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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION
BY AND AMONG
DIGITAL INSIGHT CORPORATION,
BLACK TRANSITORY CORPORATION
AND
nFRONT, INC.
Dated as of November 21, 1999
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TABLE OF CONTENTS
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ARTICLE I THE MERGER............................................................................... 2
1.1 The Merger.............................................................................. 2
1.2 Effective Time; Closing................................................................. 2
1.3 Effect of the Merger.................................................................... 2
1.4 Articles of Incorporation; Bylaws....................................................... 2
1.5 Directors and Officers.................................................................. 3
1.6 Effect on Capital Stock................................................................. 3
1.7 Surrender of Certificates............................................................... 4
1.8 No Further Ownership Rights in Company Common Stock..................................... 6
1.9 Lost, Stolen or Destroyed Certificates.................................................. 6
1.10 Tax and Accounting Consequences......................................................... 6
1.11 Taking of Necessary Action; Further Action.............................................. 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY............................................... 7
2.1 Organization and Qualification; No Subsidiaries......................................... 7
2.2 Articles of Incorporation and Bylaws.................................................... 7
2.3 Capitalization.......................................................................... 7
2.4 Authority Relative to this Agreement.................................................... 9
2.5 No Conflict; Required Filings and Consents.............................................. 9
2.6 Compliance; Permits..................................................................... 10
2.7 SEC Filings; Financial Statements....................................................... 10
2.8 No Undisclosed Liabilities.............................................................. 11
2.9 Absence of Certain Changes or Events.................................................... 11
2.10 Absence of Litigation................................................................... 11
2.11 Employee Benefit Plans.................................................................. 12
2.12 Registration Statement/Joint Proxy Statement/Prospectus................................. 14
2.13 Restrictions on Business Activities..................................................... 14
2.14 Title to Property....................................................................... 14
2.15 Taxes................................................................................... 15
2.16 Environmental Matters................................................................... 16
2.17 Brokers................................................................................. 16
2.18 Intellectual Property................................................................... 17
2.19 Agreements, Contracts and Commitments................................................... 19
2.20 Opinion of Financial Advisor............................................................ 20
2.21 Board Approval.......................................................................... 20
2.22 Vote Required........................................................................... 21
2.23 State Takeover Statutes................................................................. 21
2.24 Pooling of Interests.................................................................... 21
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB........................................................................................... 21
3.1 Organization and Qualification; Subsidiaries............................................. 21
3.2 Certificate of Incorporation and Bylaws.................................................. 21
3.3 Capitalization........................................................................... 22
3.4 Authority Relative to this Agreement..................................................... 22
3.5 No Conflict; Required Filings and Consents............................................... 22
3.6 SEC Filings; Financial Statements........................................................ 23
3.7 No Undisclosed Liabilities............................................................... 24
3.8 Absence of Certain Changes or Events..................................................... 24
3.9 Absence of Litigation.................................................................... 24
3.10 Registration Statement; Joint Proxy Statement/Prospectus................................. 25
3.11 Restrictions on Business Activities...................................................... 25
3.12 Title to Property........................................................................ 25
3.13 Taxes.................................................................................... 25
3.14 Environmental Matters.................................................................... 26
3.15 Brokers.................................................................................. 26
3.16 Intellectual Property.................................................................... 27
3.17 Agreements, Contracts and Commitments.................................................... 29
3.18 Opinion of Financial Advisor............................................................. 30
3.19 Board Approval........................................................................... 30
3.20 Vote Required............................................................................ 30
3.21 Delaware Law Section 203................................................................. 30
3.22 Pooling of Interests..................................................................... 30
3.23 Merger Sub Operations.................................................................... 30
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..................................................... 30
4.1 Conduct of Business by Company........................................................... 30
4.2 Conduct of Business by Parent............................................................ 33
ARTICLE V ADDITIONAL AGREEMENTS.................................................................... 35
5.1 Joint Proxy Statement/Prospectus; Registration Statement................................. 35
5.2 Shareholder and Stockholder Meetings..................................................... 36
5.3 Confidentiality; Access to Information................................................... 37
5.4 No Solicitation.......................................................................... 37
5.5 Public Disclosure........................................................................ 39
5.6 Reasonable Efforts; Notification......................................................... 39
5.7 Third Party Consents..................................................................... 40
5.8 Stock Options and Employee Benefits...................................................... 41
5.9 Form S-8................................................................................. 42
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5.10 Indemnification.......................................................................... 42
5.11 Nasdaq Listing........................................................................... 43
5.12 Affiliates............................................................................... 43
5.13 Regulatory Filings; Reasonable Efforts................................................... 44
5.14 Parent Board of Directors................................................................ 44
5.15 Registration Rights...................................................................... 44
5.16 Exemption from Liability under Section 16(b)............................................. 44
ARTICLE VI CONDITIONS TO THE MERGER................................................................ 45
6.1 Conditions to Obligations of Each Party to Effect the Merger............................ 45
6.2 Additional Conditions to Obligations of Company.......................................... 46
6.3 Additional Conditions to the Obligations of Parent and Merger Sub........................ 47
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...................................................... 48
7.1 Termination.............................................................................. 48
7.2 Notice of Termination; Effect of Termination............................................. 49
7.3 Fees and Expenses........................................................................ 49
7.4 Amendment................................................................................ 51
7.5 Extension; Waiver........................................................................ 51
ARTICLE VIII GENERAL PROVISIONS.................................................................... 51
8.1 Survival of Representations and Warranties............................................... 51
8.2 Notices.................................................................................. 51
8.3 Interpretation; Definitions.............................................................. 52
8.4 Counterparts............................................................................. 53
8.5 Entire Agreement; Third Party Beneficiaries.............................................. 53
8.6 Severability............................................................................. 53
8.7 Other Remedies; Specific Performance..................................................... 53
8.8 Governing Law............................................................................ 54
8.9 Rules of Construction.................................................................... 54
8.10 Assignment............................................................................... 54
INDEX OF EXHIBITS
Exhibit A Form of Shareholder Agreement
Exhibit A-2 Form of Stockholder Agreement
Exhibit B-1 Form of Company Affiliate Agreement
Exhibit B-2 Form of Parent Affiliate Agreement
Exhibit C-1 Persons to Sign Employment Agreement
Exhibit C-2 Form of Employment Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and
entered into as of November 21, 1999, among Digital Insight corporation, a
Delaware corporation ("Parent"), Black Transitory Corporation., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and nFront,
Inc., a Georgia corporation ("Company").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement
(as defined in Section 1.2 below) and in accordance with the Georgia Business
Corporation Code ("Georgia Law") and the Delaware General Corporation Law (the
"Delaware Law"), Parent and Company intend to enter into a business combination
transaction.
B. The Board of Directors of Company (i) has determined that the
Merger (as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of Company and fair to, and in the best interests
of, Company and its shareholders, (ii) has approved this Agreement, the Merger
(as defined in Section 1.1) and the other transactions contemplated by this
Agreement and (iii) has determined (subject to Section 5.4 hereof) to recommend
that the shareholders of Company adopt and approve this Agreement and approve
the Merger.
C. The Board of Directors of Parent (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Parent and is fair to, and in the best interests of, Parent and its
stockholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) has determined to
recommend that the stockholders of Parent approve the issuance of shares of
Parent Common Stock (as defined below) pursuant to the Merger (the "Share
Issuance").
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain affiliated shareholders of Company are entering into shareholder
agreements in the form attached hereto as Exhibit A-1 (the "Shareholder
Agreements"), and concurrently with the execution of this Agreement, and as a
condition and inducement to Company's willingness to enter into this Agreement,
certain affiliated stockholders of Parent are entering into stockholder
agreements in the form attached hereto as Exhibit A-2 (the "Stockholder
Agreements").
E. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
F. It is also intended by the parties hereto that the Merger
shall qualify for pooling of interests accounting treatment.
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NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Georgia Law and Delaware Law, Merger Sub shall be
merged with and into Company (the "Merger"), the separate corporate existence of
Merger Sub shall cease and Company shall continue as the surviving corporation.
Company as the surviving corporation after the Merger is hereinafter sometimes
referred to as the "Surviving Corporation."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger with the Secretary of State of the State of Georgia in
accordance with the relevant provisions of Georgia Law (the "Certificate of
Merger") and a certificate of merger with the Secretary of State of the State of
Delaware in accordance with the relevant provisions of Delaware Law (the
"Delaware Certificate of Merger") (the time of the later of such filings (or
such later time as may be agreed in writing by Company and Parent and specified
in the Certificate of Merger) being the "Effective Time") as soon as practicable
on or after the Closing Date (as herein defined). Unless the context otherwise
requires, the term "Agreement" as used herein refers collectively to this
Agreement and Plan of Merger and Reorganization, the Certificate of Merger and
the Delaware Certificate of Merger. The closing of the Merger (the "Closing")
shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx at a time
and date to be specified by the parties, which shall be no later than the second
business day after the satisfaction or waiver of the conditions set forth in
Article VI, or at such other time, date and location as the parties hereto agree
in writing (the "Closing Date").
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1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Georgia Law and Delaware Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation
of Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter amended
as provided by law and such Articles of Incorporation of the Surviving
Corporation.
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(b) The Bylaws of Company, as in effect immediately prior
to the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, Company or the holders of any of the
following securities, the following shall occur:
(a) Conversion of Company Common Stock. Each share of
Common Stock, no par value per share, of Company (the "Company Common Stock")
issued and outstanding immediately prior to the Effective Time, other than any
shares of Company Common Stock to be canceled pursuant to Section 1.6(b), will
be canceled and extinguished and automatically converted (subject to Sections
1.6(e) and (f)) into the right to receive 0.579 shares of Common Stock, $0.001
par value per share, of Parent (the "Parent Common Stock") (the "Exchange
Ratio") upon surrender of the certificate representing such share of Company
Common Stock in the manner provided in Section 1.7 (or in the case of a lost,
stolen or destroyed certificate, upon delivery of an affidavit (and bond, if
required) in the manner provided in Section 1.9). If any shares of Company
Common Stock outstanding immediately prior to the Effective Time are unvested or
are subject to a repurchase option, risk of forfeiture or other condition under
any applicable restricted stock purchase agreement or other agreement with the
Company, then the shares of Parent Common Stock issued in exchange for such
shares of Company Common Stock will also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition, and the certificates
representing such shares of Parent Common Stock may accordingly be marked with
appropriate legends. The Company shall take all action that may be necessary to
ensure that, from and after the Effective Time, Parent is entitled to exercise
any such repurchase option or other right set forth in any such restricted stock
purchase agreement or other agreement.
(b) Cancellation of Parent-Owned Stock. Each share of
Company Common Stock held by Company or owned by Merger Sub, Parent or any
direct or indirect wholly-owned subsidiary of Company or of Parent immediately
prior to the Effective Time shall be canceled and extinguished without any
conversion thereof.
(c) Stock Options; Employee Stock Purchase Plans. At the
Effective Time, all options to purchase Company Common Stock and stock
appreciation rights then outstanding under Company's Stock Incentive Plan, as
amended, (the "Incentive Plan"), Company's Director Stock Option Plan (the
"Director Plan" and, together with the Incentive Plan, the "Company Option
Plans") and each of the Company Option Plans shall be assumed by Parent in
accordance with Section 5.8 hereof. Purchase rights outstanding under Company's
Employee Stock Purchase Plan (the "ESPP") shall be treated as set forth in
Section 5.8.
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(d) Capital Stock of Merger Sub. Each share of Common
Stock, $0.001 par value per share, of Merger Sub (the "Merger Sub Common Stock")
issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable share of Common
Stock, $0.001 par value per share, of the Surviving Corporation. Each
certificate evidencing ownership of shares of Merger Sub Common Stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio
shall be adjusted to reflect appropriately the effect of any stock split,
reverse stock split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or Company Common Stock),
extraordinary cash dividends, reorganization, recapitalization,
reclassification, combination, exchange of shares or other like change with
respect to Parent Common Stock or Company Common Stock occurring on or after the
date hereof and prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Parent
Common Stock will be issued by virtue of the Merger, but in lieu thereof each
holder of shares of Company Common Stock who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after aggregating all fractional
shares of Parent Common Stock that otherwise would be received by such holder)
shall, upon surrender of such holder's Certificates(s) (as defined in Section
1.7(c)) receive from Parent an amount of cash (rounded to the nearest whole
cent), without interest, equal to the product of (i) such fraction, multiplied
by (ii) the average closing price of Parent Common Stock for the five trading
days immediately preceding the last full trading day prior to the Effective
Time, as reported on the Nasdaq National Market System ("Nasdaq").
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust
company reasonably acceptable to Company to act as the exchange agent (the
"Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for exchange
in accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(f) and any dividends or distributions to which holders
of shares of Company Common Stock may be entitled pursuant to Section 1.7(d).
(c) Exchange Procedures. As soon as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record (as of the Effective Time) of a certificate or certificates (the
"Certificates"), which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted into the
right to receive shares of Parent Common Stock pursuant to Section 1.6, cash in
lieu of any fractional shares pursuant to Section 1.6(f) and any dividends or
other distributions pursuant to Section 1.7(d), (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall contain such other provisions as
Parent may reasonably specify)
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and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock, cash in
lieu of any fractional shares pursuant to Section 1.6(f) and any dividends or
other distributions pursuant to Section 1.7(d). Upon surrender of Certificates
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Parent Common Stock into which their
shares of Company Common Stock were converted at the Effective Time, payment in
lieu of fractional shares which such holders have the right to receive pursuant
to Section 1.6(f) and any dividends or distributions payable pursuant to Section
1.7(d), and the Certificates so surrendered shall forthwith be canceled. Until
so surrendered, outstanding Certificates will be deemed from and after the
Effective Time, for all corporate purposes, subject to Section 1.7(d) as to the
payment of dividends, to evidence only the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and the right to receive an amount in cash in lieu
of the issuance of any fractional shares in accordance with Section 1.6(f) and
any dividends or distributions payable pursuant to Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock represented thereby until the
holders of record of such Certificates shall surrender such Certificates.
Subject to applicable law, following surrender of any such Certificates, the
Exchange Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(f) hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time payable with respect to such whole shares
of Parent Common Stock.
(e) Transfers of Ownership. If certificates representing
shares of Parent Common Stock are to be issued in a name other than that in
which the Certificates surrendered in exchange therefor are registered, it will
be a condition of the issuance thereof that the Certificates so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates representing shares of Parent Common Stock in any name other
than that of the registered holder of the Certificates surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(f) Required Withholding. Each of the Exchange Agent,
Parent and the Surviving Corporation shall be entitled to deduct and withhold
from any consideration payable or otherwise deliverable pursuant to this
Agreement to any holder or former holder of Company Common Stock such amounts as
may be required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable legal
requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the person to whom such amounts would otherwise have been paid.
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(g) No Liability. Notwithstanding anything to the
contrary in this Section 1.7, neither the Exchange Agent, Parent, the Surviving
Corporation nor any party hereto shall be liable to a holder of shares of Parent
Common Stock or Company Common Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued in accordance with the terms hereof
(together with any cash paid in respect thereof pursuant to Section 1.6(f) and
1.7(d)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger
shall constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations.
(b) It is intended by the parties hereto that the Merger
shall be treated as a pooling of interests for accounting purposes.
1.11 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Company and Merger Sub, the current officers and
directors of Company and Merger Sub will take all such lawful and necessary
action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date hereof and as of the Closing Date, Company represents
and warrants to Parent and Merger Sub, subject to such exceptions as are
specifically disclosed in writing in the disclosure letter and referencing a
specific representation supplied by Company to Parent dated as of the date
hereof and certified by a duly authorized officer of Company (the "Company
Schedule"), as follows:
2.1 Organization and Qualification; No Subsidiaries.
(a) Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Company is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Approvals") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to have such Approvals would not, individually or in the aggregate, be
material to the Company. Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, be material to the Company.
(b) Company has no subsidiaries. Company has neither
agreed nor is obligated to make nor be bound by any written, oral or other
agreement, contract, subcontract, lease, binding understanding, instrument,
note, option, warranty, purchase order, license, sublicense, insurance policy,
benefit plan, commitment or undertaking of any nature, as of the date hereof or
as may hereafter be in effect (a "Contract") under which it may become obligated
to make, any future investment in or capital contribution to any other entity.
Company does not directly or indirectly own any equity or similar interest in or
any interest convertible, exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business,
association or entity.
2.2 Articles of Incorporation and Bylaws. Company has previously
furnished to Parent a complete and correct copy of its Articles of Incorporation
and Bylaws as amended to date (together, the "Company Charter Documents"). Such
Company Charter Documents are in full force and effect. Company is not in
violation of any of the provisions of the Company Charter Documents.
2.3 Capitalization.
(a) The authorized capital stock of Company consists of
70,000,000 shares of Company Common Stock and 10,000,000 shares of Preferred
Stock ("Company Preferred Stock"), each having no par value per share. At the
close of business on November 15, 1999 (i) 14,196,136 shares of Company Common
Stock were issued and outstanding, all of which are validly issued,
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fully paid and nonassessable; (ii) no shares of Company Common Stock were held
in treasury by Company or by subsidiaries of Company; (iii) 100,000 shares of
Company Common Stock were available for future issuance pursuant to Company's
ESPP; (iv) 1,016,751 shares of Company Common Stock were reserved for issuance
upon the exercise of outstanding options to purchase Company Common Stock under
the Incentive Plan; (v) 4,000 shares of Company Common Stock were reserved for
issuance upon the exercise of outstanding options to purchase Company Common
Stock under the Director Plan; (vi) 1,172,149 shares of Company Common Stock
were available for future grant under the Incentive Plan; (vii) 196,000 shares
of Company Common Stock were available for future grant under the Director Plan;
and (viii) 50,000 shares of Company Common Stock were reserved for future
issuance upon conversion of warrants of the Company. As of the date hereof, no
shares of Company Preferred Stock were issued or outstanding. Section 2.3(a) of
the Company Schedule sets forth the following information with respect to each
Company Stock Option (as defined in Section 5.8) outstanding as of the date of
this Agreement: (i) the name and address of the optionee; (ii) the particular
plan pursuant to which such Company Stock Option was granted; (iii) the number
of shares of Company Common Stock subject to such Company Stock Option; (iv) the
exercise price of such Company Stock Option; (v) the date on which such Company
Stock Option was granted; (vi) the applicable vesting schedule; and (vii) the
date on which such Company Stock Option expires. Company has made available to
Parent accurate and complete copies of all stock option plans pursuant to which
the Company has granted such Company Stock Options that are currently
outstanding and the form of all stock option agreements evidencing such Company
Stock Options. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the instrument
pursuant to which they are issuable, would be duly authorized, validly issued,
fully paid and nonassessable. There are no commitments or agreements of any
character to which the Company is bound obligating the Company to accelerate the
vesting of any Company Stock Option as a result of the Merger. All outstanding
shares of Company Common Stock and all outstanding Company Stock Options have
been issued and granted in compliance with (i) all applicable securities laws
and other applicable Legal Requirements (as defined below) and (ii) all
requirements set forth in applicable Contracts. For the purposes of this
Agreement, "Legal Requirements" means any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issues, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity (as defined
below) and (ii) all requirements set forth in applicable contracts, agreements,
and instruments.
(b) Except as set forth in Section 2.3(a) there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Company is a party or by
which it is bound obligating Company to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of the Company or
obligating the Company to grant, extend, accelerate the vesting of or enter into
any such subscription, option, warrant, equity security, call, right, commitment
or agreement. As of the date of this Agreement, except as contemplated by this
Agreement, there are no registration rights and there is, except for the
Shareholder Agreements, no voting trust, proxy, rights plan, antitakeover plan
or
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other agreement or understanding to which the Company is a party or by which
they are bound with respect to any equity security of any class of the Company.
Shareholders of the Company will not be entitled to dissenters' rights under
applicable state law in connection with the Merger.
2.4 Authority Relative to this Agreement. Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and, subject to obtaining the approval
of the shareholders of Company of the Merger, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Company and
the consummation by Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Company and no other corporate proceedings on the part of Company are necessary
to authorize this Agreement or to consummate the transactions so contemplated
(other than, with respect to the Merger, the approval and adoption of this
Agreement by holders of a majority of the outstanding shares of Company Common
Stock in accordance with Georgia Law and the Company Charter Documents). This
Agreement have been duly and validly executed and delivered by Company and,
assuming the due authorization, execution and delivery by Parent and Merger Sub,
constitute legal and binding obligations of Company, enforceable against Company
in accordance with their respective terms.
2.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
Company do not, and the performance of this Agreement by Company shall not, (i)
conflict with or violate the Company Charter Documents or the equivalent
organizational documents of any of Company's subsidiaries, (ii) subject to
obtaining the approval of Company's shareholders of the Merger and compliance
with the requirements set forth in Section 2.5(b) below, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Company or any of its subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or impair Company's or any of its subsidiaries' rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Company
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Company or any of its subsidiaries is a party
or by which Company or any of its subsidiaries or its or any of their respective
properties are bound or affected, except to the extent such conflict, violation,
breach, default, impairment or other effect could not in the case of clauses
(ii) or (iii) individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company.
(b) The execution and delivery of this Agreement by
Company do not, and the performance of this Agreement by Company shall not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any court, administrative agency, commission, governmental or
regulatory authority, domestic or foreign (a "Governmental Entity"), except (i)
for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), state securities laws ("Blue Sky Laws"), the pre-merger
notification requirements (the "HSR Approval") of the Xxxx-Xxxxx-
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15
Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the rules
and regulations of Nasdaq, and the filing and recordation of the Certificate of
Merger as required by Georgia Law and the filing and recordation of the Delaware
Certificate of Merger as required by Delaware Law and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company, would not
prevent consummation of the Merger or otherwise prevent Company from performing
its obligations under this Agreement.
2.6 Compliance; Permits.
(a) Company is not in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to Company or by which its or any of their respective properties is
bound or affected, or (ii) any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Company is a party or by which Company or its properties is
bound or affected, except for any conflicts, defaults or violations that
(individually or in the aggregate) would not cause the Company to lose any
material benefit or incur any material liability. No investigation or review by
any governmental or regulatory body or authority is pending or, to the Knowledge
of Company, threatened against Company, nor has any governmental or regulatory
body or authority indicated an intention to conduct the same, other than, in
each such case, those the outcome of which could not, individually or in the
aggregate, reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company, any acquisition of
material property by the Company or the conduct of business by the Company.
(b) Company hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
material to operation of the business of Company (collectively, the "Company
Permits"). Company is in compliance in all material respects with the terms of
the Company Permits.
2.7 SEC Filings; Financial Statements.
(a) Company has made available to Parent a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Company with the Securities and Exchange Commission
("SEC") since June 29, 1999 (the "Company SEC Reports"), which are all the
forms, reports and documents required to be filed by Company with the SEC since
June 29, 1999. The Company SEC Reports (A) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(B) did not at the time they were filed (and if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Each set of consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
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16
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, do not contain footnotes as permitted by Form 10-Q
of the Exchange Act) and each fairly presents the consolidated financial
position of Company at the respective dates thereof and the consolidated results
of its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal adjustments
which were not or are not expected to be material in amount.
(c) Company has previously furnished to Parent a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 No Undisclosed Liabilities. Company has no liabilities
(absolute, accrued, contingent or otherwise) which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of Company taken as a whole, except (i) liabilities provided for in
Company's balance sheet as of September 30, 1999 or (ii) liabilities incurred
since September 30, 1999 in the ordinary course of business.
2.9 Absence of Certain Changes or Events. Since September 30,
1999, there has not been: (i) any Material Adverse Effect on Company, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Company's capital
stock, or any purchase, redemption or other acquisition by Company of any of
Company's capital stock or any other securities of Company or any options,
warrants, calls or rights to acquire any such shares or other securities except
for repurchases from employees following their termination pursuant to the terms
of their pre-existing stock option or purchase agreements, (iii) any split,
combination or reclassification of any of Company's capital stock, (iv) any
granting by Company of any increase in compensation or fringe benefits, except
for normal increases of cash compensation to non-officer employees in the
ordinary course of business consistent with past practice, or any payment by
Company of any bonus, except for bonuses made to non-officer employees in the
ordinary course of business consistent with past practice, or any granting by
Company of any increase in severance or termination pay or any entry by Company
into any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Company of the nature contemplated hereby, (v) entry by
Company into any licensing or other agreement with regard to the acquisition or
disposition of any Intellectual Property (as defined in Section 2.19) other than
licenses in the ordinary course of business consistent with past practice or any
amendment or consent with respect to any licensing agreement filed or required
to be filed by Company with the SEC, (vi) any material change by Company in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (vii) any revaluation by Company of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable or any sale of assets of the Company
other than in the ordinary course of business.
2.10 Absence of Litigation. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Company, threatened (or, to the
knowledge of Company, any governmental or
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17
regulatory investigation pending or threatened) against Company or any
properties or rights of Company, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign.
2.11 Employee Benefit Plans.
(a) All material employee compensation, incentive, fringe
or benefit plans, programs, policies, commitments or other arrangements (whether
or not set forth in a written document and including, without limitation, all
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (i) covering any
active or former employee, director or consultant of Company, or any trade or
business (whether or not incorporated) which is a member of a controlled group
with or which is under common control with Company within the meaning of Section
414 of the Code (an "Affiliate"), or (ii) with respect to which Company has or
liability, are listed in Section 2.11(a) of the Company Schedule (such plans,
programs, policies, commitments or other arrangements herein referred to as the
"Plans"). Company has provided to Parent: (i) correct and complete copies of all
documents embodying each Plan including (without limitation) all amendments
thereto, all related trust documents, and all material written agreements and
contracts relating to each such Plan; (ii) the three (3) most recent annual
reports (Form Series 5500 and all schedules and financial statements attached
thereto), if any, required under ERISA and/or the Code in connection with each
Plan; (iii) the most recent summary plan description together with the
summary(ies) of material modifications thereto, if any, required under ERISA
with respect to each Plan; (iv) all IRS or DOL determination, opinion,
notification and advisory letters relating to each Plan; (v) all material
correspondence to or from any governmental agency relating to any Plan; (vi)
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), all discrimination tests for each Plan for the most recent
three (3) plan years; (vii) the most recent annual actuarial valuations, if any,
prepared for each Plan; (viii) if the Plan is funded, the most recent annual and
periodic accounting of Plan assets; (ix) all material written agreements and
contracts relating to each Plan, including, but not limited to, administrative
service agreements, group annuity contracts and group insurance contracts; (x)
all material communications to employees or former employees regarding in each
case, relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability under any Plan or proposed
Plan; (xi) all policies pertaining to fiduciary liability insurance covering the
fiduciaries for each Plan; and (xii) all registration statements, annual reports
(Form 11-K and all attachments thereto) and prospectuses prepared in connection
with any Plan.
(b) Each Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations (foreign or
domestic), including but not limited to ERISA and the Code, which are applicable
to such Plans. No suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Plan activities) has been brought,
or to the knowledge of Company is threatened, against or with respect to any
such Plan. There are no audits, inquiries or proceedings pending or, to the
knowledge of Company, threatened by the Internal Revenue Service (the "IRS") or
Department of Labor (the "DOL") with respect to any Plans. All contributions,
reserves or premium payments required to be made or accrued as of the date
hereof to the Plans have been
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18
timely made or accrued. Any Plan intended to be qualified under Section 401(a)
of the Code and each trust intended to qualify under Section 501(a) of the Code
has either (i) obtained a favorable determination, notification, advisory and/or
opinion letter, as applicable, as to its qualified status from the IRS or still
has a remaining period of time under applicable Treasury Regulations or IRS
pronouncements in which to apply for such letter and to make any amendments
necessary to obtain such a favorable determination, and (ii) has received a
favorable determination from the IRS that such Plan incorporates all provisions
required to comply with the Tax Reform Act of 1986 and subsequent legislation or
still has a remaining period of time under applicable Treasury Regulations or
IRS pronouncements in which to apply for such letter and to make any amendment
necessary to obtain such a favorable determination. Company does not have any
commitment to establish any new Plan or to modify any Plan (except to the extent
required by law or to conform any such Plan to the requirements of any
applicable law. Each Plan can be amended, terminated or otherwise discontinued
after the Effective Time in accordance with its terms.
(c) Neither Company nor any of its Affiliates has at any
time ever maintained, established, sponsored, participated in, or contributed to
any plan subject to Title IV of ERISA or Section 412 of the Code and at no time
has Company contributed to or been requested to contribute to any "multiemployer
plan," as such term is defined in ERISA or to any plan described in Section
413(c) of the Code. Neither Company nor any officer or director of Company or
any of its subsidiaries is subject to any liability or penalty under Section
4975 through 4980B of the Code or Title I of ERISA. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
not otherwise exempt under Section 408 of ERISA, has occurred with respect to
any Plan.
(d) Neither Company nor any of its Affiliates has, prior
to the Effective Time and in any material respect, violated any of the health
continuation requirements of COBRA, the requirements of the Family Medical Leave
Act of 1993, as amended, the requirements of the Women's Health and Cancer
Rights Act, as amended, the requirements of the Newborns' and Mothers' Health
Protection Act of 1996, as amended, or any similar provisions of state law
applicable to employees of the Company or any of its subsidiaries. None of the
Plans promises or provides medical or other welfare benefits to any former
employee of Company except as required by COBRA or other applicable law or by
the terms of a written agreement with such former employee, and Company has not
represented, promised or contracted (whether in oral or written form) to provide
such retiree benefits to any employee, former employee, director, consultant or
other person, except to the extent required by statute.
(e) Company is not bound by or subject to (and none of
its respective assets or properties is bound by or subject to) any arrangement
with any labor union. No employee of Company is represented by any labor union
or covered by any collective bargaining agreement and, to the Knowledge of
Company, no campaign to establish such representation is in progress. There is
no pending or, to the Knowledge of Company, threatened labor dispute involving
Company and any group of its employees nor has Company experienced any labor
interruptions over the past three (3) years, and Company consider their
relationships with their employees to be good. The Company is in compliance in
all material respects with all applicable material foreign, federal, state and
local laws,
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19
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours.
(f) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any shareholder, director or employee of
Company or any of its subsidiaries under any Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any Plan, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
2.12 Registration Statement/Joint Proxy Statement/Prospectus. None
of the information supplied or to be supplied by Company for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of the Parent
Common Stock in or as a result of the Merger (the "S-4") will, at the time the
S-4 becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; and (ii) the joint
proxy statement/prospectus to be filed with the SEC by Company pursuant to
Section 5.1 hereof (the "Joint Proxy Statement/Prospectus") will, at the dates
mailed to the shareholders of Company, at the times of the shareholders meeting
of Company (the "Company Shareholders' Meeting") in connection with the
transactions contemplated hereby, at the dates mailed to the stockholders of
Parent, at the times of the stockholders' meeting of Parent (the "Parent
Stockholders' Meeting") in connection with the Share Issuance and as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement/Prospectus will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.
2.13 Restrictions on Business Activities. There is no agreement,
commitment, judgment, injunction, order or decree binding upon Company or to
which the Company is a party which has or could reasonably be expected to have
the effect of prohibiting or materially impairing any business practice of
Company, any acquisition of property by Company or the conduct of business by
Company as currently conducted.
2.14 Title to Property. Company does not own any material real
property. Company has good and defensible title to all of their material
properties and assets, free and clear of all liens, charges and encumbrances
except liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected thereby; and all
leases pursuant to which Company lease from others material real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
material default or event of default (or any event which with notice or lapse of
time, or both, would constitute a material
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20
default and in respect of which Company has not taken commercially reasonable
steps to prevent such default from occurring).
2.15 Taxes.
(a) For the purposes of this Agreement, "Tax" or "Taxes"
refers to any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities relating to
taxes, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) (i) The Company has timely filed all federal,
state, local and foreign returns, estimates, information statements and reports
("Returns") relating to Taxes required to be filed by the Company with any Tax
authority, except such Returns which are not material to the Company. The
Company has paid all Taxes shown to be due on such Returns.
(ii) The Company as of the Effective Time will
have withheld with respect to its employees all federal and state income taxes,
Taxes pursuant to the Federal Insurance Contribution Act, Taxes pursuant to the
Federal Unemployment Tax Act and other Taxes required to be withheld, except
such Taxes which are not material to the Company.
(iii) Company has not been delinquent in the
payment of any material Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against the Company, nor has the Company
executed any unexpired waiver of any statute of limitations on or extending the
period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return
of the Company by any Tax authority is presently in progress, nor has the
Company been notified of any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed
by the Company has been proposed in writing formally or informally by any Tax
authority to the Company or any representative thereof.
(vi) Company does not have any liability for any
material unpaid Taxes which has not been accrued for or reserved on the Company
balance sheet dated June 30, 1999 in accordance with GAAP, whether asserted or
unasserted, contingent or otherwise, which is material to the Company, other
than any liability for unpaid Taxes that may have accrued since June 30, 1999 in
connection with the operation of the business of the Company in the ordinary
course.
(vii) There is no contract, agreement, plan or
arrangement to which the Company is a party as of the date of this Agreement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of the Company that, individually or
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21
collectively, would reasonably be expected to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code. There is no contract, agreement, plan or arrangement to which the
Company is a party or by which it is bound to compensate any individual for
excise taxes paid pursuant to Section 4999 of the Code.
(viii) Company has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by the Company or any of its subsidiaries.
(ix) Company is not party to nor has any
obligation under any tax-sharing, tax indemnity or tax allocation agreement or
arrangement.
(x) None of the Company's assets are tax exempt
use property within the meaning of Section 168(h) of the Code.
(xi) The Company has not distributed the stock of
any corporation in a transaction satisfying the requirements of Section 355 of
the Code. No Company stock has been distributed in a transaction satisfying the
requirements of Section 355 of the Code.
2.16 Environmental Matters. To Company's knowledge, Company (i) has
obtained all applicable permits, licenses and other authorizations that are
required under Environmental Laws the absence of which would have a Material
Adverse Effect on Company; and (ii) is in compliance in all material respects
with all material terms and conditions of such required permits, licenses and
authorizations, and also is in compliance in all material respects with all
Environmental Laws. "Environmental Laws" means all Federal, state, local and
foreign laws and regulations relating to pollution of the environment (including
ambient air, surface water, ground water, land surface or subsurface strata) or
the protection of human health and worker safety, including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, asbestos-containing materials, hazardous substances, petroleum and
petroleum products or any fraction thereof, excluding, however, Hazardous
Materials contained in products typically used for office and janitorial
purposes properly and safely maintained in accordance with Environmental Laws.
2.17 Brokers. Except for fees payable to Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation pursuant to an engagement letter dated October
18, 1999, a copy of which has been provided to Parent, Company has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby
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22
2.18 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United
States and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("Patents"); (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing;
(iii) all copyrights, copyright registrations and applications therefor
and all other rights corresponding thereto throughout the world; (iv)
all semiconductor and semiconductor circuit designs; (v) all rights to
all mask works and reticles, mask work registrations and applications
therefor; (vi) all industrial designs and any registrations and
applications therefor throughout the world; (vii) all trade names,
logos, common law trademarks and service marks; trademark and service
xxxx registrations and applications therefor and all goodwill
associated therewith throughout the world; (viii) all databases and
data collections and all rights therein throughout the world; (ix) all
computer software including all source code, object code, firmware,
development tools, files, records and data, all media on which any of
the foregoing is recorded, all Web addresses, sites and domain names;
(x) any similar, corresponding or equivalent rights to any of the
foregoing; and (xi) all documentation related to any of the foregoing
"Company Intellectual Property" shall mean any Intellectual Property
that is owned by or exclusively licensed to the Company. Without in any
way limiting the generality of the foregoing, Company Intellectual
Property includes all Intellectual Property owned or licensed by the
Company related to the Company's products, including without limitation
all rights in any design code, documentation, and tooling for packaging
of semiconductors in connection with all current products and products
in design and development.
"Registered Intellectual Property" shall mean all United States,
international and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations
or applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; (iv) any mask work
registrations and applications to register mask works; and (v) any
other Company Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued
by, filed with, or recorded by, any state, government or other public
legal authority.
"Company Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company.
(a) No material Company Intellectual Property or software
product or service offering of the Company or any of it subsidiaries (each, a
"Company Product") is subject to any proceeding or outstanding decree, order,
judgment, contract, license, agreement, or stipulation
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23
restricting in any manner the use, transfer, or licensing thereof by Company, or
which may affect the validity, use or enforceability of such Company
Intellectual Property or Company Product.
(b) Each material item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Company Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(c) Company owns and has good and exclusive title to,
each material item of Company Intellectual Property free and clear of any lien
or encumbrance (excluding non-exclusive licenses and related restrictions
granted in the ordinary course); and the Company is the exclusive owner of all
material trademarks used in connection with the operation or conduct of the
business of Company, including the sale, distribution or provision of any
Company Products by Company.
(d) To the extent that any material Intellectual Property
has been developed or created by a third party for Company, Company has a
written agreement with such third party with respect thereto and Company thereby
either (i) has obtained ownership of, and is the exclusive owner of, or (ii) has
obtained a license (sufficient for the conduct of its business as currently
conducted) to all such third party's Intellectual Property in such work,
material or invention by operation of law or by valid assignment, to the fullest
extent it is legally possible to do so.
(e) Company has not transferred ownership of, or granted
any exclusive license with respect to, any Intellectual Property that is or was
material Company Intellectual Property, to any third party.
(f) Section 2.19(f) of the Company Schedule lists all
material contracts, licenses and agreements to which Company is a party: (i)
with respect to Company Intellectual Property licensed or transferred to any
third party (other than end-user licenses in the ordinary course); or (ii)
pursuant to which a third party has licensed or transferred any material
Intellectual Property to Company.
(g) To Company's knowledge, all material contracts,
licenses and agreements relating to Company Intellectual Property are in full
force and effect. The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination or suspension of such contracts, licenses and
agreements. Company is in material compliance with, and has not materially
breached any term of any such contracts, licenses and agreements and, to the
knowledge of Company, all other parties to such contracts, licenses and
agreements are in compliance with, and have not materially breached any term of,
such contracts, licenses and agreements. Following the Closing Date, the
Surviving Corporation will be permitted to exercise all of Company's rights
under such contracts, licenses and agreements to the same extent Company would
have been able to had the transactions contemplated
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24
by this Agreement not occurred and without the payment of any additional amounts
or consideration other than ongoing fees, royalties or payments which Company
would otherwise be required to pay.
(h) The operation of the business of the Company as such
business currently is conducted, including (i) Company's design, development,
manufacture, distribution, reproduction, marketing or sale of the products or
services of Company (including Company Products) and (ii) the Company's use of
any product, device or process, has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or constitute unfair
competition or trade practices under the laws of any jurisdiction.
(i) Company has not received notice from any third party
that the operation of the business of Company or any act, product or service of
Company, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(j) To the knowledge of Company, no person has or is
infringing or misappropriating any Company Intellectual Property.
(k) Company has taken reasonable steps to protect
Company's rights in Company's confidential information and trade secrets that it
wishes to protect or any trade secrets or confidential information of third
parties provided to Company, and, without limiting the foregoing, Company has
and enforces a policy requiring each employee and contractor to execute a
proprietary information/confidentiality agreement substantially in the form
provided to Parent and all current and former employees and contractors of
Company have executed such an agreement, except where the failure to do so is
not reasonably expected to be material to Company.
(l) All of the Company Products (i) will record, store,
process, calculate and present calendar dates falling on and after (and if
applicable, spans of time including) January 1, 2000, and will calculate any
information dependent on or relating to such dates in the same manner, and with
the same functionality, data integrity and performance, as the products record,
store, process, calculate and present calendar dates on or before December 31,
1999, or calculate any information dependent on or relating to such dates
(collectively, "Year 2000 Compliant"), (ii) will lose no functionality with
respect to the introduction of records containing dates falling on or after
January 1, 2000, and (iii) will be interoperable with other products used and
distributed by Parent that may reasonably deliver records to the Company's
products or receive records from the Company's products, or interact with the
Company's products.
2.19 Agreements, Contracts and Commitments. Except as set forth in
Section 2.19 of the Company Schedule, Company is not a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer or director or higher level employee or member of
Company's Board of Directors, other than those that are terminable by Company on
no more than thirty (30) days' notice without liability or financial obligation
to the Company;
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(b) any agreement or plan, including, without limitation,
any stock option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification or any guaranty
other than any agreement of indemnification entered into in connection with the
sale or license of software products in the ordinary course of business;
(d) any agreement, contract or commitment currently in
force relating to the disposition or acquisition by Company after the date of
this Agreement of a material amount of assets not in the ordinary course of
business or pursuant to which Company has any material ownership interest in any
corporation, partnership, joint venture or other business enterprise;
(e) any mortgages, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit;
(f) any settlement agreement entered into within five (5)
years prior to the date of this Agreement; or
(g) any other agreement, contract or commitment that has
a value of $1,000,000 or more individually.
Neither Company, nor to Company's Knowledge any other party to a
Company Contract (as defined below), is in breach, violation or default under,
and Company has not received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Company is a party or by which it
is bound that are required to be disclosed in the Company Schedule (any such
agreement, contract or commitment, a "Company Contract") in such a manner as
would permit any other party to cancel or terminate any such Company Contract,
or would permit any other party to seek material damages or other remedies (for
any or all of such breaches, violations or defaults, in the aggregate).
2.20 Opinion of Financial Advisor. Company has received an opinion
from its financial advisor, Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation,
dated as of the date hereof, that the Exchange Ratio is fair to the shareholders
of Company from a financial point of view.
2.21 Board Approval. The Board of Directors of Company has, as of
the date of this Agreement, unanimously (i) approved this Agreement and has
approved the Merger and the other transactions contemplated hereby, (ii)
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of Company and fair to, and in the best interests
of, Company and its shareholders and (iii) determined to recommend that the
shareholders of Company adopt and approve this Agreement and approve the Merger.
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2.22 Vote Required. The affirmative vote of a majority of the votes
that holders of the outstanding shares of Company Common Stock are entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
2.23 State Takeover Statutes. The Board of Directors of Company has
approved the Merger, the Merger Agreement, the Shareholder Agreement and the
transactions contemplated hereby and thereby, and such approval is sufficient to
render inapplicable to the Merger, the Merger Agreement, the Shareholder
Agreement and the transactions contemplated hereby and thereby the provisions of
Code Section 14-2-1110 et seq. and 14-2-1131 et seq. of the Georgia Law to the
extent, if any, such section is applicable to the Merger, the Merger Agreement,
the Shareholder Agreement and the transactions contemplated hereby and thereby.
No other state takeover statute or similar statute or regulation applies to or
purports to apply to the Merger, the Merger Agreement, the Shareholder Agreement
or the transactions contemplated hereby and thereby.
2.24 Pooling of Interests. Neither Company nor any of its
directors, officers or shareholders has taken any action which would interfere
with Parent's ability to account for the Merger as a pooling of interests.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure letter and referencing a specific representation supplied by
Parent to Company dated as of the date hereof and certified by a duly authorized
officer of Parent (the "Parent Schedule"), as follows:
3.1 Organization and Qualification; Subsidiaries. Each Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
Parent and Merger Sub is in possession of all Approvals necessary to own, lease
and operate the properties it purports to own, operate or lease and to carry on
its business as it is now being conducted, except where the failure to have such
Approvals would not, individually or in the aggregate, be material to Parent.
Each of Parent and Merger Sub is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, be material to Parent.
3.2 Certificate of Incorporation and Bylaws. Parent has previously
furnished to Company complete and correct copies of its Certificate of
Incorporation and Bylaws as amended to date (together, the "Parent Charter
Documents"). Such Parent Charter Documents and equivalent organizational
documents of each of its subsidiaries are in full force and effect. Parent is
not in
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violation of any of the provisions of the Parent Charter Documents, Merger Sub
is not in violation of any of its equivalent organizational documents.
3.3 Capitalization. The authorized capital stock of Parent
consists of (i) 100,000,000 shares of Parent Common Stock, and (ii) 5,000,000
shares of Preferred Stock, $0.001 par value per share ("Parent Preferred
Stock"). At the close of business on November 1, 1999, (i) 14,763,042 shares of
Parent Common Stock were issued and outstanding, (ii) no shares of Parent Common
Stock were held in treasury by Parent or by subsidiaries of Parent, (iii)
300,000 shares of Parent Common Stock were reserved for future issuance pursuant
to Parent's employee stock purchase plan, (iv) 1,970,190 shares of Parent Common
Stock were reserved for issuance upon the exercise of outstanding options
("Parent Options") to purchase Parent Common Stock and (v) 51,041 shares of
Parent Common Stock were reserved for future issue upon the exercise of
outstanding warrants to purchase Parent Common Stock. As of the date hereof, no
shares of Parent Preferred Stock were issued or outstanding. The authorized
capital stock of Merger Sub consists of 1,000 shares of common stock, par value
$0.001 per share, all of which, as of the date hereof, are issued and
outstanding. All of the outstanding shares of Parent's and Merger Sub's
respective capital stock have been duly authorized and validly issued and are
fully paid and nonassessable. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall, and the shares of
Parent Common Stock to be issued pursuant to the Merger will be, duly
authorized, validly issued, fully paid and nonassessable. All outstanding shares
of Parent Common Stock, all outstanding Parent Stock Options, and all
outstanding shares of capital stock of Merger Sub have been issued and granted
in compliance with all applicable securities laws and other applicable Legal
Requirements.
3.4 Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement, or to consummate the transactions so
contemplated, subject only to the approval of the Share Issuance by Parent's
stockholders and the filing of the Certificate of Merger pursuant to Georgia Law
and the Delaware Certificate of Merger pursuant to Delaware Law. This Agreement
has been duly and validly executed and delivered by Parent and Merger Sub and,
assuming the due authorization, execution and delivery by Company, constitute
legal and binding obligations of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms.
3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement by Parent
and Merger Sub shall not, (i) conflict with or violate the Parent Charter
Documents, Bylaws or equivalent organizational documents of Merger Sub, (ii)
subject to compliance with the requirements set forth in Section 3.5(b) below,
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its
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subsidiaries or by which it or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Parent's or any such subsidiary's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or its or any of their respective
properties are bound or affected, except to the extent such conflict, violation,
breach, default, impairment or other effect could not in the case of clauses
(ii) or (iii) individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement by Parent
and Merger Sub shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, Blue
Sky Laws, the pre-merger notification requirements of the HSR Act, the rules and
regulations of Nasdaq, and the filing and recordation of the Certificate of
Merger as required by Georgia Law and the Delaware Certificate of Merger as
required by Delaware Law and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
(x) would not prevent consummation of the Merger or otherwise prevent Parent or
Merger Sub from performing their respective obligations under this Agreement or
(y) could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Parent.
3.6 SEC Filings; Financial Statements.
(a) Parent has made available to Company a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC on or after October 1, 1999 (the
"Parent SEC Reports"), which are all the forms, reports and documents required
to be filed by Parent with the SEC since October 1, 1999. The Parent SEC Reports
(A) were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (B) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of Parent's subsidiaries is
required to file any reports or other documents with the SEC.
(b) Each set of financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, do not contain footnotes as permitted by Form 10-Q
of the Exchange Act) and each fairly presents the consolidated financial
position of Parent and its subsidiaries at the respective dates thereof and the
consolidated results of its operations and cash
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flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal adjustments which were not or are not
expected to be material in amount.
(c) Parent has previously furnished to Company a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
3.7 No Undisclosed Liabilities. Neither Parent nor Merger Sub has
any liabilities (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and Merger Sub taken as a whole,
except (i) liabilities provided for in Parent's balance sheet as of September
30, 1999 or (ii) liabilities incurred since September 30, 1999 in the ordinary
course of business.
3.8 Absence of Certain Changes or Events. Since September 30,
1999, there has not been: (i) any Material Adverse Effect on Parent, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Parent's or Merger
Sub's capital stock, or any purchase, redemption or other acquisition by Parent
of any of Parent's capital stock or any other securities of Parent Merger Sub or
any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements,
(iii) any split, combination or reclassification of any of Parent's or Merger
Sub's capital stock, (iv) any granting by Parent of any increase in compensation
or fringe benefits, except for normal increases of cash compensation to
non-officer employees in the ordinary course of business consistent with past
practice, or any payment by Parent of any bonus, except for bonuses made to
non-officer employees in the ordinary course of business consistent with past
practice, or any granting by Parent of any increase in severance or termination
pay or any entry by Parent into any currently effective employment, severance,
termination or indemnification agreement or any agreement the benefits of which
are contingent or the terms of which are materially altered upon the occurrence
of a transaction involving Parent of the nature contemplated hereby, (v) entry
by Parent or Merger Sub into any licensing or other agreement with regard to the
acquisition or disposition of any Intellectual Property other than licenses in
the ordinary course of business consistent with past practice or any amendment
or consent with respect to any licensing agreement filed or required to be filed
by Parent with the SEC, (vi) any material change by Parent in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP, or (vii) any revaluation by Parent of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable or any sale of assets of the Parent other than
in the ordinary course of business.
3.9 Absence of Litigation. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Parent, threatened (or, to the
knowledge of Parent, any governmental or regulatory investigation pending or
threatened) against Parent or Merger Sub or any properties or rights of Parent
or Merger Sub, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign.
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3.10 Registration Statement; Joint Proxy Statement/Prospectus. None
of the information supplied or to be supplied by Parent for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; and (ii) the Joint Proxy
Statement/Prospectus will not, at the dates mailed to the shareholders of
Company and of Parent, at the time of the Company Shareholders' Meeting, the
time of the Parent Stockholders' Meeting and as of the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The S-4 will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated by
the SEC thereunder. Notwithstanding the foregoing, Parent makes no
representation or warranty with respect to any information supplied by the
Company which is contained in any of the foregoing documents.
3.11 Restrictions on Business Activities. There is no agreement,
commitment, judgment, injunction, order or decree binding upon Parent or Merger
Sub or to which Parent or Merger Sub is a party which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Parent or Merger Sub, any acquisition of property by Parent or
Merger Sub or the conduct of business by Parent or Merger Sub as currently
conducted.
3.12 Title to Property. Neither Parent nor Merger Sub owns any
material real property. Parent and Merger Sub have good and defensible title to
all of their material properties and assets, free and clear of all liens,
charges and encumbrances except liens for taxes not yet due and payable and such
liens or other imperfections of title, if any, as do not materially detract from
the value of or interfere with the present use of the property affected thereby;
and all leases pursuant to which Parent or Merger Sub lease from others material
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or any event which
with notice or lapse of time, or both, would constitute a material default and
in respect of which Parent or subsidiary has not taken adequate steps to prevent
such default from occurring).
3.13 Taxes.
(a) Parent and each of its subsidiaries have timely filed
all Returns relating to Taxes required to be filed by Parent and each of its
subsidiaries with any Tax authority, except such Returns which are not material
to Parent. Parent and each of its subsidiaries have paid all Taxes shown to be
due on such Returns.
(b) Parent and each of its subsidiaries as of the
Effective Time will have withheld with respect to its employees all federal and
state income taxes, Taxes pursuant to the Federal Insurance Contribution Act,
Taxes pursuant to the Federal Unemployment Tax Act and other Taxes required to
be withheld, except such Taxes which are not material to the Parent.
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(c) Neither Parent nor any of its subsidiaries has been
delinquent in the payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against Parent or any of its
subsidiaries, nor has Parent or any of its subsidiaries executed any unexpired
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(d) No audit or other examination of any Return of Parent
or any of its subsidiaries by any Tax authority is presently in progress, nor
has Parent or any of its subsidiaries been notified of any request for such an
audit or other examination.
(e) No adjustment relating to any Returns filed by Parent
or any of its subsidiaries has been proposed in writing formally or informally
by any Tax authority to Parent or any of its subsidiaries or any representative
thereof.
(f) Neither Parent nor any of its subsidiaries has any
liability for any material unpaid Taxes which has not been accrued for or
reserved on the Parent balance sheet dated September 30, 1999 in accordance with
GAAP, whether asserted or unasserted, contingent or otherwise, which is material
to Parent, other than any liability for unpaid Taxes that may have accrued since
September 30, 1999 in connection with the operation of the business of Parent
and its subsidiaries in the ordinary course.
(g) Neither Parent nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by the Parent or any of its
subsidiaries.
(h) Neither Parent nor any of its subsidiaries is party
to or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(i) None of Parent's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(j) Parent has not distributed the stock of any
corporation in a transaction satisfying the requirements of Section 355 of the
Code. No Parent stock has been distributed in a transaction satisfying the
requirements of Section 355 of the Code.
3.14 Environmental Matters. To Parent's knowledge, Parent (i) has
obtained all applicable permits, licenses and other authorizations that are
required under Environmental Laws the absence of which would have a Material
Adverse Effect on Parent; and (ii) is in compliance in all material respects
with all material terms and conditions of such required permits, licenses and
authorizations, and also is in compliance in all material respects with all
Environmental Laws.
3.15 Brokers. Except for fees payable to Xxxxxx Xxxxxxx & Co.
Incorporated pursuant to an engagement letter dated November 11, 1999, a copy of
which has been provided to Company, Parent has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders'
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fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
3.16 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"Parent Intellectual Property" shall mean any Intellectual Property
that is owned by or exclusively licensed to Parent or any of its
subsidiaries. Without in any way limiting the generality of the
foregoing, Parent Intellectual Property includes all Intellectual
Property owned or licensed by Parent related to Parent's products,
including without limitation all rights in any design code,
documentation, and tooling for packaging of semiconductors in
connection with all current products and products in design and
development.
"Parent Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Parent or any
of its subsidiaries.
(a) No material Parent Intellectual Property or software
product or service offering of Parent or any of it subsidiaries (each, a "Parent
Product") is subject to any proceeding or outstanding decree, order, judgment,
contract, license, agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by Parent or any of its subsidiaries, or which
may affect the validity, use or enforceability of such Parent Intellectual
Property or Parent Product.
(b) Each material item of Parent Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Parent Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Parent Registered Intellectual Property
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Parent Registered Intellectual Property.
(c) Parent owns and has good and exclusive title to, each
material item of Parent Intellectual Property free and clear of any lien or
encumbrance (excluding non-exclusive licenses and related restrictions granted
in the ordinary course); and Parent is the exclusive owner of all material
trademarks used in connection with the operation or conduct of the business of
Parent and its subsidiaries, including the sale, distribution or provision of
any Parent Products by Parent or its subsidiaries.
(d) To the extent that any material Intellectual Property
has been developed or created by a third party for Parent or any of its
subsidiaries, Parent has a written agreement with such third party with respect
thereto and Parent thereby either (i) has obtained ownership of, and is the
exclusive owner of, or (ii) has obtained a perpetual license (sufficient for the
conduct of its business as currently conducted) to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
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(e) Neither Parent nor any of its subsidiaries has
transferred ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was material Parent Intellectual Property, to
any third party.
(f) To Parent's knowledge, all material contracts,
licenses and agreements relating to Parent Intellectual Property are in full
force and effect. The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination or suspension of such contracts, licenses and
agreements. Each of Parent and its subsidiaries is in material compliance with,
and has not materially breached any term of any such contracts, licenses and
agreements and, to the knowledge of Parent, all other parties to such contracts,
licenses and agreements are in compliance with, and have not materially breached
any term of, such contracts, licenses and agreements.
(g) The operation of the business of Parent and its
subsidiaries as such business currently is conducted, including (i) Parent's and
its subsidiaries' design, development, manufacture, distribution, reproduction,
marketing or sale of the products or services of Parent and its subsidiaries
(including Parent Products) and (ii) Parent's use of any product, device or
process, has not, does not and will not infringe or misappropriate the
Intellectual Property of any third party or constitute unfair competition or
trade practices under the laws of any jurisdiction.
(h) Neither Parent nor any of its subsidiaries has
received notice from any third party that the operation of the business of
Parent or any of its subsidiaries or any act, product or service of Parent or
any of its subsidiaries, infringes or misappropriates the Intellectual Property
of any third party or constitutes unfair competition or trade practices under
the laws of any jurisdiction.
(i) To the knowledge of Parent, no person has or is
infringing or misappropriating any Parent Intellectual Property.
(j) Parent and each of its subsidiaries has taken
reasonable steps to protect Parent's and its subsidiaries' rights in Parent's
confidential information and trade secrets that it wishes to protect or any
trade secrets or confidential information of third parties provided to Parent or
any of its subsidiaries, and, without limiting the foregoing, each of Parent and
its subsidiaries has and enforces a policy requiring each employee and
contractor to execute a proprietary information/confidentiality agreement
substantially in the form provided to Parent and all current and former
employees and contractors of Parent and any of its subsidiaries have executed
such an agreement, except where the failure to do so is not reasonably expected
to be material to Parent.
(k) All of the Parent Products (i) are Year 2000
Compliant, (ii) will lose no functionality with respect to the introduction of
records containing dates falling on or after January 1, 2000, and (iii) will be
interoperable with other products used and distributed by Parent that may
reasonably deliver records to Parent's or any of its subsidiaries' products or
receive records from Parent's or any of its subsidiaries' products, or interact
with Parent's or any of its subsidiaries' products.
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3.17 Agreements, Contracts and Commitments. Neither Parent nor
Merger Sub is a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer or director or higher level employee or member of
Parent's Board of Directors, other than those that are terminable by Parent or
Merger Sub on no more than thirty (30) days' notice without liability or
financial obligation to Parent;
(b) any agreement or plan, including, without limitation,
any stock option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification or any guaranty
other than any agreement of indemnification entered into in connection with the
sale or license of software products in the ordinary course of business;
(d) any agreement, contract or commitment currently in
force relating to the disposition or acquisition by Parent or Merger Sub after
the date of this Agreement of a material amount of assets not in the ordinary
course of business or pursuant to which Parent or Merger Sub has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Parent's Merger Sub;
(e) any mortgages, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit;
(f) any settlement agreement entered into within five (5)
years prior to the date of this Agreement; or
(g) any other agreement, contract or commitment that has
a value of $1,000,000 or more individually.
Neither Parent nor any of its subsidiaries, nor to Parent's knowledge any other
party to a Parent Contract (as defined below), is in breach, violation or
default under, and neither Parent nor any of its subsidiaries has received
written notice that it has breached, violated or defaulted under, any of the
material terms or conditions of any of the agreements, contracts or commitments
to which Parent or Merger Sub is a party or by which it is bound that are
required to be disclosed in the Parent Schedule (any such agreement, contract or
commitment, a "Parent Contract") in such a manner as would permit any other
party to cancel or terminate any such Parent Contract, or would permit any other
party to seek material damages or other remedies (for any or all of such
breaches, violations or defaults, in the aggregate).
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3.18 Opinion of Financial Advisor. Parent has received an opinion
from its financial advisor, Xxxxxx Xxxxxxx & Co. Incorporated, dated as of the
date hereof, that the Exchange Ratio is fair to Parent from a financial point of
view.
3.19 Board Approval. The Board of Directors of Parent has, as of
the date of this Agreement, unanimously (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of Parent
and is fair to, and in the best interests of, Parent and its stockholders, (ii)
has approved this Agreement, the Merger and the other transactions contemplated
by this Agreement and (iii) has determined to recommend that the stockholders of
Parent approve the Share Issuance.
3.20 Vote Required. The affirmative vote of a majority of the
shares of Parent Common Stock that cast votes regarding the Share Issuance in
person or by proxy at the Parent Stockholders' Meeting is the only vote of the
holders of any class or series of Parent's capital stock necessary to approve
this Agreement and the transactions contemplated hereby.
3.21 Delaware Law Section 203. The Board of Directors of Parent has
approved the Merger, the Merger Agreement, the Stockholder Agreement and the
transactions contemplated hereby and thereby, and such approval is sufficient to
render inapplicable to the Merger, the Merger Agreement, the Stockholder
Agreement and the transactions contemplated hereby and thereby the provisions of
Delaware Law Section 203 to the extent, if any, such section is applicable to
the Merger, the Merger Agreement, the Stockholder Agreement and the transactions
contemplated hereby and thereby. Neither Parent nor Merger Sub is the beneficial
owner of 10% or more of the voting power of the outstanding voting shares of
Company or is an affiliate of Company.
3.22 Pooling of Interests. Neither Parent nor any of its directors,
officers or stockholders has taken any action which would interfere with
Parent's ability to account for the Merger as a pooling of interests.
3.23 Merger Sub Operations. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not (a)
engaged in any business activities, (b) conducted any operations other than in
connection with the transactions contemplated hereby or (c) incurred any
liabilities other than in connection with the transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, Company shall,
except to the extent that Parent shall otherwise consent in writing, carry on
its business, in the ordinary course, and in compliance with all applicable laws
and regulations, pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, pay or perform other material obligations when due,
and use its commercially reasonable efforts consistent with past practices and
policies to (i) preserve intact its present business organization, (ii) keep
available the services of its present officers and employees and (iii) preserve
its relationships
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with customers, suppliers, distributors, licensors, licensees, and others with
which it has business dealings.
In addition, except as expressly permitted by the terms of this
Agreement, without the prior written consent of Parent, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time, Company shall not
do any of the following and shall not permit its subsidiaries to do any of the
following:
(a) Waive any stock repurchase rights, accelerate, amend
or change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other stock
plans or authorize cash payments in exchange for any options granted under any
of such plans;
(b) Grant any severance or termination pay to any officer
or employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan;
(c) Transfer or license to any person or entity or
otherwise extend, amend or modify any rights to the Company Intellectual
Property, or enter into grants to transfer or license to any person future
patent rights other than in the ordinary course of business consistent with past
practices, provided that in no event shall Company license on an exclusive basis
or sell any Company Intellectual Property;
(d) Declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock, equity securities or property)
in respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing with respect to, any shares of capital
stock or any securities convertible into shares of capital stock, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or enter into
other agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the issuance delivery and/or
sale of (i) shares of Company Common Stock pursuant to the exercise of stock
options outstanding as of the date of this Agreement or granted pursuant to
clause (y) hereof, and (ii) shares of Company Common Stock issuable to
participants in the ESPP consistent with the terms thereof and (y) the granting
of stock options (and the issuance of Company Common Stock upon exercise
thereof), in the ordinary course of business and consistent with past practices,
in an amount not to exceed options to purchase (and the issuance of Company
Common Stock upon exercise thereof) 50,000 shares in the aggregate;
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(g) Cause, permit or propose any amendments to the
Company Charter Documents (or similar governing instruments of any of its
subsidiaries);
(h) Acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets or enter outside the ordinary course of
Company's business consistent with past practice into any joint ventures,
strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose
of any properties or assets except sales of inventory in the ordinary course of
business consistent with past practice, except for the sale, lease or
disposition (other than through licensing) of property or assets which are not
material, individually or in the aggregate, to the business of Company and its
subsidiaries;
(j) Incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt
securities of Company, enter into any "keep well" or other agreement to maintain
any financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than in connection with the
financing of ordinary course trade payables consistent with past practice;
(k) Adopt or amend any employee benefit plan, policy or
arrangement, any employee stock purchase or employee stock option plan, or enter
into any employment contract or collective bargaining agreement (other than
offer letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable "at
will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or
consultants;
(l) Make any individual or series of related payments
outside of the ordinary course of business (including payments to legal,
accounting or other professional service advisors, but excluding payments to
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation as described in Section
2.17) in excess of $1,000,000;
(m) Revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(n) Incur or enter into any agreement, contract or
commitment outside of the ordinary course of business in excess of $1,000,000
individually;
(o) Engage in any action that could (i) cause the Merger
to fail to qualify as a "reorganization" under Section 368(a) of the Code or
(ii) interfere with Parent's ability to account for the Merger as a pooling of
interests, whether or not (in each case) otherwise permitted by the provisions
of this Article IV;
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(p) Engage in any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement;
(q) Make any tax election that, individually or in the
aggregate, is reasonably likely to adversely affect in any material respect the
tax liability or tax attributes of Company or any of its subsidiaries or settle
or compromise any material income tax liability; or
(r) Agree in writing or otherwise to take any of the
actions described in Section 4.1 (a) through (q) above.
4.2 Conduct of Business by Parent. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Parent and Merger Sub
shall, except to the extent that Company shall otherwise consent in writing,
carry on its business, in the ordinary course and in compliance with all
applicable laws and regulations, pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, pay or perform other material
obligations when due, and use its commercially reasonable efforts consistent
with past practices and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, Parent shall not do any of the following and shall not permit
its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend
or change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other stock
plans or authorize cash payments in exchange for any options granted under any
of such plans;
(b) Declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock, equity securities or property)
in respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any capital stock;
(c) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Parent or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(d) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing with respect to, any shares of capital
stock or any securities convertible into shares of capital stock, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or enter into
other agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the
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issuance delivery and/or sale of (i) shares of Parent Common Stock pursuant to
the exercise of stock options outstanding as of the date of this Agreement or
granted pursuant to clause (y) hereof and (ii) shares of Parent Common Stock
issuable to participants in Parent's employee stock purchase plan consistent
with the terms thereof and (y) the granting of stock options (and the issuance
of Parent Common Stock upon exercise thereof), in the ordinary course of
business and consistent with past practices;
(e) Cause, permit or propose any amendments to the Parent
Charter Documents (or similar governing instruments of any of its subsidiaries);
(f) Acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets or enter outside the ordinary course of
Parent's business consistent with past practice into any joint ventures,
strategic partnerships or alliances, in each case other than as would not result
in a material delay in the Merger;
(g) Sell, lease, license, encumber or otherwise dispose
of any properties or assets except sales of inventory in the ordinary course of
business consistent with past practice, except for the sale, lease or
disposition (other than through licensing) of property or assets which are not
material, individually or in the aggregate, to the business of Parent and its
subsidiaries;
(h) Revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(i) Engage in any action that could (i) cause the Merger
to fail to qualify as a "reorganization" under Section 368(a) of the Code or
(ii) interfere with Parent's ability to account for the Merger as a pooling of
interests, whether or not (in each case) otherwise permitted by the provisions
of this Article IV;
(j) Engage in any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement;
(k) Make any tax election that, individually or in the
aggregate, is reasonably likely to adversely affect in any material respect the
tax liability or tax attributes of Company or any of its subsidiaries or settle
or compromise any material income tax liability; or;
(l) Agree in writing or otherwise to take any of the
actions described in Section 4.1 (a) through (k) above.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of
this Agreement, Parent and Company shall jointly prepare and shall file with the
SEC a document or documents that will constitute (i) the prospectus forming part
of the registration statement on the S-4 and (ii) the Joint Proxy
Statement/Prospectus. Each of the parties hereto shall use all reasonable
efforts to cause the S-4 to become effective as promptly as practicable after
the date hereof, and, prior to the effective date of the S-4, the parties hereto
shall take all action required under any applicable Laws in connection with the
issuance of shares of Parent Common Stock pursuant to the Merger. Each of Parent
and Company shall provide promptly to the other said information concerning its
business and financial statements and affairs, as, in the reasonable judgment of
the providing party or its counsel, may be required or appropriate for inclusion
in the Proxy Statement/Prospectus and the S-4, or in any amendments or
supplements thereto, and to cause its counsel and auditors to cooperate with the
other's counsel and auditors in the preparation of the Proxy
Statement/Prospectus and the S-4. Each of the Company and Parent will respond to
any comments of the SEC, and will use its respective reasonable efforts to have
the S-4 declared effective under the Securities Act as promptly as practicable
after such filing, and will cause the Proxy Statement/Prospectus to be mailed to
its respective stockholders and shareholders, as promptly as practicable after
the effective date of the S-4. As promptly as practicable after the date of the
Agreement, each of Company and Parent will prepare and file any filings required
to be filed by it under the Exchange Act, the Securities Act, or other federal,
foreign or Blue Sky or related laws relating to the Merger and the transactions
contemplated by this Agreement (the "Other Filings"). Each of Company and Parent
will notify the other promptly upon the receipt of any comments of the SEC or
its staff or any other government officials for amendments or supplements to the
S-4, the Joint Proxy Statement/Prospectus or any Other Filing, or any additional
information and will supply the other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the SEC or its
staff or any other government officials, on the other hand, with respect to the
S-4, the Joint Proxy Statement/Prospectus, the Merger or any Other Filing. Each
of Company and Parent will cause all documents that it is responsible for filing
with the SEC or other regulatory authorities under this Section 5.1(a) to comply
in all material respects with all applicable requirements of law and the rules
and regulations promulgated thereunder. Whenever any event occurs which is
required to be set forth in the Joint Proxy Statement/Prospectus, the S-4 or any
Other Filing, Company or Parent as the case may be, will promptly inform the
other of such occurrence and cooperate in filing with the SEC or its staff or
any other government officials, and/or mailing to shareholders of Company, and
stockholders of Parent, such amendment or supplement.
(b) The Joint Proxy Statement/Prospectus shall include
(i) the approval of this Agreement and the Merger and the recommendation of the
Board of Directors of Company to Company's shareholders that they vote in favor
of approval of this Agreement and the Merger, subject to the right of the Board
of Directors of the Company to withdraw its recommendation in compliance with
Section 5.4 of this Agreement, and (ii) the opinion of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation referred to in Section 2.20 (unless the Board of
Directors of Company has
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withdrawn its recommendation in compliance with Section 5.4); provided, however,
that the Board of Directors of Company shall submit this Agreement to Company's
shareholders whether or not at any time subsequent to the date hereof such board
determines that it can no longer make such recommendation. The Joint Proxy
Statement/Prospectus shall include (A) the approval of the Share Issuance and
the recommendation of the Board of Directors of Parent to Parent's stockholders
that they vote in favor of approval of the Share Issuance, and (B) the opinion
of Xxxxxx Xxxxxxx & Co. Incorporated referred to in Section 3.18.
(c) No amendment or supplement to the Joint Proxy
Statement/Prospectus or the S-4 shall be made without the approval of Parent and
Company, which approval shall not be unreasonably withheld or delayed. Each of
the parties hereto shall advise the other parties hereto, promptly after it
receives notice thereof, of the time when the S-4 has become effective or any
supplement or amendment has been filed, of the issuance of any stop order, of
the suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or of any
request by the SEC for amendment of the Joint Proxy Statement/Prospectus or the
S-4 or comments thereon and responses thereto or requests by the SEC for
additional information.
5.2 Shareholder and Stockholder Meetings. Company shall take all
action necessary in accordance with applicable law and the Company Charter
Documents to convene the Company Shareholders' Meeting and Parent shall call and
hold the Parent Stockholders' Meeting as promptly as practicable after
declaration of the effectiveness of the S-4 and for the purpose of voting upon
the approval of this Agreement and the Merger or the Share Issuance, as the case
may be, pursuant to the Joint Proxy Statement/Prospectus, and Company and Parent
shall use all reasonable efforts to hold the Parent Stockholders' Meeting and
the Company Shareholders' Meeting on the same day and as soon as practicable
after the date on which the S-4 becomes effective. Nothing herein shall prevent
Company or Parent from adjourning or postponing the Company Shareholders'
Meeting or the Parent Stockholders' Meeting, as the case may be, to the extent
necessary to ensure that any necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to Company's shareholders or Parent's
stockholders in advance of a vote on the Merger and this Agreement or, if as of
the time for which the Company's Shareholders' Meeting and Parent Stockholders'
Meeting is originally scheduled (as set forth in the Joint Prospectus/Proxy
Statement) if there are insufficient shares of Company Common Stock or Parent
Common Stock, as the case may be, either in person or by proxy to constitute a
quorum necessary to conduct business at their respective meetings of the
shareholders or stockholders. Company's Board of Directors shall submit this
Agreement and the Merger for shareholder approval pursuant to Section 14-2-
1103(c) of Georgia Law subject only to the condition of shareholder approval as
described in Section 2.22. Unless Company's Board of Directors has withdrawn its
recommendation of this Agreement and the Merger in compliance with Section 5.4,
Company shall use all reasonable efforts to solicit from its shareholders
proxies in favor of the approval of this Agreement and the Merger pursuant to
the Joint Proxy Statement/Prospectus and shall take all other action necessary
or advisable to secure the vote or consent of shareholders required by Georgia
Law or applicable stock exchange requirements to obtain such approvals. Parent
shall use all reasonable efforts to solicit from its stockholders proxies in
favor of the Share Issuance pursuant to the Joint Proxy Statement/Prospectus and
shall take all other action necessary or
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advisable to secure the vote or consent of stockholders required by the Delaware
Law or applicable Nasdaq requirements to obtain such approval. Subject to
Section 5.4, each of the parties hereto shall take all other action necessary or
advisable to promptly and expeditiously secure any vote or consent of
stockholders or shareholders required by applicable law and such party's
certificate of incorporation and bylaws to effect the Merger. Company shall call
and hold the Company Shareholders' Meeting for the purpose of voting upon the
approval of this Agreement and the Merger whether or not Company's Board of
Directors at any time subsequent to the date hereof determines to no longer
recommend that Company's shareholders approve such proposal.
5.3 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have
previously executed a mutual nondisclosure agreement, dated as of October 7,
1999 (as amended, the "Confidentiality Agreement"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms.
(b) Each of the Company and Parent will afford the other
and the other's accountants, counsel and other representatives reasonable access
during normal business hours and upon reasonable notice to its properties,
books, records and personnel during the period prior to the Effective Time to
obtain all information concerning its business as such other party may
reasonably request. No information or knowledge obtained in any investigation
pursuant to this Section 5.3 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
5.4 No Solicitation.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article VII, Company
will not, nor will it authorize or permit any of its officers, directors,
affiliates or employees or any investment banker, attorney or other advisor or
representative retained by any of them to, directly or indirectly, (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal (as defined below), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
contract, agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction (as defined below); provided, however, that nothing
contained in this Section 5.4 shall prohibit the Board of Directors of Company
(i) from complying with Rule 14d-9 or 14e-2(a) promulgated under the Exchange
Act with regard to a tender or exchange offer not made in violation of this
Section 5.4 or (ii) from, in response to an unsolicited, bona fide written
Acquisition Proposal that Company's Board of Directors reasonably concludes
constitutes a Superior Proposal (as defined below), engaging in discussions and
negotiations with and furnishing information to the party making, or
recommending to Company's shareholders (and, in conjunction with such
recommendation, withdrawing its recommendation of the Merger), such Acquisition
Proposal to the
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extent (A) the Board of Directors of the Company determines, in good faith in
consultation with and in receipt of advice from its outside legal counsel, that
it is required to do so in order to act in a manner consistent with its
fiduciary obligations under applicable law, (B) (x) at least two business days
prior to furnishing any such nonpublic information to, or entering into
discussions or negotiations with, such party, Company gives Parent written
notice of Company's intention to furnish nonpublic information to, or enter into
discussions or negotiations with, such party and (y) Company receives from such
party an executed confidentiality agreement containing customary limitations on
the use and disclosure of all nonpublic written and oral information furnished
to such party by or on behalf of Company, (C) contemporaneously with furnishing
any such nonpublic information to such party, Company furnishes such nonpublic
information to Parent (to the extent such nonpublic information has not been
previously furnished by the Company to Parent) and (D) Company has otherwise
acted in full compliance with this Section 5.4. Company and its subsidiaries
will immediately cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in this Section 5.4 by any officer or
director of Company or any investment banker or attorney of Company shall be
deemed to be a breach of this Section 5.4 by Company.
For purposes of this Agreement, (A) "Acquisition Proposal" shall mean
any offer or proposal (other than an offer or proposal by Parent) relating to
any Acquisition Transaction. For the purposes of this Agreement; (B)
"Acquisition Transaction" shall mean any transaction or series of related
transactions other than the transactions contemplated by this Agreement
involving: (A) any acquisition or purchase from the Company by any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 5% interest in the total outstanding
voting securities of the Company or any of its subsidiaries or any tender offer
or exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the Company
pursuant to which the shareholders of the Company immediately preceding such
transaction hold less than 95% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 5% of the
assets of the Company; or (C) any liquidation, dissolution, recapitalization or
other significant corporate reorganization of the Company; and (C) "Superior
Proposal" shall mean an Acquisition Proposal with respect to which (x) if any
cash consideration is involved, is not subject to any financing contingency, and
with respect to which Company's Board of Directors shall have determined (based
upon the advice of Company's independent financial advisors) in the exercise of
its fiduciary duties to Company's shareholders that the acquiring party is
reasonably capable of consummating the proposed Acquisition Transaction on the
terms proposed, and (y) Company's Board of Directors shall have determined in
the exercise of its fiduciary duties to Company's shareholders provides greater
value to the shareholders of Company than the Merger (based upon the advice of
Company's independent financial advisors).
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(b) In addition to the obligations of Company set forth
in paragraph (a) of this Section 5.4, Company as promptly as practicable, and in
any event within 24 hours, shall advise Parent orally and in writing of any
request for information which Company reasonably believes would lead to an
Acquisition Proposal or of any Acquisition Proposal, or any inquiry with respect
to or which Company reasonably should believe would lead to any Acquisition
Proposal, the material terms and conditions of such request, Acquisition
Proposal or inquiry, and the identity of the person or group making any such
request, Acquisition Proposal or inquiry. Company will keep Parent informed in
all material respects of the status and details (including material amendments
or proposed amendments) of any such request, Acquisition Proposal or inquiry. In
addition to the foregoing, Company shall (i) provide Parent with at least 48
hours prior notice (or such lesser prior notice as provided to the members of
Company's Board of Directors but in no event less than eight hours) of any
meeting of Company's Board of Directors at which Company's Board of Directors is
reasonably expected to consider a Superior Proposal and (ii) provide Parent with
at least two (2) business days prior written notice of a meeting of Company's
Board of Directors at which Company's Board of Directors is reasonably expected
to recommend a Superior Proposal to its shareholders and together with such
notice a copy of the definitive documentation relating to such Superior Proposal
to the extent such documentation is then available (and otherwise provide such
definitive documentation as soon as available).
(c) Company's Board of Directors may withdraw its
recommendation of this Agreement and the Merger if both of the following
conditions exist: (i) Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
withdraws the opinion described in Section 2.20 and (ii) the Board of Directors
of the Company determines in good faith, in consultation with and in receipt of
advice from its outside legal counsel, that it is required to so withdraw in
order to act in a manner consistent with its fiduciary obligations under
applicable law.
5.5 Public Disclosure. Parent and Company will consult with each
other and agree before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement or an Acquisition Proposal
and will not issue any such press release or make any such public statement
prior to such agreement, except as may be required by law or any listing
agreement with a national securities exchange, in which case reasonable efforts
to consult with the other party will be made prior to any such release or public
statement. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
5.6 Reasonable Efforts; Notification
(a) Upon the terms and subject to the conditions,
including, without limitation, Section 5.4, set forth in this Agreement, each of
the parties agrees to use all reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement, including
using reasonable efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the conditions precedent set forth in Article
VI to be satisfied, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations,
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declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties required as a result of the transactions contemplated
by this Agreement, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, each of Parent and Company
and their respective Boards of Directors shall, if any state takeover statute or
similar statute or regulation is or becomes applicable to the Merger, this
Agreement or any of the transactions contemplated by this Agreement, use all
reasonable efforts to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger, this Agreement and the transactions
contemplated hereby. Notwithstanding anything herein to the contrary, nothing in
this Agreement shall be deemed to require Parent or Company or any subsidiary or
affiliate thereof to agree to any divestiture by itself or any of its affiliates
of shares of capital stock, other than of Company's or of any business, assets
or property, or the imposition of any material limitation on the ability of any
of them to conduct their business or to own or exercise control of such assets,
properties and stock.
(b) Company shall give prompt notice to Parent upon
becoming aware that any representation or warranty made by it contained in this
Agreement has become untrue or inaccurate, or of any failure of Company to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, such that the conditions set forth in Section 6.3(a) or 6.3(b) would not
be satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to Company upon
becoming aware that any representation or warranty made by it or Merger Sub
contained in this Agreement has become untrue or inaccurate, or of any failure
of Parent or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, in each case, such that the conditions set forth in Section
6.2(a) or 6.2(b) would not be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
5.7 Third Party Consents. As soon as practicable following the
date hereof, Parent and Company will each use its commercially reasonable
efforts to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
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5.8 Stock Options and Employee Benefits.
(a) At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (each, a "Company Stock Option") under
the Company Option Plans, whether as vested or unvested, shall by virtue of the
Merger be assumed by Parent in such manner that (1) Parent is a corporation
"issuing or assuming a stock option in a transaction to which Section 424(a)
applies" within the meaning of the Code, or (2) Parent, to the extent that
Section 424 of the Code does not apply to any such Company Options, would be
such a corporation were Section 424 of the Code applicable to such Company
options. Each Company Stock Option so assumed by Parent under this Agreement
will continue to have, and be subject to, the same terms and conditions of such
options immediately prior to the Effective Time (including, without limitation,
any repurchase rights or vesting provisions and provisions regarding
acceleration of vesting upon certain transactions other than those contemplated
by this Agreement), except that (i) each Company Stock Option will be or will
become exercisable in accordance with its terms for that number of whole shares
of Parent Common Stock equal to the product (rounded to the nearest whole number
of shares of Parent Common Stock subject to subsection (c) below) of the number
of shares of Company Common Stock that were issuable upon exercise of such
Company Stock Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock and (ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Company Stock Option will be
equal to the quotient (rounded to the nearest whole cent subject to subsection
(c) below) determined by dividing the exercise price per share of Company Common
Stock at which such Company Stock Option was exercisable immediately prior to
the Effective Time by the Exchange Ratio.
(b) Prior to the Effective Time, outstanding purchase
rights under Company's ESPP shall be exercised in accordance with Section 7.1 of
the ESPP and each share of Company Common Stock purchased pursuant to such
exercise shall by virtue of the Merger, and without any action on the part of
the holder thereof, be converted into the right to receive a number of shares of
Parent Common Stock equal to the Exchange Ratio without issuance of certificates
representing issued and outstanding shares of Company Common Stock to ESPP
participants.
(c) It is the intention of the parties (1) that subject
to applicable law, the Company Stock Options assumed by Parent qualify,
following the Effective Time, as incentive stock options, as defined in Section
422 of the Code, to the extent that the Company Stock Options qualified as
incentive stock options prior to the Effective Time, (2) that each holder of a
Company Option shall, after the Effective Time, have an option which preserves
(but does not increase) the excess of the fair market value of the shares
subject to the option immediately before the Effective Time over the aggregate
option price of such shares immediately before the Effective Time, (3) that the
terms and conditions, restrictions and provisions of the resulting option be
identical to the terms, conditions, restrictions or provisions of the Company
Stock Option which was assumed as if the Parent had originally issued such
Company Stock Option for Parent Common Stock, and (4) any terms, conditions,
restrictions or provisions of an option applicable to a number of shares rather
than a percentage or fraction of shares should be appropriately adjusted based
upon the Exchange Ratio.
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(d) To the extent permitted by Parent's employee benefit
plan and applicable law, Parent will use reasonable efforts, or will cause
Company to use reasonable efforts, give individuals who are employed by Company
and its subsidiaries as of the Effective Time ("Affected Employees") full credit
for purposes of eligibility, vesting, benefit accrual (excluding, however,
benefit accrual under any defined benefit pension plans) and determination of
the level of benefits under any employee benefit plans or arrangements
maintained by Parent or any subsidiary of Parent for such Affected Employees'
service with Company or any subsidiary of the Company to the same extent
recognized by Company immediately prior to the Effective Time.
(e) To the extent permitted by Parent's employee benefit
plans and applicable law, Parent will, or will cause Company to (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans that such employees may be eligible to
participate in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such employees and that have
not been satisfied as of the Effective Time under any welfare plan maintained
for the Affected Employees immediately prior to the Effective Time, and (ii)
provide each Affected Employee with credit for any co-payments and deductibles
paid prior to the Effective Time in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Effective Time.
(f) As of the Effective Time, Parent shall assume and
honor and shall cause Company to honor in accordance with their terms all
employment, severance and other compensation agreements and arrangements
existing and disclosed by Company to Parent prior to the execution of this
Agreement which are between Company or any subsidiary and any director, officer,
or employee thereof except as otherwise expressly agreed between Parent and such
person.
5.9 Form S-8. Parent agrees to file a registration statement on
Form S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options as soon as is reasonably practicable, and in any event
within ten business days, after the Effective Time.
5.10 Indemnification.
(a) From and after the Effective Time, Parent will cause
the Surviving Corporation to fulfill and honor in all respects the obligations
of Company pursuant to any indemnification agreements between Company and its
directors and officers in effect immediately prior to the Effective Time and any
indemnification provisions under the Company Charter Documents as in effect on
the date hereof. The Certificate of Incorporation and Bylaws of the Surviving
Corporation will contain provisions with respect to exculpation and
indemnification that are at least as favorable to the indemnified parties
thereunder (the "Indemnified Parties") as those contained in the Company Charter
Documents as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of the
Indemnified Parties, unless such modification is required by law.
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(b) In the event Company or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers a material amount of
its properties and assets to any person in a single transaction or a series of
transactions, then, and in each such case, Parent will either guaranty the
indemnification obligation referred to in this Section 5.10 or will make or
cause to be made proper provision so that the successors and assigns of Company
or the Surviving Corporation, as the case may be, assume the indemnification
obligations described herein for the benefit of the Indemnified Parties.
(c) For a period of six years after the Effective Time,
Parent will use its best efforts to maintain in effect, if available, directors'
and officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy on
terms comparable to those applicable to the current directors and officers of
the Company; provided, however, that in no event will Parent or the Surviving
Corporation be required to expend an annual premium for such coverage in excess
of 150% of the annual premium currently paid by Company.
5.11 Nasdaq Listing. Parent agrees to cause, prior to the Effective
Time, the authorization for listing on Nasdaq the shares of Parent Common Stock
issuable, and those required to be reserved for issuance, in connection with the
Merger, upon official notice of issuance.
5.12 Affiliates.
(a) Set forth in Section 5.12 of the Company Schedule is
a list of those persons who may be deemed to be, in Company's reasonable
judgment, affiliates of Company within the meaning of Rule 145 promulgated under
the Securities Act or Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations (each, a "Company Affiliate"). Company will
provide Parent with such information and documents as Parent reasonably requests
for purposes of reviewing such list. Company will use its commercially
reasonable efforts to deliver or cause to be delivered to Parent, as promptly as
practicable on or following the date hereof, from each Company Affiliate an
executed affiliate agreement in substantially the form attached hereto as
Exhibit B-1 (the "Company Affiliate Agreement"), each of which will be in full
force and effect as of the Effective Time.
(b) Set forth in Section 5.12 of the Parent Schedule is a
list of those persons who may be deemed to be, in Parent's reasonable judgment,
affiliates of Parent under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations (each, a "Parent Affiliate"). Parent will
provide Company with such information and documents as Company reasonably
requests for purposes of reviewing such list. Parent will use its commercially
reasonable efforts to deliver or cause to be delivered to Company, as promptly
as practicable on or following the date hereof, from each Parent Affiliate an
executed affiliate agreement in substantially the form attached hereto as
Exhibit B-2 (the "Parent Affiliate Agreement"), each of which will be in full
force and effect as of the Effective Time.
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5.13 Regulatory Filings; Reasonable Efforts. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as and if required by the HSR
Act, as well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. Company and Parent each shall promptly (a) supply the
other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate;
provided, however, that Parent shall not be required to agree to any divestiture
by Parent or the Company or any of Parent's subsidiaries or affiliates of shares
of capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or of the Company, its affiliates, or the imposition
of any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
5.14 Parent Board of Directors. The Board of Directors of Parent
will take all actions necessary such that two members of Company's Board of
Directors reasonably acceptable to Parent, at least one of which is an
independent director of the Company's Board of Directors, shall be appointed to
Parent's Board of Directors as of the Effective Time, which shall consist of
seven members in total after such appointments, both of which appointees will be
Class I directors of Parent. The Board of Directors of Parent will take all
actions necessary to nominate each of Company's appointees to Parent's Board of
Directors for re-election at the expiration of such appointee's initial term.
5.15 Registration Rights. Subject to Section 4.2(i)(ii), Parent
shall take all action necessary to provide, effective as of the Effective Time,
registration rights to Xxxxx X. Xxxxxxx III, Xxxxx X. Xxxxxxx and Noro-Xxxxxxx
Partners IV, L.P. (collectively, the "Company Holders") with terms equivalent to
those provided to "Investor Holders" under the Second Amended and Restated
Rights Agreement, dated as of May 26, 1999, by and among Parent and certain
stockholders thereof, and subject to Section 4.1(o)(ii) Company shall use its
best efforts to cause Noro-Xxxxxxx Partners IV, L.P. to waive, effective as of
the Effective Time, its registration rights under the Shareholder Agreement,
dated as of May 13, 1998, by and among Company and certain shareholders thereof;
provided, however, that Parent's obligation towards Noro-Xxxxxx Partners IV,
L.P. under this section is contingent upon such waiver by Noro-Xxxxxx Partners
IV, L.P.; provided further, however, that any exercise of demand registration
rights by any of the Company Holders must be pursuant to a firm commitment
underwritten offering led by an underwriter of Parent's choice (which choice
shall be reasonably satisfactory to the Company Holders).
5.16 Exemption from Liability under Section 16(b).
(a) Provided that Company delivers to Parent the Section
16 Information with respect to Company prior to the Effective Time, the Board of
Directors of Parent, or a committee of Non-Employee Directors thereof (as such
term is defined for purposes of Rule 16b-3(d) under the Exchange Act), shall
adopt a resolution in advance of the Effective Time providing that the receipt
by the Company Insiders of Parent Common Stock in exchange for shares of Company
Common Stock, and of options to Purchase Parent Common Stock in exchange for
shares of Company
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Common Stock, and of options to purchase Parent Common Stock upon assumption and
conversion by Parent of options to purchase Company Common Stock, in each case
pursuant to the transactions contemplated hereby and to the extent such
securities are listed in the Section 16 Information, are intended to be exempt
from liability pursuant to Rule 16b-3 under the Exchange Act.
(b) "Section 16 Information" shall mean information
accurate in all respects regarding the Company Insiders, the number of shares of
Company Common Stock or other Company equity securities deemed to be
beneficially owned by each Company Insider and expected to be exchanged for
Parent Common Stock in connection with the Merger.
(c) "Company Insiders" shall mean those officers and
directors of Company who are subject to the reporting requirements of Section
16(a) of the Exchange Act who are listed in the Section 16 Information.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Shareholder and Stockholder Approvals. This Agreement
shall have been approved and adopted, and the Merger shall have been duly
approved, by the requisite vote under applicable law, by the shareholders of
Company. The Share Issuance shall have been approved by the requisite vote under
applicable Nasdaq rules by the stockholders of Parent.
(b) Registration Statement Effective; Joint Proxy
Statement. The SEC shall have declared the S-4 effective. No stop order
suspending the effectiveness of the S-4 or any part thereof shall have been
issued and no proceeding for that purpose, and no similar proceeding in respect
of the Joint Proxy Statement/Prospectus, shall have been initiated or threatened
in writing by the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early and all material
foreign antitrust approvals required to be obtained prior to the Merger in
connection with the transactions contemplated hereby shall have been obtained.
(d) Tax Opinions. Parent and Company shall each have
received written opinions from their respective tax counsel (Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, and Xxxxxx, Xxxxxxx & Xxxxxx, LLP,
respectively), in form and substance reasonably satisfactory to them, to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and such opinions shall not have been withdrawn;
provided, however, that if the counsel to either Parent or Company does not
render such opinion, this condition shall
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nonetheless be deemed to be satisfied with respect to such party if counsel to
the other party renders such opinion to such party. The parties to this
Agreement agree to make such reasonable representations as requested by such
counsel for the purpose of rendering such opinions.
(e) Nasdaq Listing. The shares of Parent Common Stock
issuable to the shareholders of Company pursuant to this Agreement and such
other shares required to be reserved for issuance in connection with the Merger
shall have been authorized for listing on Nasdaq upon official notice of
issuance.
(f) Opinions of Accountants. Parent shall have received
(i) from Ernst & Young LLP, independent auditors for the Company, a copy of a
letter addressed to the Company dated as of the Closing Date in substance
reasonably satisfactory to Parent (which may contain customary qualifications
and assumptions) to the effect that Ernst & Young LLP concurs with Company
management's conclusion that no conditions exist related to the Company that
would preclude Parent from accounting for the Merger as a "pooling-of-interests"
and (ii) from PricewaterhouseCoopers LLP, independent accountants for Parent, a
letter dated as of the Closing Date in substance reasonably satisfactory to
Parent (which may contain customary qualifications and assumptions) to the
effect that PricewaterhouseCoopers LLP concurs with Parent management's
conclusion that a "pooling-of-interests" accounting is appropriate for the
merger.
6.2 Additional Conditions to Obligations of Company. The
obligation of Company to consummate and effect the Merger shall be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation
and warranty of Parent and Merger contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on and as of the Closing Date except (A) for such failures to be true and
correct that do not in the aggregate constitute a Material Adverse Effect on
Parent and Merger Sub (provided, however, such Material Adverse Effect qualifier
shall be inapplicable with respect to representations and warranties contained
in Section 2.3 (except for inaccuracies that are de minimus in amount), 2.21,
2.22 and 2.24) and (B) for those representations and warranties which address
matters only as of a particular date (which representations shall have been true
and correct (subject to the qualifications set forth in the preceding clause
(A)) as of such particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to the
Parent Schedule made or purported to have been made after the date of this
Agreement shall be disregarded). Company shall have received a certificate with
respect to the foregoing signed on behalf of Parent by an authorized officer of
Parent.
(b) Agreements and Covenants. Company shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be
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performed or complied with by them on or prior to the Closing Date, and Company
shall have received a certificate to such effect signed on behalf of Parent by
an authorized officer of Parent.
6.3 Additional Conditions to the Obligations of Parent and Merger
Sub. The obligation of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation
and warranty of Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date except (A) for such failures to be true and correct that do
not in the aggregate constitute a Material Adverse Effect on the Company
(provided, however, such Material Adverse Effect qualifier shall be inapplicable
with respect to representations and warranties contained in Section 2.3 (except
for inaccuracies that are de minimus in amount), 2.21, 2.22 and 2.24) and (B)
for those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct (subject
to the qualifications set forth in the preceding clause (A)) as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material" or
similar phrases contained in such representations and warranties shall be
disregarded and (ii) any update of or modification to the Company Schedule made
or purported to have been made after the date of this Agreement shall be
disregarded). Parent shall have received a certificate with respect to the
foregoing signed on behalf of Company by an authorized officer of Company.
(b) Agreements and Covenants. Company shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or prior to
the Closing Date, and Parent shall have received a certificate to such effect
signed on behalf of Company by the Chief Executive Office and the Chief
Financial Officer of Company.
(c) Employment Agreements. The persons set forth on
Exhibit C-1 hereto shall have entered into Employment Agreements in the form
attached hereto as Exhibit C-2, and all such agreements shall be in full force
and effect.
(d) Affiliate Agreements. Each of the Company Affiliates
shall have entered into the Company Affiliate Agreement and each of such
agreements will be in full force and effect as of the Effective Time.
(e) Consents. Company shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby in connection with the agreements, contracts,
licenses or leases set forth on Schedule 6.3(e).
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the requisite approval of
the shareholders of Company:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not
have been consummated by May 31, 2000 for any reason; provided, however, that
the right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by either Company or Parent if (i) the required
approval of the shareholders of Company contemplated by this Agreement shall not
have been obtained by reason of the failure to obtain the required vote at a
meeting of Company shareholders duly convened therefor or at any adjournment
therefor or (ii) the required approval by the stockholders of Parent of the
Share Issuance required under applicable Nasdaq rules shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Parent stockholders duly convened therefor or at any adjournment thereof;
(e) by Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent or Merger Sub set forth in
this Agreement, or if any representation or warranty of Parent shall have become
untrue, in either case such that the conditions set forth in Section 6.2(a) or
Section 6.2(b) would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided, that if
such inaccuracy in Parent's representations and warranties or breach by Parent
is curable by Parent, then Company may not terminate this Agreement under this
Section 7.1(e) for thirty (30) days after delivery of written notice from
Company to Parent of such breach, provided Parent continues to exercise best
efforts to cure such breach (it being understood that Company may not terminate
this Agreement pursuant to this paragraph (e) if such breach by Parent is cured
during such thirty (30)-day period);
(f) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of Company set forth in this
Agreement, or if any representation or warranty of Company shall have become
untrue, in either case such that the conditions set forth in Section 6.3(a) or
Section 6.3(b) would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided, that if
such inaccuracy in Company's representations and warranties or breach by Company
is curable by Company, then
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Parent may not terminate this Agreement under this Section 7.1(f) for thirty
(30) days after delivery of written notice from Parent to Company of such
breach, provided Company continues to exercise best efforts to cure such breach
(it being understood that Parent may not terminate this Agreement pursuant to
this paragraph (f) such breach by Company is cured during such thirty (30)-day
period); or
(g) by Parent, if (i) the Board of Directors of Company
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Parent or its stockholders, (ii) the Board of
Directors of Company shall have recommended to the shareholders of Company a
Company Acquisition Proposal (as defined below), (iii) the Company fails to
comply with Section 5.4, (iv) a Company Acquisition Proposal shall have been
announced or otherwise become publicly known and the Board of Directors of
Company shall have (A) failed to recommend against acceptance of such by its
shareholders (including by taking no position, or indicating its inability to
take a position, with respect to the acceptance by its shareholders of a Company
Acquisition Proposal involving a tender offer or exchange offer) or (B) failed
to reconfirm its approval and recommendation of this Agreement and the
transactions contemplated hereby, in each case within ten business days
thereafter, (v) any of Company's shareholders fail to comply with the
Shareholder Agreement, or (vi) the Board of Directors of Company resolves to
take any of the actions described above; or
(h) by Company, in the event (i) of the acquisition, by
any person or group of persons, of beneficial ownership of 30% or more of the
outstanding shares of Parent Common Stock (the terms "person," "group" and
"beneficial ownership" having the meanings ascribed thereto in Section 13(d) of
the Exchange Act and the regulations promulgated thereunder), or (ii) the Board
of Directors of Parent accepts or publicly recommends acceptance of an offer
from a third party to acquire 50% or more of the outstanding shares of Parent
Common Stock or of Parent's consolidated assets.
7.2 Notice of Termination; Effect of Termination. Any termination
of this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto
(or such later time as may be required by Section 7.1). In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
be of no further force or effect, except (i) as set forth in this Section 7.2,
Section 5.3(a), Section 7.3 and Article VIII, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for fraud in connection with, or any willful breach of, this
Agreement.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated; provided, however, that
Parent and Company shall share equally all fees and expenses, other than
attorneys' and accountants fees and expenses, incurred (i) in relation to the
printing and filing of the Joint Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the S-4 (including
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financial statements and exhibits) and any amendments or supplements thereto or
(ii) for the premerger notification and report forms under the HSR Act.
(b) Company Termination Fee.
(i) In the event that (A) Parent shall terminate
this Agreement pursuant to Section 7.1(g), or (B) this Agreement shall be
terminated (x) pursuant to Section 7.1(b) or (y) pursuant to Section 7.1(d)(i)
and, in the case of either (x) or (y), (1) at such termination, there shall
exist a Company Acquisition Proposal that has not been irrevocably withdrawn and
(2) within 12 months after such termination, Company shall enter into a
definitive agreement with respect to any Company Acquisition or any Company
Acquisition shall be consummated, then, in the case of (A), promptly after such
termination, or in the case of (B), concurrently with the execution of a
definitive agreement with respect to, or the consummation of, as applicable,
such Company Acquisition, Company shall pay to Parent an amount in cash equal to
$13.2 million (the "Termination Fee").
(ii) In the event that Parent shall terminate
this Agreement pursuant to Section 7.1(f), then Company shall promptly reimburse
Parent for Parent's documented out-of-pocket costs and expenses in connection
with this Agreement and the transactions contemplated hereby not in excess of
$1,500,000.
(c) Parent Termination Fee.
(i) In the event that Company shall terminate
this Agreement pursuant to Section 7.1(h) then, promptly after such termination,
Parent shall pay to Company an amount in cash equal to the Termination Fee.
(ii) In the event that Company shall terminate
this Agreement pursuant to Section 7.1(e), then Parent shall promptly reimburse
Company for documented out-of-pocket costs and expenses in connection with this
Agreement and the transactions contemplated hereby not in excess of $1,500,000.
(d) Each of the parties acknowledges that the agreements
contained in Section 7.3(b) and Section 7.3(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
the other party would not enter into this Agreement; accordingly, if either of
the parties fails to pay in a timely manner the amounts due pursuant to Section
7.3(b) or 7.3(c) and, in order to obtain such payment, the other party makes a
claim that results in a judgment against the first party for the amounts set
forth in this Section 7.3(b) or 7.3(c), as applicable, the first party shall pay
to the other party its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the applicable
amounts at the prime rate of Citibank, N.A. in effect on the date such payment
was required to be made. Payment of the fees or the reimbursement of expenses
described in this Section 7.3 shall not be in lieu of damages incurred in the
event of intentional breach of this Agreement.
(e) For the purposes of this Agreement, "Company Acquisition" shall
mean any of the following transactions (other than the transactions contemplated
by this Agreement): (i) a
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merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
shareholders of the Company immediately preceding such transaction hold less
than 50% of the aggregate equity interests in the surviving or resulting entity
of such transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by the Company), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of 50% of
the voting power of the then outstanding shares of capital stock of the Company;
and "Company Acquisition Proposal" shall mean any offer or proposal (other than
an offer or proposal by Parent) relating to a Company Acquisition.
7.4 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent, Merger Sub and Company
7.5 Extension; Waiver. At any time prior to the Effective Time,
any party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: President
Telecopy No.: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No.:(000) 000-0000
(b) if to Company, to:
nFront, Inc.
000 Xxxxxxxxx Xxxxx, X.X.
Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, LLP
0000 Xxxxxxxxx Xxxx, X.X.
0000 Xxxxxxx Financial Center
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Telecopy No.:(000) 000-0000
8.3 Interpretation; Definitions.
(a) When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement. Unless otherwise
indicated the words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation." The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "the business of" an entity,
such reference shall be deemed to include the business of all direct and
indirect subsidiaries of such entity. Reference to the subsidiaries of an entity
shall be deemed to include all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement:
(i) the term "knowledge" means with respect to a
party hereto, with respect to any matter in question, the actual knowledge of
the executive officers of such party;
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(ii) the term "Material Adverse Effect" when used
in connection with an entity means any change, event, violation, inaccuracy,
circumstance or effect, individually or when aggregated with other such changes,
events, violations, incurrences, circumstances or effects, that is materially
adverse to the business, assets, liabilities, financial condition or results of
operations of such entity and its subsidiaries taken as a whole; provided,
however, that in no event shall (A) a decrease in such entity's stock price or
the failure to meet or exceed Wall Street research analysts' or such entity's
internal earnings or other estimates or projections in and of itself constitute
a Material Adverse Effect or (B) any change, event, violation, inaccuracy,
circumstance or effect that such entity successfully bears the burden of proving
results from (x) the public announcement or pendency of the transactions
contemplated hereby, (y) changes affecting the internet banking industry
generally (which changes do not disproportionately affect such entity) or (z)
changes affecting the United States economy generally, constitute a Material
Adverse Effect;
(iii) the term "person" shall mean any individual,
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or Governmental Entity.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement
and the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including the Company Disclosure
Schedule and the Parent Disclosure Schedule (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as provided in Section 5.10, Section 5.14 and Section 5.15.
8.6 Severability. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the
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exercise by a party of any one remedy will not preclude the exercise of any
other remedy. The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
8.8 Governing Law. Except to the extent mandatorily governed by
Georgia Law, this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 Assignment. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
DIGITAL INSIGHT CORPORATION
By:
--------------------------
Name:
------------------------
Title:
-----------------------
BLACK TRANSITORY CORPORATION
By:
--------------------------
Name:
-------------------------
Title:
-----------------------
NFRONT, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
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Exhibit A-1
FORM OF SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is made and entered into
as of ____________ ___, 1999, among Digital Insight Corporation, a Delaware
corporation ("Parent"), and the undersigned shareholder and/or option holder
(the "Shareholder") of nFront, Inc., a Georgia corporation (the "Company").
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have
entered into an Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement"), which provides for the merger (the "Merger") of a
wholly-owned subsidiary of Parent ("Merger Sub") with and into the Company.
Pursuant to the Merger, all outstanding capital stock of the Company shall be
converted into the right to receive common stock of Parent, as set forth in the
Reorganization Agreement;
B. Shareholder is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
such number of shares of the outstanding capital stock of the Company and shares
subject to outstanding options and warrants as is indicated on the signature
page of this Agreement; and
C. In consideration of the execution of the Reorganization
Agreement by Parent, Shareholder agrees to vote the Shares (as defined below)
and other such shares of capital stock of the Company over which Shareholder has
voting power so as to facilitate consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Certain Definitions. Capitalized terms not defined herein
shall have the meanings ascribed to them in the Reorganization Agreement. For
purposes of this Agreement:
(a) "Expiration Date" shall mean the earlier to occur of
(i) such date and time as the Reorganization Agreement shall have been
terminated pursuant to Article VII thereof, or (ii) such date and time as the
Merger shall become effective in accordance with the terms and provisions of the
Reorganization Agreement.
(b) "Person" shall mean any (i) individual, (ii)
corporation, limited liability company, partnership or other entity, or (iii)
governmental authority.
(c) "Shares" shall mean: (i) all securities of the
Company (including all shares of Company Common Stock and all options, warrants
and other rights to acquire shares of Company Common Stock) owned by Shareholder
as of the date of this Agreement; and (ii) all additional securities of the
Company (including all additional shares of Company Common Stock and all
additional options, warrants and other rights to acquire shares of Company
Common Stock) of which Shareholder acquires ownership during the period from the
date of this Agreement through the Expiration Date.
62
(d) Transfer. A Person shall be deemed to have effected a
"Transfer" of a security if such person directly or indirectly: (i) sells,
pledges, encumbers, grants an option with respect to, transfers or disposes of
such security or any interest in such security; or (ii) enters into an agreement
or commitment providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
2. Transfer of Shares.
(a) Transferee of Shares to be Bound by this Agreement.
Shareholder agrees that, during the period from the date of this Agreement
through the Expiration Date, Shareholder shall not cause or permit any Transfer
of any of the Shares to be effected unless prior to any such Transfer the Person
to which any of such Shares, or any interest in any of such Shares, is or may be
transferred shall have: (a) executed a counterpart of this Agreement and a proxy
in the form attached hereto as Exhibit A (with such modifications as Parent may
reasonably request); and (b) agreed in writing to hold such Shares (or interest
in such Shares) subject to all of the terms and provisions of this Agreement.
(b) Transfer of Voting Rights. Shareholder agrees that,
during the period from the date of this Agreement through the Expiration Date,
Shareholder shall not deposit (or permit the deposit of) any Shares in a voting
trust or grant any proxy or enter into any voting agreement or similar agreement
in contravention of the obligations of Shareholder under this Agreement with
respect to any of the Shares.
3. Agreement to Vote Shares. At every meeting of the shareholders
of the Company called, and at every adjournment thereof, and on every action or
approval by written consent of the shareholders of the Company, Shareholder
shall cause the Shares to be voted in favor of approval of the Reorganization
Agreement and the Merger; provided, however, that such obligation shall only be
applicable to 86.3% of the Shares in the event the Board of Directors of Company
has withdrawn its recommendation of the Merger and the Reorganization Agreement
pursuant to the terms of Section 5.4 of the Reorganization Agreement.
4. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Shareholder agrees to deliver to Parent a proxy in the form attached
hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the fullest
extent permissible by law, with respect to the Shares.
5. Representations and Warranties of the Shareholder. Shareholder
(i) is the beneficial owner of the shares of Common Stock of the Company,
Preferred Stock of the Company and the options and warrants to purchase shares
of Common Stock of the Company indicated on the final page of this Agreement,
free and clear of any liens, claims, options, rights of first refusal, co-sale
rights, charges or other encumbrances; (ii) does not beneficially own any
securities of the Company other than the shares of Common Stock of the Company,
Preferred Stock of the Company and options and warrants to purchase shares of
Common Stock of the Company indicated on the final page of this Agreement; and
(iii) has full power and authority to make, enter into and carry out the terms
of this Agreement and the Proxy.
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6. Additional Documents. Shareholder hereby covenants and agrees
to execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Parent, to carry out the intent of this Agreement.
7. Consent and Waiver. Shareholder (not in his capacity as a
director or officer of the Company) hereby gives any consents or waivers that
are reasonably required for the consummation of the Merger under the terms of
any agreements to which Shareholder is a party or pursuant to any rights
Shareholder may have.
8. No Solicitation. Until the Merger is consummated or the
Reorganization Agreement is terminated, Shareholder shall not, nor shall
Shareholder permit any investment banker, attorney or other advisor or
representative of Shareholder to, directly or indirectly, take any action
prohibited by Section 5.4 of the Reorganization Agreement.
9. Legending of Shares. If so requested by Parent, Shareholder
agrees that the Shares shall bear a legend stating that they are subject to this
Agreement and to an irrevocable proxy. Subject to the terms of Section 2 hereof,
Shareholder agrees that Shareholder shall not Transfer the Shares without first
having the aforementioned legend affixed to the certificates representing the
Shares.
10. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
11. Miscellaneous.
(a) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may not
be modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
(d) Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Parent shall be irreparably harmed and that there shall
be no adequate remedy at law for a violation of any of the covenants or
agreements of Shareholder set forth herein. Therefore, it is agreed that, in
addition to any other remedies that may be available to Parent upon any such
violation, Parent shall have the right to enforce such covenants and agreements
by specific performance, injunctive relief or by any other means available to
Parent at law or in equity.
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(e) Notices. All notices and other communications
pursuant to this Agreement shall be in writing and deemed to be sufficient if
contained in a written instrument and shall be deemed given if delivered
personally, telecopied, sent by nationally-recognized overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following address (or at such other address for a
party as shall be specified by like notice):
If to Parent: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to Shareholder: To the address for notice set forth on
the signature page hereof.
(f) Governing Law. This Agreement shall be governed by
the laws of the State of Georgia, without reference to rules of conflicts of
law.
(g) Entire Agreement. This Agreement and the Proxy
contain the entire understanding of the parties in respect of the subject matter
hereof, and supersede all prior negotiations and understandings between the
parties with respect to such subject matter.
(h) Effect of Headings. The section headings are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(i) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
DIGITAL INSIGHT CORPORATION SHAREHOLDER
By: By:
---------------------------- ----------------------------
Signature of Authorized Signatory Signature
Name: Name:
-------------------------- --------------------------
Title: Title:
------------------------- -------------------------
-------------------------------
-------------------------------
Print Address
-------------------------------
Telephone
-------------------------------
Facsimile No.
Share beneficially owned:
____shares of Company Common Stock
____shares of Company Preferred Stock
____shares of Company Common Stock
issuable upon exercise of
outstanding options or warrants
[Signature Page to Voting Agreement]
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Exhibit A
IRREVOCABLE PROXY
The undersigned shareholder of nFront, Inc., a Georgia corporation (the
"Company"), hereby irrevocably (to the fullest extent permitted by law) appoints
the directors on the Board of Directors of Digital Insight Corporation, a
Delaware corporation ("Parent"), and each of them, as the sole and exclusive
attorneys and proxies of the undersigned, with full power of substitution and
resubstitution, to vote and exercise all voting and related rights (to the full
extent that the undersigned is entitled to do so) with respect to all of the
shares of capital stock of the Company that now are or hereafter may be
beneficially owned by the undersigned, and any and all other shares or
securities of the Company issued or issuable in respect thereof on or after the
date hereof (collectively, the "Shares") in accordance with the terms of this
Proxy. The Shares beneficially owned by the undersigned shareholder of the
Company as of the date of this Proxy are listed on the final page of this Proxy.
Upon the undersigned's execution of this Proxy, any and all prior proxies given
by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Shareholder
Agreement of even date herewith by and among Parent and the undersigned
shareholder (the "Shareholder Agreement"), and is granted in consideration of
Parent entering into that certain Agreement and Plan of Merger and
Reorganization (the "Reorganization Agreement"), among Parent, Black Transitory
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub"), and the Company. The Reorganization Agreement provides for the
merger of Merger Sub with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) such date and time as the Reorganization Agreement shall have been
validly terminated pursuant to Article VII thereof or (ii) such date and time as
the Merger shall become effective in accordance with the terms and provisions of
the Reorganization Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual, special or adjourned meeting of shareholders
of the Company and in every written consent in lieu of such meeting in favor of
approval of the Reorganization Agreement and the Merger; provided, however, that
such authorization and empowerment shall only be applicable to 86.3% of the
Shares in the event the Board of Directors of Company has withdrawn its
recommendation of the Merger and the Reorganization Agreement pursuant to the
terms of Section 5.4 of the Reorganization Agreement.
The attorneys and proxies named above may not exercise this Proxy on
any other matter except as provided above. The undersigned shareholder may vote
the Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
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This Proxy is irrevocable (to the fullest extent permitted by law). This
Proxy shall terminate, and be of no further force and effect, automatically upon
the Expiration Date.
Dated:_________________, 1999
Signature of Shareholder:
--------------------------------
Print Name of Shareholder:
-------------------------------
Shares beneficially owned:
___________ shares of the Company Common Stock
___________ shares of Company Preferred Stock
___________ shares of the Company Common Stock
issuable upon exercise of outstanding options or warrants
[Signature Page to Irrevocable Proxy]
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Exhibit A-2
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made and entered into
as of November ___, 1999, among nFront Inc., a Georgia corporation ("Company"),
and the undersigned stockholder and/or option holder (the "Stockholder") of
Digital Insight Corporation, a Delaware corporation (the "Parent").
RECITALS
A. The Parent, Merger Sub (as defined below) and Company have
entered into an Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement"), which provides for the merger (the "Merger") of a
wholly-owned subsidiary of Parent ("Merger Sub") with and into the Company.
Pursuant to the Merger, all outstanding capital stock of the Company shall be
converted into the right to receive common stock of Parent, as set forth in the
Reorganization Agreement;
B. Stockholder is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
such number of shares of the outstanding capital stock of Parent and shares
subject to outstanding options and warrants as is indicated on the signature
page of this Agreement; and
C. In consideration of the execution of the Reorganization
Agreement by Company, Stockholder agrees to vote the Shares (as defined below)
and other such shares of capital stock of the Parent over which Stockholder has
voting power so as to facilitate consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Certain Definitions. Capitalized terms not defined herein
shall have the meanings ascribed to them in the Reorganization Agreement. For
purposes of this Agreement:
(a) "Expiration Date" shall mean the earlier to occur of
(i) such date and time as the Reorganization Agreement shall have been
terminated pursuant to Article VII thereof, or (ii) such date and time as the
Merger shall become effective in accordance with the terms and provisions of the
Reorganization Agreement.
(b) "Person" shall mean any (i) individual, (ii)
corporation, limited liability company, partnership or other entity, or (iii)
governmental authority.
(c) "Shares" shall mean: (i) all securities of the Parent
(including all shares of Parent Common Stock and all options, warrants and other
rights to acquire shares of Parent Common Stock) owned by Stockholder as of the
date of this Agreement; and (ii) all additional securities of Parent (including
all additional shares of Parent Common Stock and all additional options,
warrants and other rights to acquire shares of Parent Common Stock) of which
Stockholder acquires ownership during the period from the date of this Agreement
through the Expiration Date.
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(d) Transfer. A Person shall be deemed to have effected a
"Transfer" of a security if such person directly or indirectly: (i) sells,
pledges, encumbers, grants an option with respect to, transfers or disposes of
such security or any interest in such security; or (ii) enters into an agreement
or commitment providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
2. Transfer of Shares.
(a) Transferee of Shares to be Bound by this Agreement.
Stockholder agrees that, during the period from the date of this Agreement
through the Expiration Date, Stockholder shall not cause or permit any Transfer
of any of the Shares to be effected unless prior to any such Transfer the Person
to which any of such Shares, or any interest in any of such Shares, is or may be
transferred shall have: (a) executed a counterpart of this Agreement and a proxy
in the form attached hereto as Exhibit A (with such modifications as Company may
reasonably request); and (b) agreed in writing to hold such Shares (or interest
in such Shares) subject to all of the terms and provisions of this Agreement.
(b) Transfer of Voting Rights. Stockholder agrees that,
during the period from the date of this Agreement through the Expiration Date,
Stockholder shall not deposit (or permit the deposit of) any Shares in a voting
trust or grant any proxy or enter into any voting agreement or similar agreement
in contravention of the obligations of Stockholder under this Agreement with
respect to any of the Shares.
3. Agreement to Vote Shares. At every meeting of the stockholders
of the Parent called, and at every adjournment thereof, and on every action or
approval by written consent of the stockholders of the Parent, Stockholder shall
cause 73.2% of the Shares to be voted in favor of approval of the Reorganization
Agreement and the Merger.
4. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Company a proxy in the form attached
hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the fullest
extent permissible by law, with respect to the Shares.
5. Representations and Warranties of the Stockholder. Stockholder
(i) is the beneficial owner of the shares of Common Stock of the Company,
Preferred Stock of the Company and the options and warrants to purchase shares
of Common Stock of the Company indicated on the final page of this Agreement,
free and clear of any liens, claims, options, rights of first refusal, co-sale
rights, charges or other encumbrances; (ii) does not beneficially own any
securities of the Company other than the shares of Common Stock of the Company,
Preferred Stock of the Company and options and warrants to purchase shares of
Common Stock of the Company indicated on the final page of this Agreement; and
(iii) has full power and authority to make, enter into and carry out the terms
of this Agreement and the Proxy.
6. Additional Documents. Stockholder hereby covenants and agrees
to execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Company, to carry out the intent of this Agreement.
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7. Consent and Waiver. Stockholder (not in his capacity as a
director or officer of the Company) hereby gives any consents or waivers that
are reasonably required for the consummation of the Merger under the terms of
any agreements to which Stockholder is a party or pursuant to any rights
Stockholder may have.
8. Legending of Shares. If so requested by Company, Stockholder
agrees that the Shares shall bear a legend stating that they are subject to this
Agreement and to an irrevocable proxy. Subject to the terms of Section 2 hereof,
Stockholder agrees that Stockholder shall not Transfer the Shares without first
having the aforementioned legend affixed to the certificates representing the
Shares.
9. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
10. Miscellaneous.
(a) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may not
be modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
(d) Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Company shall be irreparably harmed and that there shall
be no adequate remedy at law for a violation of any of the covenants or
agreements of Stockholder set forth herein. Therefore, it is agreed that, in
addition to any other remedies that may be available to Company upon any such
violation, Company shall have the right to enforce such covenants and agreements
by specific performance, injunctive relief or by any other means available to
Company at law or in equity.
(e) Notices. All notices and other communications
pursuant to this Agreement shall be in writing and deemed to be sufficient if
contained in a written instrument and shall be deemed given if delivered
personally, telecopied, sent by nationally-recognized overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following address (or at such other address for a
party as shall be specified by like notice):
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If to Company: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention:
Facsimile: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
Page Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to Stockholder: To the address for notice set forth on the
signature page hereof.
(f) Governing Law. This Agreement shall be governed by the laws of
the State of Delaware, without reference to rules of conflicts of law.
(g) Entire Agreement. This Agreement and the Proxy contain the
entire understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(h) Effect of Headings. The section headings are for convenience
only and shall not affect the construction or interpretation of this Agreement.
(i) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
[The remainder of this page has been intentionally left blank]
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Exhibit A
IRREVOCABLE PROXY
The undersigned shareholder of Digital Insight Corporation, a Delaware
corporation (the "Parent") hereby irrevocably (to the fullest extent permitted
by law) appoints the directors on the Board of Directors of nFront Inc., a
Georgia corpration ("Company"), and each of them, as the sole and exclusive
attorneys and proxies of the undersigned, with full power of substitution and
resubstitution, to vote and exercise all voting and related rights (to the full
extent that the undersigned is entitled to do so) with respect to all of the
shares of capital stock of the Company that now are or hereafter may be
beneficially owned by the undersigned, and any and all other shares or
securities of the Company issued or issuable in respect thereof on or after the
date hereof (collectively, the "Shares") in accordance with the terms of this
Proxy. The Shares beneficially owned by the undersigned shareholder of the
Company as of the date of this Proxy are listed on the final page of this Proxy.
Upon the undersigned's execution of this Proxy, any and all prior proxies given
by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Shareholder
Agreement of even date herewith by and among Parent and the undersigned
shareholder (the "Stockholder Agreement"), and is granted in consideration of
Parent entering into that certain Agreement and Plan of Merger and
Reorganization (the "Reorganization Agreement"), among Parent, Black Transitory
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub"), and the Company. The Reorganization Agreement provides for the
merger of Merger Sub with and into the Company in accordance with its terms (the
"Merger"). As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) such date and time as the Reorganization Agreement shall have been
validly terminated pursuant to Article VII thereof or (ii) such date and time as
the Merger shall become effective in accordance with the terms and provisions of
the Reorganization Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual, special or adjourned meeting of shareholders
of the Company and in every written consent in lieu of such meeting in favor of
approval of the Reorganization Agreement and the Merger.
The attorneys and proxies named above may not exercise this Proxy on
any other matter except as provided above. The undersigned shareholder may vote
the Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
73
This Proxy is irrevocable (to the fullest extent permitted by law).
This Proxy shall terminate, and be of no further force and effect, automatically
upon the Expiration Date.
Dated:______________________, 1999
Signature of Shareholder:
-----------------------------
Print Name of Shareholder:
-----------------------------
Shares beneficially owned:
-----------------------------
___________ shares of the Company Common Stock
___________ shares of Company Preferred Stock
___________ shares of the Company Common Stock
issuable upon exercise of outstanding options or warrants
[Signature Page to Irrevocable Proxy]
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Exhibit B-1
FORM OF COMPANY AFFILIATE AGREEMENT
THIS COMPANY AFFILIATE AGREEMENT (this "Agreement") is made and entered
into as of _____________, 1999, by and between Digital Insight Corporation, a
Delaware corporation ("Parent"), and the undersigned shareholder who may be
deemed an affiliate ("Affiliate") of nFront, Inc., a Georgia corporation
("Company"). Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Reorganization Agreement (as defined
below).
RECITALS
A. The Company, Merger Sub (as defined below) and Parent have
entered into an Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement") which provides for the merger (the "Merger") of a
wholly-owned subsidiary of Parent ("Merger Sub") with and into the Company.
Pursuant to the Merger, all outstanding capital stock of the Company (the
"Company Capital Stock") shall be converted into the right to receive Common
Stock of Parent;
B. Affiliate has been advised that Affiliate may be deemed to be
an "affiliate" of the Company, as the term "affiliate" is used for purposes of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "SEC") and of Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations.
C. The execution and delivery of this Agreement by Affiliate is a
material inducement to Parent to enter into the Reorganization Agreement.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Acknowledgments by Affiliate. Affiliate acknowledges and
understands that the representations, warranties and covenants by Affiliate set
forth herein shall be relied upon by Parent, the Company and their respective
affiliates, counsel and accounting firms, and that substantial losses and
damages may be incurred by these persons if Affiliate's representations,
warranties or covenants are breached. Affiliate has carefully read this
Agreement and the Reorganization Agreement and has discussed the requirements of
this Agreement with Affiliate's professional advisors, who are qualified to
advise Affiliate with regard to such matters.
2. Beneficial Ownership of Company Capital Stock. The Affiliate
is the sole record and beneficial owner of the number of shares of Company
Capital Stock set forth next to its name on the signature page hereto (the
"Shares"). The Shares are not subject to any claim, lien, pledge, charge,
security interest or other encumbrance or to any rights of first refusal of any
kind. There are no options, warrants, calls, rights, commitments or agreements
of any character, written or oral, to which the Affiliate is party or by which
it is bound obligating the Affiliate to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
Shares or
75
obligating the Affiliate to grant or enter into any such option, warrant, call,
right, commitment or agreement. The Affiliate has the sole right to transfer
such Shares. The Shares constitute all shares of Company Capital Stock owned,
beneficially or of record, by the Affiliate. The Shares are not subject to
preemptive rights created by any agreement to which the Affiliate is party. The
Affiliate has not engaged in any sale or other transfer of the Shares in
contemplation of the Merger. All shares of Company Capital Stock and common
stock of Parent ("Parent Common Stock") acquired by Affiliate subsequent to the
date hereof (including shares of Parent Common Stock acquired in the Merger)
shall be subject to the provisions of this Agreement as if held by Affiliate as
of the date hereof.
3. Covenants Related to Pooling of Interests. During the period
beginning 30 days preceding the Effective Time of the Merger and ending two
trading days after Parent publicly announces financial results covering at least
30 days of combined operations of Parent and the Company, Affiliate shall not
sell, exchange, transfer, pledge, distribute, make any gift or otherwise dispose
of or grant any option, establish any "short" or put-equivalent position with
respect to or enter into any similar transaction (through derivatives or
otherwise) intended or having the effect, directly or indirectly, to reduce
Affiliate's risk relative to any shares of Parent Common Stock or Company
Capital Stock (including the Shares). Parent may, at its discretion, place a
stock transfer notice consistent with the foregoing, with respect to Affiliate's
shares.
4. Compliance with Rule 145 and the Securities Act.
(a) Affiliate has been advised that (i) the issuance of
shares of Parent Common Stock in connection with the Merger is expected to be
effected pursuant to a registration statement on Form S-4 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and the resale of
such shares shall be subject to restrictions set forth in Rule 145 under the
Securities Act, and (ii) Affiliate may be deemed to be an affiliate of the
Company. Affiliate accordingly agrees not to sell, transfer or otherwise dispose
of any Parent Common Stock issued to Affiliate in the Merger unless (i) such
sale, transfer or other disposition is made in conformity with the requirements
of Rule 145(d) promulgated under the Securities Act, or (ii) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Securities Act or an appropriate exemption from registration, or (iii)
Affiliate delivers to Parent a written opinion of counsel, reasonably acceptable
to Parent in form and substance, that such sale, transfer or other disposition
is otherwise exempt from registration under the Securities Act.
(b) Parent shall give stop transfer instructions to its
transfer agent with respect to any Parent Common Stock received by Affiliate
pursuant to the Merger and there shall be placed on the certificates
representing such Common Stock, or any substitutions therefor, a legend stating
in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 APPLIES AND MAY ONLY BE TRANSFERRED IN
CONFORMITY WITH RULE 145(d) OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT
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76
OF 1933, AS AMENDED, OR IN ACCORDANCE WITH A WRITTEN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE,
THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend) and Parent shall so instruct its transfer
agent, if Affiliate delivers to Parent (i) satisfactory written evidence that
the shares have been sold in compliance with Rule 145 (in which case, the
substitute certificate shall be issued in the name of the transferee), or (ii)
an opinion of counsel, in form and substance reasonably satisfactory to Parent,
to the effect that public sale of the shares by the holder thereof is no longer
subject to Rule 145.
5. Termination. This Agreement shall be terminated and shall be
of no further force and effect in the event of the termination of the
Reorganization Agreement pursuant to Article VII of the Reorganization
Agreement.
6. Miscellaneous.
(a) Waiver; Severability. No waiver by any party hereto
of any condition or of any breach of any provision of this Agreement shall be
effective unless in writing and signed by each party hereto. In the event that
any provision of this Agreement, or the application of any such provision to any
person, entity or set of circumstances, shall be determined to be invalid,
unlawful, void or unenforceable to any extent, the remainder of this Agreement,
and the application of such provision to persons, entities or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
(b) Binding Effect and Assignment. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other party hereto.
(c) Amendments and Modification. This Agreement may not
be modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
(d) Injunctive Relief. Each of the parties acknowledge
that (i) the covenants and the restrictions contained in this Agreement are
necessary, fundamental, and required for the protection of Parent and the
Company and to preserve for Parent the benefits of the Merger; (ii) such
covenants relate to matters which are of a special, unique, and extraordinary
character that gives each of such covenants a special, unique, and extraordinary
value; and (iii) a breach of any such covenants or any other provision of this
Agreement shall result in irreparable harm and damages to Parent and the Company
which cannot be adequately compensated by a monetary award. Accordingly, it is
expressly agreed that in addition to all other remedies available at law or in
equity, Parent and the
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Company shall be entitled to the immediate remedy of a temporary restraining
order, preliminary injunction, or such other form of injunctive or equitable
relief as may be used by any court of competent jurisdiction to restrain or
enjoin any of the parties hereto from breaching any such covenant or provision
or to specifically enforce the provisions hereof.
(e) Governing Law. This Agreement shall be governed by
and construed, interpreted and enforced in accordance with the internal laws of
the State of Delaware without giving effect to any choice or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
(f) Entire Agreement. This Agreement, the Reorganization
Agreement and any other agreements referred to in the Reorganization Agreement
set forth the entire understanding of Affiliate and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between Affiliate and Parent relating to the subject matter
hereof and thereof.
(g) Attorneys' Fees. In the event of any legal actions or
proceeding to enforce or interpret the provisions hereof, the prevailing party
shall be entitled to reasonable attorneys' fees, whether or not the proceeding
results in a final judgment.
(h) Further Assurances. Affiliate shall execute and/or
cause to be delivered to Parent such instruments and other documents and shall
take such other actions as Parent may reasonably request to effectuate the
intent and purposes of this Agreement.
(i) Third Party Reliance. Counsel to and independent
auditors for Parent and the Company shall be entitled to rely upon this
Affiliate Agreement.
(j) Survival. The representations, warranties, covenants
and other provisions contained in this Agreement shall survive the Merger.
(k) Notices. All notices and other communications
pursuant to this Agreement shall be in writing and deemed to be sufficient if
contained in a written instrument and shall be deemed given if delivered
personally, telecopied, sent by nationally-recognized overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following address (or at such other address for a
party as shall be specified by like notice):
If to Parent: [Black Corp.]
Attention:
Facsimile:
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With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Affiliate: To the address for notice set forth on the
signature page hereof.
(l) Counterparts. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Affiliate Agreement to be
duly executed on the day and year first above written.
[BLACK CORP.] AFFILIATE
By: By:
------------------------------ --------------------------------
Name: Affiliate's Address for Notice:
----------------------------
Title:
--------------------------- ------------------------------------
------------------------------------
------------------------------------
Shares beneficially owned:
_______ shares of Company Common Stock
_______ shares of Company Common Stock
issuable upon exercise of
outstanding options and warrants
_______ shares of Parent Common Stock
[Signature Page to Affiliate Agreement]
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Exhibit B-2
FORM OF PARENT AFFILIATE AGREEMENT
THIS PARENT AFFILIATE AGREEMENT (this "Agreement") is made and entered
into as of _____________, 1999, among Digital Insight Corporation, a Delaware
corporation ("Parent"), and the undersigned stockholder who may be deemed an
affiliate ("Affiliate") of Parent. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Reorganization
Agreement (as defined below).
RECITALS
A. Parent, Merger Sub (as defined below) and nFront, Inc., a
Georgia corporation (the "Company"), have entered into an Agreement and Plan of
Merger and Reorganization (the "Reorganization Agreement") which provides for
the merger (the "Merger") of a wholly-owned subsidiary of Parent ("Merger Sub")
with and into the Company. Pursuant to the Merger, all outstanding capital stock
of the Company (the "Company Capital Stock") shall be converted into the right
to receive common stock of Parent ("Parent Common Stock");
B. Affiliate has been advised that Affiliate may be deemed to be
an "affiliate" of Parent, as the term "affiliate" is used for purposes of
Opinion 16 of the Accounting Principles Board and applicable Securities and
Exchange Commission rules and regulations.
C. The execution and delivery of this Agreement by Affiliate is a
material inducement to Parent to enter into the Reorganization Agreement; and
NOW, THEREFORE, intending to be legally bound, the parties hereto
agree as follows:
1. Acknowledgments by Affiliate. Affiliate acknowledges and
understands that the representations, warranties and covenants by Affiliate set
forth herein shall be relied upon by Parent, the Company and their respective
affiliates, counsel and accounting firms, and that substantial losses and
damages may be incurred by these persons if Affiliate's representations,
warranties or covenants are breached. Affiliate has carefully read this
Agreement and the Reorganization Agreement and has discussed the requirements of
this Agreement with Affiliate's professional advisors, who are qualified to
advise Affiliate with regard to such matters.
2. Beneficial Ownership of Parent Common Stock. The Affiliate is
the sole record and beneficial owner of the number of shares of Parent Common
Stock set forth next to its name on the signature page hereto (the "Shares").
The Shares are not subject to any claim, lien, pledge, charge, security interest
or other encumbrance or to any rights of first refusal of any kind. There are no
options, warrants, calls, rights, commitments or agreements of any character,
written or oral, to which the Affiliate is party or by which it is bound
obligating the Affiliate to issue, deliver, sell, repurchase or redeem, or cause
to be issued, delivered, sold, repurchased or redeemed, any Shares or
81
obligating the Affiliate to grant or enter into any such option, warrant, call,
right, commitment or agreement. The Affiliate has the sole right to transfer
such Shares. The Shares constitute all shares of Parent Common Stock owned,
beneficially or of record, by the Affiliate. The Shares are not subject to
preemptive rights created by any agreement to which the Affiliate is party. The
Affiliate has not engaged in any sale or other transfer of the Shares in
contemplation of the Merger. All shares of Parent Common Stock acquired by
Affiliate subsequent to the date hereof shall be subject to the provisions of
this Agreement as if held by Affiliate as of the date hereof.
3. Covenants Related to Pooling of Interests. During the period
beginning 30 days preceding the Effective Time of the Merger and ending two
trading days after Parent publicly announces financial results covering at least
30 days of combined operations of Parent and the Company, Affiliate shall not
sell, exchange, transfer, pledge, distribute, make any gift or otherwise dispose
of or grant any option, establish any "short" or put-equivalent position with
respect to or enter into any similar transaction (through derivatives or
otherwise) intended or having the effect, directly or indirectly, to reduce
Affiliate's risk relative to any shares of Parent Common Stock or Company
Capital Stock. Parent may, at its discretion, place a stock transfer notice
consistent with the foregoing, with respect to Affiliate's shares.
4. Termination. This Agreement shall be terminated and shall be
of no further force and effect in the event of the termination of the
Reorganization Agreement pursuant to Article VII of the Reorganization
Agreement.
5. Miscellaneous.
(a) Waiver; Severability. No waiver by any party hereto
of any condition or of any breach of any provision of this Agreement shall be
effective unless in writing and signed by each party hereto. In the event that
any provision of this Agreement, or the application of any such provision to any
person, entity or set of circumstances, shall be determined to be invalid,
unlawful, void or unenforceable to any extent, the remainder of this Agreement,
and the application of such provision to persons, entities or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
(b) Binding Effect and Assignment. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other party hereto.
(c) Amendments and Modification. This Agreement may not
be modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
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(d) Injunctive Relief. Each of the parties acknowledge
that (i) the the covenants and the restrictions contained in this Agreement are
necessary, fundamental, and required for the protection of Parent and the
Company and to preserve for Parent the benefits of the Merger; (ii) such
covenants relate to matters which are of a special, unique, and extraordinary
character that gives each of such covenants a special, unique, and extraordinary
value; and (iii) a breach of any such covenants or any other provision of this
Agreement shall result in irreparable harm and damages to Parent and the Company
which cannot be adequately compensated by a monetary award. Accordingly, it is
expressly agreed that in addition to all other remedies available at law or in
equity, Parent and the Company shall be entitled to the immediate remedy of a
temporary restraining order, preliminary injunction, or such other form of
injunctive or equitable relief as may be used by any court of competent
jurisdiction to restrain or enjoin any of the parties hereto from breaching any
such covenant or provision or to specifically enforce the provisions hereof.
(e) Governing Law. This Agreement shall be governed by
and construed, interpreted and enforced in accordance with the internal laws of
the State of Delaware without giving effect to any choice or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
(f) Entire Agreement. This Agreement, the Reorganization
Agreement and the other agreements referred to in the Reorganization Agreement
set forth the entire understanding of Affiliate and Parent relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between Affiliate and Parent relating to the subject matter
hereof and thereof.
(g) Attorneys' Fees. In the event of any legal actions or
proceeding to enforce or interpret the provisions hereof, the prevailing party
shall be entitled to reasonable attorneys' fees, whether or not the proceeding
results in a final judgment.
(h) Further Assurances. Affiliate shall execute and/or
cause to be delivered to Parent such instruments and other documents and shall
take such other actions as Parent may reasonably request to effectuate the
intent and purposes of this Agreement.
(i) Third Party Reliance. Counsel to and independent
auditors for Parent and the Company shall be entitled to rely upon this
Affiliate Agreement.
(j) Survival. The representations, warranties, covenants
and other provisions contained in this Agreement shall survive the Merger.
(k) Notices. All notices and other communications
pursuant to this Agreement shall be in writing and deemed to be sufficient if
contained in a written instrument and shall be deemed given if delivered
personally, telecopied, sent by nationally-recognized overnight courier or
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83
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following address (or at such other address for a
party as shall be specified by like notice):
If to Parent: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to Affiliate: To the address for notice set forth on the
signature page hereof.
(l) Counterparts. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Affiliate Agreement to be
duly executed on the day and year first above written.
DIGITAL INSIGHT CORPORATION AFFILIATE
By: By:
-------------------------------- --------------------------------
Name: Affiliate's Address for Notice:
------------------------------
Title:
----------------------------- -----------------------------------
-----------------------------------
-----------------------------------
Shares beneficially owned:
_______ shares of Parent Common Stock
_______ shares of Parent Common Stock
issuable upon exercise of
outstanding options and
warrants
_______ shares of Parent Common Stock
[Signature Page to Affiliate Agreement]
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Exhibit C-1
Persons to Sign Employment Agreement
Part I
Xxxxx X. Xxxxxxx III
Part II
Xxxx X. Xxxxxx
Part III
Xxxxxxx X. Xxxxxx
Part IV
Xxxxxxx X. Xxxxxxx
86
Exhibit C-2
Part I
DIGITAL INSIGHT CORPORATION
EMPLOYMENT AGREEMENT
This Agreement is entered into as of [_________], (the "Effective
Date") by and between Digital Insight Corporation (the "Company"), and Xxxxx X.
Xxxxxxx, III (the "Executive").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date,
Executive will serve as President of the Company. Executive will render such
business and professional services in the performance of his duties, consistent
with Executive's position within the Company and the Bylaws of the Company, as
shall reasonably be assigned to him by the Company's Board of Directors (the
"Board"). The period of Executive's employment under this Agreement is referred
to herein as the "Employment Term."
(b) Obligations. During the Employment Term, Executive
will perform his duties faithfully and to the best of his ability and will
devote substantially all of his full business efforts and time to the Company.
For the duration of the Employment Term, Executive agrees not to actively engage
in any other employment, occupation or consulting activity for any direct or
indirect remuneration without the prior approval of the Board, such approval not
to be unreasonably withheld; provided, however, that service on Boards of
Directors and service on behalf of charitable, trade, and non-profit
organizations shall not constitute a breach of this Section 1(b).
2. Term. Subject to the other terms and conditions of this
Agreement, Executive's employment by the Company shall be for a term of one (1)
year commencing on the date hereof (the "Term"); provided, however, that the
Term shall be extended for an additional one (1) year period at the end of the
Term (including any extended Term, as provided herein) unless the Company and
Executive each provide at least sixty (60) days written notice to Executive that
this Agreement shall not be extended. If Executive's employment continues beyond
the Term, such employment shall be terminable at-will. However, the benefits
described herein shall be provided by the Company to the Executive upon
termination at any time after the Effective Date. The effective date of the
termination of Executive's employment with the Company regardless of the reason
therefor, is referred to in this Agreement as the "Date of Termination".
3. Compensation.
(a) Base Salary. During the Employment Term, the Company
will pay Executive as compensation for his services a minimum base salary at the
annualized rate of $215,000 (the "Base Salary"). The Base Salary will be paid
periodically in accordance with the Company's normal payroll practices and be
subject to the usual, required withholding.
87
(b) Bonus. In addition to the Base Salary, Executive may
be entitled to receive during each year of Executive's employment with the
Company pursuant to this Agreement a performance bonus if the Executive and/or
the Company meets established performance milestones to be mutually agreed upon
by the Board and Executive in good faith within thirty (30) days after the
Effective Date. Notwithstanding the foregoing, Executive shall be entitled to
receive a prorated bonus during the Company's fiscal year 2000 equal to fifty
percent (50%) of Executive's Base Salary. Any such bonuses shall be subject to
applicable withholding.
(c) Stock Options. As of the Effective Date, Executive
will be eligible to receive management stock option grants consistent with
option grants granted to other top executives in the Company. Such option grants
will be subject to the terms, definitions, and provisions of the Company's Stock
Plan (the "Option Plan"), which document is incorporated herein by reference.
4. Employee Benefits. During the Employment Term, Executive will
be entitled to participate in the directors and officers, health and other
insurance and other employee benefit plans and programs currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, disability, life insurance, and flexible-spending account plans and the
Company's PDO program; and shall be entitled to at least four (4) weeks of
vacation per year. The Company reserves the right to cancel or change the
benefit plans and programs it offers to its employees, generally at any time.
5. Expenses. The Company will reimburse Executive for reasonable
travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
6. Severance.
(a) Involuntary Termination. If Executive's employment
with the Company terminates for "Good Reason" (as defined herein) by the
Executive or other than for "Cause" (as defined herein) by the Company at any
time within twelve (12) months of the Effective Date, and Executive signs and
does not revoke a standard release of claims with the Company (with such release
excepting matters relating to Executive's indemnification with the Company),
then, subject to Section 9, Executive shall be entitled to:
(i) Twelve (12) months of Executive's Base
Salary, and pro-rated bonus, as in effect as of the date of such termination,
less applicable withholding, payable in accordance with the Company's standard
payroll practices; and
(ii) For twelve (12) months following the Date of
Termination, the same level of health (i.e., medical, vision and dental)
coverage and benefits as in effect for the Executive on the day immediately
preceding the day of the Executive's termination of employment.
(b) Voluntary Termination; Termination for Cause. If
Executive's employment with the Company terminates voluntarily by Executive or
for Cause by the Company at any time,
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then (i) future all vesting of any options granted hereunder will terminate
immediately and all payments of compensation by the Company to Executive
hereunder will terminate immediately (except as to amounts already earned) and
(ii) Executive will only be eligible for severance benefits in accordance with
the Company's established policies as then in effect.
(c) Death and Disability. In the event Executive shall be
unable to perform his duties hereunder by virtue of illness or physical or
mental incapacity or disability (from any cause or causes whatsoever) in
substantially the manner and to the extent required hereunder prior to the
commencement of such disability (all such causes being herein referred to as
"disability") and Executive shall fail to perform such duties for periods
aggregating 60 days, whether or not continuous, in any continuous period of 120
days, the Company shall have the right to terminate Executive's employment
hereunder at the end of any calendar
7. Definitions.
(a) Cause. For purposes of this Agreement, "Cause" is
defined as (i) Executive's conviction of, or plea of nolo contendere to, a
felony, or (ii) Executives' gross misconduct, or Executive's continued
substantial violations of his employment duties after Executive has received a
written demand for performance from the Company approved by the Board of
Directors which specifically sets forth the factual basis for the Company's
belief that Executive has not substantially performed his duties. Executive may
not be terminated for Cause without (i) notice to Executive setting forth the
reasons for the Company's intention to terminate for Cause, and (ii) opportunity
for Executive to cure such actions within (5) days following the Company's
delivery to Executive of a written explanation specifying the basis of the
Board's beliefs with respect to such Cause events. Termination for death or
disability shall also be termination for "Cause" only if the Company complies
with the provisions of Section 5(c).
(b) Good Reason. For purposes of this Agreement, "Good
Reason" is defined as (i) without the Executive's express written consent, a
significant reduction of the Executive's duties, position or responsibilities
relative to the Executive's duties, position or responsibilities in effect
immediately prior to such reduction, (ii) without the Executive's express
written consent, a reduction by the Company of the Executive's base salary as in
effect immediately (of at least 10%) prior to such reduction; or (iii) without
the Executive's express written consent, the relocation of the Executive to a
facility or a location more than fifty (50) miles from his current location.
8. Confidential Information. Executive agrees to enter into the
Company's standard Confidential Information and Invention Assignment Agreement
(the "Confidential Information Agreement") upon commencing employment hereunder.
9. Conditional Nature of Severance Payments.
(a) Noncompete. Executive acknowledges that the nature of
the Company's business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company following
the termination of Executive's employment with the Company, it would be very
difficult for the Executive not to rely on or use the Company's trade secrets
and confidential information. Thus, to avoid the inevitable disclosure of the
Company's
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trade secrets and confidential information, Executive agrees and acknowledges
that Executive's right to receive the severance payments set forth in Section 6
(to the extent Executive is otherwise entitled to such payments) shall be
conditioned upon the Executive not directly or indirectly engaging in (whether
as an employee, consultant, agent, proprietor, principal, partner, stockholder,
corporate officer, director or otherwise), nor having any ownership interest
(other than less than 5% of a publicly traded company) in or participating in
the financing, operation, management or control of, any person, firm,
corporation or business that competes with the "Business" of the Company for the
time period equal to the later of (i) the date twelve (12) months from the date
of termination, or (ii) the date two (2) years from the Effective Date. For
purposes of this Agreement, the "Business" of the Company is providing Internet
banking and related financial service functionality to financial institutions.
Upon any breach of this section, all severance payments pursuant to this
Agreement shall immediately cease.
(b) Non-Solicitation. Until the later of (i) the date one
(1) year after the termination of Executive's employment with the Company for
any reason or (ii) the date two (2) years from the date of Closing, Executive
agrees and acknowledges that Executive's right to receive the severance payments
set forth in Section 6 (to the extent Executive is otherwise entitled to such
payments) shall be conditioned upon Executive not either directly or indirectly
soliciting or inducing any employee of the Company or causing an employee to
leave his or her employment either for Executive or for any other entity or
person.
(c) Understanding of Covenants. The Executive represents
that he (i) is familiar with the foregoing covenants not to compete and not to
solicit, and (ii) is fully aware of his obligations hereunder, including,
without limitation, the reasonableness of the length of time, scope and
geographic coverage of these covenants.
10. Assignment. This Agreement will be binding upon and inure to
the benefit of (a) the heirs, executors and legal representatives of Executive
upon Executive's death and (b) any successor of the Company. Any such successor
of the Company will be deemed substituted for the Company under the terms of
this Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.
11. Notices. All notices, requests, demands and other
communications called for hereunder shall be in writing and shall be deemed
given (i) on the date of delivery if delivered personally, (ii) one (1) day
after being sent by a well established commercial overnight service, or (iii)
four (4) days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the
following addresses, or at such other addresses as the parties may later
designate in writing:
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If to the Company:
Digital Insight Corporation
[Address]
Attn: [Name]
If to Executive:
at the last residential address known by the Company.
12. Severability. In the event that any provision hereof becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement will continue in full force and effect without said
provision.
13. Arbitration.
(a) Executive agrees that any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof, shall be settled by binding arbitration to be held in Xxxxxx County,
Georgia in accordance with the National Rules for the Resolution of Employment
Disputes then in effect of the American Arbitration Association (the "Rules").
The arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator will be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.
(b) The arbitrator(s) will apply Georgia law to the
merits of any dispute or claim, without reference to rules of conflicts of law.
The arbitration proceedings will be governed by federal arbitration law and by
the Rules, without reference to state arbitration law. The Executive hereby
consents to the personal jurisdiction of the state and federal courts located in
Georgia for any action or proceeding arising from or relating to this Agreement
or relating to any arbitration in which the parties are participants.
(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION,
WHICH DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS
AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR
IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION,
AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS
OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
DISCRIMINATION CLAIMS.
14. Integration. This Agreement, together with the Option Plan and
the Confidential Information Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in writing and signed by duly authorized representatives of the
parties hereto.
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15. Tax Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.
16. Governing Law. This Agreement will be governed by the laws of
the State of Georgia (with the exception of its conflict of laws provisions).
17. Acknowledgment. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by their duly authorized officers, as of the day and year
first above written.
DIGITAL INSIGHT CORPORATION
By: Date:
---------------------------- -------------------------
Title:
-------------------------
EXECUTIVE
------------------------------- Date:
-------------------------
Xxxxx X. Xxxxxxx, III
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Exhibit C-2
Part II
DIGITAL INSIGHT CORPORATION
EMPLOYMENT AGREEMENT
This Agreement is entered into as of ____________, (the "Effective
Date") by and between Digital Insight Corporation (the "Company"), and Xxxx
Xxxxxx (the "Executive").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date, Executive will
serve as Sales Manager of the Company. Executive will render such business and
professional services in the performance of his duties, consistent with
Executive's position within the Company and the Bylaws of the Company, as shall
reasonably be assigned to him by the Company's Board of Directors (the "Board").
The period of Executive's employment under this Agreement is referred to herein
as the "Employment Term."
(b) Obligations. During the Employment Term, Executive will
perform his duties faithfully and to the best of his ability and will devote
substantially all of his full business efforts and time to the Company. For the
duration of the Employment Term, Executive agrees not to actively engage in any
other employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board, such approval not to be
unreasonably withheld; provided, however, that service on Boards of Directors
and service on behalf of charitable, trade, and non-profit organizations shall
not constitute a breach of this Section 1(b).
2. Term. Subject to the other terms and conditions of this Agreement,
Executive's employment by the Company shall be for a term of three (3) years
commencing on the date hereof (the "Term"). If Executive's employment continues
beyond the Term, such employment shall be terminable at-will. However, the
benefits described herein shall be provided by the Company to the Executive upon
termination at any time after the Effective Date. The effective date of the
termination of Executive's employment with the Company regardless of the reason
therefor, is referred to in this Agreement as the "Date of Termination".
3. Compensation.
(a) Base Salary. During the Employment Term, the Company will pay
Executive as compensation for his services a minimum base salary at the
annualized rate of $70,200 (the "Base Salary"). The Base Salary will be paid
periodically in accordance with the Company's normal payroll practices and be
subject to the usual, required withholding.
(b) Stock Options. As of the Effective Date, Executive will be
eligible to receive management stock option grants consistent with option grants
granted to other top executives in the
94
Company. Such option grants will be subject to the terms, definitions, and
provisions of the Company's Stock Plan (the "Option Plan"), which document is
incorporated herein by reference.
4. Employee Benefits. During the Employment Term, Executive will be
entitled to participate in the directors and officers, health and other
insurance and other employee benefit plans and programs currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, disability, life insurance, and flexible-spending account plans and the
Company's PDO program; and shall be entitled to at least four (4) weeks of
vacation per year. The Company reserves the right to cancel or change the
benefit plans and programs it offers to its employees, generally at any time.
5. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
6. Severance.
(a) Involuntary Termination. If Executive's employment with the
Company terminates for "Good Reason" (as defined herein) by the Executive or
other than for "Cause" (as defined herein), and Executive signs and does not
revoke a standard release of claims with the Company relating to this agreement
(with such relief excepting matters relating to Executive's indemnification with
the Company) then, subject to Section 9, Executive shall be entitled to receive
continuing payments of Executive's Base Salary as in effect as of the date of
such termination, less applicable withholding, payable in accordance with the
Company's standard payroll practices, for the remainder of the Term.
(b) Voluntary Termination; Termination for Cause. If Executive's
employment with the Company terminates voluntarily by Executive or for Cause by
the Company at any time, then (i) all future vesting of any options granted
hereunder will terminate immediately and all payments of compensation by the
Company to Executive hereunder will terminate immediately (except as to amounts
already earned) and (ii) Executive will only be eligible for severance benefits
in accordance with the Company's established policies as then in effect.
(c) Death and Disability. In the event Executive shall be unable
to perform his duties hereunder by virtue of illness or physical or mental
incapacity or disability (from any cause or causes whatsoever) in substantially
the manner and to the extent required hereunder prior to the commencement of
such disability (all such causes being herein referred to as "disability") and
Executive shall fail to perform such duties for periods aggregating 60 days,
whether or not continuous, in any continuous period of 120 days, the Company
shall have the right to terminate Executive's employment hereunder at the end of
any calendar
7. Definitions.
(a) Cause. For purposes of this Agreement, "Cause" is defined as
(i) Executive's conviction of, or plea of nolo contendere to, a felony, or (ii)
Executive's gross misconduct, or Executive's continued substantial violations of
his employment duties after Executive has received a
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written demand for performance from the Company approved by the Board of
Directors which specifically sets forth the factual basis for the Company's
belief that Executive has not substantially performed his duties. Executive may
not be terminated for Cause without (i) notice to Executive setting forth the
reasons for the Company's intention to terminate for Cause, and (ii) opportunity
for Executive to cure such actions within (5) days following the Company's
delivery to Executive of a written explanation specifying the basis of the
Board's beliefs with respect to such Cause events. Termination for death or
disability shall also be termination for "Cause" only if the Company complies
with the provisions of Section 5(c).
(b) Good Reason. For purposes of this Agreement, "Good Reason" is
defined as (i) without the Executive's express written consent, a significant
reduction of the Executive's duties, position or responsibilities relative to
the Executive's duties, position or responsibilities in effect immediately prior
to such reduction, (ii) without the Executive's express written consent, a
reduction by the Company of the Executive's base salary as in effect immediately
(of at least 10%) prior to such reduction; or (iii) without the Executive's
express written consent, the relocation of the Executive to a facility or a
location more than fifty (50) miles from his current location.
8. Confidential Information. Executive agrees to enter into the Company's
standard Confidential Information and Invention Assignment Agreement (the
"Confidential Information Agreement") upon commencing employment hereunder.
9. Conditional Nature of Severance Payments.
(a) Noncompete. Executive acknowledges that the nature of the
Company's business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company following
the termination of Executive's employment with the Company, it would be very
difficult for the Executive not to rely on or use the Company's trade secrets
and confidential information. Thus, to avoid the inevitable disclosure of the
Company's trade secrets and confidential information, Executive agrees and
acknowledges that Executive's right to receive the severance payments set forth
in Section 6 (to the extent Executive is otherwise entitled to such payments)
shall be conditioned upon the Executive not directly or indirectly engaging in
(whether as an employee, consultant, agent, proprietor, principal, partner,
stockholder, corporate officer, director or otherwise), nor having any ownership
interest (other than less than 5% of a publicly traded company) in or
participating in the financing, operation, management or control of, any person,
firm, corporation or business that competes with the "Business" of the Company
for the time period equal to the later of (i) the date twelve (12) months from
the date of termination, or (ii) the date two (2) years from the Effective Date.
For purposes of this Agreement, the "Business" of the Company is providing
Internet banking and related financial service functionality to financial
institutions. Upon any breach of this section, all severance payments pursuant
to this Agreement shall immediately cease.
(b) Non-Solicitation. Until the later of (i) the date one (1) year
after the termination of Executive's employment with the Company for any reason
or (ii) the date two (2) years from the date of Closing, Executive agrees and
acknowledges that Executive's right to receive the severance payments set forth
in Section 6 (to the extent Executive is otherwise entitled to such payments)
shall be conditioned upon Executive not either directly or indirectly soliciting
or inducing
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96
any employee of the Company or causing an employee to leave his or her
employment either for Executive or for any other entity or person.
(c) Understanding of Covenants. The Executive represents that he
(i) is familiar with the foregoing covenants not to compete and not to solicit,
and (ii) is fully aware of his obligations hereunder, including, without
limitation, the reasonableness of the length of time, scope and geographic
coverage of these covenants.
10. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.
11. Notices. All notices, requests, demands and other communications called
for hereunder shall be in writing and shall be deemed given (i) on the date of
delivery if delivered personally, (ii) one (1) day after being sent by a well
established commercial overnight service, or (iii) four (4) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:
If to the Company:
Digital Insight Corporation
[Address]
Attn: [Name]
If to Executive:
at the last residential address known by the Company.
12. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.
13. Arbitration.
(a) Executive agrees that any dispute or controversy arising out
of, relating to, or in connection with this Agreement, or the interpretation,
validity, construction, performance, breach, or termination thereof, shall be
settled by binding arbitration to be held in Xxxxxx County, Georgia in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the "Rules"). The
arbitrator may grant injunctions or other relief
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97
in such dispute or controversy. The decision of the arbitrator will be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.
(b) The arbitrator(s) will apply Georgia law to the
merits of any dispute or claim, without reference to rules of conflicts of law.
The arbitration proceedings will be governed by federal arbitration law and by
the Rules, without reference to state arbitration law. The Executive hereby
consents to the personal jurisdiction of the state and federal courts located in
Georgia for any action or proceeding arising from or relating to this Agreement
or relating to any arbitration in which the parties are participants.
(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION,
WHICH DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS
AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR
IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION,
AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS
OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
DISCRIMINATION CLAIMS.
14. Integration. This Agreement, together with the Option Plan and
the Confidential Information Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in writing and signed by duly authorized representatives of the
parties hereto.
15. Tax Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.
16. Governing Law. This Agreement will be governed by the laws of
the State of Georgia (with the exception of its conflict of laws provisions).
(a) Acknowledgment. Executive acknowledges that he has
had the opportunity to discuss this matter with and obtain advice from his
private attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
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98
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by their duly authorized officers, as of the day and
year first above written.
DIGITAL INSIGHT CORPORATION
By: Date:
------------------------------ ---------------------------
Title:
---------------------------
EXECUTIVE
--------------------------------- Date:
-----------------------------
Xxxx Xxxxxx
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Exhibit C-2
Part III
DIGITAL INSIGHT CORPORATION
EMPLOYMENT AGREEMENT
This Agreement is entered into as of ____________, (the "Effective Date")
by and between Digital Insight Corporation (the "Company"), and Xxxx Xxxxxx (the
"Executive").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date,
Executive will serve as Vice President of Strategic Development of the Company.
Executive will render such business and professional services in the performance
of his duties, consistent with Executive's position within the Company and the
Bylaws of the Company, as shall reasonably be assigned to him by the Company's
Board of Directors (the "Board"). The period of Executive's employment under
this Agreement is referred to herein as the "Employment Term."
(b) Obligations. During the Employment Term, Executive
will perform his duties faithfully and to the best of his ability and will
devote substantially all of his full business efforts and time to the Company.
For the duration of the Employment Term, Executive agrees not to actively engage
in any other employment, occupation or consulting activity for any direct or
indirect remuneration without the prior approval of the Board, such approval not
to be unreasonably withheld; provided, however, that service on Boards of
Directors and service on behalf of charitable, trade, and non-profit
organizations shall not constitute a breach of this Section 1(b).
2. Term. Subject to the other terms and conditions of this
Agreement, Executive's employment by the Company shall be for a term of three
(3) years commencing on the date hereof (the "Term"). If Executive's employment
continues beyond the Term, such employment shall be terminable at-will. However,
the benefits described herein shall be provided by the Company to the Executive
upon termination at any time after the Effective Date. The effective date of the
termination of Executive's employment with the Company regardless of the reason
therefor, is referred to in this Agreement as the "Date of Termination".
3. Compensation.
(a) Base Salary. During the Employment Term, the Company
will pay Executive as compensation for his services a minimum base salary at the
annualized rate of $125,000 (the "Base Salary"). The Base Salary will be paid
periodically in accordance with the Company's normal payroll practices and be
subject to the usual, required withholding.
(b) Bonus. In addition to the Base Salary, Executive may
be entitled to receive during each year of Executive's employment with the
Company pursuant to this Agreement a performance bonus if the Executive and/or
the Company meets established performance milestones
100
to be mutually agreed upon by the Board and Executive in good faith within
thirty (30) days after the Effective Date. Not withstanding the foregoing,
Executive shall be entitled to receive a pro-rated bonus during the Company's
fiscal year 2000 equal to fifty percent (50%) of Executive's Base Salary. Any
such bonuses shall be subject to applicable withholding.
(c) Stock Options. As of the Effective Date, Executive
will be eligible to receive management stock option grants consistent with
option grants granted to other top executives in the Company. Such option grants
will be subject to the terms, definitions, and provisions of the Company's Stock
Plan (the "Option Plan"), which document is incorporated herein by reference.
4. Employee Benefits. During the Employment Term, Executive will
be entitled to participate in the directors and officers, health and other
insurance and other employee benefit plans and programs currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, disability, life insurance, and flexible-spending account plans and the
Company's PDO program; and shall be entitled to at least four (4) weeks of
vacation per year. The Company reserves the right to cancel or change the
benefit plans and programs it offers to its employees, generally at any time.
5. Expenses. The Company will reimburse Executive for reasonable
travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
6. Severance.
(a) Involuntary Termination. If Executive's employment
with the Company terminates for "Good Reason" (as defined herein) by the
Executive or other than for "Cause" (as defined herein), and Executive signs and
does not revoke a standard release of claims with the Company relating to this
agreement (with such relief excepting matters relating to Executive's
indemnification with the Company) then, subject to Section 9, Executive shall be
entitled to receive (i) continuing payments of Executive's Base Salary, and
bonus, as in effect as of the date of such termination, less applicable
withholding, payable in accordance with the Company's standard payroll
practices, for the remainder of the Term, and (ii) the same level of health
(i.e., medical, vision and dental) coverage and benefits as in effect for the
Executive on the day immediately preceding the day of Executive's termination of
employment for the remainder of the Term to the extent permitted by applicable
law.
(b) Voluntary Termination; Termination for Cause. If
Executive's employment with the Company terminates voluntarily by Executive or
for Cause by the Company at any time, then (i) all future vesting of any options
granted hereunder will terminate immediately and all payments of compensation by
the Company to Executive hereunder will terminate immediately (except as to
amounts already earned) and (ii) Executive will only be eligible for severance
benefits in accordance with the Company's established policies as then in
effect.
(c) Death and Disability. In the event Executive shall be
unable to perform his duties hereunder by virtue of illness or physical or
mental incapacity or disability (from any cause or
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causes whatsoever) in substantially the manner and to the extent required
hereunder prior to the commencement of such disability (all such causes being
herein referred to as "disability") and Executive shall fail to perform such
duties for periods aggregating 60 days, whether or not continuous, in any
continuous period of 120 days, the Company shall have the right to terminate
Executive's employment hereunder at the end of any calendar
7. Definitions.
(a) Cause. For purposes of this Agreement, "Cause" is
defined as (i) Executive's conviction of, or plea of nolo contendere to, a
felony, or (ii) Executive's gross misconduct, or Executive's continued
substantial violations of his employment duties after Executive has received a
written demand for performance from the Company approved by the Board of
Directors which specifically sets forth the factual basis for the Company's
belief that Executive has not substantially performed his duties. Executive may
not be terminated for Cause without (i) notice too Executive setting forth the
reasons for the Company's intention to terminate for Cause, and (ii) opportunity
for Executive to cure such actions within (5) days following the Company's
delivery to Executive of a written explanation specifying the basis of the
Board's beliefs with respect to such Cause events. Termination for death or
disability shall also be termination for "Cause" only if the Company complies
with the provisions of Section 5(c).
(b) Good Reason. For purposes of this Agreement, "Good
Reason" is defined as (i) without the Executive's express written consent, a
significant reduction of the Executive's duties, position or responsibilities
relative to the Executive's duties, position or responsibilities in effect
immediately prior to such reduction, (ii) without the Executive's express
written consent, a reduction by the Company of the Executive's base salary as in
effect immediately (of at least 10%) prior to such reduction; or (iii) without
the Executive's express written consent, the relocation of the Executive to a
facility or a location more than fifty (50) miles from his current location.
8. Confidential Information. Executive agrees to enter into the
Company's standard Confidential Information and Invention Assignment Agreement
(the "Confidential Information Agreement") upon commencing employment hereunder.
9. Conditional Nature of Severance Payments.
(a) Noncompete. Executive acknowledges that the nature of
the Company's business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company following
the termination of Executive's employment with the Company, it would be very
difficult for the Executive not to rely on or use the Company's trade secrets
and confidential information. Thus, to avoid the inevitable disclosure of the
Company's trade secrets and confidential information, Executive agrees and
acknowledges that Executive's right to receive the severance payments set forth
in Section 6 (to the extent Executive is otherwise entitled to such payments)
shall be conditioned upon the Executive not directly or indirectly engaging in
(whether as an employee, consultant, agent, proprietor, principal, partner,
stockholder, corporate officer, director or otherwise), nor having any ownership
interest (other than less than 5% of a publicly traded company) in or
participating in the financing, operation, management or control of, any person,
firm, corporation or business that competes with the "Business" of the Company
for the time period equal to the later of (i) the date twelve (12) months from
the date of termination, or (ii)
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the date two (2) years from the Effective Date. For purposes of this Agreement,
the "Business" of the Company is providing Internet banking and related
financial service functionality to financial institutions. Upon any breach of
this section, all severance payments pursuant to this Agreement shall
immediately cease.
(b) Non-Solicitation. Until the later of (i) the date one
(1) year after the termination of Executive's employment with the Company for
any reason or (ii) the date two (2) years from the date of Closing, Executive
agrees and acknowledges that Executive's right to receive the severance payments
set forth in Section 6 (to the extent Executive is otherwise entitled to such
payments) shall be conditioned upon Executive not either directly or indirectly
soliciting or inducing any employee of the Company or causing an employee to
leave his or her employment either for Executive or for any other entity or
person.
(c) Understanding of Covenants. The Executive represents
that he (i) is familiar with the foregoing covenants not to compete and not to
solicit, and (ii) is fully aware of his obligations hereunder, including,
without limitation, the reasonableness of the length of time, scope and
geographic coverage of these covenants.
10. Assignment. This Agreement will be binding upon and inure to
the benefit of (a) the heirs, executors and legal representatives of Executive
upon Executive's death and (b) any successor of the Company. Any such successor
of the Company will be deemed substituted for the Company under the terms of
this Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.
11. Notices. All notices, requests, demands and other
communications called for hereunder shall be in writing and shall be deemed
given (i) on the date of delivery if delivered personally, (ii) one (1) day
after being sent by a well established commercial overnight service, or (iii)
four (4) days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the
following addresses, or at such other addresses as the parties may later
designate in writing:
If to the Company:
Digital Insight Corporation
[Address]
Attn: [Name]
If to Executive:
at the last residential address known by the Company.
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12. Severability. In the event that any provision hereof becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement will continue in full force and effect without said
provision.
13. Arbitration.
(a) Executive agrees that any dispute or controversy arising out
of, relating to, or in connection with this Agreement, or the interpretation,
validity, construction, performance, breach, or termination thereof, shall be
settled by binding arbitration to be held in Xxxxxx County, Georgia in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the "Rules"). The
arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator will be final, conclusive and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator's decision
in any court having jurisdiction.
(b) The arbitrator(s) will apply Georgia law to the merits of any
dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings will be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. The Executive hereby consents
to the personal jurisdiction of the state and federal courts located in Georgia
for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.
(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, DISCRIMINATION
CLAIMS.
14. Integration. This Agreement, together with the Option Plan and
the Confidential Information Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in writing and signed by duly authorized representatives of the
parties hereto.
15. Tax Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.
16. Governing Law. This Agreement will be governed by the laws of
the State of Georgia (with the exception of its conflict of laws provisions).
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(a) Acknowledgment. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by their duly authorized officers, as of the day and year
first above written.
DIGITAL INSIGHT CORPORATION
By: Date:
------------------------------- -------------------------------
Title:
----------------------------
EXECUTIVE
Date:
---------------------------------- -------------------------------
Xxxx Xxxxxx
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Exhibit C-2
Part IV
DIGITAL INSIGHT CORPORATION
EMPLOYMENT AGREEMENT
This Agreement is entered into as of ____________, (the "Effective
Date") by and between Digital Insight Corporation (the "Company"), and Xxxxxx
Xxxxxxx (the "Executive").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date, Executive will
serve as Vice President of Sales of the Company. Executive will render such
business and professional services in the performance of his duties, consistent
with Executive's position within the Company and the Bylaws of the Company, as
shall reasonably be assigned to him by the Company's Board of Directors (the
"Board"). The period of Executive's employment under this Agreement is referred
to herein as the "Employment Term."
(b) Obligations. During the Employment Term, Executive will
perform his duties faithfully and to the best of his ability and will devote
substantially all of his full business efforts and time to the Company. For the
duration of the Employment Term, Executive agrees not to actively engage in any
other employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board, such approval not to be
unreasonably withheld; provided, however, that service on Boards of Directors
and service on behalf of charitable, trade, and non-profit organizations shall
not constitute a breach of this Section 1(b).
2. Term. Subject to the other terms and conditions of this Agreement,
Executive's employment by the Company shall be for a term of three (3) years
commencing on the date hereof (the "Term"). If Executive's employment continues
beyond the Term, such employment shall be terminable at-will. However, the
benefits described herein shall be provided by the Company to the Executive upon
termination at any time after the Effective Date. The effective date of the
termination of Executive's employment with the Company regardless of the reason
therefor, is referred to in this Agreement as the "Date of Termination".
3. Compensation.
(a) Base Salary. During the Employment Term, the Company will pay
Executive as compensation for his services a minimum base salary at the
annualized rate of $100,325 (the "Base Salary"). The Base Salary will be paid
periodically in accordance with the Company's normal payroll practices and be
subject to the usual, required withholding.
(b) Stock Options. As of the Effective Date, Executive will be
eligible to receive management stock option grants consistent with option grants
granted to other top executives in the
107
Company. Such option grants will be subject to the terms, definitions, and
provisions of the Company's Stock Plan (the "Option Plan"), which document is
incorporated herein by reference.
4. Employee Benefits. During the Employment Term, Executive will be
entitled to participate in the directors and officers, health and other
insurance and other employee benefit plans and programs currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, disability, life insurance, and flexible-spending account plans and the
Company's PDO program; and shall be entitled to at least four (4) weeks of
vacation per year. The Company reserves the right to cancel or change the
benefit plans and programs it offers to its employees, generally at any time.
5. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
6. Severance.
(a) Involuntary Termination. If Executive's employment with the
Company terminates for "Good Reason" (as defined herein) by the Executive or
other than for "Cause" (as defined herein), and Executive signs and does not
revoke a standard release of claims with the Company relating to this agreement
(with such relief excepting matters relating to Executive's indemnification with
the Company) then, subject to Section 9, Executive shall be entitled to receive
continuing payments of Executive's Base Salary as in effect as of the date of
such termination, less applicable withholding, payable in accordance with the
Company's standard payroll practices, for the remainder of the Term.
(b) Voluntary Termination; Termination for Cause. If Executive's
employment with the Company terminates voluntarily by Executive or for Cause by
the Company at any time, then (i) all future vesting of any options granted
hereunder will terminate immediately and all payments of compensation by the
Company to Executive hereunder will terminate immediately (except as to amounts
already earned) and (ii) Executive will only be eligible for severance benefits
in accordance with the Company's established policies as then in effect.
(c) Death and Disability. In the event Executive shall be unable
to perform his duties hereunder by virtue of illness or physical or mental
incapacity or disability (from any cause or causes whatsoever) in substantially
the manner and to the extent required hereunder prior to the commencement of
such disability (all such causes being herein referred to as "disability") and
Executive shall fail to perform such duties for periods aggregating 60 days,
whether or not continuous, in any continuous period of 120 days, the Company
shall have the right to terminate Executive's employment hereunder at the end of
any calendar.
7. Definitions.
(a) Cause. For purposes of this Agreement, "Cause" is defined as
(i) Executive's conviction of, or plea of nolo contendere to, a felony, or (ii)
Executive's gross misconduct, or Executive's continued substantial violations of
his employment duties after Executive has received a
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written demand for performance from the Company approved by the Board of
Directors which specifically sets forth the factual basis for the Company's
belief that Executive has not substantially performed his duties. Executive may
not be terminated for Cause without (i) notice too Executive setting forth the
reasons for the Company's intention to terminate for Cause, and (ii) opportunity
for Executive to cure such actions within (5) days following the Company's
delivery to Executive of a written explanation specifying the basis of the
Board's beliefs with respect to such Cause events. Termination for death or
disability shall also be termination for "Cause" only if the Company complies
with the provisions of Section 5(c).
(b) Good Reason. For purposes of this Agreement, "Good Reason" is
defined as (i) without the Executive's express written consent, a significant
reduction of the Executive's duties, position or responsibilities relative to
the Executive's duties, position or responsibilities in effect immediately prior
to such reduction, (ii) without the Executive's express written consent, a
reduction by the Company of the Executive's base salary as in effect immediately
(of at least 10%) prior to such reduction; or (iii) without the Executive's
express written consent, the relocation of the Executive to a facility or a
location more than fifty (50) miles from his current location.
8. Confidential Information. Executive agrees to enter into the Company's
standard Confidential Information and Invention Assignment Agreement (the
"Confidential Information Agreement") upon commencing employment hereunder.
9. Conditional Nature of Severance Payments.
(a) Noncompete. Executive acknowledges that the nature of the
Company's business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company following
the termination of Executive's employment with the Company, it would be very
difficult for the Executive not to rely on or use the Company's trade secrets
and confidential information. Thus, to avoid the inevitable disclosure of the
Company's trade secrets and confidential information, Executive agrees and
acknowledges that Executive's right to receive the severance payments set forth
in Section 6 (to the extent Executive is otherwise entitled to such payments)
shall be conditioned upon the Executive not directly or indirectly engaging in
(whether as an employee, consultant, agent, proprietor, principal, partner,
stockholder, corporate officer, director or otherwise), nor having any ownership
interest (other than less than 5% of a publicly traded company) in or
participating in the financing, operation, management or control of, any person,
firm, corporation or business that competes with the "Business" of the Company
for the time period equal to the later of (i) the date twelve (12) months from
the date of termination, or (ii) the date two (2) years from the Effective Date.
For purposes of this Agreement, the "Business" of the Company is providing
Internet banking and related financial service functionality to financial
institutions. Upon any breach of this section, all severance payments pursuant
to this Agreement shall immediately cease.
(b) Non-Solicitation. Until the later of (i) the date one (1) year
after the termination of Executive's employment with the Company for any reason
or (ii) the date two (2) years from the date of Closing, Executive agrees and
acknowledges that Executive's right to receive the severance payments set forth
in Section 6 (to the extent Executive is otherwise entitled to such payments)
shall be conditioned upon Executive not either directly or indirectly soliciting
or inducing
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109
any employee of the Company or causing an employee to leave his or her
employment either for Executive or for any other entity or person.
(c) Understanding of Covenants. The Executive represents that he
(i) is familiar with the foregoing covenants not to compete and not to solicit,
and (ii) is fully aware of his obligations hereunder, including, without
limitation, the reasonableness of the length of time, scope and geographic
coverage of these covenants.
10. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.
11. Notices. All notices, requests, demands and other communications called
for hereunder shall be in writing and shall be deemed given (i) on the date of
delivery if delivered personally, (ii) one (1) day after being sent by a well
established commercial overnight service, or (iii) four (4) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:
If to the Company:
Digital Insight Corporation
[Address]
Attn: [Name]
If to Executive:
at the last residential address known by the Company.
12. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.
13. Arbitration.
(a) Executive agrees that any dispute or controversy arising out
of, relating to, or in connection with this Agreement, or the interpretation,
validity, construction, performance, breach, or termination thereof, shall be
settled by binding arbitration to be held in Xxxxxx County, Georgia in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the "Rules"). The
arbitrator may grant injunctions or other relief
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in such dispute or controversy. The decision of the arbitrator will be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.
(b) The arbitrator(s) will apply Georgia law to the merits of any
dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings will be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. The Executive hereby consents
to the personal jurisdiction of the state and federal courts located in Georgia
for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.
(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, DISCRIMINATION
CLAIMS.
14. Integration. This Agreement, together with the Option Plan and the
Confidential Information Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in writing and signed by duly authorized representatives of the
parties hereto.
15. Tax Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
16. Governing Law. This Agreement will be governed by the laws of the State
of Georgia (with the exception of its conflict of laws provisions).
(a) Acknowledgment. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by their duly authorized officers, as of the day and year
first above written.
DIGITAL INSIGHT CORPORATION
By: Date:
-------------------------- ---------------------------
Title:
-----------------------
EXECUTIVE
----------------------------- Date:
Xxxxxx Xxxxxxx ----------------------------
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