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EXHIBIT 4.2
WARRANT AGREEMENT
To Purchase Shares of the Common Stock of
Digital Insight Corporation
Dated as of July 31, 2000 (the "Effective Date")
WHEREAS, AnyTime Access, Inc., a California corporation ("ATA"), has
entered into a Master Lease Agreement dated as of July 18, 1996, Equipment
Schedule No. VL-3 dated as of September 26, 1997, and related Summary Equipment
Schedules (collectively, the "Leases") with Comdisco, Inc., a Delaware
corporation (the "Warrantholder"); and
WHEREAS, ATA granted to Warrantholder, in consideration for such Leases, a
warrant to purchase shares of its Series B Preferred Stock (the "Original
Warrant") dated October 28, 1996 (the "Original Effective Date");
WHEREAS, DIGITAL INSIGHT CORPORATION, a Delaware corporation (the
"Company") has entered into an Agreement and Plan of Merger dated as of March
30, 2000 (as subsequently amended, the "Merger Agreement") with ATA and ATA
Acquisition Corp. and has assumed all outstanding warrants of ATA pursuant to
the terms of the Merger Agreement;
WHEREAS, the Company desires to assume the obligations of ATA under the
Original Warrant in accordance with the terms of the Merger Agreement by
granting to Warrantholder the right to purchase shares of its Common Stock;
NOW, THEREFORE, in accordance with the terms of the Merger Agreement and in
consideration of mutual covenants and agreements contained herein, the Company
and Warrantholder agree as follows:
1 GRANT OF THE RIGHT TO PURCHASE COMMON STOCK.
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Pursuant to the Original Warrant and in accordance with the Merger
Agreement, in lieu of the right to purchase shares of ATA Series B Preferred
Stock as described in the Original Warrant, the Company hereby grants to the
Warrantholder the right, and the Warrantholder is entitled, upon the terms and
subject to the conditions hereinafter set forth, to subscribe to and purchase,
from the Company, 6,164 fully paid and non-assessable shares of the Company's
Common Stock ("Common Stock") at a purchase price of $25.95 per share (the
"Exercise Price").
The number and purchase price of such shares are subject to adjustment as
provided in Section 8 hereof. For purposes of this Warrant Agreement, the term
"Common Stock" shall include, unless the context otherwise requires, the stock
and other securities and property at the time receivable upon the exercise of
this Warrant Agreement.
2 TERM OF THE WARRANT AGREEMENT.
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Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Common Stock granted herein shall commence on the
Original Effective Date and shall be exercisable until July 18, 2006.
Notwithstanding the term of this Warrant Agreement fixed pursuant to the above
paragraph, the right to purchase Common Stock as granted herein shall expire, if
not previously exercised, immediately upon the closing of a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, or the sale of all or substantially all of the
Company's properties and assets to any other person (a "Merger"), provided that
Warrantholder realizes in such transaction a value for its shares equal to or
greater than $103.80 per share of Common Stock.
The Company shall notify the Warrantholder in accordance with the terms of
8(e) hereof if a Merger is proposed, and if the Company fails to deliver such
written notice, then notwithstanding anything to the contrary in this Warrant
Agreement, the rights to purchase the Company's Common Stock shall not expire
until the Company complies with such notice provisions. Such notice shall also
contain such details of the proposed Merger as are
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reasonable in the circumstances. If the closing of the Merger does not take
place, the Company shall promptly notify the Warrantholder that such proposed
transaction has been terminated, and the Warrantholder may rescind any exercise
of its purchase rights promptly after such notice of termination of the proposed
transaction if the exercise of this Warrant Agreement occurred after the Company
notified the Warrantholder that the Merger was proposed. In the event of such
rescission, this Warrant Agreement will continue to be exercisable on the same
terms and conditions contained herein.
3 EXERCISE OF THE PURCHASE RIGHTS.
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The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, and in no event later than twenty-one
(21) days thereafter, the Company shall issue to the Warrantholder a certificate
for the number of shares of Common Stock purchased and shall execute the
acknowledgment of exercise in the form attached hereto as Exhibit II (the
"Acknowledgment of Exercise") indicating the number of shares which remain
subject to future purchases, if any.
The Exercise Price may be paid at the Warrantholder's election either (i)
by cash or check, or (ii) by surrender of this Warrant Agreement ("Net
Issuance") as determined below. If the Warrantholder elects the Net Issuance
method, the Company will issue Common Stock in accordance with the following
formula:
X = Y (A-B)
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A
Where: X = the number of shares of Common Stock to be issued
to the Warrantholder.
Y = the number of shares of Common Stock requested to
be exercised under this Warrant Agreement.
A = the fair market value of one (1) share of Common
Stock.
B = the Exercise Price.
For purposes of the above calculation, current fair market value of Common
Stock shall mean with respect to each share of Common Stock:
(i) the average of the closing bid and asked prices for the
Common Stock quoted on the NASDAQ system (or similar system) over the ten
(10) trading day period ending one day before the day the current fair
market value of the Common Stock is being determined; or
(ii) if at any time the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ system or the over the counter
market, the highest price per share which the Company could obtain from a
willing buyer (not a current employee or director) for shares of Common
Stock sold by the Company, from authorized but unissued shares, as
determined in good faith by the Company's Board of Directors, unless the
Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party, in
which case the fair market value of Common Stock shall be the value
received the holders of the Company's Common Stock pursuant to such merger
or acquisition.
Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.
4 RESERVATION OF SHARES.
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(a) Authorization and Reservation of Shares. During the term of this
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Warrant Agreement, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for
the exercise of the rights to purchase Common Stock as provided for herein.
(b) Registration or Listing. If any shares of Common Stock required
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to be reserved hereunder require registration with or approval of any
governmental authority under any Federal or state law (other than any
registration under the Securities Act of 1933, as then in effect, or any
similar Federal statute then enforced, or any state securities law,
required by reason of any transfer involved), or listing on any domestic
securities exchange, before such shares may be issued, the Company will, at
its expense and as expeditiously as possible, use its best efforts to cause
such shares to be duly registered, listed or approved for listing on such
domestic securities exchange, as the case may be.
5 NO FRACTIONAL SHARES OR SCRIP.
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No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant Agreement, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the
basis of the Exercise Price then in effect.
6 NO RIGHTS AS SHAREHOLDER.
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This Warrant Agreement does not entitle the Warrantholder to any
voting rights or other rights as a shareholder of the Company prior to the
exercise of this Warrant Agreement.
7 WARRANTHOLDER REGISTRY.
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The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.
8 ADJUSTMENT RIGHTS.
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The purchase price per share and the number of shares of Common Stock
purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a
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capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or
into another corporation whether or not the Company is the surviving
corporation, or the sale of all or substantially all of the Company's
properties and assets to any other person (hereinafter referred to as a
"Merger Event"), then, as a part of such Merger Event, lawful provision
shall be made so that the Warrantholder shall thereafter be entitled to
receive, upon exercise of this Warrant Agreement, the number of shares of
preferred stock or other securities of the successor corporation resulting
from such Merger Event equivalent in value to that which would have been
issuable if Warrantholder had exercised this Warrant immediately prior to
the Merger Event. In any such case, appropriate adjustment (as determined
in good faith by the Company's Board of Directors) shall be made in the
application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end
that the provisions of this Warrant Agreement (including adjustments of the
Exercise Price and number of shares of Common Stock purchasable) shall be
applicable to the greatest extent possible.
(b) Reclassification of Shares. If the Company at any time shall, by
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combination, reclassification exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under
this Warrant Agreement exist into the same or a different number of
securities of any other class or classes, this Warrant Agreement shall
thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with
respect to the securities which were subject to the purchase rights under
this Warrant Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change.
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(c) Subdivision or Combination of Shares. If the Company at any time
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shall combine or subdivide its Common Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend
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payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Common Stock, then the Exercise Price shall be adjusted, from and after the
record date of such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such record
date by a fraction, (i) the numerator of which shall be the total number of
all shares of the Common Stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the
total number of all shares of the Common Stock outstanding immediately
after such dividend or distribution. The Warrantholder shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of shares of Common Stock (calculated to the nearest whole
share) obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of shares of Common Stock issuable
upon the exercise hereof immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
(e) Notice of Adjustments. If: (i) the Company shall declare any
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dividend or distribution uponthe Common Stock, whether in cash, property,
stock or other securities; (ii) there shall be any Merger Event; (iii)
there shall be a public offering; or (iv) there shall be any voluntary
dissolution, liquidation or winding up of the Company; then, in connection
with each such event, the Company shall send to the Warrantholder: (A) at
least twenty (20) days' prior written notice of the date on which the books
of the Company shall close or a record shall be taken for such dividend,
distribution, or for determining rights to vote in respect of such Merger
Event, dissolution, liquidation or winding up; (B) in the case of any such
Merger Event, dissolution, liquidation or winding up, at least twenty (20)
days' prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Common Stock shall be entitled
to exchange their Common Stock for securities or other property deliverable
upon such Merger Event, dissolution, liquidation or winding up); and (C) in
the case of a public offering, at least twenty (20) days written notice
prior to the effective date thereof.
Each such written notice shall set forth, in reasonable detail, (i)
the event requiring the adjustment, (ii) the amount of the adjustment,
(iii) the method by which such adjustment was calculated, (iv) the adjusted
Exercise Price, and (v) the number of shares subject to purchase hereunder
after giving effect to such adjustment, and shall be given by first class
mail, postage prepaid, addressed to the Warrantholder, at the address as
shown on the books of the Company.
(f) Timely Notice. Failure to timely provide such notice required by
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subsection (e) above shall entitle Warrantholder to retain the benefit of
the applicable notice period notwithstanding anything to the contrary
contained in any insufficient notice received by Warrantholder. The notice
period shall begin on the date Warrantholder actually receives a written
notice containing all the information specified above.
9 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
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(a) Reservation of Common Stock. The Common Stock issuable upon
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exercise of the Warrantholder's rights has been duly and validly reserved
and, when issued in accordance with the provisions of this Warrant
Agreement, will be validly issued, fully paid and non-assessable, and will
be free of any taxes, liens, charges or encumbrances of any nature
whatsoever; provided, however, that the Common Stock issuable pursuant to
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this Warrant Agreement may be subject to restrictions on transfer under
state and/or Federal securities laws. The Company has made available to the
Warrantholder true, correct and complete copies of its Certificate of
Incorporation and Bylaws, as amended. The issuance of certificates for
shares of Common Stock upon exercise of the Warrant Agreement shall be made
without charge to the Warrantholder for any issuance tax in respect
thereof, or other cost incurred by the Company in connection with such
exercise and the related issuance of shares of Common Stock. The Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved and the issuance and delivery of any certificate in a
name other than that of the Warrantholder.
(b) Due Authority. The execution and delivery by the Company of this
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Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire
the shares of Common Stock have been duly authorized by all necessary
corporate action on the part of the Company, are not inconsistent with the
Company's Certificate of Incorporation or Bylaws, do not contravene any
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law or governmental rule, regulation or order applicable to the Company, do
not and will not contravene any provision of, or constitute a default
under, any indenture, mortgage, contract or other instrument to which the
Company is a party or by which the Company is bound. This Warrant Agreement
constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(c) Consents and Approvals. No consent or approval of, giving of
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notice to, registration with, or taking of any other action in respect of
any state, Federal or other governmental authority or agency is required
with respect to the execution, delivery and performance by the Company of
its obligations under this Warrant Agreement, except for applicable
requirements, if any, of the Securities Act of 1933, the Securities
Exchange Act of 1934, Blue Sky Laws, the pre-merger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act, the rules
and regulations of NASDAQ, and the filing of the Merger Agreement and
related documents as required by the California General Corporation Law.
(d) Insurance. The Company has in full force and effect insurance
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policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are
customary for corporations engaged in a similar business and similarly
situated and as otherwise may be required pursuant to the terms of any
other contract or agreement.
(e) Other Commitments to Register Securities. Except as set forth in
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this Warrant Agreement, the Third Amended & Restated Rights Agreement dated
February 10, 2000, among the Company and the persons named therein, and the
Shareholder Agreement dated May 13, 1998, among nFront Inc. (a wholly-owned
subsidiary of the Company) and the persons named therein, the Company is
not, pursuant to the terms of any other agreement currently in existence,
under any obligation to register under the Securities Act of 1933 any of
its presently outstanding securities or any of its securities which may
hereafter be issued.
10 TRANSFERS. This Warrant Agreement and all rights hereunder are
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transferable in whole or in part by the Warrantholder and any successor
transferee who agrees to be bound by the terms of this Warrant Agreement;
provided, however, in no event shall the number of transfers of the rights
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and interests in all of the Warrant Agreement exceed three (3) transfers.
The transfer shall be recorded on the books of the Company upon receipt by
the Company at its principal offices of a notice of transfer in the form
attached hereto as Exhibit III (the "Transfer Notice"), and the payment to
the Company of all transfer taxes and other governmental charges imposed on
such transfer.
11 MISCELLANEOUS.
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(a) Effective Date. The provisions of this Warrant Agreement shall be
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construed and shall be given effect in all respects as if it had been
executed and delivered by the Company on the date hereof. This Warrant
Agreement shall be binding upon any successors or assigns of the Company.
(b) Attorneys' Fees. In any litigation, arbitration or court
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proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all
costs of proceedings incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
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construed for all purposes under and in accordance with the laws of the
State of California.
(d) Counterparts. This Warrant Agreement may be executed in two (2)
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or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one (1) and the same instrument.
(e) Notices. Any notice required or permitted hereunder shall be
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given in writing and shall be deemed effectively given upon personal
delivery, facsimile transmission (provided that the original is sent by
personal delivery or mail as hereinafter set forth) or seven (7) days after
deposit in the United States mail, by registered or certified mail,
addressed (i) to the Warrantholder at 6111 North River Road, Rosemont,
Illinois 60018, attention: James Labe, Venture Group, cc: Legal Department,
attn: General Counsel, (and/or, if by facsimile, (847) 518-5465 and (847)
518-5088) and (ii) to the Company at 26025 Mureau Road, Calabasas,
California 91302, attention: Kevin McDonnell (and/or if by facsimile, (818)
871-7555) or at such other address as any such party may subsequently
designate by written notice to the other party.
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(f) Remedies. In the event of any default hereunder, the non-
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defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an
action for damages as a result of any such default, and/or an action for
specific performance for any default where Warrantholder will not have an
adequate remedy at law and where damages will not be readily ascertainable.
The Company expressly agrees that it shall not oppose an application by the
Warrantholder or any other person entitled to the benefit of this Warrant
Agreement requiring specific performance of any or all provisions hereof or
enjoining the Company from continuing to commit any such breach of this
Warrant Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of
-----------------------
its Certificate of Incorporation or through any other means, avoid or seek
to avoid the observance or performance of any of the terms of this Warrant
Agreement, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary
or appropriate in order to protect the rights of the Warrantholder against
impairment.
(h) Survival. The representations, warranties, covenants and
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conditions of the respective parties contained herein or made pursuant to
this Warrant Agreement shall survive the execution and delivery of this
Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of
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this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision,
which comes closest to the intention of the parties underlying the invalid,
illegal or unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be
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amended by a written instrument signed by the Company and by the
Warrantholder.
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by their respective officers thereunto duly authorized
as of the Effective Date.
Company: DIGITAL INSIGHT CORPORATION
By: /s/ Kevin McDonnell
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Title: Senior Vice President, Chief Financial
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Officer and Secretary
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Warrantholder: COMDISCO, INC
By: /s/ Jill C. Hanses
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Title: Senior Vice President
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EXHIBIT I
NOTICE OF EXERCISE
To: _________________________
(1) The undersigned Warrantholder hereby elects to purchase _______ shares of
the Common Stock of Digital Insight Corporation, pursuant to the terms of
the Warrant Agreement dated the 31/st/ day of July, 2000 (the "Warrant
Agreement") between Digital Insight Corporation and the Warrantholder, and
tenders herewith payment of the purchase price for such shares in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below.
______________________________________
(Name)
______________________________________
(Address)
Warrantholder: COMDISCO, INC.
By: __________________________________
Title: _______________________________
Date: ________________________________
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EXHIBIT II
ACKNOWLEDGEMENT OF EXERCISE
The undersigned __________________, hereby acknowledges receipt of the
"Notice of Exercise" from Comdisco, Inc., to purchase ____ shares of the Common
Stock of Digital Insight Corporation, pursuant to the terms of the Warrant
Agreement, dated the 31/st/ day of July, 2000 (the "Warrant Agreement"), and
further acknowledges that ______ shares remain subject to purchase under the
terms of the Warrant Agreement.
Company:
By: ______________________________________
Title: ___________________________________
Date: ____________________________________
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EXHIBIT III
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement, execute this form
and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to
______________________________________
Please Print Name of Transferee)
whose address is _____________________
___________________________________________
Dated: _____________________________
Warrantholder's Signature _________________________
Warrantholder's Address: _______________________
________________________________________________
Signature Guaranteed: ______________________________________
Transferee hereby agrees to be bound by the terms and conditions of the Warrant
Agreement dated July 31, 2000 between the Company and Comdisco, Inc.
Dated: ______________________________________
Transferee's Signature ___________________
Transferee's Address: ____________________
_____________________________________________
NOTE: The signature to this Transfer Notice must correspond with the
name as it appears on the face of the Warrant Agreement,
without alteration or enlargement or any change whatever.
Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of
authority to assign the foregoing Warrant Agreement.
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