
Section 1.24. Environmental Laws.
------------------
"Environmental Laws" shall have the meaning set forth in Section 4.17
hereof.
Section 1.25. ERISA.
-----
"ERISA" shall have the meaning set forth in Section 4.10((a)) hereof.
Section 1.26. Escrow Agent.
------------
"Escrow Agent" shall have the meaning set forth in Section
2.7((a)) hereof.
Section 1.27. Fees and Termination Letter Agreement.
-------------------------------------
"Fees and Termination Letter Agreement" shall mean the letter
agreement, dated as of January 11, 2001, by and among the Home Account, certain
Home Account Stockholders and Parent, attached hereto as Exhibit 1.27.
Section 1.28. Funding Notice.
--------------
"Funding Notice" shall have the meaning set forth in Section 7.5(b)
hereof.
Section 1.29. GAAP.
----
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States of America at the time of the preparation of the subject
financial statement.
Section 1.30. Governmental Authority.
----------------------
"Governmental Authority" shall mean any federal, state, provincial,
municipal or other governmental department, commission, board, bureau, agency,
instrumentality or arbitration panel, or any court, in each case whether of the
United States, any of its possessions or territories, or of any foreign nation.
Section 1.31. Home Account.
------------
"Home Account" shall have the meaning set forth in the preamble to this
Agreement.
Section 1.32. Home Account 2000 Incentive Plan.
--------------------------------
"Home Account 2000 Incentive Plan" shall mean the management incentive
plan of Home Account, substantially in the form attached hereto as Exhibit 1.32.
Section 1.33. Home Account Affiliate.
----------------------
"Home Account Affiliate" shall have the meaning set forth in
Section 4.14 hereof.
Section 1.34. Home Account Beneficiary.
-------------------------
"Home Account Beneficiary" shall have the meaning set forth in Section
4.10((a)) hereof.
Section 1.35. Home Account Benefit Plans.
--------------------------
"Home Account Benefit Plans" shall have the meaning set forth in
Section 4.10((a)) hereof.
Section 1.36. Home Account Common Stock.
-------------------------
"Home Account Common Stock" shall mean the common stock, $.001 par
value per share, of Home Account.
Section 1.37. Home Account Contracts.
----------------------
"Home Account Contracts" shall have the meaning set forth in Section
4.24((a)) hereof.
Section 1.38. Home Account Disclosure Schedule.
--------------------------------
"Home Account Disclosure Schedule" shall have the meaning set forth in
the introduction to Article IV hereof.
Section 1.39. Home Account Dissenting Holder.
------------------------------
"Home Account Dissenting Holder" shall have the meaning set forth in
Section 2.5(h) hereof.
Section 1.40. Home Account ERISA Affiliate.
----------------------------
"Home Account ERISA Affiliate" shall have the meaning set forth in
Section 4.10((c)) hereof.
Section 1.41. Home Account Financial Statements.
---------------------------------
"Home Account Financial Statements" shall have the meaning set forth in
Section 4.8 hereof.
Section 1.42. Home Account Intellectual Property.
----------------------------------
"Home Account Intellectual Property" shall have the meaning set forth
in Section 4.18((a)) hereof.
Section 1.43. Home Account License Agreements.
-------------------------------
"Home Account License Agreements" shall have the meaning set forth in
Section 4.18((b)) hereof.
Section 1.44. Home Account Notes.
------------------
"Home Account Notes" shall have the meaning set forth in Section 4.2
hereof.
Section 1.45. Home Account Participant.
------------------------
"Home Account Participant" shall have the meaning set forth in Section
7.5(c) hereof.
Section 1.46. Home Account Preferred Stock.
----------------------------
"Home Account Preferred Stock" shall mean the shares of Home Account
Series A Stock, the Home Account Series B Stock and the Home Account Series C
Stock issued and outstanding immediately prior to the Effective Time.
Section 1.47. Home Account Series A Stock.
---------------------------
"Home Account Series A Stock" shall have the meaning set forth in the
recitals to this Agreement.
Section 1.48. Home Account Series B Stock.
---------------------------
"Home Account Series B Stock" shall have the meaning set forth in the
recitals to this Agreement.
Section 1.49. Home Account Series C Stock.
---------------------------
"Home Account Series C Stock" shall have the meaning set forth in the
recitals to this Agreement.
Section 1.50. Home Account Shares.
-------------------
"Home Account Shares" shall mean the shares of Home Account Common
Stock, Home Account Series A Stock, Home Account Series B Stock and Home Account
Series C Stock issued and outstanding immediately prior to the Effective Time.
Section 1.51. Home Account Stockholder Approval.
---------------------------------
"Home Account Stockholder Approval" shall mean the adoption and
approval of this Agreement and the Merger by the holders of a majority of the
outstanding shares of capital stock of Home Account, acting by written consent
in lieu of meeting in accordance with Section 228 of the DGCL.
Section 1.52. Home Account Stockholders.
-------------------------
"Home Account Stockholders" shall mean the Persons listed in Section
1.52 of the Home Account Disclosure Schedule.
Section 1.53. Home Account Stock Options.
--------------------------
"Home Account Stock Options" shall have the meaning set forth in
Section 2.5(d) hereof.
Section 1.54. Home Network.
------------
"Home Network" shall mean Home Account Network, Inc., a Delaware
corporation and a wholly owned subsidiary of Home Account.
Section 1.55. Home Network Common Stock.
-------------------------
"Home Network Common Stock" shall have the meaning set forth in Section
4.2 hereof.
Section 1.56. Home Network Convertible Preferred Stock.
----------------------------------------
"Home Network Convertible Preferred Stock" shall have the meaning set
forth in Section 4.2 hereof.
Section 1.57. HSR Documents.
-------------
"HSR Documents" shall have the meaning set forth in Section
7.3((c))((ii)) hereof.
Section 1.58. Indemnity Escrow Agent.
----------------------
"Indemnity Escrow Agent" shall have the meaning set forth in Section
2.7(a) hereof.
Section 1.59. Indemnity Escrow Agreement.
--------------------------
"Indemnity Escrow Agreement" shall mean the escrow agreement,
dated as of the Closing Date, among Parent, the Stockholders'
Representatives and the Indemnity Escrow Agent, substantially
in the form of Exhibit 1.59 attached hereto.
Section 1.60. Indemnity Escrow Shares.
-----------------------
"Indemnity Escrow Shares" shall have the meaning set forth in Section
2.7 hereof.
Section 1.61. IRS.
---
"IRS" shall mean the Internal Revenue Service.
Section 1.62. Knowledge of Home Account.
-------------------------
"Knowledge of Home Account" shall mean the actual knowledge, after due
inquiry, of the persons set forth in Section 1.62 of the Home Account Disclosure
Schedule.
Section 1.63. Knowledge of Parent.
-------------------
"Knowledge of Parent" shall mean the actual knowledge, after due
inquiry, of the persons set forth on Exhibit 1.63 attached hereto.
Section 1.64. Law.
---
"Law" shall mean any federal, state, provincial, local or other law,
statute, act, ordinance or other governmental requirement of any kind, and the
rules, regulations and orders promulgated thereunder.
Section 1.65 Lien.
----
"Lien" shall mean any mortgages, liens, pledges, charges, security
interests or encumbrances of any kind.
Section 1.66. Material Adverse Effect.
-----------------------
"Material Adverse Effect" shall mean, with respect to any entity or
group of entities, a material adverse effect (or any development which, insofar
as reasonably can be foreseen, is reasonably likely to have a material adverse
effect in the future), on the business, assets, financial or other condition,
results of operations or prospects of such entity or group of entities taken as
a whole.
Section 1.67. Merger.
------
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
Section 1.68. Merger Consideration.
--------------------
"Merger Consideration" shall mean the Stock Consideration, the Common
Cash Consideration, the Debt Escrow Shares and the Requisite Cash Amount, if
any.
Section 1.69. Merger Consideration Escrow Agent.
---------------------------------
"Merger Consideration Escrow Agent" shall have the meaning set forth in
Section 2.7(a) hereof.
Section 1.70. Merger Consideration Escrow Agreement.
-------------------------------------
"Merger Consideration Escrow Agreement" shall mean the escrow
agreement, dated as of the Closing Date, by and among Parent, Home Account, the
Stockholders' Representatives, the Merger Consideration Escrow Agent and certain
Persons named therein, substantially in the form attached hereto as Exhibit
1.70.
Section 1.71. Merger Consideration Escrow Shares.
----------------------------------
"Merger Consideration Escrow Shares" shall mean the Aggregate Parent
Shares less the Indemnity Escrow Shares, deposited into escrow pursuant to the
Merger Consideration Escrow Agreement and Section 2.7(a) hereof.
Section 1.72. Merger Subsidiary.
-----------------
"Merger Subsidiary" shall have the meaning set forth in the preamble to
this Agreement.
Section 1.73. Merger Subsidiary Common Stock.
------------------------------
"Merger Subsidiary Common Stock" shall have the meaning set forth in
Section 5.2 hereof.
Section 1.74. Note and Fee Exchange Agreement.
-------------------------------
"Note and Fee Exchange Agreement" shall mean the Note and Fee Exchange
Agreement, dated as of the Closing Date, by and among Parent, Home Account, U.S.
Bancorp Xxxxx Xxxxxxx, and the holders of Home Account Notes, substantially in
the form of Exhibit 1.74 attached hereto.
Section 1.75. Parent.
------
"Parent" shall have the meaning set forth in the preamble to this
Agreement.
Section 1.76. Parent Common Stock.
-------------------
"Parent Common Stock" shall have the meaning set forth in the recitals
to this Agreement.
Section 1.77. Parent Preferred Stock.
----------------------
"Parent Preferred Stock" shall have the meaning set forth in Section
5.2 hereof.
Section 1.78. Parent SEC Documents.
--------------------
"Parent SEC Documents" shall have the meaning set forth in Section 5.5
hereof.
Section 1.79 Patents.
-------
"Patents" shall have the meaning set forth in Section 4.18((a)) hereof.
Section 1.80. Permits.
-------
"Permits" shall mean all permits, licenses, variances, exemptions,
orders, registrations and approvals and governmental authorizations of all
Governmental Authorities.
Section 1.81. Person.
------
"Person" shall mean any individual, corporation, partnership, limited
liability company, association, trust, unincorporated entity or other legal
entity.
Section 1.82. Preferred Certificates.
----------------------
"Preferred Certificates" shall have the meaning set forth in Section
2.6(a) hereof.
Section 1.83. Promissory Notes.
----------------
"Promissory Notes" shall have the meaning set forth in Section 4.2
hereof.
Section 1.84. Reduced Stock Option.
--------------------
"Reduced Stock Option" shall have the meaning set forth in Section
2.5(b) hereof.
Section 1.85. Registration Rights Agreement.
-----------------------------
"Registration Rights Agreement" shall have the meaning set forth in
Section 8.1((n)) hereof.
Section 1.86. Registration Statement.
----------------------
"Registration Statement" shall have the meaning set forth in Section
7.1((a)) hereof.
Section 1.87. Representatives.
---------------
"Representatives" shall have the meaning set forth in Section 9.1((a))
hereof.
Section 1.88. Requisite Cash Amount.
---------------------
"Requisite Cash Amount" shall have the meaning set forth in Section
2.5(b) hereof.
Section 1.89. Restricted Period.
-----------------
"Restricted Period" shall have the meaning set forth in Section
9.1((a)) hereof.
Section 1.90. SEC.
---
"SEC" shall mean the Securities and Exchange Commission.
Section 1.91. Securities Act.
--------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.92 Stock Consideration.
-------------------
"Stock Consideration" shall have the meaning set forth in Section
2.5((a)) hereof.
Section 1.93. Stockholders' Representatives.
-----------------------------
"Stockholders' Representatives" shall have the meaning set forth in the
preamble to this Agreement.
Section 1.94. Stock Option Notes.
------------------
"Stock Option Notes" shall mean the outstanding promissory notes issued
by a Home Account employee, officer, consultant or director to Home Account as
full or partial payment of the exercise price of the options to purchase Home
Account Common Stock, which options were granted to such employee, officer,
consultant or director under the Amended and Restated Home Account Holdings,
Inc. 1999 Stock Plan or the Home Account Holdings, Inc. 1999 Directors and
Consultants Stock Plan. Certain information pertaining to the Stock Option Notes
is set forth in Section 4.2(iii) of the Home Account Disclosure Schedule.
Section 1.95. Subsidiary.
----------
"Subsidiary" shall mean each corporate entity with respect to which a
party has the right to vote (directly or indirectly through one or more other
entities or otherwise) shares representing 50% or more of the votes eligible to
be cast in the election of directors of such entity.
Section 1.96. Surviving Corporation.
---------------------
"Surviving Corporation" shall have the meaning set forth in Section
2.1((a)) hereof.
Section 1.97. Takeover Proposal.
-----------------
"Takeover Proposal" shall have the meaning set forth in Section
9.1((a)) hereof.
Section 1.98. Tax; Taxes.
----------
"Tax" or "Taxes" means any federal, state, county, local, or foreign
taxes, charges, levies, imposts, duties, other assessments, or similar charges
of any kind whatsoever, including any interest, penalties, and additions imposed
thereon or with respect thereto.
Section 1.99. Tax Return.
----------
"Tax Return" means any report, return, information return, or other
information required to be supplied to a taxing authority in connection with
Taxes, including any return of an affiliated or combined or unitary group.
Section 1.100. Termination Fee.
---------------
"Termination Fee" shall have the meaning set forth in Section 11.4
hereof.
Section 1.101. Trade Secrets.
-------------
"Trade Secrets" shall have the meaning set forth in Section 4.18((a)).
Section 1.102. Trademarks.
----------
"Trademarks" shall have the meaning set forth in Section 4.18((a)).
ARTICLE II
THE MERGER
Section 2.1 The Merger.
----------
(a) Immediately prior to the Effective Time,(i) Merger Subsidiary and Home
Account shall execute and deliver a certificate of merger, substantially in the
form attached hereto as Exhibit 2.1,which shall be filed with the Secretary of
State of the State of Delaware in accordance with the DGCL (the "Certificate of
Merger"). Subject to the terms and conditions of this Agreement, at the
Effective Time, Merger Subsidiary shall be merged with and into Home Account in
accordance with the provisions of, and with the effects provided in, Subchapter
IX of the DGCL. Home Account shall be the surviving corporation (the "Surviving
Corporation") resulting from the Merger and shall continue to be governed by the
laws of the State of Delaware and shall succeed to and assume all of the rights
and obligations of Merger Subsidiary and the separate corporate existence of
Merger Subsidiary shall cease.
(b) If at any time after the Effective Time of the Merger, the Surviving
Corporation shall consider or be advised that any further assignments or
assurances in law or otherwise are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, all rights, title
and interests in all real estate and other property and all privileges, powers
and franchises of Home Account and Merger Subsidiary, then the Surviving
Corporation and its proper officers and directors, in the name and on behalf of
Home Account and Merger Subsidiary, shall execute and deliver all such proper
deeds, assignments and assurances in law and do all things necessary and proper
to vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this Agreement, and the
proper officers and directors of the Surviving Corporation are fully authorized
in the name of Home Account and Merger Subsidiary or otherwise to take any and
all such action.
Section 2.2. Certificate of Incorporation and Bylaws.
---------------------------------------
(a) The Certificate of Incorporation of Home Account, as in effect
immediately prior to the Effective Time of the Merger, shall be amended and
restated as of the Effective Time of the Merger to read as set forth in Exhibit
2.2((a)) hereto, and, as so amended, shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The Bylaws of Home Account, as in effect immediately prior to the
Effective Time of the Merger, shall be amended and restated as of the Effective
Time of the Merger to read as set forth in Exhibit 2.2((b)) hereto, and, as so
amended, shall be the Bylaws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
Section 2.3. Board of Directors.
------------------
The Board of Directors of Merger Subsidiary immediately prior to the
Effective Time shall be the Board of Directors of the Surviving Corporation at
the Effective Time.
Section 2.4. Management.
----------
The principal officers of Merger Subsidiary immediately prior to the
Effective Time shall be the principal officers of the Surviving Corporation at
the Effective Time.
Section 2.5. Effect on Capital Stock.
-----------------------
As of the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of any holders of Home Account Shares or capital
stock of Merger Subsidiary:
(a) Subject to the other provisions of this Section 2.5, each Home Account
Stockholder shall be entitled to receive (subject to the escrow provisions in
Section 2.7) the cash and stock consideration as follows: (i) each issued and
outstanding share of Home Account Common Stock shall be converted into the right
to receive, upon the surrender of the certificate formerly representing such
share of Home Account Common Stock, $0.29 cash, net of repayment of any
outstanding Stock Option Notes plus accrued interest thereon up to and including
the Effective Time (the "Common Cash Consideration"); (ii) each issued and
outstanding share of Home Account Series A Stock shall be converted into the
right to receive, upon the surrender of the certificate formerly representing
such share of Home Account Series A Stock, the number of shares of Parent Common
Stock designated in the Merger Consideration Escrow Agreement; (iii) each issued
and outstanding share of Home Account Series B Stock shall be converted into the
right to receive, upon the surrender of the certificate formerly representing
such share of Home Account Series B Stock, the number of shares of Parent Common
Stock designated in the Merger Consideration Escrow Agreement; and (iv) each
issued and outstanding share of Home Account Series C Stock shall be converted
into the right to receive, upon the surrender of the certificate formerly
representing such share of Home Account Series C Stock, the number of shares of
Parent Common Stock designated in the Merger
Consideration Escrow Agreement (together (ii)-(iv) above are the "Stock
Consideration"); provided, however, that notwithstanding anything in this
Agreement to the contrary, the number of Aggregate Parent Shares shall at no
time exceed the lesser of (x) 6,900,000 or (y) 19.9% of the issued and
outstanding shares of Parent Common Stock as of the Effective Time.
(b) In the event that 6,900,000 shares of Parent Common Stock would
represent more than 19.9% (rounded to the nearest whole number of shares) (the
"Threshold Percentage") of the total issued and outstanding shares of Parent
Common Stock (calculated as of the business day immediately preceding the
Closing Date), Parent shall have the option (the "Cash Option"), in its sole and
absolute discretion, to reduce the number of Aggregate Parent Shares and to pay
cash in lieu of Parent Common Stock in an amount (the "Requisite Cash Amount")
such that the number of Aggregate Parent Shares would not exceed the Threshold
Percentage. The Requisite Cash Amount shall equal (i) the value of 6,900,000
shares of Parent Common Stock (calculated using a per share price for the Parent
Common Stock equal to the average closing price of Parent Common Stock on the
Nasdaq National Market for the five-trading day period ending one business day
prior to the Closing Date), less (ii) the value of 19.9% of the total issued and
outstanding shares of Parent Common Stock on the Closing Date (calculated using
a per share price for the Parent Common Stock equal to the average closing price
of Parent Common Stock on the Nasdaq National Market for the five-trading day
period ending one business day prior to the Closing Date). Alternatively, Parent
shall have the option (the "Reduced Stock Option"), in its sole and absolute
discretion, to (i) reduce the number of Aggregate Parent Shares such that the
number of Aggregate Parent Shares would not exceed the Threshold Percentage and
(ii) not pay any cash to compensate for the reduction in Aggregate Parent
Shares, with the result that the aggregate Merger Consideration would thereby be
reduced by an amount equal to the Requisite Cash Amount that would have been
payable by Parent if Parent had exercised the Cash Option. In the event the
number of Aggregate Parent Shares would exceed the Threshold Percentage and
Parent exercises the Reduced Stock Option, Home Account shall have the right to
terminate this Agreement in accordance with Section 11.1(f) hereof.
(c) In no event will the aggregate value of the Merger Consideration exceed
$50,000,000. In the event that the aggregate value of the Merger Consideration
(calculated using a per share price for the Aggregate Parent Shares equal to the
average closing price of Parent Common Stock on the Nasdaq National Market for
the five-trading day period ending one business day prior to the Closing Date)
would exceed $50,000,000 without adjustment by this Section 2.5(c), the
Requisite Cash Amount payable shall be reduced to an amount such that the
aggregate value of the Merger Consideration would not exceed $50,000,000. In the
event that, notwithstanding the reduction to the Requisite Cash Amount in the
preceding sentence, the aggregate value of the Merger Consideration would exceed
$50,000,000 without further adjustment by this Section 2.5(c), the number of
Aggregate Parent Shares shall be reduced such that the aggregate value of the
(i) Aggregate Parent Shares (calculated using a per share price for the Parent
Common Stock equal to the average closing price of Parent Common Stock on the
Nasdaq National Market for the five-trading day period ending one business day
prior to the Closing Date) plus (ii) the Common Cash Consideration would not
exceed $50,000,000. In such
case, the conversion ratios for the Home Account Preferred Stock set forth in
the Merger Consideration Escrow Agreement should be reduced accordingly.
(d) Each outstanding option to purchase shares of Home Account capital
stock issued under and in accordance with the Amended and Restated Home Account
Holdings, Inc. 1999 Stock Plan or the Home Account Holdings, Inc. 1999 Directors
and Consultants Stock Plan (each, a "Home Account Stock Option"), whether vested
or unvested, shall be assumed by Parent and by virtue of the Merger and without
any further action on the part of Home Account or any holder of a Home Account
Stock Option, shall be converted into the right to receive $0.29 cash, upon
exercise of such Home Account Stock Option in accordance with its terms for each
share of Home Account Common Stock that otherwise would have been acquired on
the exercise of such Home Account Stock Option; provided, however, no holder of
a Home Account Stock Option shall have the right to pay any part of the exercise
price of such Home Account Stock Option by delivery of a promissory note which
by its terms is states that it is to be secured by shares purchased by exercise
of the Home Account Stock Option.
(e) Each issued and outstanding warrant to purchase shares of Home Account
capital stock, whether vested or unvested, by virtue of the Merger and without
any further action on the part of Home Account or any holder of such warrant,
shall be cancelled, retired and cease to exist and no payment shall be made with
respect thereto.
(f) All Home Account Shares that are owned by Home Account or Parent, shall
be canceled, retired and cease to exist and no consideration shall be delivered
in exchange therefor.
(g) No fractional shares of Parent Common Stock shall be issued in the
Merger. A holder of Home Account Shares that would otherwise be entitled to
receive a fractional share of Parent Common Stock as a result of the Merger
shall be entitled to receive, in lieu thereof, an amount in cash determined in
accordance with the Indemnity Escrow Agreement and the Merger Consideration
Escrow Agreement, as applicable.
(h) Each share of Merger Subsidiary Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger will be converted into one
share of the common stock, par value $.001 per share, of the Surviving
Corporation, and such common stock of the Surviving Corporation issued on that
conversion will constitute all of the issued and outstanding shares of capital
stock of the Surviving Corporation.
(i) Notwithstanding any provision contained in this Agreement to the
contrary, Home Account Shares outstanding immediately prior to the Effective
Time of the Merger and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has demanded appraisal for such shares
("Dissenting Shares") in accordance with the DGCL (a "Home Account Dissenting
Holder") shall not be converted into a right to receive the Merger
Consideration, but shall, from and after the Effective Time, have only such
rights as are afforded to the holders thereof by the provisions of Section 262
of the DGCL, unless such Home Account Dissenting Holder fails to perfect or
withdraws or otherwise loses such Home Account Dissenting Holder's right to
appraisal. If, after the Effective Time of the Merger,
such Home Account Dissenting Holder fails to perfect or withdraws or loses such
Home Account Dissenting Holder's right to appraisal, such shares shall be
treated as if they had been converted as of the Effective Time of the Merger
into a right to receive the Merger Consideration payable in respect of such
shares pursuant to Section 2.5((a)). Home Account shall give Parent prompt
notice of (i) any demands received by Home Account for appraisal of shares,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL and received by Home Account and (ii) all negotiations and proceedings with
respect to such demands. Home Account shall not, except with the prior written
consent of Parent, make any payment with respect to any demands for appraisal,
or offer to settle, or settle any such demands.
Section 2.6. Exchange of Certificates.
------------------------
(a) On or before the Effective Time of the Merger, Parent shall mail to
each holder of record of a certificate or certificates that immediately prior to
the Effective Time of the Merger represented outstanding shares of Home Account
Common Stock (the "Common Certificates") or outstanding shares of Home Account
Preferred Stock (the "Preferred Certificates"), other than Parent, Home Account
and any wholly owned subsidiary of Home Account or Parent, (i) a 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 Parent and shall be in a form and have such other provisions as
Parent may reasonably specify), (ii) to holders of Preferred Certificates only,
a stock power to be executed by such holder to provide for the deposit into and
payment out of escrow in accordance with the Indemnity Escrow Agreement, the
Merger Consideration Escrow Agreement and Section 2.7 of this Agreement and
(iii) instructions for use in effecting the surrender of (A) the Common
Certificates in exchange for the Common Cash Consideration and (B) the Preferred
Certificates in exchange for the right to receive Merger Consideration in
accordance with the terms of the Merger Consideration Escrow Agreement. Upon
surrender of a Common Certificate to Parent or to such other agent or agents as
may be appointed by the Surviving Corporation, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by Parent, (i) the holder of such Common Certificate shall receive from
Parent, as soon as reasonably practicable, the Common Cash Consideration payable
with respect to the number of shares of Home Account Common Stock represented by
such Common Certificate and (ii) the Common Certificate so surrendered shall
forthwith be canceled. Upon surrender of a Preferred Certificate to Parent or to
such other agent or agents as may be appointed by the Surviving Corporation,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by Parent, (i) the holder of such
Preferred Certificate shall have the right to receive Merger Consideration in
accordance with the terms of the Merger Consideration Escrow Agreement, (ii) the
Preferred Certificate so surrendered shall forthwith be canceled and (iii) the
Stock Consideration and Requisite Cash Amount, if any, shall be deposited into
escrow pursuant to the terms of the Merger Consideration Escrow Agreement and
Section 2.7 of this Agreement. If any shares of Parent Common Stock that a
holder of a Preferred Certificate has a right to receive are to be issued to a
Person other than the Person in whose name such Preferred Certificate so
surrendered is registered, it shall be a condition of exchange that such
Preferred Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the Person requesting such exchange shall pay any transfer or
other taxes required by reason of the exchange
to a Person other than the registered holder of such Preferred Certificate or
establish to the reasonable satisfaction of Parent and the Surviving Corporation
that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.6, each Certificate shall be deemed as of the
Effective Time of the Merger to represent only the right to receive, upon
surrender of such Certificate in accordance with this Section 2.6((a)), Merger
Consideration.
(b) No dividends or other distributions declared or made after the
Effective Time of the Merger with respect to the Parent Common Stock shall be
paid to the holder of any unsurrendered Preferred Certificate with respect to
the Parent Common Stock represented thereby. No Common Cash Consideration shall
be paid to any holder of a Common Certificate until the holder of record of such
Common Certificate shall surrender such Common Certificate in accordance with
Section 2.6((a)). No shares of Parent Common Stock and no cash payment
(including any (i) Requisite Cash Amount and (ii) cash in lieu of a fractional
share) with respect to Home Account Preferred Stock shall be deposited into
escrow or paid to any Person until the holder of record of the Preferred
Certificate representing the right to receive such shares of Parent Common Stock
or cash payment shall have been surrendered in accordance with Section 2.6((a)).
Subject to the effect of applicable Laws, following surrender to Parent of any
Preferred Certificate, there shall be paid into escrow, in accordance with the
terms of the terms of the Merger Consideration Escrow Agreement, without
interest, (i) the amount of dividends or other distributions with a record date
after the Effective Time with respect to each whole share of Parent Common Stock
that the holder of such Preferred Certificate has the right to receive out of
escrow and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
each whole share of Parent Common Stock that the holder of such Preferred
Certificate has the right to receive out of escrow.
(c) All shares of Parent Common Stock issued upon the surrender of
Preferred Certificates in accordance with the terms of this Article II, together
with any dividends payable thereon to the extent contemplated by this Section
2.6, shall be deemed to have been exchanged and paid in full satisfaction of all
rights pertaining to the Home Account Preferred Stock theretofore represented by
such Preferred Certificates and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Home Account Preferred Stock that were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
(d) Neither Parent nor Home Account nor any of their subsidiaries shall be
liable to any holder of Home Account Shares or Parent Common Stock, as the case
may be, for such shares (or dividends or distributions with respect thereto) or
cash (including any cash in lieu of fractional shares of Parent Common Stock)
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
(e) Parent or the Surviving Corporation shall be entitled to deduct and
withhold, or cause the its exchange agent to deduct and withhold, from
consideration otherwise payable pursuant to this Agreement to any Home Account
Stockholder such amounts as are
required to be deducted and withheld with respect to the making of such payment
under the Code, or any provision of state, local or foreign Tax law. To the
extent that amounts are so withheld, (i) such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Certificates in respect of which such deduction and withholding was made, and
(ii) Parent shall provide, or cause its exchange agent to provide, to the
holders of such securities written notice of the amounts so deducted or
withheld.
Section 2.7. Escrow.
------
(a) Promptly following the Effective Time, (i) subject to receipt of the
Preferred Certificates and the Common Certificates in accordance with Section
2.6, the Merger Consideration (less the Indemnity Escrow Shares (as defined
below) and the Common Cash Consideration) will be deposited into escrow with
SunTrust Bank, Richmond, Virginia (the "Merger Consideration Escrow Agent"),
pursuant to the Merger Consideration Escrow Agreement and the Note and Fee
Exchange Agreement. All shares of Parent Common Stock deposited into such escrow
shall be referred to herein as "Merger Consideration Escrow Shares." Promptly
following the Effective Time, 1,000,000 shares of Parent Common Stock (the
"Indemnity Escrow Shares") constituting part of the Merger Consideration shall
be deposited into escrow with SunTrust Bank, Richmond, Virginia (the "Indemnity
Escrow Agent"), pursuant to the Indemnity Escrow Agreement.
(b) The Merger Consideration Escrow Shares shall be released in accordance
with the Merger Consideration Escrow Agreement.
(c) The Indemnity Escrow Shares shall be released to Parent from time to
time to
satisfy Escrow Losses for which Parent is entitled to indemnification or
reimbursement in accordance with Article X hereof. The aggregate number of
Indemnity Escrow Shares released to Parent shall be equal to the lesser of (i)
the quotient of (A) Escrow Losses (as defined in Section 10.1(a)) theretofore
suffered or incurred by Parent or its affiliates divided by (B) the average
closing sale price per share of Parent Common Stock on the Nasdaq National
Market for the 20 trading days prior to each date Indemnity Escrow Shares are
released from escrow to Parent or (ii) the total number of Indemnity Escrow
Shares. Dividends, if any, paid with respect to Indemnity Escrow Shares shall be
paid in accordance with Section 8 of the Indemnity Escrow Agreement.
(d) Unless Parent earlier instructs the Indemnity Escrow Agent to terminate
the escrow and release the Indemnity Escrow Shares, the Indemnity Escrow Shares,
less that number of Indemnity Escrow Shares released to Parent in accordance
with Section 2.7((a)), shall be distributed on March 31, 2002 to the Home
Account Stockholders in accordance with the exchange ratios set forth in Section
2.5(a)(ii)-(iv) hereof, and the escrow shall terminate. Notwithstanding the
foregoing, if at the time Indemnity Escrow Shares are to be released and
distributed to the beneficial holders thereof any claim has then been made that
could result in Escrow Losses or Parent asserts the reasonable prospect that it
could incur Escrow Losses, supported by written notice describing with
reasonable specificity the facts giving rise to such assertion, there shall be
withheld from the distribution that number of Indemnity Escrow Shares
necessary to cover any Escrow Losses resulting from such pending claims or
prospective Escrow Losses in accordance with the terms of the Indemnity Escrow
Agreement, and such Indemnity Escrow Shares shall either be (i) released to
Parent or (ii) distributed to the beneficial holders thereof as determined upon
final resolution of such claims in accordance with the terms of the Indemnity
Escrow Agreement.
(e) Parent will issue, or cause to be issued, to the Indemnity Escrow Agent
instructions to release or retain Indemnity Escrow Shares only in the event, and
only in an amount and to the extent, that Parent determines, in good faith, that
it is entitled to or may be entitled to indemnification or reimbursement under
Article IX hereof. Should such instructions be issued by Parent and thereafter
Parent, acting in good faith, determines that it is not entitled to such
indemnification or reimbursement, then Parent shall promptly and appropriately
modify such instructions by written notice to the Indemnity Escrow Agent.
(f) No fractional shares shall be distributed from the escrow. In lieu of
receiving a fractional share, Parent will redeem the fractional share and pay
the beneficial holder thereof cash calculated in accordance with Section 2.5(0)
hereof (determined as if the distribution date were the Effective Time of the
Merger).
(g) The Home Account Stockholders and the Incentive Plan Participants (as
defined in the Merger Consideration Escrow Agreement) hereby irrevocably appoint
Xxxxxx X. Xxxxxxxxxx and Xxxxxx Xxxxx as the Stockholders' Representatives to
act as the agents of such stockholders with respect to, and with the full power
to resolve, all questions, disputes, conflicts and controversies concerning
Indemnification Claims, to authorize the payments of amounts held under the
Indemnity Escrow Agreement for expenses and Indemnification Claims, to defend,
negotiate and/or settle such claims, to employ such agents, consultants and
professionals, to delegate authority to his agents, and to take such actions, to
grant such consents and waivers and execute such documents on their behalf in
connection with Article IX of this Agreement and the Indemnity Escrow Agreement
as a Stockholders' Representative, in his sole discretion, deems best and to
perform all of the functions of the Stockholders' Representative under the
Merger Consideration Escrow Agreement. Any action to be taken by a Stockholders'
Representative may be taken by either of Xxxxxx X. Xxxxxxxxxx or Xxxxxx Xxxxx.
Parent, the Merger Consideration Escrow Agent, the Indemnity Escrow Agent and
any other party receiving notice or instructions from either Stockholders'
Representative shall be entitled to rely upon the first such notice or
instructions received and shall not be held liable for relying on such notice or
instructions regardless of whether subsequent notices or instructions from the
same or the other Stockholders' Representative conflict with the previously
received notice or instructions.
Section 2.8. Anti-Dilution Provisions.
------------------------
In the event Parent changes the number of shares of Parent Common Stock
issued and outstanding prior to the Effective Date as a result of a stock split,
stock dividend, recapitalization or similar transaction with respect to the
outstanding Parent Common Stock and the record date therefor shall be prior to
the Effective Time, the number of shares of Parent Common Stock constituting the
Merger Consideration shall be proportionately adjusted.
ARTICLE III
EFFECTIVE TIME; CLOSING
Section 3.1 Effective Time.
--------------
The Merger shall become effective upon (i) the filing and recordation
of the Certificate of Merger with the Secretary of State of the State of
Delaware or (ii) at such later time as is set forth in the Certificate of Merger
(the "Effective Time"). Upon satisfaction by Home Account of the conditions
precedent to the consummation of the Merger set forth in Section 8.1 and upon
satisfaction by Parent of the conditions precedent to the consummation of the
Merger set forth in Section 8.2, the parties shall cause the Certificate of
Merger to be filed on the same day this Agreement is executed by all of the
parties hereto; provided, however, if the offices of the Secretary of State of
the State of Delaware are closed at such time, the parties will cause the
Certificate of Merger to be filed with the Secretary of State of the State of
Delaware at the earliest possible time on the next business day on which such
offices are not closed following execution of this Agreement.
Section 3.2. Time and Place of Closing.
-------------------------
The closing of the transactions contemplated by this Agreement shall
take place at a time and on a date mutually agreed upon by the parties hereto,
provided that such date shall be no later than the third business day following
the date on which all of the conditions to the obligations of the parties set
forth in Article VIII have been satisfied as provided therein (the "Closing").
The Closing shall take place at the offices of Hunton & Xxxxxxxx located either
at 0000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx Xxxxxx, XxXxxx, Xxxxxxxx 00000 or
Bank of America Plaza, Suite 4100, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx
00000-0000, as determined by Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOME ACCOUNT
Except as specifically set forth in the disclosure schedule of Home
Account attached hereto (the "Home Account Disclosure Schedule"), Home Account
represents and warrants to Parent and Merger Subsidiary as follows:
Section 4.1. Organization and Authority of Home Account.
------------------------------------------
Each of Home Account and Home Network is duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
Home Account and Home Network has full corporate power to carry on its business
as it is now being conducted and to own, operate and hold under lease its assets
and properties as, and in the places where, such properties and assets now are
owned, operated or held. Each of Home Account and Home Network is duly qualified
as a foreign entity to do business, and is in good standing, in each
jurisdiction where the failure to be so qualified would have a Material Adverse
Effect on Home Account or Home Network, as the case may be. The copies of the
Certificate of Incorporation
and Bylaws of each of Home Account and Home Network, which have been delivered
to Parent, are complete and correct and in full force and effect on the date
hereof, and no amendment or other modification has been filed, recorded or is
pending or contemplated thereto.
Section 4.2. Capitalization.
--------------
Home Account's authorized equity capitalization consists of 110,000,000
shares of Home Account Common Stock, 38,741,666 shares of Home Account Series A
Stock, 13,800,000 shares of Home Account Series B Stock, 11,839,764 shares of
Home Account Series C Stock. As of the close of business on the date hereof,
2,701,932 shares of Home Account Common Stock, 29,637,374 shares of Home Account
Series A Stock, 13,800,000 shares of Home Account Series B Stock and 7,643,054
shares of Home Account Series C Stock were issued and outstanding. Such shares
of Home Account capital stock constituted all of the issued and outstanding
shares of capital stock of Home Account as of such date. In addition as of the
date hereof, Home Account has authorized and has issued and outstanding (i)
$3,000,000 of 10% convertible promissory subordinated notes (the "Convertible
Notes") convertible into 2,281,369 shares of Series C Stock of Home Account and
(ii) $1,500,000 of 10% promissory notes (the "Promissory Notes" and together
with the Convertible Notes, the "Home Account Notes"). Home Network's authorized
equity capitalization consists of 35,000,000 shares of Home Network common
stock, $.001 par value per share (the "Home Network Common Stock") and
15,000,000 shares of convertible preferred stock, $.001 par value per share (the
"Home Network Convertible Preferred Stock"). As of the close of business on the
date hereof, 14,882,683 shares of Home Network Common Stock and 10,021,000
shares of Home Network Convertible Preferred Stock were issued and outstanding.
Such shares of Home Network Common Stock and Home Account Convertible Preferred
Stock constituted all of the issued and outstanding shares of capital stock of
Home Network as of such date and all such shares are owned by Home Account. All
issued and outstanding shares of Home Network Common Stock, Home Network
Convertible Preferred Stock and Home Account Shares have been duly authorized
and validly issued and are fully paid and nonassessable, are not subject to and
have not been issued in violation of any preemptive rights and have not been
issued in violation of any federal or state securities laws. Neither Home
Account nor Home Network has declared or paid any dividend on, or declared or
made any distribution with respect to, or authorized or effected any split-up or
any other recapitalization of, any of the Home Network Common Stock, Home
Network Convertible Preferred Stock or Home Account Shares, or directly or
indirectly redeemed, purchased or otherwise acquired any of its outstanding
capital stock or agreed to take any such action and will not take any such
action during the period between the date of this Agreement and the Effective
Time. Section 4.2(i) of the Home Account Disclosure Schedule lists all of the
stockholders of Home Account as of the date hereof and sets forth the respective
holdings of each such stockholder. Section 4.2(ii) of the Home Account
Disclosure Schedule sets forth all outstanding options, warrants, notes,
subscriptions or other rights to purchase or acquire any capital stock of Home
Network or Home Account, the exercise or purchase price for such securities and
the expiration date thereof, and lists all contracts, commitments,
understandings, arrangements or restrictions by which Home Network or Home
Account is bound to sell or issue any shares of its capital stock. Section
4.2(iii) of the Home Account Disclosure Schedule sets forth the outstanding
principal amount and accrued interest (calculated as of the date hereof),
interest rate and original issuance date of
each of the outstanding notes and other debt obligations payable to Home
Account, including, without limitation, all promissory notes made by holders of
Home Account options as of the date hereof.
Section 4.3. Authority Relative to this Agreement; Recommendation.
----------------------------------------------------
The execution, delivery and performance of this Agreement and of all of
the other documents and instruments required hereby by Home Account are within
the corporate power and authority of Home Account. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Board of Directors of Home
Account, and no other corporate proceeding on the part of Home Account other
than obtaining the Home Account Stockholder Approval is necessary to authorize
this Agreement or to consummate the transactions contemplated herein. The
consummation of the transactions contemplated by this Agreement have been duly
and validly authorized and approved by the Board of Directors of Home Network
and no other corporate proceeding on the part of Home Network is necessary to
consummate the transactions contemplated herein. This Agreement and all of the
other documents and instruments required hereby have been or will be duly and
validly executed and delivered by Home Account and (assuming the due
authorization, execution and delivery hereof and thereof by Parent and Merger
Subsidiary) constitute or will constitute valid, legal and binding agreements of
Home Account, enforceable against Home Account in accordance with their
respective terms.
Section 4.4. Consents and Approvals; No Violations.
-------------------------------------
Except for (i) the filing and recordation of the Certificate of Merger
with the Secretary of State of the State of Delaware as required by the DGCL;
(ii) the filing, if required, by the parties of a pre-merger notification and
report form under the HSR Act and the expiration or termination of the waiting
period thereunder; (iii) obtaining the Home Account Stockholder Approval and
(iv) otherwise as set forth in Section 4.4 of the Home Account Disclosure
Schedule attached hereto, no filing or registration with, or notice to, and no
Permit, authorization, consent or approval of, any public court, tribunal or
administrative, governmental or regulatory body, agency or authority is
necessary or required in connection with the execution and delivery of this
Agreement by Home Account or for the consummation by Home Account or Home
Network of the transactions contemplated by this Agreement. Assuming that all
filings, registrations, Permits, authorizations, consents and approvals
contemplated by the immediately preceding sentence have been duly made or
obtained, neither the execution or delivery of this Agreement by Home Account
nor the performance of this Agreement nor the consummation of the transactions
contemplated hereby by Home Account or Home Network will (x) conflict with or
result in any breach of any provision of the Certificates of Incorporation or
Bylaws of Home Account or Home Network, (y) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, Home Account Contract or other instrument or
obligation to which Home Account or Home Network is a party or by which they or
any of their
properties or assets may be bound or (z) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Home Account or Home Network
or any of their properties or assets.
Section 4.5. Title to and Condition of Assets.
--------------------------------
(a) Each of Home Account and Home Network has good title to, or valid
leasehold interests in, all its properties and assets owned by it, except for
such as are no longer used or useful in the conduct of its businesses or as have
been disposed of in the ordinary course of business, except for minor defects in
title, easements, restrictive covenants and similar encumbrances or impediments
that, in the aggregate do not and will not materially interfere with its ability
to conduct its business as currently conducted. Except as set forth in Section
4.5 of the Home Account Disclosure Schedule, all such assets and properties,
other than assets and properties in which Home Account or Home Network has
leasehold interests, are free and clear of all Liens, except for minor Liens,
that, in the aggregate, do not and will not materially interfere with the
ability of Home Account or Home Network to conduct business as currently
conducted or as reasonably expected to be conducted.
(b) Each of Home Account and Home Network has complied in all material
respects with the terms of all leases to which it is a party and under which it
is in occupancy, and all such leases are in full force and effect. Each of Home
Account and Home Network enjoys peaceful and undisturbed possession under all
such leases.
(c) Except as set forth in Section 4.5 of the Home Account Disclosure
Schedule, the buildings and premises of Home Account and Home Network that are
used in their businesses are in reasonably good operating condition and in a
state of reasonably good maintenance and repair, normal wear and tear excepted,
and are reasonably adequate and suitable for the purpose for which they are
currently being used, have access to adequate utility services necessary for the
conduct of the business. All items of operating equipment of Home Account and
Home Network are in reasonably good operating condition and in a state of
reasonable maintenance and repair, ordinary wear and tear excepted.
Section 4.6. Absence of Certain Events.
-------------------------
Except as set forth in Section 4.6 of the Home Account Disclosure
Schedule, since January 1, 2000, neither Home Account nor Home Network has
suffered any adverse change in its business, financial condition or results of
operations that will have a Material Adverse Effect on either Home Account or
Home Network. Since January 1, 2000, each of Home Account and Home Network has
conducted its business in the ordinary course and consistent with past practice
and there has not been: (i) any entry into any Contract or an amendment of any
Contract between Home Account or Home Network on the one hand, and any of the
executive officers or key employees or consultants of Home Account or Home
Network on the other hand, providing for employment of any such officer or key
employee or consultant or any general or material increase in the compensation,
severance or termination benefits payable or to become payable by Home Account
or Home Network to any of the executive officers or key employees or consultants
of Home Account or Home Network (except for normal increases in the ordinary
course of business that are consistent with past practices and that, in the
aggregate, do not result
in a material increase in benefits or compensation expense), or any adoption of
or increase in any bonus, insurance, pension or other employee benefit plan,
payment or arrangement (including, without limitation, the granting of stock
options or stock appreciation rights or the award of restricted stock) made to,
for or with any such executive officer or key employee or consultant, other than
adoption of the Home Account 2000 Incentive Plan; (ii) any entry by Home Account
or Home Network into any material Contract or transaction (including, without
limitation, any borrowing, capital expenditure, sale of assets or any Lien made
on any of the properties or assets of Home Account or Home Network) other than
in the ordinary and usual course of business; (iii) any change in the accounting
methods, principles or practices of Home Account or Home Network; (iv) any
damage, destruction or loss, whether covered by insurance or not, having a
Material Adverse Effect upon Home Account or Home Network; (v) any event,
occurrence or action that has had or is reasonably likely to have a Material
Adverse Effect on Home Account or Home Network; (vi) any declaration, setting
aside or payment of any dividend or distribution (whether in cash, stock or
property) with respect to the Home Account Shares or the Home Network Common
Stock; (vii) any amendment of any material term of any outstanding equity
security of Home Account or Home Network; (viii) any repurchase, redemption or
other acquisition by Home Account or Home Network of any outstanding shares of
capital stock or other equity securities of, or other ownership interests in,
Home Account or Home Network; or (ix) any Contract to do any of the foregoing.
Section 4.7. Subsidiaries.
------------
Except for Home Network, which is a wholly owned subsidiary of Home
Account, neither Home Account nor Home Network has any Subsidiaries and neither
Home Account nor Home Network owns or holds of record and/or beneficially owns
or holds, any shares of any class of the capital stock of any corporation or any
legal or beneficial ownership interest in any general or limited partnership,
limited liability company, business trust or joint venture or any other
unincorporated trade or business enterprise.
Section 4.8. Financial Statements.
--------------------
The (i) audited consolidated statements of financial condition, results
of operations and cash flows of Home Account as of and for the period ended
December 31, 1999, (ii) unaudited consolidated statements of financial
condition, results of operations and cash flows of Home Account as of and for
the period ended September 30, 2000 and (iii) unaudited consolidated balance
sheet of Home Account as of December 31, 2000, attached hereto as Exhibit 4.8.
(the "Home Account Financial Statements"), were previously provided to Parent.
Except as disclosed in the notes to the Home Account Financial Statements, the
Home Account Financial Statements taken as a whole present fairly in accordance
with GAAP, in all material respects, the consolidated financial condition,
results of operations and cash flows of Home Account, as of the dates, and for
the periods indicated.
Section 4.9. Litigation.
----------
Except as set forth in Section 4.9 of the Home Account Disclosure
Schedule, there is no action, suit, proceeding or investigation pending or, to
the Knowledge of Home Account,
threatened, against, relating to or affecting Home Account or Home Network at
law or in equity, or before any Governmental Authority, including, without
limitation, with respect to infringement of any Home Account Intellectual
Property. Except as set forth in Section 4.9 of the Home Account Disclosure
Schedule, neither Home Account nor Home Network is subject to any order,
judgment, decree or obligation that would materially limit the ability of either
Home Account or Home Network to operate its business in the ordinary course.
Section 4.10. Employee Benefit Plans Matters.
------------------------------
(a) Section 4.10 of the Home Account Disclosure Schedule contains a true
and complete list of (i) all employee welfare benefit and employee pension
benefit plans as defined in sections 3(1) and 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), including, but not limited
to, plans that provide retirement income or result in a deferral of income by
employees for periods extending to termination of employment or beyond, and
plans that provide medical, surgical, or hospital care benefits or benefits in
the event of sickness, accident, disability, death or unemployment and (ii) all
other employee benefit agreements or arrangements, including without limitation
deferred compensation plans, incentive plans, bonus plans or arrangements, stock
option plans, stock purchase plans, stock award plans, golden parachute
agreements, severance pay plans, dependent care plans, cafeteria plans, employee
assistance programs, scholarship programs, employee discount programs,
employment contracts, retention incentive agreements, noncompetition agreements,
consulting agreements, confidentiality agreements, vacation policies, and other
similar plans, agreements and arrangements that are currently in effect as of
the date of this Agreement, or have been approved before this date but are not
yet effective, for the benefit of any director, officer, employee or other
service provider or any former director, officer, employee or other service
provider (or any of their beneficiaries) of Home Account or Home Network
(collectively, a "Home Account Beneficiary"), or with respect to which Home
Account or Home Network may have any liability ("Home Account Benefit Plans").
(b) With respect to each Home Account Benefit Plan, Home Account has
heretofore made available to Parent, as applicable, complete and correct copies
of each of the following documents which Home Account has prepared or has been
required to prepare:
(i) the Home Account Benefit Plans and any amendments thereto(or if a
Home Account Benefit Plan is not a written agreement, a
description thereof);
(ii) the three most recent annual Form 5500 reports filed with the
IRS;
(iii)the most recent statement filed with the Department of Labor (the
"DOL") pursuant to 29 X.X.X.xx. 2520.104-23;
(iv) the three most recent annual Form 990 and 1041 reports filed with
the IRS;
(v) the three most recent actuarial reports;
(vi) the three most recent reports prepared in accordance with
Statement of Financial Accounting Standards No. 106;
(vii)the most recent summary plan description and summaries of
material modifications thereto;
(viii) the trust agreement, group annuity contract or other funding
agreement that provides for the funding of the Home Account
Benefit Plan;
(ix) the most recent financial statement;
(x) the most recent determination letter received from the IRS; and
(xi) any agreement pursuant to which Home Account or Home Network is
obligated to indemnify any Person.
(c) All contributions and other payments required to have been made by Home
Account or Home Network or any entity (whether or not incorporated) that is
treated as a single employer with Home Account or Home Network under Section 414
of the Code (a "Home Account ERISA Affiliate") with respect to any Home Account
Benefit Plan (or to any person pursuant to the terms thereof) have been or will
be timely made and all such amounts properly accrued through the date of the
Home Account Financial Statements have been reflected therein.
(d) The terms of all Home Account Benefit Plans that are intended to be
"qualified" within the meaning of Section 401(a) of the Code have received
favorable determination letters from the IRS on the current forms of such Home
Account Benefit Plans or the applicable remedial periods will not have ended
prior to the Effective Time of the Merger. Except as disclosed in Section 4.10
of the Home Account Disclosure Schedule, no event or condition exists or has
occurred that could cause the IRS to disqualify any Home Account Benefit Plan
that is intended to be qualified under Section 401(a) of the Code. Except as
disclosed in Section 4.10 of the Home Account Disclosure Schedule, with respect
to each Home Account Benefit Plan, Home Account, Home Network and each Home
Account ERISA Affiliate are in compliance in all material respects with, and
each Home Account Benefit Plan and related source of benefit payment is and has
been operated in compliance with, its terms, all applicable Laws governing such
plan or source, including, without limitation, ERISA, the Code and applicable
local Law. To the Knowledge of Home Account, except as set forth in Section 4.10
of the Home Account Disclosure Schedule, no Home Account Benefit Plan is subject
to any ongoing audit, investigation, or other administrative proceeding of the
IRS, the DOL, or any other Governmental Authority or is scheduled to be subject
to such an audit investigation or proceeding.
(e) With respect to each Home Account Benefit Plan, to the Knowledge of
Home Account, there exists no condition or set of circumstances that could
subject Home Account, Home Network or any Home Account ERISA Affiliate to any
liability arising under the Code, ERISA or any other applicable Law (including,
without limitation, any liability to or under
any such plan or under any indemnity agreement to which Home Account, Home
Network or any Home Account ERISA Affiliate is a party), which liability,
excluding liability for benefit claims and funding obligations, each payable in
the ordinary course, could reasonably be expected to have a Material Adverse
Effect on Home Account or Home Network. No claim, action or litigation has been
made, commenced or, to the Knowledge of Home Account, threatened, by or against
any Home Account or Home Network with respect to any Home Account Benefit Plan
(other than for benefits in the ordinary course) that could reasonably be
expected to have a Material Adverse Effect on Home Account or Home Network.
(f) Except as disclosed in Section 4.10 of the Home Account Disclosure
Schedule, no Home Account Benefit Plan that is a "welfare benefit plan" (within
the meaning of Section 3(1) of ERISA) provides benefits for any retired or
former employees (other than as required under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, or other applicable state or local law
that specifically mandates continued health coverage).
(g) The consummation or announcement of any transaction contemplated by
this Agreement will not (either alone or in conjunction with another event,
including termination of employment) result in (i) any payment (whether of
severance pay or otherwise) becoming due from Home Account or Home Network to
any Home Account Beneficiary or to the trustee under any "rabbi trust" or
similar arrangement, or (ii) any benefit under any Home Account Benefit Plan
being established or increased, or becoming accelerated, vested or payable.
(h) Neither Home Account nor Home Network nor any entity that was at any
time during the six-year period ending on the date of this Agreement a Home
Account ERISA Affiliate has ever maintained, had an obligation to contribute to,
contributed to, or had any liability with respect to any plan that is or was a
pension plan (as defined in Section 3(2) of ERISA) that is or was subject to
Title IV of ERISA.
(i) Section 4.10 of the Home Account Disclosure Schedule sets forth for
each employee of Home Account or Home Network as of the execution date of this
Agreement, (i) the accrued vacation time of such employee as of the execution
date of this Agreement and (ii) the estimated accrued vacation time as of the
Closing Date (assuming the Closing Date occurs as of January 29, 2001.)
Section 4.11. Labor Matters.
-------------
Except as set forth in Section 4.11 of the Home Account Disclosure
Schedule:
(a) Each of Home Account and Home Network is and has been in compliance in
all material respects with all applicable Laws respecting employment and
employment practices, terms and conditions of employment and wages and hours
including, without limitation, any such Laws respecting employment
discrimination and occupational safety and health requirements, and has not and
is not engaged in any unfair labor practice;
(b) there is no unfair labor practice charge or complaint against Home
Account or Home Network pending or, to the Knowledge of Home Account, threatened
before the National Labor Relations Board or any other comparable authority;
(c) neither Home Account nor Home Network is a party to any collective
bargaining agreements;
(d) there is no litigation, arbitration proceeding, governmental
investigation, citation or action of any kind pending or, to the Knowledge of
Home Account, threatened against Home Account or Home Network relating to
employment, employment practices, terms and conditions of employment or wages
and hours;
(e) there are no pending or, to the Knowledge of Home Account, threatened,
strikes, lockouts or other work stoppages involving any persons employed by Home
Account or Home Network; and
(f) there are no representation petitions or other similar petitions or
requests for representation pending or, to the Knowledge of Home Account,
threatened, before the National Labor Relations Board or other Government
Authority in connection with any persons employed by Home Account or Home
Network.
Section 4.12. Tax Matters.
-----------
(a) Except as set forth in Section 4.12 of the Home Account Disclosure
Schedule:
(i) Home Account and Home Network are members of the affiliated
group, within the meaning of Section 1504(a) of the Code, of
which Home Account is the common parent; such affiliated group
files a consolidated federal income Tax Return; and neither Home
Account, Home Network, any of their former Subsidiaries, nor any
entity to whose liabilities Home Account or Home Network or any
of their former Subsidiaries has succeeded, has ever filed a
consolidated federal income Tax Return with (or been included in
a consolidated return of) a different affiliated group;
(ii) each of Home Account and Home Network has timely filed or caused
to be filed all Tax Returns required to have been filed by or for
it, and all information set forth in such Tax Returns is correct
and complete in all material respects;
(iii)each of Home Account and Home Network has paid all Taxes due and
payable by it;
(iv) there are no unpaid Taxes due and payable by Home Account or Home
Network or by any other Person that could become a Lien
on any asset or property of Home Account or Home Network, or
otherwise have a Material Adverse Effect on Home Account or Home
Network;
(v) each of Home Account and Home Network is in material compliance
with, and its records contain all information and documents
(including, without limitation, properly completed IRS Forms W-9)
necessary to comply with, all applicable Tax information
reporting and Tax withholding requirements;
(vi) each of Home Account and Home Network has collected or withheld
all amounts required to be collected or withheld by it for any
Taxes, and all such amounts have been paid to the appropriate
Governmental Authorities or set aside in appropriate accounts for
future payment when due;
(vii)the Home Account Financial Statements fully and properly reflect,
as of their dates, the liabilities of each of Home Account and
Home Network for all Taxes for all periods ending on or before
such dates, and the books and records of each of Home Account and
Home Network fully and properly reflect all liabilities for Taxes
for all periods after December 31, 1999;
(viii) neither Home Account nor Home Network has granted (nor is
either subject to) any waiver currently in effect of the period
of limitations for the assessment of Tax, no unpaid Tax
deficiency has been asserted against or with respect to Home
Account or Home Network by any taxing authority, and there is no
pending examination, administrative or judicial proceeding, or
deficiency or refund litigation, with respect to any Taxes of
Home Account or Home Network;
(ix) neither Home Account nor Home Network has made or entered into,
or holds any asset subject to, a consent filed pursuant to
Section 341(f) of the Code and the regulations thereunder or a
"safe harbor lease" subject to former Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended before the Tax Reform
Act of 1984, and the regulations thereunder;
(x) neither Home Account nor Home Network is required to include in
income any amount from an adjustment pursuant to Section 481 of
the Code or the regulations thereunder or any similar provision
of state law;
(xi) neither Home Account nor Home Network is a party to, or obligated
under, any Contract, nor to the Knowledge of Home
Account is there any Contract, providing for the payment of any
amount that would be an "excess parachute payment" under Section
280G of the Code;
(xii)neither Home Account nor Home Network has distributed to its
stockholders or other security holders stock or securities of a
controlled corporation in a transaction to which Section 355(a)
of the Code applies; and
(xiii) neither Home Account nor Home Network is, or has been at any
time within the last five years, a "United States real property
holding corporation" for purposes of Section 897 of the Code.
(b) Section 4.12 of the Home Account Disclosure Schedule describes all
material Tax elections, consents and agreements made by or affecting Home
Account or Home Network currently in effect, lists all material types of Taxes
paid and Tax Returns filed by or on behalf of Home Account or Home Network,
expressly indicates each Tax with respect to which either of them is or has been
included in a consolidated, unitary or combined return, and describes the status
of all examinations, administrative or judicial proceedings, and litigation with
respect to any Taxes of Home Account and Home Network.
Section 4.13. Compliance with Law.
-------------------
Each of Home Account and Home Network holds all Permits necessary for
the lawful conduct of its business, except for failures to hold such Permits
that would not have a Material Adverse Effect on Home Account or Home Network.
Each of Home Account and Home Network is in compliance with the terms of the
Permits, except where the failure so to comply would not have a Material Adverse
Effect on Home Account or Home Network. The business of each of Home Account and
Home Network is not being conducted in violation of any Law, ordinance or
regulation of any Governmental Authority except for violations or possible
violations which do not have, and, could not reasonably be expected to have, a
Material Adverse Effect on Home Account or Home Network. No investigation or
review by any Governmental Authority with respect to Home Account or Home
Network is pending or, to the Knowledge of Home Account, threatened, nor, to the
Knowledge of Home Account, has any Governmental Authority indicated an intention
to conduct the same.
Section 4.14. Transactions With Affiliates.
----------------------------
Except as set forth in Section 4.14 of the Home Account Disclosure
Schedule, since January 1, 2000, neither Home Account nor Home Network has, in
the ordinary course of business or otherwise, purchased, leased or otherwise
acquired any material property or assets or obtained any material services from,
or sold, leased or otherwise disposed of any material property or assets or
provided any material services to (except with respect to remuneration for
services rendered in the ordinary course as a director, officer or employee of
Home Account or Home Network) (a) any holder of 5% or more of the voting
securities of Home Account, (b) any director, officer or employee of Home
Account, (c) any Person that directly or indirectly
controls, is controlled by or is under common control with Home Account or Home
Network or (d) any member of the immediate family of any of such persons (each,
a "Home Account Affiliate"). Except as set forth in Section 4.14 of the Home
Account Disclosure Schedule, the Home Account Contracts do not include any
obligation or commitment between Home Account or Home Network on the one hand
and any Home Account Affiliate on the other hand, and the assets of Home Account
and Home Network do not include any receivable or other obligation or commitment
from a Home Account Affiliate to Home Account or Home Network, and no Home
Account Affiliate has any interest in any material property, real or personal,
tangible or intangible, including, without limitation, any Home Account
Intellectual Property, used in or pertaining to the business of Home Account or
Home Network, except for the ordinary rights of a shareholder. The liabilities
reflected on the Home Account Financial Statements do not include any obligation
or commitment to any Home Account Affiliate.
Section 4.15. Fees and Expenses of Brokers and Others.
---------------------------------------
Neither Home Account nor Home Network (a) has had any dealings,
negotiations or communications with any broker, finder or investment banker
(other than U.S. Bancorp Xxxxx Xxxxxxx, whose fees and expenses shall be paid by
the holders of Home Account Preferred Stock immediately prior to the Effective
Time in accordance with Section 7.4 hereof) or other intermediary in connection
with the transactions contemplated by this Agreement, (b) is committed to any
liability for any brokers' or finders' fees or any similar fees in connection
with the transactions contemplated by this Agreement or (c) has retained any
broker, finder or investment banker (other than U.S. Bancorp Xxxxx Xxxxxxx) or
other intermediary to act on its behalf in connection with the transactions
contemplated by this Agreement.
Section 4.16. Absence of Undisclosed Liabilities.
----------------------------------
Except as set forth in Section 4.16 of the Home Account Disclosure
Schedule, neither Home Account nor Home Network has any liabilities or
obligations of any kind, whether absolute, accrued, asserted or unasserted,
contingent or otherwise, required by GAAP to be set forth in a financial
statement or in the notes thereto except liabilities, obligations or
contingencies that (i) are accrued or reserved against in the balance sheet of
Home Account as of December 31, 1999, or (ii) were incurred after December 31,
1999 in the ordinary course of business and consistent with past practices.
Section 4.17. Environmental Laws and Regulations.
----------------------------------
(a) Each of Home Account and Home Network is and always has been in
compliance with all applicable Laws (including common law) and regulations
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) (collectively, "Environmental Laws"), which
compliance includes, but is not limited to, the possession by each of Home
Account and Home Network of all Permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof.
(b) Neither Home Account nor Home Network has received written notice of,
or, to the Knowledge of Home Account, is the subject of, any action, cause of
action, claim, investigation, demand or notice by any Person alleging liability
under or non-compliance with any Environmental Law (an "Environmental Claim").
(c) There have been no releases or offsite shipments from any property ever
owned by Home Account or Home Network of any hazardous, toxic or radioactive
material, substance or wastes defined or regulated as such under the
Environmental Law that would be reasonably likely to result in an Environmental
Claim.
(d) To the Knowledge of Home Account, there are no circumstances that are
reasonably likely to prevent or interfere with the material compliance with all
Environmental Laws by Home Account and Home Network in the future.
(e) There are no Environmental Claims that are pending or, to the Knowledge
of Home Account, threatened, against Home Account or Home Network or, to the
Knowledge of Home Account, against any Person whose liability for any
Environmental Claim Home Account or Home Network has or may have retained or
assumed either contractually or by operation of law.
Section 4.18. Intellectual Property.
---------------------
(a) To the Knowledge of Home Account, either Home Account or Home Network
owns, or has a valid license to use or otherwise has the right to use, free and
clear of all Liens, all (i) patents and industrial design registrations or
applications (including any continuations, divisionals, continuations-in-part,
renewals, reissues, and applications for any of the foregoing) (collectively,
"Patents"), (ii) trademarks, service marks, trade names, Internet domain names,
designs, logos, slogans, and general intangibles of like nature, together with
all goodwill, registrations and applications related to the foregoing
(collectively, "Trademarks"), (iii) copyrights (including any registrations and
applications therefor) (collectively "Copyrights"), (iv) software, (v) "mask
works" (as defined under 17 U.S.C. ss. 901) and any registrations and
applications for "mask works" and (vi) technology, trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, and methodologies (collectively, "Trade Secrets"), in the case of each
of the foregoing clauses, used in or necessary for the conduct of its business
of Home Account and Home Network as currently conducted (collectively, the "Home
Account Intellectual Property").
(b) Section 4.18 sets forth, for the Home Account Intellectual Property, a
complete and accurate list as of the date hereof of (i) all U.S. and foreign (A)
patents and patent applications, each as owned by Home Account or Home Network,
(B) trademark registrations (including Internet domain name registrations),
trademark applications, and material unregistered trademarks, each as owned by
Home Account or Home Network and (C) copyright and mask work registrations and
applications, and material unregistered copyrights, each as owned by Home
Account or Home Network; and (ii) all material Contracts (whether oral or
written) (A) granting or obtaining any right to use or practice any rights under
any Home Account Intellectual Property, or (B) restricting Home Account's or
Home Network's rights to use any Home
Account Intellectual Property, including license agreements, consulting and
professional services agreements, development agreements, distribution
agreements, settlement agreements, consent to use agreements, and covenants not
to xxx (collectively, the "Home Account License Agreements"). The Home Account
License Agreements are (i) valid and binding obligations of Home Account or Home
Network, as the case may be, and, to the Knowledge of Home Account, of each of
the other parties thereto and (ii) enforceable in accordance with their terms,
except that the enforcement thereof may be limited by (A) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or thereafter
in effect relating to creditors' rights generally and (B) the availability of
the remedy of specific performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be subject to the
discretion of the court before which any proceeding therefor may be brought.
There exists no event or condition which will result in a violation or breach
of, or constitute (with or without due notice of lapse of time or both) a
default by Home Account or Home Network or, to the Knowledge of Home Account,
any party under any such Home Account License Agreement. Neither Home Account
nor Home Network has licensed or sublicensed, nor has any third party acquired,
rights in any Home Account Intellectual Property other than pursuant to the Home
Account License Agreements.
(c) No royalties, honoraria or other fees are payable by Home Account or
Home Network to any third parties for the use of or right to use any Home
Account Intellectual Property except pursuant to the Home Account License
Agreements identified in Section 4.18 of the Home Account Disclosure Schedule.
(d) Except as set forth in Section 4.18 of the Home Account Disclosure
Schedule:
(i) Home Account or Home Network is listed in the records of the
appropriate U.S., state or foreign registry as the sole and
current owner of record for each application and registration
listed in Section 4.18 of the Home Account Disclosure Schedule;
(ii) Each registered Trademark owned by Home Account or Home Network
and, to the Knowledge of Home Account, each registered Copyright
and Trademark not owned but used by Home Account or Home Network,
is in full force and effect, and has not been canceled, expired,
or abandoned, and is valid and enforceable. To the Knowledge of
Home Account, each unregistered Copyright and Trademark owned by
Home Account or Home Network and, each unregistered Copyright and
Trademark not owned but used by Home Account or Home Network, is
in use, and has not been abandoned;
(iii)There has never been any claim, suit, arbitration or other
adversarial proceeding before any Governmental Authority in any
jurisdiction, nor, to the Knowledge of Home Account, is there
threatened or any valid basis for any such claim, suit,
arbitration or other adversarial proceeding, (A) involving the
Home Account Intellectual Property owned by Home Account or Home
Network or the Home Account Intellectual Property licensed to
Home Account or Home Network or (B) alleging that the activities
or the conduct of the Home Account or Home Network business does
or will infringe upon, violate or constitute the unauthorized use
of the intellectual property rights of any third party, or
challenging the ownership, use, validity, enforceability or
registrability of any Home Account Intellectual Property. There
are no settlements, forbearances to xxx, consents, judgments,
orders or similar obligations other than the Home Account License
Agreements to which Home Account or Home Network or any of their
respective executive officers is subject or a party or the
existence of which Home Account or Home Network or any of its
directors or executive officers is otherwise aware which (1)
restrict Home Account's or Home Network's rights to use any Home
Account Intellectual Property, (2) restrict Home Account's or
Home Network's business in order to accommodate a third party's
intellectual property rights or (3) permit any third party to use
any Home Account Intellectual Property;
(iv) To the Knowledge of Home Account, the conduct of Home Account's
and Home Network's businesses as currently conducted or planned
to be conducted do not infringe upon (either directly or
indirectly, such as through contributory infringement or
inducement to infringe) any intellectual property rights owned or
controlled by any third party. To the Knowledge of Home Account,
no third party is misappropriating, infringing, diluting or
violating any Home Account Intellectual Property, and no claim,
suit, arbitration or other adversarial proceeding alleging any
such misappropriation, infringement, dilution or violation has
ever been brought against any third party by Home Account or Home
Network nor has Home Account or Home Network ever threatened any
such claim against any third party;
(v) Each of Home Account and Home Network takes reasonable measures
to protect the confidentiality of its Trade Secrets. To the
Knowledge of Home Account, no Trade Secret has been disclosed or
authorized to be disclosed to any third party other than pursuant
to a non-disclosure agreement that fully protects the proprietary
interests of each of Home Account and Home Network to such Trade
Secrets. To the Knowledge of Home Account, no party to any
non-disclosure agreement relating to Home Account's and Home
Network's Trade Secrets is in breach or default thereof;
(vi) No current or former partner, director, officer, or employee of
Home Account will, after giving effect to each of the
transactions contemplated herein, own or retain any rights in or
to any of the Home Account Intellectual Property; and
(vii)The consummation of the transactions contemplated hereby will not
result in any breach or default under any Home Account License
Agreement, or require the consent of any party thereto and will
not result in the loss or impairment of Home Account's or Home
Network's rights to own or use any of the Home Account
Intellectual Property, nor will it require the consent of any
Governmental Authority or third party in respect of any such Home
Account Intellectual Property.
Section 4.19. Insurance.
---------
All material fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by each of Home Account and Home Network are with reputable
insurance carriers, provide full and adequate coverage for all normal risks
incident to the business of each of Home Account and Home Network and its
properties and assets, and are in character and amount at least equivalent to
that carried by Persons engaged in similar businesses and subject to the same or
similar perils or hazards, except for any such failures to maintain insurance
policies that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on Home Account or Home Network. Home Account and
Home Network have maintained such policies on a continuous basis since August
1998. Except as disclosed in Section 4.19 of the Home Account Disclosure
Schedule, with respect to each such insurance policy: (a) the policy is legal,
valid, binding, enforceable and in full force and effect; (b) neither Home
Account, Home Network nor, to the Knowledge of Home Account, any other party to
the policy, is in breach or default thereunder (including with respect to the
payment of premiums or the giving of notices), and no event has occurred that,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification or acceleration under the policy; and (c) no
party to such policy has repudiated any provision thereof.
Section 4.20. State Takeover Statutes.
-----------------------
Home Account has taken all necessary actions to exempt the transactions
contemplated by this Agreement from, or, if necessary, to challenge the
validity, enforceability or applicability of, Section 203 of the DGCL, and
accordingly, such section will not apply to the Merger or any of such
transactions. No other "control share acquisition," "fair price," "investor
protection" or other anti-takeover Laws or regulations enacted under state or
federal Laws in the United States apply to this Agreement or any of the
transactions contemplated hereby.
Section 4.21. Minute Books.
------------
The minute books of Home Account and Home Network contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, board of directors and committees of the board of directors of
each of Home Account and Home Network, and no meeting of any such stockholders,
board of directors or committees have been held for which minutes have not been
prepared and are not contained in such minute books. All prior action taken by
Home Account or Home Network or their respective officers and directors have
been duly approved or ratified by all necessary action on the part of their
respective Boards of Directors and, if necessary or appropriate, their
respective stockholders. No Person has a claim against either Home Account or
Home Network with respect to any action taken, or not taken, by either Home
Account or Home Network or their officers or directors based on a theory that
such action or inaction was not properly authorized by either the Board of
Directors or the stockholders of either Home Account or Home Network.
Section 4.22. Books and Records.
-----------------
The books of account, minute books, stock record books and other
records of Home Account and Home Network are complete and correct in all
material respects and have been maintained in accordance with sound business
practices, including the requirements relating to a system of internal
accounting controls. To the Knowledge of Home Account, Home Account has made
available to Parent for examination the originals or true and correct copies of
all documents Parent has requested in connection with the transactions
contemplated by this Agreement.
Section 4.23. Accounts.
--------
The Accounts all have arisen from bona fide transactions in the
ordinary course of business, and except as set forth in Section 4.23 of the Home
Account Disclosure Schedule, there are no offsets or credits that may be applied
against the Accounts. All accounts payable of Home Account and Home Network have
arisen from bona fide transactions in the ordinary course of business and are to
be paid in accordance with normal trade practice. All accounts receivable of
Home Account and Home Network have arisen from bona fide transactions in the
ordinary course of business and were, on the Home Account Financial Statements,
subject to adequate reserves in accordance with and based upon Home Account's
past practice. To the Knowledge of Home Account and except as set forth in
Section 4.23 of the Home Account Disclosure Schedule, none of the accounts
receivable are in dispute or subject to any reduction or counterclaim.
Section 4.24. Material Contracts.
------------------
(a) Section 4.24 of the Home Account Disclosure Schedule contains a true,
correct and complete list of all Contracts (and all amendments, modifications
and supplements thereto and all side letters affecting the obligations of any
party thereunder) to which Home Account is a party or by which any of the
properties or assets of Home Account or Home Network are bound that are,
material to the business, properties or assets of Home Account or Home Network
taken as a whole, including, without limitation, all: (i) employment, product
design or development, personal services, consulting, non-competition,
severance, golden parachute, or indemnification contracts (including, without
limitation, any Contract to which either Home Account or Home Network is a party
involving employees of either Home Account or Home Network); (ii) licensing,
publishing, merchandising or distribution agreements; (iii) Contracts granting
rights of first refusal or first negotiation; (iv) partnership or joint venture
agreements; (v) agreements for the acquisition, sale or lease of material
properties or assets or stock or otherwise; (vi) Contracts or agreements with
any Governmental Authority; (vii) Contracts relating to the purchase of goods,
equipment or services used in support of the business or operations of Home
Accounts or Home Network of amounts in excess of $10,000 per year or having a
duration in excess of one year; (viii) customer Contracts; (ix) Contracts which
contain covenants pursuant to which either Home Account or Home Network has
agreed not to compete with any Person or any Person has agreed not to compete
with either Home Account or Home Network; (x) Contracts upon which any
substantial part of the business of Home Account or Home Network is dependent or
which, if breached, could reasonably be expected to have a Material Adverse
Effect on Home Account or Home Network; (xi) Contracts with independent
contractors, consultants, advisors or other service providers; (xii) Contracts,
other than those in (i)-(xi) above, that are material to the business of either
Home Account or Home Network; and (xiii) all commitments and agreements to enter
into any of the foregoing (collectively, the "Home Account Contracts"). Neither
Home Account nor Home Network is a party to or bound by any consulting,
severance, golden parachute, indemnification or other agreement with any
employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation as
a result of the consummation of the transactions contemplated hereby and neither
Home Account nor Home Network is obligated to make a payment to an individual
that would be a "parachute payment" to a "disqualified individual" (as those
terms are defined in Section 280G of the Code, without regard to whether such
payment is reasonable compensation for personal services performed or to be
performed in the future).
(b) Except as set forth in Section 4.24 of the Home Account Disclosure
Schedule, each of the Home Account Contracts is valid, binding, in full force
and effect and enforceable in accordance with its terms, and true and correct
copies thereof have been delivered to Parent, and there is no default under any
Home Account Contract so listed either by Home Account or Home Network or, to
the Knowledge of Home Account, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by Home Account or Home Network or, to the
Knowledge of Home Account, any other party.
(c) Except as set forth in Section 4.24 of the Home Account Disclosure
Schedule, no party to any such Home Account Contract has given notice to Home
Account or Home Network of, threatened to make, or made a claim against Home
Account or Home Network with respect to any breach or default thereunder.
(d) Except as set forth in Section 4.4 of the Home Account Disclosure
Schedule, the execution and delivery of this Agreement by Home Account does not,
and the consummation of the transactions contemplated by this Agreement will
not, result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require the consent or waiver under, any of the material terms, conditions or
provisions of the Home Account Contracts identified in Schedule 4.24 of the Home
Account Disclosure Schedule. All such consents and waivers shall be obtained at
or prior to the Effective Time in accordance with Section 8.1(j), except as
Parent shall direct or allow in writing.
Section 4.25. Real Property.
-------------
Except as set forth in Section 4.25 of the Home Account Disclosure
Schedule, neither Home Account nor the Home Network leases for a term of more
than six months nor owns any real property.
Section 4.26. Warranties.
----------
Neither Home Account nor Home Network has any unexpired express product
warranties with respect to any products that it produces, publishes, processes
or sells or that it has heretofore produced, published, processed or sold in
connection with the business of Home Account or Home Network. There are no
claims (actual or threatened) based on any product warranty of which Home
Account or Home Network has received notice.
Section 4.27. Certain Business Practices.
--------------------------
None of Home Account, Home Network or any of their respective
directors, officers, agents or employees has (i) used any funds for unlawful
contribution, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
Section 4.28. Vote Required.
-------------
The affirmative vote of the holders of a majority of the outstanding
shares of Home Account capital stock is the only vote of the holders of any
class or series of Home Account's capital stock necessary to approve and adopt
this Agreement and the Merger. Home Account has taken all action necessary to
have the holders of Home Account capital stock approve and adopt this Agreement
and the Merger in accordance with the applicable provisions of this Agreement,
the DGCL, the certificate of incorporation and bylaws of Home Account and any
other applicable governing instruments. In accordance with the applicable
provisions of the DGCL, the certificate of incorporation and bylaws of Home
Account and any other applicable governing instruments, Home Account has
received a validly executed, non-unanimous written consent of all of the Home
Account Stockholders listed on Exhibit 4.28 hereto.
Section 4.29. First Data Services Agreement.
-----------------------------
The Services Agreement, dated June 28, 1999, between Home Network and
First Data Resources, Inc., was amended by the parties thereto in a letter
agreement dated as of December 20, 2000, with an effective date of January 1,
2001 (the "First Data Letter Amendment"), and is valid, binding, in full force
and effect and enforceable in accordance with its terms, as amended. A copy of
the First Data Letter Amendment is attached hereto as Exhibit 4.29 and a copy of
the Services Agreement has previously been delivered to Parent.
Section 4.30. Sales Commission Plan.
----------------------
Neither Home Account nor Home Network has adopted a sales commission
plan for the year commencing January 1, 2001.
Section 4.31. Termination of Contracts.
------------------------
Home Account or Home Network, as applicable, has terminated and been
released from all obligations under and with respect to, each of the Contracts
listed on Exhibit 4.31. Other than the Contracts listed on Exhibit 4.31 and the
Home Account Contracts, Home Account is not a party to any (i) financing or loan
Contracts, (ii) stockholders' or investor rights agreements, (iii) Contracts
providing for put or call rights, registration rights, voting rights, tag-along
rights, preemptive rights, first refusal or first offer rights or (iv) Contracts
similar in nature or purpose to any of the foregoing.
Section 4.32. Indebtedness.
------------
As of the date hereof, neither Home Account nor Home Network (i) owes
any back wages, (ii) has any indebtedness for money borrowed or (iii) has
guaranteed any such indebtedness of another Person, other than indebtedness set
forth in Exhibits C and D of the Note and Fee Exchange Agreement.
Section 4.33. Bank Accounts.
-------------
The checking accounts, savings accounts, custodial accounts,
certificates of deposit, safe deposit boxes, money market accounts, brokerage
accounts and other bank accounts listed on Section 4.33 of the Home Account
Disclosure Schedule are all of the checking accounts, savings accounts,
custodial accounts, certificates of deposit, safe deposit boxes, money market
accounts, brokerage accounts and other bank accounts of any type maintained by
Home Account or Home Network.
Section 4.34. Full Disclosure.
---------------
(a) No representation or warranty made by Home Account contained in this
Agreement and no statement contained in any agreement, certificate or schedule
furnished or to be furnished by Home Account to Parent in, or pursuant to the
provisions of, this Agreement, contains or shall contain any untrue statement of
a material fact or omits or will omit to state any
material fact necessary, in the light of the circumstances under which it was
made, in order to make statements herein or therein not misleading.
(b) To the Knowledge of Home Account, all materials and information
provided by Home Account to Parent as part of Parent's due diligence review of
Home Account and Home Network were true, accurate and complete as of the dates
on which such materials and information were provided to Parent, and no events,
occurrences or facts have arisen that would make such materials or information
untrue, inaccurate or incomplete as of the date hereof. To the Knowledge of Home
Account, there are no facts that might reasonably be expected to have a Material
Adverse Effect on Home Account or Home Network that have not been set forth in
this Agreement, the exhibits hereto or the Home Account Disclosure Schedule.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary represent and warrant to Home Account,
jointly and severally, as follows:
Section 5.1. Organization and Authority of the Parent.
----------------------------------------
Each of Parent and Merger Subsidiary is duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
Parent and Merger Subsidiary has full corporate power to carry on its business
as it is now being conducted and to own, operate and hold under lease its assets
and properties as, and in the places where, such properties and assets now are
owned, operated or held. Each of Parent and Merger Subsidiary is duly qualified
as a foreign entity to do business, and is in good standing, in each
jurisdiction where the failure to be so qualified would have a Material Adverse
Effect on Parent or Merger Subsidiary, as the case may be. The copies of the
Certificate of Incorporation and Bylaws of each of Parent and Merger Subsidiary,
which have been delivered to Home Account, are complete and correct and in full
force and effect on the date hereof, and no amendment or other modification has
been filed, recorded or is pending or contemplated thereto.
Section 5.2. Capitalization.
--------------
Parent's authorized equity capitalization consists of 60,000,000 shares
of Parent Common Stock and 5,000,000 shares of preferred stock, $.001 par value
per share ("Parent Preferred Stock"). As of the close of business on the date
hereof, 38,573,354 shares of Parent Common Stock and no shares of Parent
Preferred Stock were issued and outstanding. Such shares of Parent Common Stock
constituted all of the issued and outstanding shares of capital stock of Parent
as of such date. Merger Subsidiary's authorized equity capitalization consists
of 100 shares of Merger Subsidiary common stock, $.001 par value per share (the
"Merger Subsidiary Common Stock"). As of the close of business on the date
hereof, 10 shares of Merger Subsidiary Common Stock were issued and outstanding.
Such shares of Merger Subsidiary
Common Stock constituted all of the issued and outstanding shares of capital
stock of Merger Subsidiary as of such date. All issued and outstanding shares of
Parent Common Stock and Merger Subsidiary Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable, are not subject to and
have not been issued in violation of any preemptive rights.
Section 5.3. Authority Relative to this Agreement.
------------------------------------
The execution, delivery and performance of this Agreement and of all of
the other documents and instruments required hereby by Parent and Merger
Subsidiary are within the corporate power and authority of Parent and Merger
Subsidiary. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors of Parent and Merger Subsidiary and no other corporate
proceeding on the part of Parent or Merger Subsidiary is necessary to authorize
this Agreement or to consummate the transactions contemplated herein. This
Agreement and all of the other documents and instruments required hereby have
been or will be duly and validly executed and delivered by Parent and Merger
Subsidiary, as applicable, and (assuming the due authorization by Home Network
and the authorization, execution and delivery hereof and thereof by the Board of
Directors of Home Account) constitute or will constitute valid, legal and
binding agreements of Parent and Merger Subsidiary, enforceable against Parent
and Merger Subsidiary in accordance with their respective terms.
Section 5.4. Consents and Approvals; No Violations.
-------------------------------------
Except for (i) the filing and recordation of the Certificate of Merger
with the Secretary of State of the State of Delaware as required by the DGCL;
(ii) the filing, if required, by the parties of a pre-merger notification and
report form under the HSR Act and the expiration or termination of the waiting
period thereunder; and (iii) the filing with the Nasdaq National Market of a
listing application covering the shares of Parent Common Stock issuable in the
Merger, no filing or registration with, or notice to, and no Permit,
authorization, consent or approval of, any public court, tribunal or
administrative, governmental or regulatory body, agency or authority is
necessary or required in connection with the execution and delivery of this
Agreement by Parent and Merger Subsidiary or for the consummation by Parent and
Merger Subsidiary of the transactions contemplated by this Agreement. Assuming
that all filings, registrations, Permits, authorizations, consents and approvals
contemplated by the immediately preceding sentence have been duly made or
obtained, neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated hereby by Parent and Merger
Subsidiary will (x) conflict with or result in any breach of any provision of
the Certificate of Incorporation or Bylaws of Parent or Merger Subsidiary, (y)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, license, Contract or
other instrument or obligation to which Parent or Merger Subsidiary is a party
or by which Parent or Merger Subsidiary or any of their properties or assets may
be bound or (z) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or Merger Subsidiary or any of their properties
or assets except, in the case of subsections (y) or (z) above, for violations,
breaches or defaults that would not have a Material Adverse Effect on Parent or
Merger
Subsidiary and that will not prevent or delay the consummation of the
transactions contemplated hereby.
Section 5.5. SEC Documents.
-------------
Parent has filed all required reports, schedules, forms, statements and
other documents with the SEC under the Exchange Act since January 1, 1998 (such
documents, together with all exhibits and schedules thereto and documents
incorporated by reference therein collectively referred to herein as the "Parent
SEC Documents"). As of their respective dates, the Parent SEC Documents complied
in all material respects with the requirements of the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Parent included in the
Parent SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Rule
10-01 of Regulation S-X of the SEC) and fairly present the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and other adjustments described therein).
Section 5.6. Fees and Expenses of Brokers and Others.
---------------------------------------
Neither Parent nor Merger Subsidiary (a) has had any dealings,
negotiations or communications with any broker, finder or investment banker
(other than Xxxxxx Brothers, whose fees and expenses shall be paid by Parent) or
other intermediary in connection with the transactions contemplated by this
Agreement, (b) is committed to any liability for any brokers' or finders' fees
or any similar fees in connection with the transactions contemplated by this
Agreement (except as provided in Section 7.4 hereof) or (c) has retained any
broker, finder or investment banker (other than Xxxxxx Brothers) or other
intermediary to act on its behalf in connection with the transactions
contemplated by this Agreement.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1. Conduct of Business of Home Account and Home Network.
----------------------------------------------------
During the period from the date of this Agreement to the Effective Time
of the Merger, unless Parent shall otherwise consent in writing and except as
otherwise expressly contemplated or permitted by this Agreement, Home Account
will, and will cause Home Network to, to the extent permitted by this Agreement,
operate its business solely in the ordinary course, consistent
with past practice and in good faith with the goal of preserving intact its
assets and current business organizations, keeping available the services of its
current officers and employees, maintaining the Home Account Contracts and
preserving its relationships with customers, suppliers, creditors, brokers,
agents and others with whom it has business dealings. Without limiting the
generality of the foregoing, and except as otherwise expressly contemplated by
this Agreement, or as agreed to in writing by Parent, Home Account agrees as to
itself and Home Network that:
(a) Home Account and Home Network shall not issue, sell or grant any shares
of capital stock of any class, or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of capital
stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock or any other securities
in respect of, in lieu of, or in substitution for, shares outstanding on the
date hereof.
(b) Neither Home Account nor Home Network shall (i) split, combine,
subdivide or reclassify any shares of its capital stock or (ii) declare, set
aside for payment or pay any dividend, or make any other distribution in respect
of, any of its capital stock, or redeem or repurchase any of its capital stock
or any outstanding options, warrants or rights of any kind to acquire any shares
of, or any outstanding securities that are convertible into or exchangeable for
any shares of its capital stock, except for repurchases of unvested shares in
connection with the termination of a relationship with any employee, consultant
or director pursuant to stock option or purchase agreements in effect on the
date hereof or approved by Parent.
(c) Neither Home Account nor Home Network shall adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization.
(d) Neither Home Account nor Home Network shall adopt any amendments to its
certificate of incorporation or bylaws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion its corporate structure or
ownership.
(e) Except as contemplated by Section 7.5, neither Home Account nor Home
Network shall (i) incur any additional indebtedness for money borrowed or
guarantee any such indebtedness of another Person, other than up to $500,000
which may be borrowed from First Data Resources, Inc. or its affiliates, (ii)
enter into any "keep well" or other agreement to maintain any financial
condition of another Person or (iii) enter into any arrangement having the
economic effect of any of the foregoing.
(f) Neither Home Account nor Home Network shall acquire or agree to acquire
by merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, (i) any business or any corporation, limited
liability company, partnership, joint venture, association or other business
organization or division thereof or (ii) any assets that, individually or in the
aggregate, are material to Home Account except (without
limitation of Section 6.1((h)) below but subject to Section 6.1((i))), in the
ordinary course of business consistent with past practice.
(g) Except in the ordinary course of business, neither Home Account nor
Home Network shall sell, lease, license or otherwise encumber or subject to any
Lien or otherwise dispose of any of the properties or assets of Home Account or
Home Network that, individually or in the aggregate, are material to Home
Account.
(h) Neither Home Account nor Home Network shall make or agree to make any
capital expenditures not previously approved by the Board of Directors in Home
Account's 2000 or 2001 capital budget as set forth in Section 6.1(h) of the Home
Account Disclosure Schedule.
(i) Except in the ordinary course of business, neither Home Account nor
Home Network shall (i) enter into any Contract in excess of $10,000 individually
or in the aggregate, or (ii) modify, amend or transfer in any respect or
terminate any Home Account Contract or waive, release or assign any rights or
claims thereunder.
(j) Except as set forth in Section 6.1((j)) of the Home Account Disclosure
Schedule, neither Home Account nor Home Network shall (i) adopt or amend (except
as may be required by law) any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other employee
benefit plan, agreement, trust, fund or other arrangement (including any Home
Account Benefit Plan) for the benefit or welfare of any employee, officer,
director or service provider or former employee, officer, director or service
provider, (ii) increase the compensation or fringe benefits of any such
individuals of Home Account or Home Network, or (iii) except as provided in an
existing Home Account Benefit Plan, increase the compensation or fringe benefits
of any such individuals or pay any benefit not required by any existing plan,
arrangement or agreement.
(k) Neither Home Account nor Home Network shall make any change to its
accounting methods, principles or practices, except as may be required by GAAP.
(l) Neither Home Account nor Home Network shall create, incur or assume any
Lien on any of its material assets.
(m) Neither Home Account nor Home Network shall settle any litigation or
waive, assign or release any rights or claims except in either case (i) in the
ordinary course of business and (ii) for any such settlement which (x) would not
impose either restrictions on the conduct of the business of Home Account or
Home Network or (y) for litigation items settled for money, involve in the
aggregate in excess of $10,000 in cost to Home Account or Home Network. Neither
Home Account nor Home Network shall pay, discharge or satisfy any liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), except in the ordinary course of business or in accordance with
their terms.
(n) Neither Home Account nor Home Network shall make or rescind any
material express or deemed election relating to Taxes, settle or compromise any
material claim,
action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or make any material change to any of its methods
of reporting income or deductions for federal income tax purposes from those
employed in the preparation of its latest federal income tax return, except as
may be required by applicable Law.
(o) Neither Home Account nor Home Network shall commence any material
research and development project or terminate any material research and
development project that is currently ongoing, in either case, except pursuant
to the terms of existing Contracts.
(p) Neither Home Account nor Home Network shall authorize, recommend,
propose or announce an intention to take, or agree in writing or otherwise to
take, or have any affiliate, director, officer, employee, agent, consultant or
other third party take or otherwise agree to take, any of the actions described
in Sections 6.1(a) through 6.1(o) or any action which would make any of the
representations or warranties of Home Account contained in this Agreement untrue
or incorrect.
(q) Home Account shall, and shall cause Home Network to, use commercially
reasonable efforts to maintain in full force and effect all self-insurance or
insurance, as the case may be, currently in effect.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1. Registration Statement.
----------------------
(a) As required by the Registration Rights Agreement, as soon as reasonably
practicable after the Closing Date, taking into account the requirement to
include Home Account financial statements in the Registration Statement, Parent
shall prepare and file with the SEC a registration statement on Form S-3
(together with all amendments thereto, the "Registration Statement") in
connection with the registration under the Securities Act for resale of the
shares of Parent Common Stock constituting the Merger Consideration that are to
be issued to the stockholders of Home Account pursuant to the Merger in
accordance with the Registration Rights Agreement attached hereto as Exhibit
8.1(m). Parent shall use its reasonable best efforts to cause the Registration
Statement to become effective as promptly as practicable.
(b) Parent shall promptly prepare and submit to the Nasdaq National Market
a listing application covering the shares of Parent Common Stock issuable in the
Merger, and shall use its reasonable best efforts to obtain, prior to the
Effective Time of the Merger or as soon as reasonably practicable thereafter,
approval for the listing of such Parent Common Stock, subject to official notice
of issuance, and Home Account shall cooperate with Parent with respect to such
listing.
Section 7.2. Access to Information.
---------------------
Upon reasonable notice, Home Account and Parent shall each (and shall
cause each of their respective Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access during normal business hours during the period from the date
hereof to the Effective Time of the Merger, to all of its properties, books,
contracts, commitments and records, and during such period, each of Home Account
and Parent shall (and shall cause each of their respective Subsidiaries to)
furnish promptly to the other all information concerning its business,
properties and personnel as such other party may reasonably request; provided,
however, that notwithstanding the foregoing provisions of this Section 7.2 or
any other provision of this Agreement, neither Home Account nor Parent shall be
required to provide to the other party any information that is subject to a
confidentiality agreement and that relates primarily to a party other than Home
Account, Parent or any Subsidiary or former Subsidiary of Home Account or
Parent. Each of Home Account and Parent agrees that it will not, and it will
cause its respective representatives not to, use any information obtained
pursuant to this Section 7.2 for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement. The Confidentiality Agreement
dated November 11, 2000 (the "Confidentiality Agreement"), by and between Home
Account and Parent, shall apply with respect to information furnished by Home
Account, Parent and their respective Subsidiaries and representatives thereunder
or hereunder and any other activities contemplated thereby. The parties agree
that this Agreement and the transactions contemplated hereby shall not
constitute a violation of the Confidentiality Agreement and that the provisions
hereof shall supersede all provisions of the Confidentiality Agreement in the
event of a conflict.
Section 7.3. Reasonable Efforts; Notification.
---------------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, except to the extent otherwise required by United States regulatory
considerations and otherwise provided in this Section 7.3, each of Home Account
and Parent agrees to use commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger, and the other transactions contemplated by this Agreement, including (i)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Authorities and the making of all necessary
registrations and filings (including filings with Governmental Authorities, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Authority, (ii) the obtaining of all necessary consents, approvals
or waivers from third parties, (iii) the defending of any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Authority vacated or reversed and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement. Notwithstanding the foregoing, neither Home
Account nor Parent shall be required to agree to any consent, approval or waiver
that would require such party to take an action that would impair the value that
such party reasonably attributes to the Merger and the transactions contemplated
thereby. In connection with and without limiting the foregoing, Home Account
and its Board of Directors shall (i) take all action reasonably necessary to
ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to the Merger and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to the Merger, take all action
reasonably necessary to ensure that the Merger may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger.
(b) Home Account shall give prompt notice to Parent, and Parent shall give
prompt notice to Home Account, of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
affect the representations or warranties or covenants or agreements of the
parties or the conditions to the obligations of the parties hereunder.
(c) (i) Each of Home Account and Parent shall file, if required, a
premerger notification and report form under the HSR Act with respect to the
Merger as promptly as reasonably possible following execution and delivery of
this Agreement. Each of Home Account and Parent agrees to use its reasonable
best efforts to promptly respond to any request for additional information
pursuant to Section (e)(1) of the HSR Act.
(ii) Except as otherwise required by United States regulatory
considerations, each party will furnish to the other party copies
of all correspondence, filings or communications (or memoranda
setting forth the substance thereof) (collectively, "HSR
Documents") between it, or any of its respective representatives,
on the one hand, and any Governmental Authority, or members of
the staff of such agency or authority, on the other hand, with
respect to this Agreement or the Merger; provided, however, that
(x) with respect to documents and other materials filed by or on
behalf of such party with the Antitrust Division of the
Department of Justice, the Federal Trade Commission, or any state
attorneys general that are available for review by the other
party, copies will not be required to be provided to the other
party and (y) with respect to any HSR Documents (A) that contain
any information which, in the reasonable judgment of such party's
counsel, should not be furnished to the other party because of
antitrust considerations or (B) relating to a request for
additional information pursuant to Section (e)(1) of the HSR Act,
the obligation of such party to furnish any such HSR Documents to
the other party shall be satisfied by the delivery of such HSR
Documents on a confidential basis to the other party's counsel
pursuant to a confidentiality agreement in form and substance
reasonably satisfactory to each party.
Section 7.4. Fees and Expenses.
-----------------
The parties hereto agree that (i) Parent shall bear all fees and
expenses, including, but not limited to, the fees and expenses of investment
bankers, accountants and attorneys, incurred by Parent or Merger Subsidiary in
connection with this Agreement, the Merger, the Registration Statement and the
transactions contemplated hereby and thereby and (ii) the holders of Home
Account Preferred Stock immediately prior to the Effective Time, in accordance
with the Fees and Termination Letter Agreement, shall bear all fees and
expenses, including, but not limited to, the fees and expenses of investment
bankers, accountants and attorneys, incurred by Home Account, Home Network or
the Home Account Stockholders in connection with this Agreement, the Merger and
the transactions contemplated hereby and thereby in excess of $250,000, which
$250,000 shall be the obligation of Home Account, which Parent shall cause to be
satisfied.
Section 7.5. Pre-Closing Funding of Home Account.
-----------------------------------
(a) Home Account will be expected to fund its own business operations from
the date hereof until the Closing Date. Parent shall, following the Closing
Date, reimburse any stockholders of Home Account who advanced funds to Home
Account for payment of reasonable and ordinary operating expenses between the
execution date of this Agreement and the Closing Date; provided, however, that
Parent shall not be obligated to reimburse any such amounts in excess of $35,000
per business day during such period; further provided, that Parent shall not be
obligated to reimburse any amounts if the Agreement is terminated in accordance
with Article XI or if the Closing does not occur because the conditions
precedent set forth in Section 8.1 have not been satisfied.
(b) Notwithstanding Section 7.5(a), at any time after the execution of this
Agreement but prior to the Effective Time, Home Account may submit a written
notice (the "Funding Notice") to Parent requesting Parent to provide funds to
Home Account to pay for Home Account's anticipated reasonable and ordinary
operating expenses up to and including the Closing Date. The Funding Notice
shall provide a good faith estimate of the aggregate amount of such reasonable
and ordinary operating expenses that Home Account expects to incur up to and
including the Closing Date.
(c) Upon receipt of a Funding Notice, Parent shall have the option, in its
sole and absolute discretion, to advance funds to Home Account to satisfy Home
Account's expected capital needs. Any such advance of funds shall be upon terms
and conditions to be agreed upon by Home Account and Parent, provided that any
such advance shall be fully and unconditionally secured and collateralized by an
irrevocable letter of credit from a nationally recognized banking institution
with a minimum of $5 billion in assets and which can and will be drawn upon by
Parent upon termination of this Agreement.
Section 7.6. Public Announcements.
--------------------
Parent and Home Account will consult with each other before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior
each party having had the opportunity to review and comment on such press
release or public statement, except that each party may respond to questions
from stockholders and may respond to inquiries from financial analysts and media
representatives in a manner consistent with its past practice and each party may
make such disclosure as may be required by applicable law or by obligations
pursuant to any listing agreement with the Nasdaq National Market or any
national securities exchange without prior consultation to the extent such
consultation is not reasonably practicable. The parties agree that the initial
press release or releases to be issued in connection with the execution of this
Agreement shall be mutually agreed upon prior to the issuance thereof.
Section 7.7. Employee Matters.
----------------
(a) Within 30 days after the Closing Date, Parent shall enter into stock
option agreements in accordance with Parent's stock option plan with certain
employees of the Surviving Corporation, whom Parent, in its sole discretion,
shall select, who were formerly employees of Home Account or Home Network. Such
stock option agreements will be substantially similar in form and substance as
those customarily used by Parent to grant options to its employees. In no event
shall Parent be required to grant options for in excess of 250,000 shares of
Parent Common Stock or to any participant in the Home Account 2000 Incentive
Plan.
(b) Parent shall make a severance payment to each individual (i) who is an
employee of Home Account on the business day immediately preceding the Closing
Date, (ii) who remains continuously employed by the Surviving Corporation or
Parent from the Closing Date until the date requested by Parent, (iii) whose
employment with the Surviving Corporation or Parent is terminated without cause
by the Surviving Corporation or Parent prior to the one-year anniversary of the
Closing Date and (iv) who executes a written release in form and substance
satisfactory to Parent. Any severance payment paid in accordance with the
preceding sentence shall be paid within 30 days of the date of such employee's
termination and shall be in an amount equal to such employee's total salary for
the last four consecutive weeks of such employee's employment with the Surviving
Corporation or Parent, as the case may be.
(c) Following the Effective Time, Parent shall arrange for each participant
in the Home Account Benefit Plans (a "Home Account Participant") whom Parent (or
any of its subsidiaries) employs at the applicable time to participate in the
relevant employee benefit plans that Parent (or its applicable subsidiaries)
maintains (on the terms of such plans) after the time the relevant Home Account
Benefit Plan has been terminated or no longer has benefits being accrued for any
Home Account Participant. Each Home Account Participant whom the Parent (or its
applicable subsidiary) then employs shall receive at such time, to the extent
permitted by law and applicable tax-qualification requirements, and subject to
any generally applicable break in service or similar rules, credit for purposes
of eligibility to participate and vesting only under Parent's tax-qualified
retirement plans and Parent's vacation/sick leave policy for years of service
that such Home Account Participant earned with Home Account (and its
subsidiaries and predecessors) prior to the Effective Time.
Section 7.8. Agreement to Defend.
-------------------
In the event any claim, action, suit, investigation or other proceeding
by any Governmental Authority or other person or other legal or administrative
proceeding is commenced that questions the validity or legality of the
transactions contemplated hereby or seeks damages in connection therewith, the
parties hereto agree to cooperate and use their reasonable best efforts to
defend against and respond thereto.
Section 7.9. Amendment of Schedules.
----------------------
Home Account shall promptly (and, in any event, within a reasonable
time prior to Closing) notify Parent of (a) any event that would render
inaccurate in any material respect any representation or warranty of Home
Account, or (b) any change or addition that Home Account proposes to make to any
schedule to this Agreement. No notification made pursuant to this Section 7.9
shall be deemed to cure any breach of any representation, warranty or covenant
made in this Agreement or to modify any of the schedules attached hereto unless
Parent specifically agrees thereto in writing, nor shall any such notification
be considered to constitute or give rise to a waiver by Parent of any condition
set forth in this Agreement unless Parent specifically so agrees.
Section 7.10. Other Actions.
-------------
Except as contemplated by this Agreement, neither Parent nor Home
Account shall, and neither shall permit any of its Subsidiaries to, take or
agree or commit to take any action that is reasonably likely to result in any of
its respective representations or warranties hereunder being untrue in any
material respect (except to the extent any representation or warranty is already
qualified by materiality in which case it shall be true in all respects) or in
any of the conditions to the Merger set forth in Article VIII not being
satisfied.
ARTICLE VIII
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER
Section 8.1. Conditions Precedent to Obligations of Parent and
-------------------------------------------------
Merger Subsidiary.
-----------------
The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction or waiver at or prior to the Effective
Time of the following conditions precedent:
(a) The representations and warranties of Home Account contained in this
Agreement (other than any representations and warranties made as of a specific
date) shall be true and correct as of the Closing Date in all material respects
(except to the extent any representation or warranty is already qualified by
materiality, in which case it shall be true and correct in all respects), except
as otherwise contemplated or permitted by this Agreement, and Parent shall have
received a certificate to that effect dated the Closing Date and executed on
behalf of Home Account by the chief executive officer.
(b) Each of the covenants, agreements and obligations of Home Account to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time, and at the Closing, Home Account shall have delivered to
Parent a certificate to that effect.
(c) Parent shall have received the opinions of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, counsel to Home Account, and Xxxx Xxxxx, Esq., General Counsel of Home
Account, dated the Closing Date and addressed to Parent in the forms attached
hereto as Exhibit 8.1(c)(i) and Exhibit 8.1(c)(ii), respectively.
(d) The stockholders of Home Account listed on Exhibit 4.28 hereto, acting
by non-unanimous written consent, shall have adopted and approved this Agreement
and the transactions contemplated hereby, including the Merger, as and to the
extent required by, and in accordance with, the DGCL or other applicable Law,
and by the provisions of any governing instruments.
(e) Prior to the execution of this Agreement, Parent shall have received in
writing from Home Account an undertaking by each Person, if any, that Home
Account, after discussions with counsel for Home Account, believes may be an
"Affiliate" of Home Account, within the meaning of Rule 145 of the SEC pursuant
to the Securities Act ("Affiliates"), in form satisfactory to Parent that no
shares of Parent Common Stock received or to be received by such Affiliate
pursuant to the Merger will be sold or disposed of except pursuant to an
effective registration statement under the Securities Act or in accordance with
the provisions of paragraph (d) of Rule 145 under the Securities Act or another
exemption from registration under the Securities Act.
(f) Home Account shall have received final invoices for all services
rendered, current as of the Closing Date, from all Persons who shall have
provided services in connection with this Agreement or the transactions
contemplated hereby, including, without limitation, U.S. Bancorp Xxxxx Xxxxxxx,
the Merger Consideration Escrow Agent, Xxxxxx & Xxxxxxx LLP, Xxxxxx Xxxxxx White
& XxXxxxxxx LLP, Deloitte & Touche LLP and Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
which invoices shall be paid in accordance with Section 7.4.
(g) Vault Holdings, LLC shall not have been liquidated or otherwise
terminated and the winding up of Vault Holdings, LLC shall not have been
completed.
(h) Each outstanding warrant to purchase shares of Home Account capital
stock, whether vested or unvested, shall have been canceled and retired and
shall have ceased to exist.
(i) Notwithstanding anything in this Agreement to the contrary, none of the
holders of the Home Account Preferred Stock and not more than 5% of the holders
of Home Account Shares in the aggregate shall have demanded appraisal for their
Home Account Shares in accordance with the DGCL.
(j) Parent shall have received evidence, in form and substance reasonably
satisfactory to it, that such licenses, Permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities and other
third parties as are reasonably necessary in connection with the transactions
contemplated hereby have been obtained.
(k) There shall not be pending or threatened by any Governmental Authority
any suit, action or proceeding (or by any other Person any pending suit, action
or proceeding which has a reasonable likelihood of success) (i) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or seeking to obtain from
Parent or Merger Subsidiary any damages that are material in relation to Parent
and Merger Subsidiary taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Surviving Corporation or any of its Subsidiaries
of any material portion of the business or assets of Home Account, Parent or any
of their respective Subsidiaries, to dispose of or hold separate any material
portion of the business or assets of Home Account, Parent or any of their
respective Subsidiaries, as a result of the Merger or any of the other
transactions contemplated by this Agreement or (iii) seeking to prohibit the
Surviving Corporation or any of its Subsidiaries from effectively controlling in
any material respect the business or operations of Home Account or its
respective Subsidiaries.
(l) Since January 1, 2000, Home Account (i) shall have conducted its
business only in the ordinary course and in accordance with Section 6.1 and
shall have maintained and preserved its organization, goodwill and properties,
and (ii) shall not have made any material change to Home Account Financial
Statements, except as required by the operation of the business in the ordinary
course or to conform to GAAP, or prepaid any indebtedness, changed depreciation
or amortization methods, delayed incurring budgeted expenses or deviated from
usual and customary terms with suppliers, lessors, customers or buyers, except
for delays in paying accounts payable and increases in accounts payable
resulting from operation of the business after December 29, 2000.
(m) Home Account shall have caused each of the holders of Home Account
Preferred Stock listed in Section 1.52 of the Home Account Disclosure Schedule
to agree to the transfer restrictions set forth in the Registration Rights
Agreement with respect to the shares of Parent Common Stock to be received by
such stockholders in the Merger.
(n) Each of the holders of Home Account Shares who are to receive Parent
Common Stock in the Merger shall have executed and delivered to Parent the
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit 8.1(n) (the "Registration Rights Agreement").
(o) Home Account or Home Network, as applicable, shall have terminated and
have been released from all obligations under and with respect to, each of the
Contracts listed on Exhibit 4.31.
(p) Home Account and the holders of Home Account Preferred Stock
immediately prior to the Effective Time shall have executed and delivered to
Parent the Fees and Termination Letter Agreement.
(q) Each of the holders of Home Account Notes, U.S. Bancorp Xxxxx Xxxxxxx
and Home Account shall have executed and delivered to Parent the Note and Fee
Exchange Agreement prior to the execution date of this Agreement, and such Note
and Fee Exchange Agreement shall be in full force and effect as of the Effective
Time.
(r) Subject to Section 7.4, the holders of Home Account Preferred Stock
immediately prior to the Effective Time shall have paid all of the fees and
expenses of Home Account, Home Network and the Home Account Stockholders
incurred in connection with the Agreement, the Merger or the transactions
contemplated hereby or thereby.
(s) Each of the parties thereto (other than Parent) shall have executed and
delivered to Parent the Indemnity Escrow Agreement prior to the execution date
of this Agreement, and such Escrow Agreement shall be in full force and effect
as of the Effective Time.
(t) Each of the parties thereto (other than Parent) shall have executed and
delivered to Parent the Merger Consideration Escrow Agreement prior to the
execution date of this Agreement, and such Merger Consideration Escrow Agreement
shall be in full force and effect as of the Effective Time.
(u) As of the Closing Date, neither Home Account nor Home Network shall (i)
owe any back wages, (ii) have any indebtedness for money borrowed or (iii)
guarantee any such indebtedness of another Person, other than indebtedness set
forth in Exhibits C and D of the Note and Fee Exchange Agreement.
(v) Each holder of a Home Account Note shall have executed and delivered to
Parent a payoff letter, substantially in the form attached hereto as Exhibit
8.1(v).
(w) There shall have been no events, changes or effects with respect to
Home Account or Home Network having or which could reasonably be expected to
have a Material Adverse Effect on Home Account or Home Network.
(x) All proceedings, corporate or other, to be taken by Home Account in
connection with the transactions contemplated by this Agreement, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to Parent and Parent's counsel, and Home Account shall have made
available to Parent for examination the originals or true and correct copies of
all documents that Parent may reasonably request in connection with the
transactions contemplated by this Agreement.
Section 8.2. Conditions Precedent to Obligations of Home Account.
---------------------------------------------------
The obligations of Home Account to consummate the Merger are subject
to the satisfaction or waiver at or prior to the Effective Time of the
following conditions precedent:
(a) The representations and warranties of Parent and Merger Subsidiary
contained in this Agreement (other than any representations and warranties
made as of a specific
date) shall be true and correct as of the Closing Date in all material
respects (except to the extent any representation and warranty is already
qualified by materiality, in which case it shall be true and correct in all
respects), except as otherwise contemplated or permitted by this Agreement
and Home Account shall have received a certificate to that effect dated the
Closing Date and executed on behalf of Parent by the chief executive
officer.
(b) Each of the covenants, agreements and obligations of Parent and
Merger Subsidiary to be performed at or before the Effective Time pursuant
to the terms of this Agreement shall have been duly performed in all
material respects at or before the Effective Time and at the Closing Parent
and Merger Subsidiary shall have delivered to Home Account a certificate to
that effect.
(c) Home Account shall have received the opinion of Hunton & Xxxxxxxx,
counsel to Parent and Merger Subsidiary, dated the Closing Date and
addressed to Home Account in the form attached hereto as Exhibit 8.2(c).
(d) Unless Parent, in its sole option, shall have advanced funds to
Home Account for payment of reasonable and ordinary operating expenses
incurred by Home Account in accordance with Section 7.5(b), Parent shall
have reimbursed the stockholders of Home Account who advanced funds to Home
Account in accordance with Section 7.5(c).
(e) Parent shall have executed and delivered to Home Account the
Registration Rights Agreement.
(f) All proceedings, corporate or other, to be taken by Parent and
Merger Subsidiary in connection with the transactions contemplated by this
Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to Home Account and Home Account's
counsel, and Parent and Merger Subsidiary shall have made available to Home
Account for examination the originals or true and correct copies of all
documents that Home Account may reasonably request in connection with the
transactions contemplated by this Agreement.
ARTICLE IX
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
Section 9.1. No Solicitation.
---------------
(a) Following the execution of this Agreement and before the Effective
Time (the "Restricted Period"), Home Account and Home Network shall not,
and will use its best efforts to cause each officer, director or employee
of or any investment banker, attorney or other advisor, agent or
representative of Home Account or Home Network ("Representatives") not to,
directly or indirectly, (i) solicit, initiate or encourage the submission
of any Takeover Proposal (as hereinafter defined), (ii) enter into any
agreement with respect to any Takeover Proposal, (iii) seek to sell or
otherwise dispose of shares of capital stock of Home Account or Home
Network or any portion of the assets of Home Account or Home Network to any
third party, or enter into
any agreements with any third party with respect to such a sale or
disposition, or (iv) participate in any discussions or negotiations
regarding, or furnish to any Person any information with respect to, or
take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding sentence shall
be deemed to be a material breach of this Agreement by Home Account. For
purposes of this Agreement, "Takeover Proposal" means (i) any proposal or
offer, other than a proposal or offer by Parent or any of its affiliates,
for a merger, share exchange or other business combination involving Home
Account or Home Network, (ii) any proposal or offer, other than a proposal
or offer by Parent or any of its affiliates, to acquire from Home Account
or Home Network in any manner, directly or indirectly, a greater than 10%
voting or equity interest in Home Account or Home Network or the
acquisition of a material amount of the assets of Home Account or Home
Network, or (iii) any proposal or offer, other than a proposal or offer by
Parent of any of its affiliates, to acquire from the Home Account
Stockholders by tender offer, exchange offer or otherwise more than 10% of
Home Account Shares then outstanding.
(b) Neither the Board of Directors of Home Account nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Parent, the approval or recommendation by the Board of
Directors of Home Account or any such committee of the Merger or this
Agreement or take any action having such effect or (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
(c) If Home Account receives a Takeover Proposal, or a request for
information relating to Home Account (or any of its Subsidiaries) or for
access to the properties, books or records of Home Account (or any of its
Subsidiaries) by any Person who is considering making or has made a
Takeover Proposal, Home Account shall immediately inform Parent orally and
shall as promptly as practicable (and in any event within one business day)
inform Parent in writing of the terms and conditions of such proposal and
the identity of the Person making it, forwarding a copy of any written
communications relating thereto. Home Account will keep Parent fully
informed on as prompt a basis as is practicable of the status and details
of any such Takeover Proposal or request, including by forwarding copies of
any material written communications relating thereto. Home Account will
immediately cease and cause its Subsidiaries, and its and their officers,
directors, agents, representatives and advisors, to cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing, except that it shall use
its best efforts to cause any such parties in possession of confidential
information about Home Account (or its Subsidiaries) that was furnished by
or on behalf of Home Account (or its Subsidiaries) in connection with any
of the foregoing to return or destroy all such information in the
possession of any such party or in the possession of any agent or advisor
of any such party. Home Account agrees not to release any third party from,
or waive any provisions of, any confidentiality or standstill agreement to
which it (or its subsidiaries) is a party. Home Account shall use
reasonable efforts to ensure that the officers, directors and employees of
Home Account and its Subsidiaries and any investment banking firm or other
advisor or representative retained by such party are aware of and
instructed to comply with the restrictions described in this Section 9.1.
Section 9.2. Parent Board.
------------
As of the Closing Date, Parent shall increase the number of its
Board of Directors to include Xxxxxxx Xxxxx, subject to final approval
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 10.1. Indemnification of Parent and the Surviving Corporation.
--------------------------------------------------------
Subject to Sections 10.4 and 10.6, Parent, the Surviving Corporation
and each of their respective officers, directors and stockholders (but not
officers, directors, employees, agents and stockholders of Home Account prior to
the Closing) (collectively, the "Parent Indemnified Parties") shall be entitled,
as the sole and exclusive remedy for Escrow Losses (defined below), to
indemnification and reimbursement from the Indemnity Escrow Shares in accordance
with this Section 10.1, Section 2.7 and the Escrow Agreement for any and all
losses, damages, costs, expenses, liabilities, obligations and claims of any
kind, reasonable attorneys' fees and other reasonable legal costs and expenses
(hereinafter referred to collectively as "Escrow Losses"), that the Parent
Indemnified Parties may at any time suffer or incur, or become subject to, as a
result of, in connection with or arising out of: (i) any breach or inaccuracy of
any of the representations and warranties made by Home Account in this Agreement
or any other agreement or instrument delivered by Home Account pursuant hereto;
(ii) any failure of Home Account to carry out, perform, satisfy and discharge
any of its covenants, agreements, undertakings, liabilities or obligations under
this Agreement or under any other agreement or instrument delivered by Home
Account pursuant hereto; (iii) any failure or delay by the holders of Home
Account Preferred Stock immediately prior to the Effective Time to pay (in
accordance with Section 7.4) the fees and expenses of Home Account, Home Network
and the Home Account Stockholders incurred with respect to this Agreement, the
Merger or the transactions contemplated hereby or thereby; and (iv) any matter
identified on Exhibit 10.1.
Section 10.2. Notice and Control of Litigation.
---------------------------------
If any action, claim, suit or litigation is asserted in writing by a
third party against a Parent Indemnified Party which would give rise to a claim
under Section 10.1 (a "Third Party Claim"), Parent shall promptly notify (the
"Parent Indemnification Notice") the Stockholders' Representatives in writing of
the commencement or assertion of such Third Party Claim; provided, however, that
failure to give such notice shall not affect the right to indemnification
hereunder except to the extent of actual prejudice. Parent may settle such Third
Party Claim with the written consent of a Stockholders' Representative (not to
be unreasonably withheld).
Section 10.3. Notice of Claim.
---------------
If a Parent Indemnified Party becomes aware of any claims then made or
threatened which may result in Escrow Losses ("Parent Indemnification Claims,"
together with Third Party Claims, "Indemnification Claims"), the Parent
Indemnified Party shall notify the Stockholders'
Representatives in writing of the same promptly after becoming aware of such
claims, specifying and substantiating in detail the circumstances and facts that
give rise to a claim under Section 10.1. Should the Parent Indemnified Party
fail to promptly notify the Stockholders' Representatives, such failure shall
not affect the right to indemnification hereunder except to the extent of actual
prejudice.
Section 10.4. Limitation of Liability.
-----------------------
Notwithstanding anything herein to the contrary, the Parent Indemnified
Parties shall not be entitled to indemnification unless and until the amount of
all Escrow Losses incurred by the Parent Indemnified Parties exceeds $250,000 in
the aggregate (the "Basket Amount") at which point the Parent Indemnified
Parties shall be entitled to indemnification and reimbursement for all Escrow
Losses (including the first $250,000); provided, however, that the Basket Amount
shall not apply to Escrow Losses that the Parent Indemnified Parties may at any
time suffer or incur, or become subject to, as a result of, in connection with
or arising out of (i) Section 10.1(iii) or Section 10.1(iv) or (ii) a breach or
inaccuracy of any representation or warranty in Section 4.15 (Fees and Expenses
of Brokers), Section 4.23 (Accounts) or Section 4.32 (Indebtedness).
Section 10.5. Stockholders' Representatives.
-----------------------------
(a) For purposes of this Article X, the Parent Indemnified Parties may rely
upon written directions and notices received from either Stockholders'
Representative with respect to the matters described herein. In the event Xxxxxx
X. Xxxxxxxxxx or Xxxxxx Xxxxx ceases to be able to perform his duties as a
Stockholders' Representative as a result of his death, incapacity or
resignation, he shall designate an individual to serve as his successor and to
assume all of his duties and obligations as a Stockholders' Representative
hereunder and shall so notify Parent in writing of any such designation. The
parties acknowledge and agree that Xxxxxx X. Xxxxxxxxxx and Xxxxxx Xxxxx, or any
successors designated pursuant to this Section 10.5, are acting as Stockholders'
Representatives for the stockholders of Home Account for the limited
administrative purposes set forth herein and nothing in this Agreement, the
Indemnity Escrow Agreement or the Merger Consideration Escrow Agreement is
intended to, nor shall, impose any personal liability on Xxxxxx X. Xxxxxxxxxx,
Xxxxxx Xxxxx or any other Persons who serve as Stockholders' Representatives. At
any time, stockholders who held immediately prior to Closing a majority of the
Home Account Shares may remove or replace the persons serving as the
Stockholders' Representatives and name substitutes for such persons by joint
written notice to Parent.
(b) No Stockholders' Representative shall be liable for any act done or
omitted in such capacity while acting in good faith, except for any act done or
omitted which constitutes gross negligence or willful misconduct. Any act done
or omitted pursuant to the advice of counsel shall be conclusive evidence of
such good faith and of the absence of gross negligence or willful misconduct.
(c) Each of the Home Account Stockholders hereby agrees, jointly and
severally, to indemnify, defend and forever hold the Stockholders'
Representatives harmless, from and against any and all losses, demands, causes
of action, judgments, liabilities, claims,
costs, damages and expenses (including, without limitation, fines, forfeitures,
reasonable attorneys' fees, disbursements and administrative or court costs)
directly or indirectly arising out of, resulting from, or in connection with,
any claim or alleged claim with respect to the Stockholders' Representatives'
obligations under this Agreement, the Indemnity Escrow Agreement, the Merger
Consideration Escrow Agreement or any other agreement contemplated hereby or
thereby, except for claims or alleged claims arising out of the gross negligence
or willful misconduct of a Stockholders' Representative.
(d) Parent shall provide the Stockholders' Representatives with access to
or copies of any information contained in the records of Parent, its
Subsidiaries and its independent accountants and other agents that is relevant
to Indemnification Claims, and shall otherwise provide the Stockholders'
Representatives with such information and assistance as he may reasonably
request, including making employees available on a mutually convenient basis.
Section 10.6. Survival of Representations and Warranties.
------------------------------------------
The representations and warranties contained in Article IV herein shall
survive the Closing Date until March 31, 2002. Any Indemnification Claim shall
only be effective if written notice of such Indemnification Claim shall have
been given in writing to the Stockholders' Representatives within the time
period prescribed in the foregoing sentence. Any Indemnification Claim for which
notice has been given within the prescribed period may be prosecuted to
conclusion notwithstanding the subsequent expiration of such period.
ARTICLE XI
TERMINATION; AMENDMENT; WAIVER
Section 11.1. Termination.
-----------
This Agreement may be terminated and the Merger contemplated hereby may
be abandoned at any time prior to the Effective Time, notwithstanding approval
of this Agreement, the Merger and the transactions contemplated hereby and
thereby by the stockholders of Home Account:
(a) by mutual written consent of Home Account and Parent;
(b) by, Parent, if Home Account Stockholder Approval is not attained upon a
vote at a duly held meeting of stockholders of Home Account or at any
adjournment thereof or by the written consent of such stockholders in accordance
with the DGCL and the Home Account Certificate of Incorporation and Bylaws;
(c) by either Parent or Home Account:
(i) if any court of competent jurisdiction or any Governmental
Authority shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise
prohibiting the Merger; or
(ii) if the Merger shall not have been consummated on or before March
31, 2001, unless the failure to consummate the Merger is the
result of a material breach of this Agreement by the party
seeking to terminate this Agreement.
(d) by Parent, if Home Account breaches in any material respect any of its
representations or warranties herein or fails to perform in any material respect
any of its covenants, agreements or obligations under this Agreement, which
breach has not been cured within 30 days following receipt by Home Account of
notice of breach or by the date specified in Section 11.1((c))((ii));
(e) by Home Account, if Parent breaches in any material respect any of its
representations or warranties herein or fails to perform in any material respect
any of its covenants, agreements or obligations under this Agreement, which
breach has not been cured within 30 days following receipt by Parent of notice
of breach or by the date specified in Section 11.1((c))((ii));
(f) by Home Account pursuant to Section 2.5((b)) hereof, if the number of
Aggregate Parent Shares would exceed the Threshold Percentage and Parent
exercises the Reduced Stock Option; and
(g) by Home Account in the event that Parent fails to file the Certificate
of Merger with the Secretary of State of the State of Delaware in accordance
with Section 11.2 hereof within 24 hours of execution of this Agreement by all
parties hereto, unless the failure to file is the result of (i) the failure of
Home Account to satisfy all of the conditions to the consummation of the Merger
set forth in Section 8.1 or (ii) the office of the Secretary of State of the
State of Delaware being closed, provided that the filing is completed as soon as
practicable upon the reopening of such office.
Section 11.3. Effect of Termination.
----------------------
If this Agreement is so terminated and the Merger is not consummated,
this Agreement shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers, employees, agents
or stockholders, other than the confidentiality provisions of Section 7.2 and
the provisions of Section 7.4 (Fees and Expenses) and Section 9.1. Nothing
contained in this Section 11.3 shall relieve any party from liability for any
breach of this Agreement.
Section 11.4. Termination Fee.
----------------
In the event Home Account agrees to a Takeover Proposal within 12
months after the termination of this Agreement with any third party with whom
Home Account or any Person acting on its behalf had contact in violation of
Section 9.1 during the term of this Agreement, Home Account agrees to pay to
Parent in immediately available funds $1,000,000 (the "Termination Fee") and
shall reimburse Parent for all reasonable out-of-pocket expenses of Parent,
including, without limitation, the expenses of investment bankers, accountants
and
attorneys incurred by Parent or on its behalf in connection with the
transactions contemplated by this Agreement. Payment of the Termination Fee
shall be made within one business day following the event causing payment of
such fee. If Home Account does not pay the Termination Fee within such one day
period, Home Account shall pay Parent's costs and expenses (including legal fees
and expenses) reasonably incurred in connection with any actions taken to
collect such payment, together with interest thereon.
Section 11.5. Amendment.
---------
This Agreement and the Certificate of Merger may be amended by action
taken by Merger Subsidiary, Home Account and Parent at any time before or after
adoption of this Agreement by the stockholders of Home Account; provided,
however, that after such shareholder approval no amendment shall be made which
under applicable Law requires the approval of such stockholders without the
approval of stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of both of the parties hereto.
Section 11.6. Extension; Waiver.
-----------------
At any time prior to the Effective Time, either party hereto may, to
the extent legally allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto by the other party
hereto or (iii) subject to the proviso contained in Section 11.5, waive
compliance with any of the agreements or conditions contained herein by the
other party hereto; provided, however, that any waiver by Parent of a condition
to closing in Section 8.1 hereto shall not in any way impair or otherwise
negatively affect Parent's indemnification rights under Section 10.1 hereto in
the event Home Account fails to satisfy such condition. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
Section 11.7. Procedure for Termination, Amendment, Extension
-----------------------------------------------
or Waiver.
---------
A termination of this Agreement pursuant to Section 11.1,
an amendment of this Agreement pursuant to Section 11.5 or an extension or
waiver pursuant to Section 11.6 shall, in order to be effective, require in the
case of Parent or Home Account, action by its respective Board of Directors or
the duly authorized designee of such Board of Directors.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Entire Agreement; Assignment.
----------------------------
This Agreement and the Confidentiality Agreement (a) constitute the
entire agreement between the parties with respect to the subject matter hereof
and thereof and supersedes all other
prior agreements and understandings, both written and oral, between the parties
or any of them with respect to the subject matter hereof and thereof, and (b)
shall not be assigned by operation of Law or otherwise.
Section 12.2. Notices.
-------
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telecopy,
telegram or telex, overnight delivery service from a national carrier or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
if to Home Account:
Home Account Holdings, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000 000-0000
if to Parent or Merger Subsidiary:
InteliData Technologies Corporation
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Hunton & Xxxxxxxx
NationsBank Plaza, Suite 4100
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Stockholders' Representatives:
Xxxxxx X. Xxxxxxxxxx
Oak Investment Partners
Xxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxx Xxxxx
International Place 2
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxx Xxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
Section 12.3. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
Section 12.4. Descriptive Headings.
--------------------
The descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
Section 12.5. Parties in Interest.
-------------------
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 12.6. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
Section 12.7. Specific Performance.
--------------------
The parties hereto agree that irreparable damage would occur in the
event any of the provisions of this Agreement were not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or
equity.
Section 12.8. Severability.
------------
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
AGREEMENT AND PLAN OF MERGER
HOME ACCOUNT HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
SVP and General Counsel
INTELIDATA TECHNOLOGIES
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
------------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and Chief
Executive Officer
INTELIDATA MERGERSUB, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
------------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and Chief
Executive Officer
STOCKHOLDERS' REPRESENTATIVES
/s/ Xxxxxx X. Xxxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
EXHIBIT 4.1
-----------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of the 11th day of January, 2001 by and among INTELIDATA TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Company"), and those holders of the
Company's common stock, par value $.001 per share (the "Stock"), listed on
Exhibit A attached hereto. The holders listed on Exhibit A are herein referred
to individually as an "Investor" and collectively as the "Investors".
RECITALS
--------
WHEREAS, the Company has entered into an Agreement and Plan of Merger
with Home Account Holdings, Inc. ("Home Account"), dated as of the date hereof
(the "Merger Agreement"), pursuant to which it is a condition precedent to the
Closing (as defined in the Merger Agreement) that the parties hereto enter into
this Agreement; and
WHEREAS, the parties hereto desire to set forth certain rights of the
Investors as holders of the Stock.
NOW, THEREFORE, in consideration of the premises, which are
incorporated into and made part of this Agreement, and of the mutual covenants,
agreements and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
---------
ARTICLE XIII
DEFINITIONS
Capitalized terms not otherwise defined when first used herein shall
have the meanings set forth in the Merger Agreement.
ARTICLE XIV
SHELF REGISTRATION
14.1. Shelf Registration. As soon as reasonably practicable after the
------------------
date hereof, taking into account the requirement to include Home Account
financial statements in the Registration Statement, the Company agrees to file
with the SEC a shelf registration statement on Form S-3 (together with all
amendments thereto, the "Registration Statement"), with respect to the
registration under the Securities Act for resale of the Stock constituting
Merger Consideration that is to be issued to the Investors pursuant to the
Merger Agreement (the "Registrable Stock"). The Company will use its reasonable
best efforts to cause the Registration Statement to be declared effective under
the Securities Act as promptly as practicable. The Company will use its
reasonable best efforts to keep the Registration Statement continuously
effective until the earliest of (a) the date when all of the shares of
Registrable Stock covered thereby are issued or sold thereunder, (b) the date on
which all Investors then holding Stock agree to the withdrawal of the
Registration Statement or (c) the first date on which all of the shares of
Registrable Stock covered thereby could, in the opinion of counsel for the
Company, be sold in any three month period pursuant to Rule 144 under the
Securities Act or any successor rule thereto (the "Shelf Registration Period").
The Company further agrees to supplement or make amendments to the Registration
Statement, if required by the rules, regulations, or instructions applicable to
the registration form utilized by the Company or by the Securities Act or rules
and regulations thereunder for the Registration Statement. No provision of this
Article II shall require the Company to file a registration statement on any
form other than Form S-3 or a successor form thereto.
14.2. Registration and Qualification Procedures. The Company will:
-----------------------------------------
(a) use its reasonable best efforts to cause the Registration Statement to
be declared effective by the SEC as promptly as practicable;
(b) use its reasonable best efforts to keep the Registration Statement
effective and the related prospectus current throughout the Shelf Registration
Period;
(c) furnish to each Investor such numbers of copies of the relevant
prospectuses, and supplements or amendments thereto, and such other related
documents as they may reasonably request; and
(d) use its reasonable best efforts to register or qualify the securities
covered by the Registration Statement under applicable state securities or blue
sky laws; provided, however, that the Company shall not be required to (i)
qualify as a foreign corporation or consent to a general and unlimited service
of process in any jurisdiction in which it would not otherwise be required to be
qualified or so consent or (ii) qualify as a dealer in securities.
14.3. Allocation of Expenses. The Company shall pay all expenses in
----------------------
connection with the Registration Statement, including, without limitation, (a)
SEC registration fees, (b) printing expenses, (c) accounting and legal fees and
expenses for the Company (but not the fees and expenses of any accountant or
attorney engaged by any Investor) and (d) expenses of complying with applicable
securities or blue sky laws in connection with the Registration Statement;
provided, however, the Company shall not be liable for (i) any discounts or
commissions to any broker attributable to any sale of shares of Registrable
Stock, or (ii) any fees or expenses incurred by Investors in connection with
such registration which, according to the written instructions of any regulatory
authority, the Company is not permitted to pay.
14.4. Indemnification. In connection with the Registration Statement,
---------------
the Company agrees to indemnify the Investors in accordance with the provisions
of Article III hereof.
14.5. Listing on Securities Exchange. The Company will, at its
------------------------------
expense, promptly prepare and submit to the Nasdaq National Market a listing
application covering the shares of
Registrable Stock, and shall use its reasonable best efforts to obtain, prior to
the Effective Time of the Merger, approval for the listing of such shares of
Registrable Stock, subject to official notice of issuance, and Home Account
shall cooperate with the Company with respect to such listing.
14.6. Lockup Agreement.
----------------
(a) Notwithstanding the effectiveness of the Registration Statement, in
consideration for the Company agreeing to its obligations under this Agreement,
each Investor agrees that it shall not offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose of (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of an
option to purchase or other sale or disposition of) any shares of Registrable
Stock on or before the eighteen-month anniversary of the Closing Date (as
defined in the Merger Agreement); provided, however,
(i) that during the First Release Period (as defined in the Merger
Consideration Escrow Agreement) up to 10% of the shares of
Registrable Stock held by all of the Investors (the "First
Release Volume Limitation") may be sold first by the
Stockholders' Representative for the benefit of the Incentive
Plan Participants (as defined in the Merger Consideration Escrow
Agreement) in accordance with the Merger Consideration Escrow
Agreement and subject to the aggregate daily and weekly volume
limits for all of the Investors listed on Exhibit B hereto solely
to fund such Incentive Plan Participants' Withholding Amounts (as
defined in the Merger Consideration Escrow Agreement) until such
time as the Incentive Plan Participants' Withholding Amounts are
paid in full (the "Incentive Payoff"), second if the Incentive
Payoff is satisfied in full, by the Stockholders' Representative
for any then known expenses or fees contemplated by Section 8 of
the Merger Consideration Escrow Agreement, including for the
benefit of First Data Resources Inc. ("First Data") and Xxxxxx
Xxxxxx (collectively, "MCEA Expenses") in accordance with the
Merger Consideration Escrow Agreement and subject to the
aggregate daily and weekly volume limits for all of the Investors
listed on Exhibit B hereto until such time as the then known MCEA
Expenses are paid in full (the "the "MCEA Expense Payoff"),
third, if the Incentive Payoff and the MCEA Expense Payoff are
satisfied in full, by the Investors listed on Exhibit B and Vault
Holdings, LLC ("Vault") (provided that Vault may not sell more
than the Registrable Shares transferred to it under Section 5(b)
of the Merger Consideration Escrow Agreement) subject to the
aggregate daily and weekly volume limits for all of the Investors
listed on Exhibit B hereto, including the daily and weekly volume
limits for Vault set forth on Exhibit C hereto, but only for such
period of time as Xxxxxx Xxxxxxxxxx in his capacity of
Stockholders Representative or his agent ("Xxxxxxxxxx") deems
reasonably appropriate (such period not to extend beyond the
earlier of (i) the date on which each of the Investors set forth
on Exhibit B have sold all its Authorized Number (as defined in
the Merger Consideration Escrow Agreement) of shares of
Registrable Stock and (ii) the Exclusivity Cap Date (as defined
below)) (the last day of such period being the "Former Creditor
Payoff Date"), and fourth, beginning immediately after the Former
Creditor Payoff Date has occurred, by the Investors listed on
Exhibit C hereto and subject to each Investor's daily and weekly
volume limits as set forth on Exhibit C; provided, further,
(ii) that during the Second Release Period (as defined in the Merger
Consideration Escrow Agreement) up to an additional 15% of the
shares of Registrable Stock held by all of the Investors (the
"Second Release Volume Limitation") may be sold first by the
Stockholders' Representative to satisfy the Incentive Payoff, if
any, second if the Incentive Payoff is satisfied in full, by the
Stockholders' Representative to satisfy the MCEA Expense Payoff,
if any, third, if the Incentive Payoff and the MCEA Expense
Payoff are satisfied in full and the Former Creditor Payoff Date
has not occurred, by the Investors listed on Exhibit B and Vault
(provided that Vault may not sell more than the Registrable
Shares transferred to it under Section 5(b) of the Merger
Consideration Escrow Agreement) subject to the aggregate daily
and weekly volume limits for all of the Investors listed on
Exhibit B hereto, including the daily and weekly volume limits
for Vault set forth on Exhibit C hereto, but only for such period
of time not to extend beyond the Former Creditor Payoff Date, as
determined above, and fourth, beginning immediately after the
Former Creditor Payoff Date has occurred, by the Investors listed
on Exhibit C hereto and subject to each Investor's daily and
weekly volume limits as set forth on Exhibit C; provided,
further,
(iii)that from the Final Release Period (as defined in the Merger
Consideration Escrow Agreement) until the date that is 18 months
after the Closing Date, the remaining shares of Registrable Stock
held by all of the Investors may be sold first by the
Stockholders' Representative to satisfy the Incentive Payoff, if
any, second if the Incentive Payoff is satisfied in full, by the
Stockholders' Representative to satisfy the MCEA Expense Payoff,
if any, third, if the Incentive Payoff and the MCEA Expense
Payoff are satisfied in full and the Former Creditor Payoff Date
has not occurred, by the Investors listed on Exhibit B and
Vault (provided that Vault may not sell more than the Registrable
Shares transferred to it under Section 5(b) of the Merger
Consideration Escrow Agreement) subject to each such Investor's
daily and weekly volume limits as set forth on Exhibit B hereto,
including the daily and weekly volume limits for Vault set forth
on Exhibit C hereto, but only for such period of time not to
extend beyond the earlier of (A) the Former Creditor Payoff Date,
as determined above and (B) 30 calendar days after the start of
the Final Release Period, and fourth, immediately after the
Former Creditor Payoff Date has occurred, by the Investors listed
on Exhibit C subject to each Investor's daily and weekly volume
limits as set forth on Exhibit C hereto;
provided, further, that in no such case shall the aggregate number of shares of
Registrable Stock that may be sold within an applicable time period set forth
herein exceed the aggregate daily and weekly volume limitations for all the
Investors set forth in Exhibit B, except that with respect to ITEM fourth in
each of clause (i), (ii) and (iii) above the aggregate number of shares of
Registrable Stock that may be sold within an applicable time period set forth
herein shall not exceed the aggregate daily and weekly volume limitations for
all the Investors set forth in Exhibit C. "Exclusivity Cap Date" means, for the
First Release Period, the Second Release Period, or the Final Period, as
applicable, the number of days after the commencement of the First Release
Period, the Second Release Period, or the Final Period, as applicable, computed
by the Stockholders' Representative by multiplying 1 by a fraction whose
numerator is the aggregate amount of Former Indebtedness (as defined in the
Merger Consideration Escrow Agreement) on the day immediately preceding the date
which is first trading of (i) the First Release Period, (ii) the Second Release
Period, or (iii) the Final Period, whichever is applicable, and whose
denominator is the Formula Price (as defined in the Merger Consideration Escrow
Agreement) multiplied by the aggregate weekly volume limits for all of the
Investors listed on Exhibit B hereto, including the weekly volume limits for
Vault set forth on Exhibit C hereto.
(b) Notwithstanding anything to the contrary herein, (i) no more than 10%
of the shares of Registrable Stock held by all of the Investors may be sold
during the Initial Release Period, and (ii) no more than an additional 15% of
the shares of Registrable Stock held by all of the Investors may be sold during
the Second Release Period.
(c) For the purposes of this Section 2.6, an Investor who is an affiliated
entity with another Investor may aggregate their shares of Registrable Stock for
purposes of calculating such Investor's daily and weekly volume limits as set
forth on Exhibit B and Exhibit C, as the case may be, provided, however, that
such affiliated Investor's daily and weekly volume limits are correspondingly
reduced.
(d) The provisions of this Section 2.6 shall terminate in the event of any
merger in which the stockholders of the Company immediately before such merger
do not own in excess of 50% of the issued and outstanding stock of the surviving
or resulting corporation immediately after such merger.
ARTICLE XV
INDEMNIFICATION
15.1. Indemnification. In the event any shares of Registrable
---------------
Stock are included in a Registration Statement under this Agreement:
(a) to the extent permitted by law, the Company will indemnify and hold
harmless each Investor joining in the Registration Statement, each of such
Investor's officers, directors and partners, any underwriter (as defined in the
Securities Act) for such Investor and each person, if any, who controls such
Investor or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein not misleading or arise out of any violation by the Company
of any rule or regulation promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration; and will reimburse each such Investor, each of such
Investor's officers, directors and partners, such underwriter or controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating and defending or settling any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 3.1(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld)
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in connection with such Registration Statement, preliminary prospectus,
final prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such holder, underwriter or controlling person
unless such information was subsequently corrected in a writing specifically
noting the correction furnished to the Company prior to the filing of the
Registration Statement;
(b) to the extent permitted by law, each Investor joining in the
Registration Statement will indemnify and hold harmless the Company, each of its
directors and officers, each person, if any, who controls the Company within the
meaning of the Securities Act and each agent and any underwriter for the Company
(within the meaning of the Securities Act) and each other such Investor joining
in the Registration Statement and each of their officers, directors, and
partners, and each person controlling such holder, against any losses, claims,
damages or liabilities to which the Company or any such director, officer,
controlling person, agent or underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
such Registration Statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary or final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished by such holder expressly for use
in connection with such registration; and each such holder will reimburse any
legal or other expenses reasonably incurred by the Company or other holder or
any such director, officer, controlling person, agent or underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 3.1(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such holder (which consent shall not be unreasonably withheld);
and provided, further, in no event will any such holder be obliged to make
payments to indemnified parties in excess of the net proceeds realized by such
holder in a sale of securities pursuant to such Registration Statement; and
(c) promptly after receipt by an indemnified party under this paragraph of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
paragraph, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all indemnified parties which may be represented without conflict
by one counsel) shall have the right to retain one separate counsel, with the
fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interest between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to his ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this paragraph, but the omission so to notify the
indemnifying party will not relieve him of any liability that he may have to any
indemnified party otherwise than under this paragraph.
15.2. Contribution.
------------
(a) If for any reason the indemnification provisions contemplated herein
are either unavailable or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages, or liabilities referred to therein, then
the party that otherwise would be required to provide indemnification or the
indemnifying party (in either case, for purposes of this section, the
"Indemnifying Party") in respect of such losses, claims, damages, or
liabilities, shall contribute to the amount paid or payable by the party that
would otherwise be entitled to indemnification or the indemnified party (in
either case, for purposes of this section, the "Indemnified Party") as a result
of such losses, claims, damages, liabilities, or expense, in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact related to information supplied by the Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities, and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party.
(b) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this section were determined by pro rata allocation
(even if the holders or any underwriters or all of them were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. No person or entity determined to have committed a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
ARTICLE XVI
GENERAL
16.1. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be delivered by hand, transmitted by
facsimile transmission, or sent prepaid by international courier, to the
Investors at their addresses as set forth on the Exhibit A attached hereto.
Notices to the Company, shall be delivered at or mailed to: InteliData
Technologies Corporation, 00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx 00000, Attn: General Counsel. The Company may specify a different
address by written notice to the Investors. Any Investor may specify a different
address by written notice to the Company. Any notice, request, demand or other
communication delivered or sent in the manner aforesaid shall be deemed given or
made (as the case may be) when delivered by hand or confirmed by facsimile
transmission, or, in the case of delivery by courier, when actually delivered to
the address of the intended recipient.
16.2. Entire Agreement. This Agreement and exhibits attached hereto
-----------------
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties or any of them with respect to the subject
matter hereof.
16.3. Pronouns and Plurals. When the context in which words are used
---------------------
in this Agreement indicates that such is the intent, words in the singular
number shall include the plural and the masculine gender shall include the
neuter or female gender as the context may require.
16.4. Descriptive Headings. The descriptive headings herein are
---------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
16.5. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
16.6. Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of Delaware regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
16.7. Assignment. This Agreement shall not be assigned by operation of
----------
law or otherwise.
16.8. Amendment. This Agreement may be amended by written agreement
---------
executed by the Company and each Investor to be bound thereby.
16.9. Authority; Binding Effect. Each party hereto represents and
---------
warrants to the other parties that it has the full legal right, power and
authority to execute this Agreement, that this Agreement has been duly
authorized, executed and delivered on behalf of such party and constitutes a
valid and binding agreement of such party enforceable in accordance with its
terms.
IN WITNESS WHEREOF, each party has duly executed this Agreement as of
the day and year first above written.
INTELIDATA TECHNOLOGIES
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
---------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and Chief
Executive Officer
INVESTORS:
U.S. BANCORP XXXXX XXXXXXX
By: U.S. BANCORP XXXXX XXXXXXX
By: /s/ Stuart Duty
-----------------
Stuart Duty
Managing Director
XXXXX & XXXXXXXX CAPITAL
TECHNOLOGY PROFESSIONALS
VENTURE FUND, L.P.
By: MMC Capital, Inc.
-----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Legal Director
TRIDENT II, L.P.
By: MMC Capital, Inc.
-----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Legal Director
XXXXX & MCLENNAN EMPLOYEES'
SECURITIES COMPANY, L.P.
By: MMC Capital, Inc.
-----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Legal Director
XXXXX & XXXXXXXX CAPITAL
PROFESSIONALS FUND, L.P.
By: MMC Capital, Inc.
----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Legal Director
XXXXX & MCLENNAN CAPITAL
TECHNOLOGY VENTURE FUND, L.P.
By: MMC Capital, Inc.
----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Legal Director
MOBIUS MANAGEMENT SYSTEMS, INC
By: /s/ Xxxxxxxx Xxxxx
-------------------
Xxxxxxxx Xxxxx
President
NEW ENTERPRISE ASSOCIATES VIII,
LIMITED PARTNERSHIP
By: NEA Partners VIII, L.P.
-----------------------
Its: General Partner
By: /s/ Xxxxxxx Xxxxx
------------------
Xxxxxxx Xxxxx
General Partner
NEW ENTERPRISE PRESIDENTS FUND,
LIMITED PARTNERSHIP
By: NEA General Partners, L.P.
-------------------------
Its: General Partner
By: /s/ Xxxxxx X. Xxxx
-------------------
Xxxxxx X. Xxxx
General Partner
NEA VENTURES 1999, L.P.
By: NEA Ventures 1999, L.P.
-----------------------
Its: Vice President
By: /s/ Xxxxxxxxxx Xxxxx
---------------------
Xxxxxxxxxx Xxxxx
Vice President
OAK VIII AFFILIATES FUND, L.P.
By: Managing Member of Oak VIII
---------------------------
Affiliates, LLC
---------------
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxxxx
Managing Member
OAK INVESTMENT PARTNERS VIII, L.P.
By: Managing Member of Oak VIII
---------------------------
Affiliates, LLC
---------------
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxxxx
Managing Member
EONE GLOBAL, LP
By: /s/_David X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
Managing Director
FIRST DATA RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxx
-------------------
Xxxxxx X. Xxxx
Assistant Secretary
VAULT HOLDINGS, LLC
By: /s/ Xxxx X. Small
------------------
Xxxx X. Small
Liquidating Trustee
/s/ Xxxxxx Xxxxx
------------------
Xxxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
------------------
Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
------------------
Xxxxxxx Xxxxx
/s/ Xxxx Xxxxx
---------------
Xxxx Xxxxx
/s/ Xxxxx Xxxxxx
----------------
Xxxxx Xxxxxx
/s/ Xxxxxxx Xxxx
-----------------
Xxxxxxx Xxxx
/s/ Xxxxxxx Xxxxxx
-------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxx
-------------------
Xxxxxx Xxxxxxx
/s/ Xxxx Xxxxxx
----------------
Xxxx Xxxxxx
/s/ Xxx Lofshultz
------------------
Xxx Lofshultz
/s/ Xxxxxxx Xxxxx
------------------
Xxxxxxx Xxxxx
Exhibit 10.1
------------
MERGER CONSIDERATION ESCROW AGREEMENT
This Merger Consideration Escrow Agreement (the "Agreement"), dated as of
January 11, 2001, is made and entered into by and among InteliData Technologies
Corporation, a Delaware corporation ("Parent"), Home Account Holdings, Inc., a
Delaware corporation ("Home Account"), Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxx, each
in his capacity as representative of the stockholders of Home Account (the
"Stockholders' Representative") and SunTrust Bank, Richmond, Virginia (the
"Escrow Agent").
RECITALS
________
A. Parent, InteliData, Mergersub, Inc., a Delaware corporation
and wholly owned subsidiary of Parent ("Merger Subsidiary"), and Home
Account intend to enter into the Merger Agreement. Section 2.7(a) of
the Merger Agreement provides that Parent will deliver to the Escrow
Agent the Merger Consideration Escrow Shares to be held by the Escrow
Agent in accordance with the terms and conditions of this Agreement.
B. In order to establish the escrow of the Merger Consideration
Escrow Shares pursuant to the Merger Agreement, the parties hereto are
entering into this Agreement.
AGREEMENT
_________
1. Definitions. The following defined terms have the meanings set forth below.
-----------
"Agreement" means this Merger Consideration Escrow Agreement.
"Allocation Notice" means written instructions by the
Stockholders' Representative to the Escrow Agent to transfer
Merger Consideration Escrow Shares, as provided in Paragraphs 4,
5 and 6 of this Agreement.
"Applicable Date" means, with reference to the Former
Indebtedness of Former Creditors who are Holders identified in
the NFEA, the date as of which the Stockholders' Representative
(in its instructions to the Escrow Agent) calculates the number
of Merger Consideration Escrow Shares to be allocated and
transferred in respect of such Former Indebtedness.
"Authorized Number" with respect to each Former Creditor means
the total number of Merger Consideration Escrow Shares authorized
to be transferred to such Former Creditor as determined by the
Stockholders' Representative by dividing the Former Indebtedness
to such Former Creditor by the Formula Price applicable to the
Period for which the determination is made. Any fractional
Escrow Share resulting from this computation shall be rounded
down, except for a fractional Escrow Share resulting from the
computation that satisfies the full amount of the Former
Creditor's Former Indebtedness, which fraction shall be rounded
up.
"Effective Time" has the meaning set forth in the Merger
Agreement.
"Escrow Agent" means Sun Trust Bank acting as escrow agent under
this Agreement, and any successor thereof.
"Expense Funding Shares" has the meaning ascribed in Paragraph 8
of this Agreement. "FDR" means First Data Resources, Inc.
"FDR Note Amount" means the $1,000,000 principal amount of senior
promissory notes issued by Home Account to, FDR, plus interest
accrued thereon to the Effective Time, plus interest that would
have accrued on the unpaid principal and interest after the
Effective Time had such notes remained outstanding to the date on
which FDR receives payment ("pseudo interest"). If FDR receives a
payment in an amount less than the full amount of the FDR Note
Amount, such payment shall be applied to reduce equal percentages
of unpaid pseudo interest and unpaid principal and interest
amounts.
"Fees Agreement" has the meaning ascribed in Paragraph 8 of this
Agreement.
"Final Period" means any time after the end of the Second Release
Period.
"First Release Period" means the period beginning on the date the
Registration is declared effective by the SEC and ending on the
90th day thereafter.
"Former Creditor" means each of the "Holders" and "Xxxxx Xxxxxxx"
as identified in the NFEA, but excluding FDR.
"Former Indebtedness" means (i) in the case of a Holder, the
principal amount of the Home Account Note or Notes exchanged
under the NFEA, plus unpaid interest thereon accrued to the
Effective Time, plus an amount equal to the interest that would
have accrued thereon after the Effective Time had such Home
Account Note or Notes remained outstanding to the Applicable
Date; and (ii) in the case of Xxxxx Xxxxxxx, the amount of its
fee as set forth in the NFEA, without interest; in each case less
any amount thereof in satisfaction of which Merger Consideration
Escrow Shares shall have previously been issued.
"Formula Price" means the average of the high and low sale prices
of Parent Common Stock, as reported by The Wall Street Journal,
for the three Trading Days immediately preceding the date which
is first Trading Day of (i) the First Release Period, (ii) the
Second Release Period, or (iii) the Final Period, whichever is
applicable; provided however that for purposes of determining the
Authorized Number (and corresponding reductions in the Former
Indebtedness) of any Former Creditor, the Formula Price shall be
the higher of such average price and $2.00 (subject to adjustment
for any events described in the last sentence of
Paragraph 16 of this Agreement). If such high and low sale prices
are not reported in The Wall Street Journal, the Stockholders'
Representative may obtain them from another source believed to be
reliable, or may use the closing bid and asked prices so
reported.
"Home Account" means Home Account Holdings, Inc. a Delaware
corporation. "Incentive Plan Allotment" has the meaning ascribed
in Paragraph 5 of this Agreement.
"Incentive Plan Participant" means each participant in the
Incentive Plan who is
identified in Exhibit A hereto.
"Incentive Plan" has the meaning ascribed in Paragraph 3 of this
Agreement. "Indemnity Agreement" means the Indemnity Escrow
Agreement among Parent, Home Account, the Stockholders'
Representative and the Escrow Agent.
"Merger Agreement" means to the Agreement and Plan of Merger
among Parent, Merger Subsidiary, Home Account the Stockholders'
Representative.
"Merger Consideration Escrow Shares" means all shares issued to
the Escrow Agent pursuant to Paragraph 2(b) of this Agreement.
"Merger Stock Consideration" has the meaning set forth in the
Merger Agreement.
"NFEA" means the Note and Fee Exchange Agreement, dated the date
of this Agreement, among the Holders, Xxxxx Xxxxxxx, Parent and
Home Account Holdings, Inc.
"Parent" means InteliData Technologies, Inc., a Delaware
corporation.
"Period" means either of the First Release Period, the Second
Release Period or the Final Period, as appropriate in the
context.
"Permissible Sales" has the meaning ascribed in Paragraph 4 of
this Agreement.
"Preferred Holders" means the holders of shares of Preferred
Stock of Home Account set forth in Exhibit B hereto, or their
assigns after the date of this Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement among Parent and certain Home Account stockholders.
"Registration" means the registration statement filed by Parent
in accordance with Article II of the Registration Rights
Agreement.
"Residual Shares" has the meaning ascribed in Paragraph 5 of this
Agreement.
"Salable Number" means the number of Merger Consideration Escrow
Shares permitted by the Registration Rights Agreement to be sold
by each Former Creditor in each of the First Release Period or
Second Release Period, as applicable, which number shall be
computed by the Stockholders' Representative
by multiplying the total number of Permissible Sales in such
period (which number, in the First Release Period, shall be the
total number of Permissible Sales in such period less the sum of
(i) the number of Merger Consideration Escrow Shares to be
transferred to the Stockholders' Representative as agent for
Incentive Plan Participants in such period and (ii) the number of
Merger Consideration Escrow Shares to be transferred to Vault
Holdings LLC in such period; and which number in each period
shall be reduced by the number of Merger Consideration Escrow
Shares, if any, designated in the Allocation Notice for such
period to be transferred to the Stockholders' Representative
pursuant to Paragraph 8 of this Agreement) by a fraction whose
numerator is the amount of Former Indebtedness of such Former
Creditor at the commencement of the period (taking into account
the accruals contemplated in clause (i) of the definition of
Former Indebtedness, as well as any prior issuances of Merger
Consideration Escrow Shares in satisfaction of such Former
Creditor's Former Indebtedness and prior accruals thereon) and
the denominator is the total of such amounts for all the Former
Creditors. Any fractional Escrow Share resulting from this
computation shall be rounded off. "Second Release Period" means
the period beginning on the first day after the end of the First
Release Period and ending on the first anniversary of the date of
the Merger Agreement.
"Stockholders' Representative" means, either individually or
collectively Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxx, or the successor
of either of both.
"Trading Days" means any day on which trading takes place for at
least one hour on the New York Stock Exchange.
"Withholding Amount" has the meaning ascribed in Paragraph 3 of
this Agreement.
2. Issuance of Merger Stock Consideration. As soon as practicable after the
---------------------------------------
Effective Time, the Merger Stock Consideration will be issued by Parent in
accordance with Article II of the Merger Agreement as follows:
(a) 1,000,000 shares to the escrow agent for the Indemnity Escrow
Agreement; and
(b) 5,900,000 shares to the Escrow Agent for allocation in accordance with
this Agreement.
3. Withholding Amounts. As soon as practicable after the Effective Time,
--------------------
Parent will notify (or cause Home Account to notify) the Stockholders'
Representative in writing of the amount paid or to be paid by Home Account or
Parent to all Federal, State and other taxing authorities with respect to income
tax and any other tax liabilities of each Incentive Plan Participant arising
from the award of stock bonuses to such persons under the Home Account 2000
Incentive Plan (the "Incentive Plan") which they are by contract obligated to
reimburse Home Account or Parent (individually the "Withholding Amount" and
collectively the "Withholding Amounts").
4. Registration of Merger Consideration Escrow Shares. Parent will file the
--------------------------------------------------
Registration in accordance with the Registration Rights Agreement, which
will cover the public offer and resale of all the Merger Consideration Escrow
Shares. The Registration Rights Agreement permits the sale of no more than 10%
of the total Merger Stock Consideration during the First Release Period, no more
than an incremental 15% of the total Merger Stock Consideration during the
Second Release Period, and all Merger Stock Consideration during the Final
Period (the "Permissible Sales"). Only Merger Consideration Escrow Shares will
be eligible for sale during the First Release Period and Second Release Period.
5. First Release Period. When the Registration is declared effective by the SEC,
--------------------
Parent will promptly so notify the Stockholders' Representative, with a copy to
the Escrow Agent, by fax, with confirming duplicates by email and by US mail to
the Stockholders' Representative. The Stockholders' Representative, within two
Trading Days after the Stockholders' Representative receives such notice, will
deliver to the Escrow Agent an Allocation Notice to transfer Merger
Consideration Escrow Shares as provided below, subject however to Paragraph 8 of
this Agreement.
(a) The Escrow Agent shall transfer to the Stockholders' Representative, as
agent of each Incentive Plan Participant, a number of Merger Consideration
Escrow Shares determined by the Stockholders' Representative by dividing that
Incentive Plan Participant's Withholding Amount by the Formula Price.
(b) The Escrow Agent shall transfer to Vault Holdings, LLC a
number of Merger Consideration Escrow Shares determined by the Stockholders'
Representative by dividing $200,000 by the Formula Price.
(c) The Escrow Agent shall transfer to each of the Former Creditors (or to
purchasers of their shares under the Registration, if the Former Creditors so
instruct), a number of Merger Consideration Escrow Shares equal to the lesser of
(i) the Authorized Number of such Former Creditor and (ii) the Salable Number of
such Former Creditor. If the number of Merger Consideration Escrow Shares to be
transferred according to the Stockholders' Representative's instruction to the
Former Creditors shall not have equaled their total Authorized Number, the
Escrow Agent shall hold the balance of the Merger Consideration Escrow Shares
until additional transfers are made in accordance with paragraph 6.
(d) If the total number of Merger Consideration Escrow Shares transferred
to the Former Creditors shall have equaled their total Authorized Number, the
Allocation Notice shall instruct the Escrow Agent to transfer the balance of the
remaining Merger Consideration Escrow Shares (the "Residual Shares"). To
determine the allocation of the Residual Shares, the
Stockholders' Representative shall add to the number of Residual Shares (x) the
total number of Merger Consideration Escrow Shares transferred in respect of
Withholding Amounts and (y) the Merger Consideration Escrow Shares transferred
to Vault Holdings, LLC pursuant to subparagraph (c), and the resulting sum shall
be multiplied by 15% ("Incentive Plan Allotment"). The Allocation Notice shall
instruct the Escrow Agent to
(i) transfer to each Incentive Plan Participant a number of Merger
Consideration Escrow Shares equal to the percentage of the
Incentive Plan Allotment set forth opposite the name of such
Incentive Plan Participant in Exhibit A hereto, less the number
of Merger Consideration Escrow Shares transferred to the
Stockholders' Representative as agent of such Incentive Plan
Participant; the Escrow Agent shall notify Parent of any
transfers to Incentive Plan Participants pursuant to this
subparagraph at least ten business days prior to the transfer,
and any stock certificate issued with respect to such shares
which Parent prior to issuance shall notify the Escrow Agent to
be unvested under the Incentive Plan shall be retained by the
Escrow Agent until receipt of notification from Parent either (x)
that vesting has been satisfied, in which case those shares shall
then be released to the Incentive Plan Participant, or (y) that
vesting cannot occur, in which case those shares will be added to
the Merger Consideration Escrow Shares to be transferred to
Preferred Holders as provided in subparagraph (ii); and
(ii) transfer the balance of the Residual Shares pro rata to the
respective Preferred Holders in accordance with Exhibit B hereto;
provided, however, that the number of Residual Shares to be
transferred to Vault Holdings LLC (or its assigns) shall be
reduced by the number of Merger Consideration Escrow Shares
transferred to Vault Holdings LLC (or its assigns) pursuant to
Paragraph 5(b).
6. Second Release Period. The Stockholders' Representative shall on the
---------------------
first day of the Second Release Period deliver to the Escrow Agent an Allocation
Notice to transfer to each of the Former Creditors (or to purchasers of their
shares under the Registration, if the Former Creditors so instruct), a number of
Merger Consideration Escrow Shares equal to the lesser of (i) the Authorized
Number of such Former Creditor and (ii) the Salable Number of such Former
Creditor. If the number of Merger Consideration Escrow Shares to be transferred
according to the Stockholders' Representative's instruction to the Former
Creditors shall not have equaled their total Authorized Number, the Escrow Agent
shall hold the balance of the Merger Consideration Escrow Shares until
additional transfers are made in accordance with paragraph 7. If the total
number of Merger Consideration Escrow Shares transferred to the Former Creditors
shall have equaled their total Authorized Number, the Allocation Notice shall
instruct the Escrow Agent to transfer the Residual Shares. To determine the
allocation of the Residual Shares, the Stockholders' Representative shall add to
the number of Residual Shares (x) the total number of Merger Consideration
Escrow Shares transferred in respect of Withholding Amounts and (y) the Merger
Consideration Escrow Shares transferred to Vault Holdings, LLC pursuant to
subparagraph (c), and the resulting sum shall be multiplied by 15% ("Incentive
Plan Allotment"). The Allocation Notice shall instruct the Escrow Agent to
(i) transfer to each Incentive Plan Participant a number of Merger
Consideration Escrow Shares equal to the percentage of the
Incentive Plan Allotment set forth opposite the name of such
Incentive Plan Participant in Exhibit A hereto, less the number
of Merger Consideration Escrow Shares transferred to the
Stockholders' Representative pursuant to Paragraph 5(a) as agent
of such Incentive Plan Participant; the Escrow Agent shall notify
Parent of any transfers to Incentive Plan Participants pursuant
to this subparagraph at least ten business days prior to the
transfer, and any stock certificate issued with respect to such
shares which Parent prior to issuance shall notify the Escrow
Agent to be unvested under the Incentive Plan shall be retained
by the Escrow Agent until receipt of notification from Parent
either (x) that vesting has been satisfied, in which case those
shares shall then be released to the Incentive Plan Participant,
or (y) that vesting cannot occur, in which case those shares will
be added to the Merger Consideration Escrow Shares to be
transferred to Preferred Holders as provided in subparagraph
(ii); and
(ii) transfer the balance of the Residual Shares pro rata to the
respective Preferred Holders in accordance with Exhibit B hereto;
provided, however, that the number of Residual Shares to be
transferred to Vault Holdings LLC (or its assigns) shall be
reduced by the number of Merger Consideration Escrow Shares
transferred to Vault Holdings LLC (or its assigns) pursuant to
Paragraph 5(b).
7. Final Period. The Stockholders'Representative shall on the first day of the
------------
Final Period deliver to the Escrow Agent an Allocation Notice to transfer to
each of the Former Creditors (or to purchasers of their shares under the
Registration, if the Former Creditors so instruct), a number of Merger
Consideration Escrow Shares equal to the Authorized Number of such Former
Creditor. If the number of Merger Consideration Escrow Shares to be transferred
according to the Stockholders' Representative's instruction exceeds the total
number of Merger Consideration Escrow Shares, the Merger Consideration Escrow
Shares shall be transferred pro rata to the Former Creditors in the proportion
that the Authorized Number of each bears to the total Authorized Number of all;
and the Preferred Holders shall receive nothing from this Escrow. If the number
of Merger Consideration Escrow Shares transferred to the Former Creditors shall
have equaled their total Authorized Number, the Allocation Notice shall instruct
the Escrow Agent to transfer the Residual Shares. To determine the allocation of
the Residual Shares, the Stockholders' Representative shall add to the number of
Residual Shares (x) the total number of Merger Consideration Escrow Shares
transferred in respect of Withholding Amounts and (y) the Merger Consideration
Escrow Shares transferred to Vault Holdings, LLC pursuant to subparagraph (c),
and the resulting sum shall be multiplied by 15% ("Incentive Plan Allotment").
The Allocation Notice shall instruct the Escrow Agent to
(i) transfer to each Incentive Plan Participant a number of Merger
Consideration Escrow Shares equal to the percentage of the
Incentive Plan Allotment set forth opposite the name of such
Incentive Plan Participant in Exhibit A hereto, less the number
of Merger Consideration Escrow Shares transferred to the
Stockholders' Representative as agent of such Incentive Plan
Participant pursuant to Paragraph 5(a); the Escrow Agent shall
notify Parent of any transfers to Incentive Plan Participants
pursuant to this subparagraph at least ten business days prior to
the transfer, and any stock certificate issued with respect to
such shares which Parent prior to issuance shall notify the
Escrow Agent to be unvested under the Incentive Plan shall be
retained by the Escrow Agent until receipt of notification from
Parent either (x) that vesting has been satisfied, in which case
those shares shall then be released to the Incentive Plan
Participant, or (y) that vesting cannot occur, in which case
those shares will be added to the Merger Consideration Escrow
Shares to be transferred to Preferred Holders as provided in
subparagraph (ii); and (ii) transfer the balance of the Residual
Shares pro rata to the respective Preferred Holders in accordance
with Exhibit B hereto; provided, however, that the number of
Residual Shares to be transferred to Vault Holdings LLC (or its
assigns) shall be reduced by the number of Merger Consideration
Escrow Shares transferred to Vault Holdings LLC (or its assigns)
pursuant to Paragraph 5(b).
8. Funding of Expenses. Notwithstanding Paragraphs 5, 6 and 7, the
-----------------------
Stockholders' Representative may in any Allocation Notice instruct the Escrow
Agent to transfer to the Stockholders' Representative a number of Merger
Consideration Escrow Shares specified in the Allocation Notice, to be sold by
the Stockholders' Representative to provide funds for any or all of the
following purposes (the "Expense Funding Shares"); and shall mandatorily include
in the Allocation Notice for the First Release Period, after taking into account
the Merger Consideration Escrow Shares to be transferred to the Stockholders'
Representative pursuant to Paragraph 5(a) as agent for Incentive Plan
Participants, which shall have priority, the number of Merger Consideration
Escrow Shares to be sold to provide funds to pay the amounts in subpararaphs (d)
and (e):
(a) in connection with the Fees and Termination Letter Agreement ("Fees
Agreement") among certain of the Preferred Holders, Home Account and Parent:
(i) To pay directly any Merger Expenses (as defined in the Fees
Agreement) for which any Preferred Holder may be liable
under Section I of the Fees Agreement, or any liability of
any Preferred Holder under Section III of the Fees
Agreement, or
(ii) to reimburse any Preferred Holder for any such Merger
Expenses or any such liability paid by it to Parent with
Stockholders' Representatives Consent;
(b) in connection with the Indemnity Agreement or this Agreement,
(i) to pay directly any expenses (including, but not limited to,
fees, expenses and retainers of attorneys, accountants,
experts and any out-of-pocket expenses of Stockholders'
Representative) incurred or expected to be incurred in
connection with investigating, contesting or otherwise
dealing with any claim by Parent or any other person
entitled, or claiming to be entitled, to indemnification
under the
Indemnity Agreement, or other expenses incurred in
connection with the discharge of the duties of the
Stockholders' Representative, or
(ii) to reimburse Stockholders' Representative for any such
expenses; (c) to pay the fees and expenses of the Escrow
Agent;
(d) to pay the FDR Note Amount; and
(e) to pay up to $150,000 in fees to Xxxxxx Xxxxxx in connection with the
Letter Agreement dated March 13, 1999 between Vault Holdings, LLC and Xxxxxx
Xxxxxx, the obligation for which amount of fees has been assumed by Home Account
prior to the execution of the Merger Agreement.
Until the FDR Note Amount is paid in full, no transfers of
Merger Consideration Escrow Shares for any other purpose under
Paragraphs 5, 6, 7 or this Paragraph 8 shall be made, except
for transfers for the allocation in Paragraph 5(a). Merger
Consideration Escrow Shares specified in an Allocation Notice
to be transferred to the Stockholders' Representative pursuant
to this Paragraph 8 shall be transferred in priority over any
transfers contemplated in Paragraphs 5, 6 or 7, except the
Merger Consideration Escrow Shares to be transferred to the
Stockholders' Representative pursuant to Paragraph 5(a) as
agent for Incentive Plan Participants. The Stockholders'
Representative will (x) sell the Expense Funding Shares
transferred to Stockholders' Representative or such portion
thereof as the Stockholders' Representative deems necessary
under the circumstances, (y) use the net proceeds of such
sales only for the purposes set forth in this Paragraph 8
(remitting to FDR the amount necessary to discharge the full
FDR Note Amount), and (z) remit to the Escrow Agent any Merger
Consideration Escrow Shares not sold and any net proceeds not
so expended. The Stockholders' Representative will provide to
the Escrow Agent, prior to the disbursement of the Residual
Shares by the Escrow Agent, copies of all sales confirmation
notices relating to the Expense Funding Shares. The Escrow
Agent will at the time of the distribution of the Residual
Shares allocate to the respective accounts of the Incentive
Plan Participants and Preferred Holders any net proceeds
remitted by the Stockholders' Representative. The allocation
shall be made for each distributee by multiplying the total
such net proceeds remitted by a fraction the numerator of
which is the sum of the number of Merger Consideration Escrow
Shares transferred in respect of that person's Withholding
Amount and the number of Residual Shares transferred to that
person, and the denominator of which is the total of such
numbers for all persons. For purposes of the records of the
distributees with regard to the sale for their respective
accounts of the Expense Funding Shares, the Escrow Agent shall
compute, based upon the same allocation methodology, each
distributee's pro rata portion of the Expense Funding Shares
sold and the net proceeds of such sales, and so notify each
distributee.
9. Transfers of Property Received from Indemnity Escrow. Any shares of Parent
------------------------------------------------------
Common Stock, cash or other property received by the Escrow Agent in a
disbursement from the escrow created under the Indemnity Agreement shall become
Merger Consideration Escrow Shares and be transferred in accordance with
Paragraph 7 of this Agreement.
10. Stock Certificates. Stock certificates representing all Merger Consideration
------------------
Escrow Shares that are transferred pursuant to Paragraphs 5, 6 or 7 of this
Agreement shall be released from this escrow and delivered in accordance with
the instructions of the Former Creditor or Preferred Holder, as the case may be,
subject to compliance with the terms of Section 2.6 of the Registration Rights
Agreement.
11. Voting of Merger Consideration Escrow Shares. All Merger
---------------------------------------------------
Consideration Escrow Shares registered in the name of the Escrow Agent will be
voted by the Escrow Agent on each proposal properly submitted for a vote to the
stockholders of Parent in proportion to the numbers of votes duly cast in the
aggregated by all other stockholders of Parent.
12. Reliance on Stockholders' Representative. The Escrow Agent shall be
----------------------------------------
absolutely entitled to rely on written instructions it receives from the
Stockholders' Representative as contemplated in paragraphs 5, 6, 7 and 8 of this
Agreement, and shall have no obligation whatever to verify the accuracy of the
information or computations on which such instructions are based. The provisions
of Section 2.7(g) of the Merger Agreement are incorporated herein by this
reference.
13. Acknowledgements and Covenants to Parent as Xxxxxx. The Escrow Agent
-----------------------------------------------------
and Stockholders' Representative each acknowledges and covenants that the
Merger Consideration Escrow Shares transferred to each Plan Participant pursuant
to Paragraph 5(a) hereof constitute Pledged Collateral which it will hold as
bailee for Parent as security for payment of the Withholding Amount of such Plan
Participant; provided, however, that Escrow Agent shall deliver the stock
certificates representing such Merger Consideration Escrow Shares of a Plan
Participant to the Stockholders' Representative as contemplated by Paragraph
5(a), and Stockholders' Representative shall cause such Merger Consideration
Escrow Shares to be sold and to receive from the selling broker the proceeds of
such sale, which proceeds shall be remitted promptly to Parent in accordance
with Parent's instructions to the Escrow Agent. The Stockholders' Representative
shall have no liability to Parent or to the Plan Participant for the timing or
manner of execution of such sale, provided it is made in a brokerage transaction
on the public market, or a transaction with the market maker for Parent Common
Stock (or otherwise with Parent's written consent), and shall not be responsible
if the proceeds are less than the Plan Participant's Withholding Amount, or any
other amount owing to Parent. Neither Escrow Agent nor the Stockholders'
Representative shall have any liability to Parent or to a Plan Participant for
any failure to obtain or maintain possession of Merger Consideration Escrow
Shares, provided that it shall be liable for its gross negligence or willful
misconduct causing such failure.
14. Stockholders' Representative. The provisions of Section 10.5 of the Merger
----------------------------
Agreement (relating to the Stockholders' Representative) are incorporated herein
by this reference.
15. Escrow Agent.
------------
(a) The Escrow Agent shall not be liable for any action taken or omitted to
be taken by it in good faith. In no event shall the Escrow Agent be liable or
responsible except for its own gross negligence or willful misconduct.
(b) The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the construction of any of the provisions of this
Agreement or the Escrow Agent's duties hereunder, and the Escrow Agent shall
incur no liability and shall be fully protected in acting in accordance with the
advice of such counsel.
(c) In the event of any disagreement between any of the parties to this
Agreement, or between any of them and any third party, resulting in adverse
claims or demands being made in connection with the matters covered by this
Agreement, or in the event that the Escrow Agent, in good faith, be in doubt as
to what action it should take hereunder, the Escrow Agent may, at its option,
refuse to comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists,
and in any such event, the Escrow Agent shall not be or become liable in any way
or to any party for its failure or refusal to act, and the Escrow Agent shall be
entitled to continue to refrain from acting until the earlier to occur of: (i)
the rights of all interested parties shall have been fully and finally
adjudicated by a court of competent jurisdiction; or (ii) all differences shall
have been adjudged and all doubt resolved by agreement among all of the
interested parties, and the Escrow Agent shall have been notified thereof in
writing signed by all such parties. Notwithstanding the preceding sentence, the
Escrow Agent may, in its sole discretion, obey the order, judgment, decree or
levy of any court, whether with or without jurisdiction, or of an agency of the
United States or any political subdivision thereof, and the Escrow Agent is
hereby authorized, in its sole discretion, to comply with and obey any such
orders, judgments, decrees or levies. The rights of the Escrow Agent under this
Section 15 are cumulative of all other rights which it may have by law or
otherwise.
16. Dividends on Merger Consideration Escrow Shares. Cash dividends or
--------------------------------------------------
distributions of property (other than pursuant to a stock split, share
reclassification or other similar event) paid with respect to the Merger
Consideration Escrow Shares shall be held in escrow by the Escrow Agent until
the escrow provided for in this Agreement has terminated, at which time such
dividends or distributions shall be paid or delivered to the beneficial holders
of such Merger Consideration Escrow Shares. Distributions of shares of Parent
Common Stock paid with respect to the Merger Consideration Escrow Shares as the
result of a stock split, dividend in shares, share reclassification or other
similar event shall be paid or delivered to the party receiving the Merger
Consideration Escrow Shares out of escrow, with each such distribution on each
such Merger Consideration Escrow Share following each such share. The number of
Merger Consideration Escrow Shares transferred to an Incentive Plan Participant
or to Vault Holdings LLC pursuant to Paragraph 5 prior to any such stock split,
stock dividend, reclassification or the like shall be appropriately adjusted for
purposes of determining later transfers to such persons or their assigns.
17. Fees and Expenses. Home Account shall pay the initial fees and expenses
------------------
of the Escrow Agent in accordance with Section 7.4 of the Merger
Agreement. All other fees and expenses of the Escrow Agent shall be paid from
the Expense Funding Shares in accordance with Paragraph 8 of this Agreement.
18. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, email, telegram or telex, overnight delivery service from a national
carrier or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
if to Home Account:
Home Account Holdings, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxx.xxx
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Email: xxxxx@xxxx.xxx
if to Parent:
InteliData Technologies Corporation
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Email: xxx@xxxxxxxxxx.xxx
with a copy to:
Hunton & Xxxxxxxx
NationsBank Plaza, Suite 4100
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Email: Xxxxxxx@xxxxxx.xxx
if to the Stockholders' Representative:
Xxxxxx X. Xxxxxxxxxx
Xxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Email:
Xxxxxx Xxxxx
International Place 2
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Email: xxxxxx0000@xxx.xxx
With a copy to:
Xxxx Xxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Email: xxxxxxxx@xxx.xxx
if to the Escrow Agent:
SunTrust Bank
Corporate Trust Division, HDQ5310
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: J. Xxx Xxxx, Senior Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Email: xxxx.xxxx@xxxxxxxx.xxx
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
19. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Delaware, without regard to conflicts
of laws principles thereof, and shall be binding upon the parties hereto and
their respective successors and assigns.
20. Rights of Third Parties. This Agreement is not intended to, and shall not
------------------------
give rise to any rights, or be enforceable by, any person other than the parties
hereto and their respective successors and assigns. Notwithstanding the
foregoing, FDR and Xxxxxx Xxxxxx shall be deemed to be third party beneficiaries
to the extent of their rights to payment under Paragraph 8 hereof and the
Incentive Plan Participants shall be deemed to be third party beneficiaries to
the extent of their rights to receive Merger Consideration Escrow Shares as set
forth herein.
21. Captions. Captions used herein are for convenience only and shall not be
--------
given any substantive or interpretive effect.
IN WITNESS WHEREOF, the parties have signed this Merger Consideration Escrow
Agreement as of the date first above written.
INDEMNITY ESCROW AGREEMENT
and
Merger consideration Escrow Agreement
INTELIDATA TECHNOLOGIES
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
--------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and Chief Executive
Officer
HOME ACCOUNT HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx
------------------
Xxxx X. Xxxxx
Senior Vice President and
General Counsel
SUNTRUST BANK
By: /s/ J. Xxx Xxxx
---------------
J. Xxx Xxxx
Senior Vice President
/s/ Xxxxxx X. Xxxxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxxx,
as Stockholders Representative
/s/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx,
as Stockholders Representative
Exhibit 10.2
------------
INDEMNITY ESCROW AGREEMENT
--------------------------
This Indemnity Escrow Agreement (the "Agreement"), dated as of January
11, 2001, is made and entered into by and among InteliData Technologies
Corporation, a Delaware corporation ("Parent"), Home Account Holdings, Inc., a
Delaware corporation ("Home Account"), Xxxxxx X. Xxxxxxxxxx and Xxxxxx Xxxxx,
each in his capacity as representative of the stockholders of Home Account (for
the purposes of this Agreement, each individual acting alone may serve as the
"Stockholders' Representative") and SunTrust Bank, Richmond, Virginia (the
"Indemnity Escrow Agent").
BACKGROUND
Parent, InteliData Mergersub, Inc., a Delaware corporation and wholly
owned subsidiary of Parent ("Merger Subsidiary"), and Home Account intend to
enter into that certain Agreement and Plan of Merger (the "Merger Agreement"),
substantially in the form attached hereto as Exhibit A, providing for the merger
of Merger Subsidiary with and into Home Account (the "Merger"). Section 2.7(a)
of the Merger Agreement provides that Parent will deliver to the Indemnity
Escrow Agent an aggregate of 1,000,000 shares of Parent Common Stock (the
"Indemnity Escrow Shares") on the Effective Date to be held by the Indemnity
Escrow Agent in accordance with the terms and conditions of this Agreement.
The Home Account Stockholders immediately before the Effective Time have
appointed the Stockholders' Representative to act on their behalf with respect
to Escrow Losses claimed to have been suffered or incurred by Parent pursuant to
Section 2.7 and Article X of the Merger Agreement, or with respect to any other
matter specified herein.
The Indemnity Escrow Agent has agreed to accept, hold and disburse the
Indemnity Escrow Shares in accordance with the terms of this Agreement.
In order to establish the escrow of the Indemnity Escrow Shares pursuant to
the Merger Agreement, the parties hereto are entering into this Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned in the Merger Agreement.
STATEMENT OF AGREEMENT
1. Appointment of Indemnity Escrow Agent. Parent, the Stockholders'
--------------------------------------
Representative, and Home Account hereby appoint the Indemnity Escrow Agent to
serve as Indemnity Escrow Agent hereunder. The Indemnity Escrow Agent hereby
accepts such
appointment and, upon receipt of the Indemnity Escrow Shares, agrees to hold and
disburse the Indemnity Escrow Shares in accordance with this Agreement.
2. Stockholders' Representative. The Stockholders' Representative shall
----------------------------
act on behalf of all Home Account Stockholders with respect to any Escrow Losses
that Parent claims to have suffered or incurred or may suffer or incur pursuant
to Section 2.7 and Article X of the Merger Agreement, or with respect to any
other matter specified herein. The Stockholders' Representative shall receive
and make all notices and communications in connection with this Agreement, the
Merger Consideration Escrow Agreement and the Merger Agreement and shall have
the authority to settle, defend, challenge or compromise any or all claims of
Escrow Losses. Parent and the Indemnity Escrow Agent shall be entitled to rely,
and shall be fully protected in so relying, upon any instrument or document
executed, or any notice, communication, decision or action made by the
Stockholders' Representative.
3. Indemnity Escrow Shares. Indemnity Escrow Shares shall be held by
------------------------
the Indemnity Escrow Agent for the term provided herein and in the Merger
Agreement unless and until the receipt by the Indemnity Escrow Agent of a
certificate in the form of Exhibit B signed by a duly authorized officer of
Parent certifying that Parent has suffered or incurred or may suffer or incur
Escrow Losses within the meaning of Section 2.7 and Article X of the Merger
Agreement (the "Escrow Certificate"). The Escrow Certificate shall (i) contain a
description in reasonable detail as to the nature and substance of such Escrow
Losses and (ii) instruct the Indemnity Escrow Agent to release to Parent a
number of Indemnity Escrow Shares in accordance with the formula set forth in
Section 2.7 of the Merger Agreement necessary to pay the amount of such Escrow
Losses. Parent shall deliver an executed copy of the Escrow Certificate to the
Stockholders' Representative simultaneously with the delivery to the Indemnity
Escrow Agent, and the Indemnity Escrow Agent shall forward a copy of such Escrow
Certificate to the Stockholders' Representative within one business day of the
Indemnity Escrow Agent's receipt of such Escrow Certificate. If the Indemnity
Escrow Agent does not receive prior to the expiration of 10 business days after
receipt of the Escrow Certificate by the Stockholders' Representative a written
notice from the Stockholders' Representative not to do so, the Indemnity Escrow
Agent shall release the Indemnity Escrow Shares as specified in the Escrow
Certificate. If the Stockholders' Representative sends a notice to the Indemnity
Escrow Agent not to release Indemnity Escrow Shares (an "Escrow Certificate
Dispute"), then the Indemnity Escrow Agent shall not release such disputed
Indemnity Escrow Shares until such time as the Indemnity Escrow Agent shall have
received (i) joint written instructions signed by the Stockholders'
Representative and a duly authorized officer of Parent, or (ii) a final and
unappealable order of a court having competent jurisdiction resolving such
dispute and ordering the release of such disputed Indemnity Escrow Shares be
made as provided therein.
4. Termination of Escrow. Unless, prior to March 31, 2002, (the "Escrow
---------------------
Termination Date") the Indemnity Escrow Agent has received an Escrow Certificate
or an Escrow Extension (as defined below), then on the Escrow Termination Date,
the Indemnity Escrow Agent shall release all remaining Indemnity Escrow Shares
to the Merger Consideration Escrow Agent in accordance with Section 5 hereof.
If, prior to the Escrow Termination Date, the Indemnity Escrow Agent has
received either an Escrow Certificate or an Escrow Extension, the
Indemnity Escrow Agent shall release, or continue to hold, the Indemnity Escrow
Shares in accordance with Section 3 or 6 hereof, as the case may be. If the
Indemnity Escrow Agent has previously released any Indemnity Escrow Shares prior
to the Escrow Termination Date, then, upon the Escrow Termination Date, the
Indemnity Escrow Agent will release all remaining Indemnity Escrow Shares to the
Merger Consideration Escrow Agent in accordance with Section 5 hereof, excluding
those remaining Indemnity Escrow Shares held by the Indemnity Escrow Agent
pursuant to (i) an Escrow Certificate Dispute or (ii) an Escrow Extension.
5. Release of Indemnity Escrow Shares. Whether on the Escrow
---------------------------------------
Termination Date or any later date (due to the existence of an Escrow
Certificate or an Escrow Extension) the Indemnity Escrow Agent is required to
release Indemnity Escrow Shares in accordance with this Agreement, the Indemnity
Escrow Agent shall release such Indemnity Escrow Shares to the Merger
Consideration Escrow Agent in accordance with this Agreement, the Merger
Consideration Escrow Agreement and Section 2.6 of the Merger Agreement;
provided, however, that the Indemnity Escrow Agent shall not release any
Indemnity Escrow Shares for which Parent has not received certificates
representing the appropriate number of shares of Home Account capital stock in
accordance with Section 2.6 of the Merger Agreement.
6. Continuation of Escrow. At any time prior to the Escrow Termination
----------------------
Date, if Parent, in accordance with Article X of the Merger Agreement, instructs
the Indemnity Escrow Agent (with written notice to the Stockholders'
Representative) to continue to hold the Indemnity Escrow Shares as a result of
(i) a claim having been then made that could result in Escrow Losses, or (ii)
the assertion by Parent of the reasonable prospect that it could incur Escrow
Losses, supported by written notice describing with reasonable specificity the
facts giving rise to such assertion (in either case, an "Escrow Extension"),
then the Indemnity Escrow Agent shall continue to hold the number of Indemnity
Escrow Shares necessary to cover any Escrow Losses associated with any Escrow
Extension in accordance with the formula set forth in Section 2.7 of the Merger
Agreement and in accordance with this Agreement. The Indemnity Escrow Agent
shall continue to hold such Indemnity Escrow Shares beyond the Escrow
Termination Date until such time as the Indemnity Escrow Agent shall have
received joint written instructions signed by both the Stockholders'
Representative and a duly authorized officer of Parent or a final and
unappealable order of a court having competent jurisdiction resolving such
dispute and ordering that delivery of the Indemnity Escrow Shares be made as
provided therein. The date on which the escrow shall terminate and all Indemnity
Escrow Shares have been released shall be referred to as the "Final Escrow
Release Date."
7. Disputes; Reliance on Counsel.
-----------------------------
(a) The Indemnity Escrow Agent may consult with legal counsel in the event
of any dispute or question as to the construction of any of the provisions of
this Agreement or the Indemnity Escrow Agent's duties hereunder, and the
Indemnity Escrow Agent shall incur no liability and shall be fully protected in
acting in accordance with the advice of such counsel.
(b) In the event of any disagreement between any of the parties to this
Agreement, or between any of them and any third party, resulting in adverse
claims or demands
being made in connection with the matters covered by this Agreement, or in the
event that the Indemnity Escrow Agent, in good faith, be in doubt as to what
action it should take hereunder, the Indemnity Escrow Agent may, at its option,
refuse to comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists,
and in any such event, the Indemnity Escrow Agent shall not be or become liable
in any way or to any party for its failure or refusal to act, and the Indemnity
Escrow Agent shall be entitled to continue to refrain from acting until the
earlier to occur of: (i) the rights of all interested parties shall have been
fully and finally adjudicated by a court of competent jurisdiction; or (ii) all
differences shall have been adjudged and all doubt resolved by agreement among
all of the interested parties, and the Indemnity Escrow Agent shall have been
notified thereof in writing signed by all such parties. Notwithstanding the
preceding sentence, the Indemnity Escrow Agent may, in its sole discretion, obey
the order, judgment, decree or levy of any court, whether with or without
jurisdiction, or of an agency of the United States or any political subdivision
thereof, and the Indemnity Escrow Agent is hereby authorized, in its sole
discretion, to comply with and obey any such orders, judgments, decrees or
levies. The rights of the Indemnity Escrow Agent under this Section 7(b) are
cumulative of all other rights which it may have by law or otherwise.
8. Dividends on Indemnity Escrow Shares. Cash dividends or
------------------------------------------
distributions of property (other than pursuant to a stock split, share
reclassification or other similar event) paid with respect to the Indemnity
Escrow Shares shall be held in escrow by the Indemnity Escrow Agent until the
escrow provided for in the Merger Consideration Escrow Agreement has terminated,
at which time such dividends or distributions shall be paid or delivered to the
beneficial holders of such Indemnity Escrow Shares. Distributions of shares of
Parent Common Stock paid with respect to the Indemnity Escrow Shares as the
result of a stock split, share reclassification or other similar event shall be
paid or delivered to the party receiving the Indemnity Escrow Shares out of
escrow, with each such distribution on each such Indemnity Escrow Share
following each such share.
9. Voting of Indemnity Escrow Shares. All Indemnity Escrow Shares held
---------------------------------
in escrow shall be voted by the Indemnity Escrow Agent with respect to any
particular matter in proportion to the votes of all shares of Parent Common
Stock (other than the Indemnity Escrow Shares and the Merger Consideration
Escrow Shares) with respect to such matter.
10. Basket. In accordance with Article X of the Merger Agreement, and
------
except as otherwise provided in Article X, Parent shall not be entitled to any
Indemnity Escrow Shares pursuant to an Escrow Certificate or an Escrow Extension
unless and until the amount of all Escrow Losses incurred by Parent exceeds
$250,000 in the aggregate, at which point Parent shall be entitled to Indemnity
Escrow Shares to cover all Escrow Losses.
11. Fees and Expenses. Parent shall pay the fees and expenses of the
-----------------
Indemnity Escrow Agent.
12. Limitation of Liability. The Indemnity Escrow Agent shall not
-------------------------
be liable for any action taken or omitted to be taken by it in good faith. In no
event shall the Indemnity Escrow Agent be liable or responsible except for its
own gross negligence or willful misconduct.
13. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex, overnight delivery service from a national carrier
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
if to Home Account:
Home Account Holdings, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000 000-0000
if to Parent:
InteliData Technologies Corporation
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Hunton & Xxxxxxxx
NationsBank Plaza, Suite 4100
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Stockholders' Representative:
Xxxxxx X. Xxxxxxxxxx
Xxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxx Xxxxx
International Place 2
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxx Xxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Indemnity Escrow Agent:
SunTrust Bank
Corporate Trust Division, HDQ5310
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: J. Xxx Xxxx, Senior Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Merger Consideration Escrow Agent:
SunTrust Bank
Corporate Trust Division, HDQ5310
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: J. Xxx Xxxx, Senior Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
14. Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of Delaware, without regard to
conflicts of laws principles thereof, and shall be binding upon the parties
hereto and their respective successors and assigns.
15. Rights of Third Parties. This Agreement is not intended to,
------------------------
and shall not give rise to any rights, or be enforceable by, any person other
than the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have signed this Indemnity Escrow
Agreement as of the date first above written.
INTELIDATA TECHNOLOGIES
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
---------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and Chief
Executive Officer
HOME ACCOUNT HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx
-------------------
Xxxx X. Xxxxx
Senior Vice President and
General Counsel
SUNTRUST BANK
By: /s/ J. Xxx Xxxx
----------------
J. Xxx Xxxx
Senior Vice President
/s/ Xxxxxx X. Xxxxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxxx,
as Stockholders Representative
/s/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx,
as Stockholders Representative
Exhibit 10.3
------------
NOTE AND FEE EXCHANGE AGREEMENT
THIS NOTE AND FEE EXCHANGE AGREEMENT (the "Agreement") is made and
entered into as of this 11th day of January, 2001, by and among InteliData
Technologies Corporation, a Delaware corporation ("Parent"), Home Account
Holdings, Inc., a Delaware corporation ("Home Account"), U.S. Bancorp Xxxxx
Xxxxxxx ("Xxxxx Xxxxxxx") and the Persons listed on Exhibit A attached hereto
(each, a "Holder" and collectively, the "Holders").
RECITALS
WHEREAS, Home Account, Parent and InteliData Mergersub, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Subsidiary"), intend to enter into that certain Agreement and Plan of Merger,
substantially in the form attached hereto as Exhibit B (the "Merger Agreement"),
pursuant to which Merger Subsidiary will merge with and into Home Account with
Home Account being the surviving corporation and a wholly owned subsidiary of
Parent (the "Merger");
WHEREAS, the Holders are the holders of the 10% Convertible
Subordinated Promissory Notes, dated August 29, 2000 (the "Convertible Notes"),
and the 10% Promissory Notes, dated November 22, 2000 (the "Non-Convertible
Notes" and together with the Convertible Notes, the "Home Account Notes"),
issued by Home Account in the principal amounts set forth on Exhibit C attached
hereto;
WHEREAS, the Holders are the holders of outstanding warrants, issued in
connection with the issuance of the Convertible Notes, to purchase shares of
Home Account Series C Stock (the "Home Account Warrants"), as set forth on
Exhibit C attached hereto;
WHEREAS, Xxxxx Xxxxxxx has served as Home Account's investment bank in
connection with the Merger and Home Account owes Xxxxx Xxxxxxx fees and costs in
the aggregate amount set forth on Exhibit D attached hereto (the "Xxxxx Xxxxxxx
Fee");
WHEREAS, pursuant to Section 8.1(n) of the Merger Agreement, it is a
condition precedent to the obligation of Parent to consummate the Merger that
the Holders, Xxxxx Xxxxxxx and Home Account shall have executed and delivered
this Agreement to Parent on or before the execution date of the Merger Agreement
and that this Agreement shall be in full force and effect as of the Closing
Date;
WHEREAS, Parent and the Holders desire to exchange each Home Account
Note and each Home Account Warrant for Merger Consideration, upon the terms and
subject to the conditions of this Agreement; and
WHEREAS, Parent and Xxxxx Xxxxxxx desire to provide for the payment in
full of the Xxxxx Xxxxxxx Fee in shares of Parent Common Stock, upon the terms
and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants,
conditions and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
hereby is agreed that:
AGREEMENT
ARTICLE XVII
DEFINED TERMS
Capitalized terms not otherwise defined when used herein shall have the
meanings assigned to such terms in the Merger Agreement.
ARTICLE XVIII
EXCHANGE OF HOME ACCOUNT NOTES AND
PAYMENT OF XXXXX XXXXXXX FEE
18.1. Exchange and Payment.
--------------------
(a) Exchange of Non-Convertible Notes. Subject to Section 2.7 of the Merger
Agreement and the Merger Consideration Escrow Agreement:
(i) each Non-Convertible Note (other than the Non-Convertible
Notes held by First Data Resources, Inc.) shall be exchanged
for the right to receive the number of Merger Consideration
Escrow Shares and Requisite Cash Amount, if any, payable
with respect thereto, determined in accordance with the
Merger Consideration Escrow Agreement; and
(ii) the Non-Convertible Notes held by First Data Resources, Inc.
shall be exchanged (together with the exchange in Section
2.1(i) above, the "Non-Convertible Note Exchange") for the
right to receive the proceeds from the sale of Merger
Consideration Escrow Shares as set forth in Section 8(d) of
the Merger Consideration Escrow Agreement.
(b) Exchange of Convertible Notes and Warrants. Subject to Section 2.7 of
the Merger Agreement and the Merger Consideration Escrow Agreement, each
Convertible Note and the Home Account Warrant issued in connection therewith,
shall be exchanged (the "Convertible Note Exchange" and together with the
Non-Convertible Note Exchange, the "Note Exchange") for the right to receive the
number of Merger Consideration Escrow Shares and Requisite Cash Amount, if any,
payable with respect thereto, determined in accordance with the Merger
Consideration Escrow Agreement.
(c) Payment of Xxxxx Xxxxxxx Fee. Subject to Section 2.7 of the Merger
Agreement and the Merger Consideration Escrow Agreement, the Xxxxx Xxxxxxx Fee
shall be exchanged (the "Xxxxx Xxxxxxx Fee Payment") for the right to receive
the number of Merger Consideration Escrow Shares and Requisite Cash Amount, if
any, payable with respect thereto, determined in accordance with the Merger
Consideration Escrow Agreement.
18.2. Effective Time of Exchange. The Note Exchange and the Piper
----------------------------
Jaffray Fee Payment shall become effective at the Effective Time.
18.3. Escrow.
------
(a) Debt Escrow Shares. Pursuant to Section 2.7 of the Merger Agreement and
the Merger Consideration Escrow Agreement, the Merger Consideration (less
Indemnity Escrow Shares and Common Cash Consideration) will be deposited into
escrow promptly following the Effective Time in accordance with Section 2.6 of
the Merger Agreement. Pursuant to Section 5 and Section 6 of the Indemnity
Escrow Agreement, Indemnity Escrow Shares, if any, remaining in escrow on the
Final Escrow Release Date will be deposited with the Merger Consideration Escrow
Agent. The portion of the Merger Consideration so deposited into escrow
constituting Debt Escrow Shares shall be determined in accordance with the
Merger Consideration Escrow Agreement.
(b) Distribution of Debt Escrow Shares. The Debt Escrow Shares and the
Requisite Cash Amount, if any, shall be released from escrow and distributed to
the Holders and Xxxxx Xxxxxxx in accordance with the Merger Consideration Escrow
Agreement.
(c) No Further Rights To Payment. Upon deposit of the Merger Consideration
(less Indemnity Escrow Shares and Common Cash Consideration) into escrow with
the Merger Consideration Escrow Agent pursuant to Section 2.3 hereof, (i) the
Holders and Xxxxx Xxxxxxx shall have no further right to payment of the Debt
Amount or any portion thereof, (ii) all payment obligations of Home Account, the
Surviving Corporation or Parent with respect to the Xxxxx Xxxxxxx Fee shall be
satisfied in full, (iii) neither any Holder nor Xxxxx Xxxxxxx shall have any
claim against Home Account, the Surviving Corporation or Parent with respect to
any obligations in connection with, arising out of, or resulting from, the Home
Account Notes, the Home Account Warrants or the Xxxxx Xxxxxxx Fee and (iv) each
Holder and Xxxxx Xxxxxxx shall execute and deliver to Parent a release, in form
and substance satisfactory to Parent, acknowledging the foregoing.
18.4. No Fractional Shares. No fractional Debt Escrow Shares shall be
---------------------
issued to a Holder or Xxxxx Xxxxxxx upon any disbursement from escrow pursuant
to Section 2.3 hereof. If a Holder or Xxxxx Xxxxxxx would otherwise be entitled
to receive a fractional Debt Escrow Share upon a disbursement from escrow
pursuant to Section 2.3, the number of Debt Escrow Shares distributable to such
Holder or Xxxxx Xxxxxxx, as the case may be, shall be rounded down to the next
whole number of Debt Escrow Shares. The parties acknowledge that the rounding
down of Debt Escrow Shares distributable to a Holder or Xxxxx Xxxxxxx pursuant
to Section 2.3 merely represents a mechanical rounding-off for purposes of
simplifying the corporate and accounting complexities that would otherwise be
caused by the issuance of fractional shares.
18.5. Rights of Holders. Upon the distribution by the Merger
-----------------
Consideration Escrow Agent of Debt Escrow Shares to a Holder or Xxxxx Xxxxxxx,
each such distributee shall be entitled to receive a certificate representing
the number of shares of Parent Common Stock that such distributee has the right
to receive in accordance with the terms and conditions of this Agreement.
18.6. Surrender of Home Account Notes; Issuance of Parent Common Stock
----------------------------------------------------------------
Prior to the Effective Time, the Holders shall have delivered to Parent all of
the Home Account Notes and Home Account Warrants to be exchanged pursuant
hereto.
18.7. Restrictions on Transfer.
------------------------
All of the shares of Parent Common Stock to be deposited into escrow
pursuant to Section 2.3(a) hereof shall be subject to the terms and provisions,
including those providing for indemnification obligations and transfer
restrictions, of the Registration Rights Agreement, substantially in the form
attached hereto as Exhibit E (the "Registration Rights Agreement").
ARTICLE XIX
REPRESENTATIONS AND WARRANTIES
19.1. Representations and Warranties of Parent.
----------------------------------------
Parent hereby represents and warrants to the Holders and Xxxxx Xxxxxxx
as follows:
(a) Organization and Qualification. Parent is a corporation duly organized,
------------------------------
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to conduct its business as
currently conducted.
(b) Parent Common Stock. The shares of Parent Common Stock to be placed
---------------------
into escrow and subsequently disbursed to the Holders and Xxxxx Xxxxxxx in
accordance with this Agreement will be duly authorized for issuance and, when
issued in accordance with the terms hereof, will be validly issued, fully paid
and non-assessable, and will not be subject to or issued in violation of any
preemptive rights.
(c) Authorization. Parent has full right, power and authority to enter into
-------------
this Agreement and to consummate the transactions contemplated hereby, and has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement. Upon execution and delivery of this Agreement, this Agreement
will constitute a valid and binding obligation of Parent, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally, and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
19.2. Representations and Warranties of the Holders and Xxxxx Xxxxxxx.
---------------------------------------------------------------
Each Holder and Xxxxx Xxxxxxx hereby represents and warrants to Parent as
follows:
(a) Purpose. (i) Taking into account the personnel and resources that it
-------
can practically bring to bear with regard to the transactions contemplated
hereby, it is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in shares presenting an
investment decision like that involved in the transactions contemplated hereby,
including investments in securities issued by Parent, and has requested,
received, reviewed and considered all information that it deems relevant in
making an informed decision to participate in the Note Exchange or Xxxxx Xxxxxxx
Fee Payment, as the case may be; (ii) it is acquiring the shares of Parent
Common Stock in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of such shares
until the Registration Statement on Form S-3 to be filed with the SEC by Parent
is first declared effective and then, only in accordance with the terms and
subject to the conditions of the Registration Rights Agreement to which it is a
party; (iii) it has adequate net worth and means of providing for its current
needs and contingencies to sustain a complete loss of its investment in Parent
and has no need for liquidity in its investment; (iv) it agrees not to, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any shares
of Parent Common Stock except in compliance with the Securities Act and any
applicable state securities or blue sky laws; (v) it has, in connection with the
Note Exchange or Xxxxx Xxxxxxx Fee Payment, as the case may be, relied solely
upon this Agreement and the representations and warranties of Parent contained
herein; and (vi) it is an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated under the Securities Act.
(b) Authorization. Such Holder or Xxxxx Xxxxxxx, as the case may be,
-------------
further represents and warrants to Parent that: (i) it has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of such Holder or Xxxxx Xxxxxxx, as the case may
be, enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally, and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
19.3. Ownership of Home Account Notes. Each Holder further represents
-------------------------------
and warrants that (i) it owns of record and beneficially good, valid and
marketable title to the Home Account Note(s) and Home Account Warrant set forth
next to such Holder's name on Exhibit C hereto, free and clear of any and all
mortgages, liens, encumbrances, charges, claims, restrictions, pledges, security
interests or impositions and (ii) upon delivery of the Home Account Note(s) and
Home Account Warrant to Parent as set forth in Section 2.6 hereof, and upon
Parent's deposit of shares of Parent Common Stock in escrow with the Debt Escrow
Agent in accordance with Section 2.3(a) hereof, good and valid title to such
Home Account Note(s) and Home Account Warrant, free and clear of all mortgages,
liens, encumbrances, charges, claims, restrictions, pledges, security interests
or impositions, will pass to Parent.
ARTICLE XX
ADDITIONAL AGREEMENTS OF THE PARTIES
20.1. Taking of Necessary Action.
--------------------------
Each of the parties hereto agrees to use all reasonable efforts
promptly to take or cause to be taken all action, and promptly to do or cause to
be done, all things necessary, proper or advisable under applicable Law to
consummate and make effective the Note Exchange and Xxxxx Xxxxxxx Fee Payment
contemplated by this Agreement.
20.2. Registration Rights.
-------------------
As of the Closing Date, Parent, Xxxxx Xxxxxxx and the Holders will
enter into the Registration Rights Agreement.
20.3. Outstanding Options and Warrants.
--------------------------------
The Holders and Xxxxx Xxxxxxx hereby acknowledge that pursuant to
Section 2.5(g) of the Merger Agreement, all of the outstanding options and
warrants to purchase shares of Home Account capital stock (other than the Home
Account Warrants, which are to be exchanged for Debt Escrow Shares in accordance
with Section 2.1(b) hereof), whether vested or unvested, shall be canceled,
retired and cease to exist and no payment shall be made by Home Account, Parent
or the Surviving Corporation with respect thereto. Each Holder hereby waives any
and all claims or rights to payment with respect to any such options and
warrants held by such Holder as of the Closing Date.
20.4. Legend Requirement. Each Holder and Xxxxx Xxxxxxx agrees to
-------------------
the imprinting, until the later of the effective date of the Registration
Statement or for so long as required by law, of a legend on certificates
representing all of its Debt Escrow Shares to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT
AND SUCH LAWS OR PURSUANT TO A WRITTEN OPINION OF COUNSEL FOR THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
ARTICLE XXI
TERMINATION
This Agreement shall automatically terminate upon the termination of
the Merger Agreement, at which time this Agreement shall forthwith become void
and of no force and effect, except that no party shall be relieved of any
liability for breach of this Agreement prior to the date of termination.
ARTICLE XXII
MISCELLANEOUS
22.1. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex, overnight delivery service from a national carrier
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows:
if to Home Account:
Home Account Holdings, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to Parent:
InteliData Technologies Corporation
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Hunton & Xxxxxxxx
NationsBank Plaza, Suite 4100
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to a Holder, then to such Holder's address set forth on
Exhibit A hereto.
22.2. Amendments; Entire Agreement. This Agreement may not be modified
----------------------------
or amended except pursuant to an instrument in writing signed by the parties
hereto. This Agreement sets forth the entire understanding of the parties and
supersedes all prior agreements, covenants, arrangements, communications,
representations or warranties, whether written or oral, made by the parties or
any agent or representative of the parties.
22.3. Headings. The headings of the various sections of this Agreement
--------
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
22.4. Severability. In case any provision contained in this Agreement
------------
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
22.5. Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of Delaware without regard to the
conflicts of law principles thereof.
22.6. Construction. For purposes of construing this Agreement, the
------------
recitals hereto shall be deemed to be a substantive part of this Agreement. To
the extent of any conflict between any provision set forth in this Agreement and
any provision of any other agreement referred to herein, the provisions set
forth in this Agreement shall be deemed controlling.
22.7. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed by an authorized representative as of the day and year first above
written.
INTELIDATA TECHNOLOGIES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
----------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and Chief Executive
Officer
HOME ACCOUNT HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx
------------------
Xxxx X. Xxxxx
Senior Vice President and
General Counsel
U.S. BANCORP XXXXX XXXXXXX
By: /s/ Stuart Duty
----------------
Stuart Duty
Managing Director
HOLDERS:
XXXXX & XXXXXXXX CAPITAL TECHNOLOGY
PROFESSIONALS VENTURE FUND
By: MMC Capital, Inc.
----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
Legal Director
TRIDENT II, L.P.
By: MMC Capital, Inc.
-----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Legal Director
XXXXX & MCLENNAN EMPLOYEES
--------------------------
SECURITIES COMPANY, L.P.
------------------------
By: MMC Capital, Inc.
----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Legal Director
XXXXX & XXXXXXXX CAPITAL
------------------------
PROFESSIONALS FUND, L.P.
------------------------
By: MMC Capital, Inc.
-----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Legal Director
XXXXX & MCLENNAN CAPITAL TECHNOLOGY
-----------------------------------
VENTURE FUND, L.P.
------------------
By: MMC Capital, Inc.
-----------------
Its: Manager
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
Legal Director
MOBIUS MANAGEMENT SYSTEMS, INC.
By: /s/ Xxxxxxxx Xxxxx
-------------------
Xxxxxxxx Xxxxx
President
NEW ENTERPRISE ASSOCIATES VIII
------------------------------
LIMITED PARTNERSHIP
-------------------
By: NEA Partners VIII, L.P.
-----------------------
Its: General Partner
By: /s/ Xxxxxxx Xxxxx
------------------
Xxxxxxx Xxxxx
General Partner
OAK VIII AFFILIATES FUND, L.P.
By: Managing Member of Oak
----------------------
Affiliates, LLC
---------------
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxxx
Managing Member
OAK INVESTMENT PARTNERS VIII, L.P.
By: Managing Member of Oak
----------------------
Associates VIII, LLC
--------------------
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxxx
Managing Member
FIRST DATA RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxx
------------------
Xxxxxx X. Xxxx
Assistant Secretary
EXHIBIT 99.1
------------
InteliData Announces Acquisition of Home Account Network
RESTON, Va. --Jan. 12, 2001--InteliData Technologies Corp. (Nasdaq:INTD)
announced today that it has acquired Home Account Holdings, Inc. and its
operating subsidiary, Home Account Network, Inc. ("Home Account"), in exchange
for 6,900,000 shares of InteliData stock which would be valued at $36.225
million based on Thursday's closing price of $5.25 per share. The transaction
will be treated as a purchase for accounting purposes.
Home Account provides a suite of industry leading UNIX-based Internet banking
and Electronic Xxxx Presentment and Payment (EBPP) products and services in an
Application Services Provider (ASP) environment. With this acquisition,
InteliData adds major clients such as Bank of America, Citigroup, First Union,
United Missouri Bank, Metris, Xxxxxxx Xxxxxx, and Alliance Capital. The combined
firm has a strong base of leading financial services clients representing 10 of
the top 50 banks, four of the top 10 brokerage firms, and several of the
industry's leading credit card issuers. InteliData's potential user base now
exceeds 100 million customers, with more than one million active users today.
This acquisition expands InteliData's investor base adding First Data Corp.,
Xxxxx & XxXxxxxx Capital, Oak Investment Partners, New Enterprise Associates,
and Mobius Management Systems, Inc. as shareholders in InteliData.
"This transaction significantly broadens our product suite and technology
competency and increases our intellectual capital with a team of professionals
who share our passion and values," said Xx Xxxxxxxx, President and CEO of
InteliData. "Furthermore, by adding Home Account's Statement Rendering, Xxxx
Presentment and Xxxx Payment application with its real-time interface to First
Data Corp.'s credit card processing system, InteliData becomes a significant
Xxxxxx Services Provider (BSP), and will realize immediate revenue in the credit
card processing channel. In addition, these customers will be able to leverage
our expertise in payment system switches, like Spectrum, for presenting their
statements and bills."
Speaking about the acquisition, Xxxxx X. Xxxxx, Xx., Equity Research Analyst at
Xxxxxx Brothers, said, "In 2000, financial institutions sought to build Internet
banking products following the apparent success of models like Xxxxxxxxxxxx.xxx.
Unfortunately, some of these models stumbled, leaving many institutions
wondering what approach would best serve their retail customers. This year we
expect to see a second wave evolution in Internet banking and EBPP, creating new
opportunities for companies like InteliData. To be effective, companies will
need to develop deep capabilities and fully integrated products. The combination
of InteliData and Home Account Network should be well positioned to win new
business."
Former Home Account President and CEO, Xxxxxxx X. Xxxxx, xxxx join InteliData as
Vice Chairman, overseeing the Xxxxxx Services Provider channel and assuming a
corporate development role, identifying potential new partners and customers.
According to White, "This is
a win-win transaction. By combining our complementary products and customers,
InteliData will gain a strong suite of products and services, a leading presence
in a number of developing market segments, and economies of scale. Home
Account's clients will benefit from the combined company's expanded product
offerings as well as InteliData's strong balance sheet." Xxxxxxxx added, "During
the past year, InteliData has invested in the development of a next-generation,
fully-integrated Internet banking, Xxxx Presentment and Xxxx Payment system,
which is platform independent and is based on industry standard Java 2
Enterprise Edition (J2EE) architecture. This solution ensures that our customers
will continue to receive industrial-strength performance and reliability with
unsurpassed flexibility as their base of users increases."
Commenting on the acquisition, InteliData's Founder and Chairman, Xxxx Xxxxx,
said, "This industry is reaching a stage where consolidation will be the order
of the day. As a result of this environment, we were presented with a unique
opportunity to leverage our market capitalization and the technology investments
we've made in the past year. This is a rare case where not only do we see an
excellent strategic fit, but we also believe that the economics are equally
compelling. InteliData's recurring revenue base is enhanced by the addition of
Home Account's ASP-based transaction revenues, making this acquisition
substantially accretive."
The company's headquarters will continue to be in Reston, Virginia and it will
maintain three development centers of expertise. InteliData's facility in
Charleston, South Carolina will focus on Open Financial eXchange (OFX) and
Interactive Financial eXchange (IFX) development; the Omaha, Nebraska site will
be devoted to Xxxxxx Service Provider (BSP) products and services; and the
Reston, Virginia facility will concentrate on Consumer Service Provider (CSP)
and Internet banking products and services. A fourth facility in Toledo, Ohio
will manage all Application Services Provider (ASP) operations and provide
technical support to all customers.
Xxxxxx Brothers, Inc. served as InteliData's financial advisor in this
transaction.
About InteliData
InteliData provides Internet banking and Electronic Xxxx Payment and Presentment
(EBPP) technology and services to banks, credit unions, and financial
institution processors. InteliData's EBPP products offer banks and other
financial institutions an end-to-end solution for creating e-bills for billers,
distributing e-bills and e-payments through multiple delivery channels,
delivering e-bills to consumers, and enabling payment of bills through multiple
payment processors utilizing OFX and IFX messaging standards. InteliData's
Internet banking products provide large financial institutions throughout the
U.S. with unsurpassed scalability, flexibility and security in supplying
real-time, Internet based banking services to their customers. For more
information about InteliData, visit the company's Web site at
xxxx://xxx.xxxxxxxxxx.xxx.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995: This release contains forward looking statements that are subject to risks
and uncertainties, including, but not limited to, the ability of the Company to
successfully assimilate and retain the employees of Home Account and integrate
the products of Home Account with those of the Company, the risks of not
realizing the cost savings anticipated by eliminating personnel and facilities,
the
Company's ability to retain customers and subscribers as a result of the
acquisition of Home Account, the risk of anticipated revenues following the
acquisition of Home Account not meeting the Company's expectations, the ability
of the Company to complete product implementations in required time frames and
the Company's ability to increase its recurring revenues and profits through its
ASP business model, the impact of competitive products, pricing pressure,
product demand and market acceptance risks, pace of consumer acceptance of home
banking and reliance on the Company's bank clients to increase usage of Internet
banking by their customers, mergers and acquisitions, risk of integration of the
Company's technology by large software companies, the ability of financial
institution customers to implement applications in the anticipated time frames
or with the anticipated features, functionality or benefits, reliance on key
strategic alliances and newly emerging technologies, the ability of the Company
to leverage its Spectrum relationship into new business opportunities in the
EBPP market, the on-going viability of the mainframe marketplace and demand for
traditional mainframe products, the ability to attract and retain key employees,
the availability of cash for long-term growth, product obsolescence, ability to
reduce product costs, fluctuations in operating results, ability to continue
funding operating losses, delays in development of highly complex products and
other risks detailed from time to time in InteliData filings with the Securities
and Exchange Commission. These risks could cause the Company's actual results
for 2001 and beyond to differ materially from those expressed in any forward
looking statements made by, or on behalf of, InteliData. InteliData is not under
any obligation (and expressly disclaims an obligation to) update or alter its
forward-looking statements, whether as a result of new information or otherwise.
About InteliData
INTELIDATA INVESTOR CALL TODAY
InteliData Technologies Corporation will host an investment community conference
call at 11:00 AM (EST) today, January 12, 2001, to review company status and
discuss this announcement. The call will be hosted by Xx Xxxxxxxx, President and
CEO, Xxxx Xxxxx, Chairman, and Xxxxx Xxxxxxx, Chief Financial Officer.
Conference Call Details:
o Time: 11:00 AM (EST)
o Call-in Number: (000) 000-0000
o The call will be replayed and available on January 12, 13, 14, and 15
by calling (000) 000-0000 and entering #17630953. International
callers should call (000) 000-0000 and enter the same number.
Contact: InteliData
Xxxxx Xxxxxxx, 703/259-3000
CFO
xxxxxxxx@xxxxxxxxxx.xxx
or
Magnet Communications
for InteliData
Xxxx Xxxxxxxxxx, 212/367-6936
xxxxxxxxxxx@xxxxxxxxx.xxx
