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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
Page
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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
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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
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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").
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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.
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
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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,
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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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at a time
and date to be specified by the parties, which shall be no later than the second
business day after the satisfaction or waiver of the conditions set forth in
Article VI, or at such other time, date and location as the parties hereto agree
in writing (the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
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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.
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(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
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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
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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
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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
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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
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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
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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
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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
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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.
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(a) Exchange Agent. Parent shall select a bank or trust company
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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,
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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(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.
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(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.
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(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
-8-
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 ▇▇▇▇-▇▇▇▇▇-
-9-
▇▇▇▇▇▇ 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
-10-
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
-11-
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
-12-
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,
-13-
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
-14-
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
-15-
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 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
-------
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
-16-
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 ▇▇▇▇ 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
-17-
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
-18-
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;
-19-
(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, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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.
-20-
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
-21-
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
-22-
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
-23-
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.
-24-
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.
-25-
(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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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'
-26-
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.
-27-
(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.
-28-
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, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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;
-31-
(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 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ 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;
-32-
(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
-33-
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.
-34-
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 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation referred to in Section 2.20 (unless the Board of
Directors of Company has
-35-
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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
-36-
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
-37-
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).
-38-
(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)
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ 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.
-42-
(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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Noro-▇▇▇▇▇▇▇
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-▇▇▇▇▇▇▇ 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-▇▇▇▇▇▇ Partners IV,
L.P. under this section is contingent upon such waiver by Noro-▇▇▇▇▇▇ 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
-44-
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 (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, 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
-45-
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
-46-
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
-49-
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
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.:(▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Company, to:
nFront, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇▇▇ Financial Center
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy No.:(▇▇▇) ▇▇▇-▇▇▇▇
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;
-52-
(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
-53-
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:_______________________________________
-▇▇-
▇▇▇▇▇▇▇ ▇-▇
-----------
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.
(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.
-2-
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.
-3-
(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
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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]
-4-
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]
-5-
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.
-2-
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]
-3-
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.
(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.
-2-
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):
-3-
If to Company: Digital Insight Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
Page ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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]
-4-
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.
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]
-2-
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
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
-2-
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
-3-
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:
-4-
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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.
-5-
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]
-6-
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
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.
-2-
(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
-3-
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
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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.
-4-
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]
-5-
Exhibit C-1
Persons to Sign Employment Agreement
Part I
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Part II
▇▇▇▇ ▇. ▇▇▇▇▇▇
Part III
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Part IV
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
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.
(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 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) 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,
-2-
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
-3-
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:
If to the Company:
-4-
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 ▇▇▇▇▇▇ 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.
-5-
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.
-6-
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:_____________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
-7-
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 ▇▇▇▇ ▇▇▇▇▇▇ (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
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
-2-
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
-3-
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 ▇▇▇▇▇▇ 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
-4-
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.
-5-
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:__________________________
▇▇▇▇ ▇▇▇▇▇▇
-6-
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 ▇▇▇▇ ▇▇▇▇▇▇ (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
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
-2-
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)
-3-
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.
-4-
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 ▇▇▇▇▇▇ 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).
-5-
(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.
-6-
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:__________________
__________________________________
▇▇▇▇ ▇▇▇▇▇▇
-7-
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(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
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
-2-
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
-3-
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
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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
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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
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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.
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(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 ▇▇▇▇▇▇ 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
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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
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State of Georgia (with the exception of its conflict of laws provisions).
(a) Acknowledgment. Executive acknowledges that he has had the
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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:___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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