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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 17, 1999
SECURITY FIRST TECHNOLOGIES CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 000-24931 58-2395199
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3390 PEACHTREE ROAD, NE, SUITE 1700, ATLANTA, GEORGIA 30326
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(Address of principal executive offices)
Registrant's telephone number, including area code: (404) 812-6300
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On May 17, 1999, Security First Technologies Corporation ("S1")
announced transactions with Intuit Inc. ("Intuit"), Edify Corporation ("Edify")
and FICS Group N.V. ("FICS"). The press releases related to those transactions
are attached at Exhibits 99.1 and 99.2, and incorporated by reference herein. On
May 17, 1999, management of S1, Edify and FICS held a conference call with
securities analysts relating to the proposed transactions. The related analyst
presentation is filed at Exhibit 99.3 hereto and is incorporated by reference
herein.
In the Intuit transaction, S1 and Intuit, including its affiliates,
announced that the companies entered into a strategic alliance to deliver
on-line personal financial software and services to financial institutions. S1
and Intuit also entered into a Stock Purchase and Option Agreement pursuant to
which Intuit agreed to purchase 970,813 shares of S1 common stock for $50.0
million, and S1 granted an option for as many as 5,429,187 additional shares if
the Edify and FICS transactions close by March 31, 2000. The Stock Purchase and
Option Agreement is filed at Exhibit 10.1 hereto and is incorporated by
reference herein.
In the FICS transaction, S1 entered into a Share Purchase Agreement
pursuant to which a S1 Belgian subsidiary will acquire from the FICS
stockholders all of the capital stock of FICS. S1 also entered into a Stock
Purchase Agreement pursuant to which the stock and option holders of S1 will
acquire up to 20,000,000 shares of S1 common stock. The FICS transaction is
subject to any applicable regulatory filings and notices, as well as approval by
the stockholders of S1, customary closing conditions and the ability of S1 to
complete an underwritten offering of a limited number of shares of S1 for sale
by FICS's largest stockholder. The acquisition of FICS by the Belgian subsidiary
of S1 also is subject to the subsidiary obtaining financing for the acquisition.
The Share Purchase Agreement and the Stock Purchase Agreement are filed at
Exhibits 2.1 and 10.2, respectively, and incorporated by reference herein.
In the Edify transaction, S1 entered into an Agreement and Plan of
Merger (the "Merger Agreement") by which S1 will acquire Edify in a
stock-for-stock exchange (the "Merger"). The Merger is subject to applicable
stockholder approvals of both S1 and Edify and any required regulatory filings
and notices, as well as customary closing conditions. Edify also granted to S1 a
stock option for newly issued shares of Edify stock (the "Option Agreement").
The Merger Agreement and the Option Agreement are filed at Exhibits 2.2 and 2.3,
respectively, and incorporated by reference herein.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
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Exhibit
No. Description
<S> <C>
2.1 Share Purchase Agreement by and among S1 Europe Holdings N.V.
(a Belgian corporation in the process of incorporation,
represented by Security First Technologies Corporation) and
the stockholders of FICS Group N.V., and for the limited
purposes stated therein Security First Technologies
corporation and FICS Group N.V. dated as of May 16, 1999
2.2 Agreement and Plan of Merger by and among Security First
Technologies Corporation, Sahara Strategy Corporation and
Edify Corporation dated as of May 16, 1999
2.3 Option Agreement dated as of May 16, 1999 between Edify
Corporation and Security First Technologies Corporation
10.1 Stock Purchase and Option Agreement by and between Security
First Technologies Corporation and Intuit, Inc. dated as of
May 16, 1999
10.2 Stock Purchase Agreement by and among Security First
Technologies Corporation, the Individuals identified on
Schedule 1 thereto and FICS Group N.V. dated as of May 16,
1999
99.1 Press Release dated May 17, 1999
99.2 Press Release dated May 17, 1999
99.3 Analyst Presentation dated May 17, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SECURITY FIRST TECHNOLOGIES CORPORATION
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(Registrant)
/s/ Robert F. Stockwell
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Robert F. Stockwell
Chief Financial Officer and Treasurer
Date: May 18, 1999
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Index to Exhibits
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Exhibit
No. Description
<S> <C>
2.1 Share Purchase Agreement by and among S1 Europe Holdings N.V.
(a Belgian corporation in the process of incorporation,
represented by Security First Technologies Corporation) and
the stockholders of FICS Group N.V., and for the limited
purposes stated therein Security First Technologies
corporation and FICS Group N.V. dated as of May 16, 1999
2.2 Agreement and Plan of Merger by and among Security First
Technologies Corporation, Sahara Strategy Corporation and
Edify Corporation dated as of May 16, 1999
2.3 Option Agreement dated as of May 16, 1999 between Edify
Corporation and Security First Technologies Corporation
10.1 Stock Purchase and Option Agreement by and between Security
First Technologies Corporation and Intuit, Inc. dated as of
May 16, 1999
10.2 Stock Purchase Agreement by and among Security First
Technologies Corporation, the Individuals identified on
Schedule 1 thereto and FICS Group N.V. dated as of May 16,
1999
99.1 Press Release dated May 17, 1999
99.2 Press Release dated May 17, 1999
99.3 Analyst Presentation dated May 17, 1999
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EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
BY AND AMONG
S1 EUROPE HOLDINGS N.V.
(A BELGIAN CORPORATION IN THE PROCESS OF INCORPORATION, REPRESENTED BY
SECURITY FIRST TECHNOLOGIES CORPORATION)
AND
THE STOCKHOLDERS OF FICS GROUP N.V.,
AND FOR THE LIMITED PURPOSES STATED HEREIN
SECURITY FIRST TECHNOLOGIES CORPORATION
AND
FICS GROUP N.V.
DATED AS OF
MAY 16, 1999
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TABLE OF CONTENTS
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PAGE
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ARTICLE I THE TRANSACTION................................................. 1
1.1. The Transaction.................................................. 1
1.2. Closing.......................................................... 1
1.3. Purchase Amount.................................................. 2
1.4. FICS Securities Transfers........................................ 2
1.5. Deliveries at Closing............................................ 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS.................. 5
2.1. Organization of Sellers.......................................... 5
2.2. Authorization of Transaction..................................... 6
2.3. Noncontravention................................................. 6
2.4. Broker's Fees.................................................... 7
2.5. FICS Securities.................................................. 7
2.6. Absence of Bankruptcy Proceedings................................ 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FICS AND SELLERS............ 7
3.1. Corporate Organization........................................... 8
3.2. Capitalization................................................... 8
3.3. Authority; No Violation.......................................... 9
3.4. Consents and Approvals........................................... 10
3.5. Financial Statements; Books and Records.......................... 10
3.6. Broker's Fees.................................................... 11
3.7. Absence of Certain Changes or Events............................. 11
3.8. Legal Proceedings................................................ 12
3.9. Taxes and Tax Returns............................................ 12
3.10. Employee Plans.................................................. 14
3.11. Employees....................................................... 15
3.12. Certain Contracts............................................... 15
3.13. Environmental Matters........................................... 16
3.14. Properties and Assets........................................... 17
3.15. Insurance....................................................... 18
3.16. Compliance with Applicable Laws................................. 18
3.17. FICS Information................................................ 18
3.18. Intellectual Property........................................... 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF S1
HOLDINGS AND S1....................................................... 22
4.1. Corporate Organization........................................... 22
4.2. Authority; No Violation.......................................... 23
4.3. Consents and Approvals........................................... 24
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS....................... 25
5.1. Covenants relating to FICS....................................... 25
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5.2. Covenants of Sellers............................................. 27
5.3. Covenants of S1.................................................. 28
5.4. Compliance with Antitrust Laws................................... 28
ARTICLE VI ADDITIONAL AGREEMENTS.......................................... 29
6.1. Regulatory Matters............................................... 29
6.2. Access to Information............................................ 30
6.3. Shareholder Meeting.............................................. 31
6.4. Reserved......................................................... 31
6.5. FICS Year 2000 Officer........................................... 31
6.6. Subsequent Interim Financial Statements.......................... 31
6.7. Advice of Changes................................................ 32
6.8. Current Information.............................................. 32
6.9. Transaction Expenses of FICS..................................... 33
ARTICLE VII CONDITIONS PRECEDENT.......................................... 33
7.1. Conditions to Each Party's Obligation To Effect the
Transaction.................................................... 33
7.2. Conditions to Obligations of S1 Holdings......................... 34
7.3. Conditions to Obligations of the Sellers......................... 35
ARTICLE VIII TERMINATION AND AMENDMENT.................................... 37
8.1. Termination...................................................... 37
8.2. Effect of Termination............................................ 38
8.3. Amendment........................................................ 38
8.4. Extension; Waiver................................................ 39
ARTICLE IX GENERAL PROVISIONS............................................. 39
9.1. Expenses......................................................... 39
9.2. Notices.......................................................... 39
9.3. Interpretation................................................... 41
9.4. Counterparts..................................................... 41
9.5. Entire Agreement................................................. 41
9.6. Governing Law.................................................... 41
9.7. Enforcement of Agreement......................................... 41
9.8. Severability..................................................... 42
9.9. Publicity........................................................ 42
9.10. Assignment; Limitation of Benefits.............................. 42
9.11. Additional Definitions.......................................... 42
ARTICLE X INDEMNIFICATION................................................. 43
10.1. Survival........................................................ 43
10.2. Indemnification of the Sellers.................................. 43
10.3. Akkermans Indemnification....................................... 44
10.4. Pledge Agreement................................................ 45
10.5. Claim for Indemnification....................................... 45
10.6. Third Party Claims.............................................. 45
10.7. Cumulative Remedies............................................. 46
10.8. Release of Claims............................................... 46
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PAGE
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EXHIBITS
A. Form of Pledge Agreement
B. Form of S1 Stockholder Agreement
SCHEDULES
A. Schedule of holders of all FICS Capital Stock and Securities Convertible
into FICS Capital Stock
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SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT, dated as of May 16, 1999 (this
"Agreement"), is entered into by and among S1 Europe Holdings N.V., a Belgian
corporation ("S1 Holdings") in the process of incorporation, represented
pursuant to Article 13 bis of the Belgian company law by Security First
Technologies Corporation, a Delaware corporation ("S1"), each of the
stockholders and bondholders of FICS Group N.V., a Belgian corporation ("FICS"),
listed on the signature page to this Agreement (individually, a "Seller," and
collectively, the "Sellers"), and for the limited purposes stated herein, S1 and
FICS.
WHEREAS, the Sellers collectively own all of the issued and outstanding
capital stock of FICS (the "FICS Capital Stock"), and all of the issued and
outstanding securities otherwise convertible into capital stock of FICS (the
"FICS Stock Equivalents," and together with FICS Capital Stock, the "FICS
Securities"), in the name and the amounts set forth on Schedule A; and
WHEREAS, S1 Holdings, through its representative S1, and each of the
Sellers have determined that it is in their best interests to consummate the
transaction provided for herein in which, subject to the terms and conditions
set forth herein, S1 Holdings will acquire all of the issued and outstanding
FICS Securities in exchange for the Transaction Consideration as defined in
Section 1.3 hereunder;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE TRANSACTION
1.1. THE TRANSACTION.
At the Closing (as defined below at Section 1.2), and subject to the terms
and conditions of this Agreement, the Sellers hereby agree to sell to S1
Holdings, and S1 Holdings hereby agrees to purchase from the Sellers, the FICS
Securities (the "Transaction").
1.2. CLOSING.
Subject to the terms and conditions of this Agreement, the closing of the
Transaction (the "Closing") will take place at 10:00 a.m. at the offices of
Hogan & Hartson L.L.P., 555 Thirteenth Street, NW, Washington, DC and, as to the
recordation of change of ownership of the FICS Capital Stock, at the offices of
Hogan & Hartson L.L.P., Avenue des Arts 41, 1040 Brussels, Belgium, on (i) the
fifth
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business day after the latest to occur of (x) the date the last of any required
governmental or regulatory approvals is received and all applicable statutory or
regulatory waiting periods have expired or been terminated, and (y) the date on
which the approval of S1's stockholders is obtained, or (ii) such other date,
place and time as the parties may mutually agree (the "Closing Date").
Notwithstanding the foregoing, any of Akkermans, General Atlantic Partners 20,
L.P., GAP Coinvestment Partners, L.P., General Atlantic Partners 52, L.P., or
GIMV N.V. (together the "Majority Sellers"), acting together, or S1 Holdings,
may extend the Closing Date by up to 90 days (but not later than March 31, 2000)
if, in the case of S1 Holdings, any of the conditions set forth at Sections 7.1
and 7.2 are not met as of the date which would otherwise be the Closing Date
under the preceding sentence, and, in the case of the Majority Sellers, if any
of the conditions set forth at Sections 7.1 and 7.3 are not met as of the date
which would otherwise be the Closing Date under the preceding sentence.
1.3. PURCHASE AMOUNT.
(a) At the Closing and subject to the terms and conditions of this
Agreement, S1 Holdings hereby agrees to purchase the FICS Securities for an
aggregate purchase price (the "Transaction Consideration") of the lower of
either (i) $1,080,000,000 or (ii) the product of (x) the stock price, as quoted
on the Nasdaq Stock Market or such other national exchange on which the common
stock of S1, par value $.01 per share ("S1 Common Stock"), as of the close of
business on the third business day prior to the Closing Date is then traded, of
a share of S1 Common Stock at the close of business on the date which is three
business days prior to the Closing Date (the "Closing Market Price") multiplied
by (y) 20,000,000 (after adjustment for any stock splits, combinations or
dividends or distributions in the S1 Common Stock between the date of this
Agreement and the date three business days prior to the Closing Date). The
Transaction Consideration for each FICS Ordinary Share and for each share of
FICS Series B1 Preferred Stock, FICS Series B2 Preferred Stock and FICS Series C
Preferred Stock issued and outstanding immediately before the Closing shall
equal the Transaction Consideration divided by the sum of (x) 146,604 plus (y)
the aggregate number of shares subject to options granted by FICS Group
Holding, Inc. at such time.
(b) The Transaction Consideration shall be payable in cash, if S1
Holdings is able to arrange third party financing for such amount on terms
which are reasonably acceptable to S1 Holdings.
1.4. FICS SECURITIES TRANSFERS.
Each of the Sellers covenants that it shall not in any way transfer or
assign any of its FICS Securities prior to the Closing. Concurrently with the
execution of this Agreement, FICS shall make a notation in its share registry,
that prior to Closing, no transfer of FICS Securities shall be recorded in
FICS's share registry from the date hereof, and within two business days of the
date hereof shall have such stock
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transfer book delivered to a Belgian notary mutually acceptable to FICS and S1
Holdings, which notary shall hold such stock transfer book until the Closing (or
the termination of this Agreement, if earlier). The fees of such notary shall be
paid by S1 Holdings.
1.5. DELIVERIES AT CLOSING.
(a) In addition to the other items required pursuant hereto,
including without limitation the documents and items required under Article VII
below, at the Closing, each Seller shall deliver or cause a representative of
all Sellers (the "Custodian") to deliver, as the case may be, to S1 Holdings the
following:
1. If the Seller is not a natural person, a copy of the resolutions
or other corporate documentation, certified by the Secretary (or, if
the Seller is a partnership, a general partner) of such Seller as
being true, correct and complete and then in full force and effect,
authorizing the Transaction, the execution, delivery and performance
of this Agreement by the Seller, and the performance of the Seller's
obligations hereunder.
2. A certificate of the Seller certifying that the representations
and warranties of such Seller made herein are true, complete and
correct as of the date of this Agreement and are true and correct as
of the Closing Date, and that such Seller has performed and complied
with all covenants and agreements required to be performed or
complied with by him or it on or prior to the Closing.
3. Such other certificates, instruments or documents as S1 Holdings
may reasonably request in order to effect and document the
transactions contemplated hereby.
4. The irrevocable instruction of each Seller to record in the share
registry of FICS the transfer of its FICS Securities to S1 Holdings.
5. An update of the Seller Disclosure Schedule reflecting any change
required as if the Agreement were being executed as of the date of
the Closing.
(b) In addition to the other items required pursuant hereto,
including without limitation the documents and items required under Article VII
below, at the Closing, FICS shall deliver, or cause to be delivered, as the case
may be, to S1 Holdings the following:
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1. A copy of the resolutions of the Board of Directors of FICS,
certified by the Secretary of FICS as being true, correct and
complete and then in full force and effect, authorizing the
execution, delivery and performance of this Agreement by FICS, and
the performance of FICS' obligations hereunder.
2. A certificate of FICS signed by the managing director of FICS
certifying that the representations and warranties of FICS made
herein are true, complete and correct as of the date of this
Agreement and are true and correct as of the Closing Date, and FICS
has performed and complied with all covenants and agreements
required to be performed or complied with by it on or prior to the
Closing.
3. Such other certificates, instruments or documents as S1 Holdings
may reasonably request in order to effect and document the
transactions contemplated hereby.
4. An update of the FICS Disclosure Schedule reflecting any change
required as if the Agreement were being executed as of the date of
the Closing.
5. The stock transfer register of FICS, certified by the Managing
Director of FICS as then being true, accurate and complete.
(c) In addition to the other items required pursuant hereto,
including without limitation the documents and items required under Article VII
below, at the Closing, S1 Holdings shall deliver, or cause to be delivered, as
the case may be, to each Seller the following:
1. A copy of the resolutions of the Board of Directors of S1
Holdings, certified by the Managing Director of S1 Holdings as being
true, correct and complete and then in full force and effect,
authorizing the Transaction, the execution, delivery and performance
of this Agreement by S1 Holdings, and the performance of S1
Holdings's obligations hereunder.
2. Such other certificates, instruments or documents as the Sellers
may reasonably request in order to effect and document the
transactions contemplated hereby.
3. The Transaction Consideration.
(d) In addition to the other items required pursuant hereto,
including without limitation the documents and items required under Article VII
below, at the Closing, S1 shall deliver, or cause to be delivered, as the case
may be, to each Seller the following:
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1. A copy of the resolutions of the Board of Directors of S1,
certified by the Secretary of S1 as being true, correct and complete
and then in full force and effect, authorizing the Transaction, the
execution, delivery and performance of this Agreement by S1, and the
performance of S1's obligations hereunder.
2. A certificate of S1 signed by the President of S1 certifying that
the representations and warranties of S1 made herein are true,
complete and correct as of the date of this Agreement and are true
and correct as of the Closing Date, and S1 has performed and
complied with all covenants and agreements required to be performed
or complied with by it on or prior to the Closing.
3. Such other certificates, instruments or documents as the Sellers
may reasonably request in order to effect and document the
transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers severally and not jointly hereby makes the following
representations and warranties to S1 Holdings as set forth in this Article II,
each of which is being relied upon by S1 Holdings as a material inducement to
enter into and perform this Agreement. All of the disclosure schedules of the
Sellers referenced below and thereby required of the Sellers pursuant to this
Agreement, which disclosure schedules shall be cross-referenced to the specific
sections and subsections of this Agreement and delivered herewith, are referred
to herein as the "Sellers' Disclosure Schedule."
2.1. ORGANIZATION OF SELLERS.
If such Seller is not a natural person, such Seller is duly organized and
validly existing under the laws of the jurisdiction of its formation.
2.2. AUTHORIZATION OF TRANSACTION.
(a) If such Seller is not a natural person, such Seller has full
power and authority to execute and deliver this Agreement and to perform his,
her or its obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite action on the part of such Seller and no other
proceedings on the part of such Seller are necessary to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Seller and (assuming due authorization, execution
and delivery by FICS and S1 Holdings of this Agreement) will constitute a valid
and legally binding obligation of
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such Seller, enforceable in accordance with its terms, except as enforcement may
be limited by general principles of equity, whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally. Except as set forth in Section 2.2(a)
of the Sellers' Disclosure Schedule, such Seller need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(b) Such Seller acknowledges that he, she or it has read this
Agreement and has been provided with, or been granted access to, all information
necessary to make his or her decision to execute this Agreement. Such Seller
acknowledges that his, her or its signature on this Agreement shall be deemed
his, her or its written consent, in his, her or its capacity as a shareholder of
FICS, to the execution of the Agreement by a representative of FICS on behalf of
FICS, and to the consummation of all of the transactions contemplated by this
Agreement. Such Seller hereby waives any right of first refusal, preemptive
right or other right which he, she or it may have (including, without
limitation, rights arising under Article 11 of the FICS Restated Articles of
Association (Statuten)) to acquire any of the FICS Securities and the FICS Bonds
to be sold by any other Seller pursuant to this Agreement.
2.3. NONCONTRAVENTION.
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which such Seller is subject, (B) conflict with, result in a breach of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, note, bond,
mortgage, deed of trust, or other arrangement to which such Seller is a party or
by which he or it is bound or to which any of his or its assets is subject or
(C) if such Seller is not a natural person, violate any provisions of its
organizational documents.
2.4. BROKER'S FEES.
Except for the agreement described in Section 3.6, such Seller has no
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement nor has
such Seller created any such liability or obligation which, upon consummation of
the Transaction, will become an obligation of FICS or any FICS Subsidiary
(defined below), or S1 Holdings or S1.
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2.5. FICS SECURITIES.
Such Seller holds of record and owns beneficially the FICS Securities set
forth next to his, her or its name in Section 2.5 of the Sellers' Disclosure
Schedule, free and clear of any restrictions on transfer (other than the rights
of S1 Holdings hereunder and the rights in favor of FICS and certain other
Sellers which are described in Section 2.5 of the Sellers' Disclosure Schedule),
taxes, security interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Such Seller is not a party to any
option, warrant, purchase right, call, or other contract or commitment that
could require such Seller to sell, transfer, or otherwise dispose of any capital
stock of FICS. Except as set forth at Section 2.5 of the Sellers' Disclosure
Schedule, such Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock of
FICS.
2.6. ABSENCE OF BANKRUPTCY PROCEEDINGS.
There are no bankruptcy, reorganization or arrangement proceedings pending
against, being contemplated by, or threatened against such Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FICS AND AKKERMANS
FICS and Michel Akkermans ("Akkermans") hereby jointly and not severally
make the following representations and warranties to S1 Holdings as set forth in
this Article III, each of which is being relied upon by S1 Holdings as a
material inducement to enter into and perform this Agreement. All of the
disclosure schedules of FICS or Akkermans referenced below and thereby required
pursuant to this Agreement, which disclosure schedules shall be cross-referenced
to the specific sections and subsections of this Agreement and delivered
herewith, are referred to herein as the "FICS Disclosure Schedule."
3.1. CORPORATE ORGANIZATION.
(a) FICS is a corporation duly organized and validly existing under
the laws of Belgium. FICS has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of any material business conducted by it or the character or
location of any material properties or assets owned or leased by it makes such
licensing or qualification necessary. The Restated Articles of Association
(Statuten) of FICS (the "FICS Statuten"), copies of which have previously been
delivered to S1, are true, correct and complete copies of such documents as in
effect as of the date of this Agreement.
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(b) Each "Subsidiary" (defined below) of FICS (each, a "FICS
Subsidiary") and the jurisdiction of its organization is set forth at Section
3.1(b) of the FICS Disclosure Schedule. Each FICS Subsidiary is a corporation
duly organized and validly existing under the laws of the jurisdiction of its
organization. Each FICS Subsidiary has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business as it is
now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of any material business conducted by it or the
character or location of any material properties or assets owned or leased by it
makes such licensing or qualification necessary. The charter or other
constitutive or corporate governance documents of each FICS Subsidiary, copies
of which have previously been delivered to S1, are true, correct and complete
copies of such documents as in effect as of the date of this Agreement. For
purposes of this Agreement, the term "Subsidiary," with respect to any party,
means any corporation, partnership or other organization, whether incorporated
or unincorporated, (i) which is consolidated with such party for financial
reporting purposes, or (ii) in which such party holds a 25% or greater equity,
partnership or other capital interest.
3.2. CAPITALIZATION.
(a) The capital stock of FICS, all of which is issued and
outstanding, is as follows: (i) 96,350 FICS Ordinary Shares, (ii) 40,000 shares
of Series B1 preferred stock, no par value per share, (iii) 950 shares of Series
B2 preferred stock, no par value per share and (iv) 9,302 shares of Series C
preferred stock, no par value per share (the Series B1, B2 and C preferred stock
is collectively referred to herein as "FICS Preferred Stock"). The FICS Ordinary
Shares and FICS Preferred Stock have been duly authorized and validly issued and
are fully paid and nonassessable. Except for rights arising pursuant to Article
11 of the FICS Statuten, statutory preferential subscription rights as provided
by Belgian law and except as set forth in Section 1.4 of the FICS Disclosure
Schedule, there are no preemptive or statutory rights to acquire any FICS
Securities, including without limitation, any FICS Ordinary Shares or FICS
Preferred Stock. Except for $3,750,000 of FICS Convertible Bond 1 bonds and
$383,737 of Convertible Bond 2 bonds, FICS does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any FICS Ordinary
Shares or shares of FICS Preferred Stock or any other equity security of FICS or
any securities representing the right to purchase or otherwise receive any FICS
Ordinary Shares or any other equity security of FICS.
(b) Except as set forth at Section 3.2(b) of the FICS Disclosure
Schedule, FICS owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each FICS Subsidiary, free and clear of all liens,
charges, encumbrances and security interests whatsoever, and all of such shares
are duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof.
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Except for 16,500 shares of FICS Option Subsidiary Stock reserved for issuance
upon exercise of outstanding stock options or otherwise, pursuant to the FICS
Stock Plan (of which options for 15,682.5 shares are currently outstanding), no
FICS Subsidiary has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of capital stock or any other equity security
of such Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security of
such Subsidiary. The names of the optionees, the date of each option to purchase
FICS Option Subsidiary Stock granted, the number of shares subject to each such
option, the expiration date of each such option, and the price at which each
such option may be exercised under the FICS Stock Plan are set forth in Section
3.2(b) of the FICS Disclosure Schedule.
3.3. AUTHORITY; NO VIOLATION.
(a) FICS has full corporate power and authority to execute and
deliver this Agreement. The execution and delivery of this Agreement has been
duly and validly approved by the Board of Directors of FICS. Assuming the due
execution hereof by each Seller, no further corporate approvals or consents on
the part of FICS, its directors or shareholders are necessary to approve this
Agreement, or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by FICS and (assuming due
authorization, execution and delivery by S1 and each of the Sellers of this
Agreement) will constitute valid and binding obligation of FICS, enforceable
against FICS in accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by FICS nor
compliance by FICS with any of the terms or provisions hereof, will (i) violate
any provision of the Restated Articles of Association of FICS, or (ii) assuming
that the consents and approvals referred to in Section 3.4 hereof are duly
obtained, (x) violate any Laws (as defined in Section 9.11) applicable to FICS
or any FICS Subsidiary, or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
FICS or any FICS Subsidiary, under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which FICS or any FICS Subsidiary is a
party, or by which they or any of their respective properties or assets may be
bound or affected.
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3.4. CONSENTS AND APPROVALS.
(a) Except for such filings, notices, authorizations or approvals,
as applicable, as may be set forth in Section 3.4 of the FICS Disclosure
Schedule, no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity"), or with any third party are
necessary in connection with (1) the execution and delivery by FICS of this
Agreement, and (2) the consummation of the Transaction and the other
transactions contemplated hereby, except, in each case, for such consents,
approvals or filings, the failure of which to obtain will not have a Material
Adverse Effect on the ability of S1 Holdings to consummate the transactions
contemplated hereby.
(b) Akkermans hereby represents to S1 Holdings that he has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 3.4(a) cannot be
obtained or granted on a timely basis.
3.5. FINANCIAL STATEMENTS; BOOKS AND RECORDS.
FICS has previously delivered to S1 Holdings true, correct and complete
copies of the consolidated balance sheets of FICS and its Subsidiaries as of
December 31 for the fiscal years 1998 and 1997 and the related consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
years 1998, 1997 and 1996, inclusive, as reported in FICS' Registration
Statement on Form F-1 filed with the Securities and Exchange Commission (the
"SEC") on April 13, 1999, as amended by Amendment No. 1 filed with the SEC on
April 30, 1999 (the "Registration Statement") under the U.S. Securities Act of
1933, as amended (the "Securities Act"), in each case accompanied by the audit
report of PricewaterhouseCoopers & Co. Bedrijfsrevisoren, independent public
accountants with respect to FICS, and the interim financial statements of FICS
as of and for the three months ended March 31, 1999 and 1998. The financial
statements referred to in this Section 3.5 (including the related notes, where
applicable) fairly present, and the financial statements referred to in Section
6.6 hereof will fairly present (subject, in the case of the unaudited
statements, to normal and recurring audit adjustments), the results of the
consolidated operations and consolidated financial condition of FICS and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply, and the financial statements referred to in Section 6.6
hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and each of such
statements (including the related notes, where applicable) has been, and the
financial statements referred to in Section 6.6 hereof will be prepared in
accordance with generally accepted accounting principles, as applied in the
United States, and consistently applied during the periods involved ("US GAAP"),
except in each case as indicated in such statements or in the notes thereto or,
in the case of
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unaudited statements. The books and records of FICS have been, and are being,
maintained in all material respects in accordance with US GAAP and any other
applicable legal and accounting requirements. The statutory financial statements
of FICS and those of its books and records prepared to conform with the
requirements of Belgian law are prepared in accordance with Belgian GAAP. Other
than in the previous sentence, references elsewhere in this Agreement to
"financial statements and "books and records" do not refer to financial
statements and books and records prepared by FICS to conform with the
requirements of Belgian law.
3.6. BROKER'S FEES.
Neither FICS nor any FICS Subsidiary nor any of their respective officers
or directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement, except that FICS has engaged, and
will pay a fee or commission to Credit Suisse First Boston ("CSFB") in
accordance with the terms of a letter agreement between CSFB and FICS, dated May
16, 1999, a true, complete and correct copy of which has been provided to S1
Holdings.
3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth at Section 3.7 of the FICS Disclosure
Schedule, since December 31, 1998 (i) neither FICS nor any FICS Subsidiary has
incurred any material liability, except as contemplated by this Agreement or in
the ordinary course of their businesses consistent with their past practices,
and (ii) no event has occurred which has had, or is likely to have, individually
or in the aggregate, a Material Adverse Effect on FICS.
(b) Since December 31, 1998, FICS and each FICS Subsidiary has
carried on its respective businesses in the ordinary and usual course consistent
with past practices.
3.8. LEGAL PROCEEDINGS.
(a) Except as set forth at Section 3.8 of the FICS Disclosure
Schedule, neither FICS nor any FICS Subsidiary is a party to any, and there are
no pending, or to the knowledge of FICS, threatened, legal, administrative,
arbitration or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against FICS or any FICS Subsidiary or which
challenge the validity of the transactions contemplated by this Agreement as to
which there is a reasonable probability of success.
(b) There is no injunction, order, judgment, or decree imposed upon
FICS, any FICS Subsidiary or the assets of FICS or any FICS Subsidiary.
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3.9. TAXES AND TAX RETURNS.
(a) For purposes of this Section 3.9, FICS shall include FICS and
each FICS Subsidiary and any other affiliated or related corporation or entity
if FICS or any FICS Subsidiary has or could have any material liability for the
taxes of such corporation or entity. FICS has duly filed all Tax Returns
required to be filed by it on or prior to the date hereof (all such returns
being accurate and complete in all material respects) and has duly paid or made
provision on the financial statements referred to in Sections 3.5 and 6.6 hereof
in accordance with US GAAP for the payment of all material Taxes which have been
incurred or are due or claimed to be due from it by Taxing Authorities on or
prior to the date hereof other than Taxes (a) which (x) are not yet delinquent
or (y) are being contested in good faith and set forth in Section 3.9 of the
FICS Disclosure Schedule and (b) which have not been finally determined. The
charges, accruals, and reserves with respect to Taxes on the books of FICS are
adequate (as determined in accordance with US GAAP) and are at least equal to
its liability for Taxes. There exists no proposed tax assessment against FICS
except as disclosed in the FICS financial statements. No consent to the
application of Section 341(f)(2) of the Code has been filed with respect to any
property or assets held, acquired, or to be acquired by FICS. All Taxes that
FICS is or was required to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Entity. All liability with respect to the Tax Returns of FICS and its
Subsidiaries has been satisfied for all years to and including 1998. No Taxing
Authority has notified FICS of, or otherwise asserted, that there are any
material deficiencies with respect to the Tax Returns of FICS subsequent to
1998. There are no material disputes pending, or claims asserted for, Taxes or
assessments upon FICS, nor has FICS been requested to give any currently
effective waivers extending the statutory period of limitation applicable to any
Tax Return for any period. In addition, Tax Returns that are accurate and
complete in all material respects have been filed by FICS for all periods for
which returns were due with respect to income tax withholding with respect to
wages and other income and the amounts shown on such Tax Returns to be due and
payable have been paid in full or adequate provision therefor in accordance with
US GAAP has been included by FICS in the financial statements referred to in
Sections 3.5 and 6.6 hereto. No audit by any relevant Taxing Authority in
connection with any FICS Tax Return is pending or has been announced. All
deficiencies proposed as a result of any examinations have been paid or settled,
for all periods before and including the taxable year ended December 31, 1998.
FICS has not consented to any waiver or extension of any statute of limitations
with respect to any Tax. FICS has provided or made available to S1 Holdings
complete and correct copies of its Tax Returns and all material correspondence
and documents, if any, relating directly or indirectly to taxes for each taxable
year or other relevant period as to which the applicable statute of limitations
has not run on the date hereof. For this purpose, "correspondence and documents"
include, without limitation, amended Tax Returns, pending claims for refunds,
notices from Taxing Authorities of proposed changes or adjustments to Taxes or
Tax Returns that have not been finally resolved, consents
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to assessment or collection of Taxes, acceptances of proposed adjustments,
closing agreements, rulings and determination letters and requests therefor, and
all other written communications to or from Taxing Authorities relating to any
material Tax liability of FICS.
(b) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Taxing Authority in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any law, regulation or other legal
requirement relating to any Tax.
"Taxing Authority" means any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
3.10. EMPLOYEE PLANS.
(a) For purposes of this Section 3.10: (1) "Employee Benefit Plan"
means any plan, agreement or other arrangement (other than plans mandated or
provided for by U.S. and foreign statute such as Social Security, workmen's
compensation, unemployment compensation and the like) for the providing of
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retirement or welfare benefits as described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or any other
benefit other than cash compensation to employees, including plans which would
not be subject to ERISA because all of the participants are non-resident in the
United States; (2) the FICS Group means FICS, its Subsidiaries, and any other
entity which would be deemed part of a controlled or affiliated group within the
meaning of Section 414 of the Code without regard to whether such entities are
organized outside the United States.
(b) Within ten business days after the date of this Agreement, FICS
will deliver to S1 (1) a true and complete list of each Employee Benefit Plan
that FICS maintains or contributes to as of the date of this Agreement, or under
which FICS has any liability (collectively, the "FICS Plans") and (2) a true,
correct and complete copy of each FICS Plan and all related documents and a
written description of any FICS Plan that is not otherwise in writing.
(c) FICS has performed all of its obligations under all FICS Plans.
FICS has made appropriate entries in its financial records and statements for
all obligations and liabilities under the FICS Plans that have accrued but are
not due. No statement, either written or oral, has been made by FICS with regard
to any FICS Plan that was not in accordance with the FICS Plan and that could
have a Material Adverse Effect on S1 Holdings. FICS has no material liability to
the IRS, the U.S. Pension Benefit Guaranty Corporation or any other governmental
or quasi-governmental agency or authority with respect to any FICS Plan.
(d) Except as set forth at Section 3.10(d) of the FICS Disclosure
Schedule, (i) each of the FICS Plans has been operated and administered in all
material respects in compliance with applicable Laws, (ii) FICS does not provide
health, life insurance or other welfare benefits for any retired or former
employee and is not obligated to provide such benefits to any active employee
following such employee's retirement or other termination of service, other than
coverage mandated by applicable Law, (iii) FICS has incurred no liability under
ERISA or any other Law relating to employee benefits or employees or their
beneficiaries that has not been satisfied in full or accrued in accordance with
U.S. GAAP in the financial statements referred to in Section 3.5 and 6.6 hereof,
and no condition exists that presents a material risk of FICS incurring a
material liability thereunder, (iv) all contributions or other amounts payable
by FICS with respect to each FICS Plan and all other liabilities of FICS with
respect to each FICS Plan, in respect of current or prior plan years have been
paid or accrued in accordance with U.S. GAAP in the financial statements
referred to in Sections 3.5 and 6.6 hereof, (v) to the knowledge of FICS, there
are no pending, threatened or anticipated claims (other than routine claims for
benefits) by, or behalf of or against any of the plans or any trust related
thereto, (vi) all FICS Plans could be terminated as of the Closing without
material liability in excess of the amount accrued therefor in the financial
statements referred to in Sections 3.5 and 6.6 hereof.
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3.11. EMPLOYEES.
FICS and each FICS Subsidiary complies with all labor and social security
laws, decrees, ordinances and regulations applicable to it.
3.12. CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12 of the FICS Disclosure
Schedule, neither FICS nor any FICS Subsidiary is a party to or bound by any
contract, arrangement or commitment (i) with respect to the employment of any
directors, officers, employees or consultants, (ii) which, upon the consummation
of the transactions contemplated by this Agreement will (either alone or upon
the occurrence of any additional acts or events) result in any payment (whether
of severance pay or otherwise), except as contemplated by Article I, becoming
due from S1, FICS or any of their respective Subsidiaries to any director,
officer or employee thereof, (iii) which materially restricts the conduct of any
line of business by FICS or any FICS Subsidiary, (iv) with or to a labor union
or guild (including any collective bargaining agreement) or (v) except as
contemplated by Article I and as set forth on Section 3.12(a)(v) of the FICS
Disclosure Schedule, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated by the occurrence of any of
the transactions contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement (including as to this clause (v), any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan). Except as set forth at Section 3.12 of the FICS Disclosure
Schedule, there are no employment, consulting and deferred compensation
agreements to which FICS or any FICS Subsidiary is a party. Section 3.12(a) of
the FICS Disclosure Schedule sets forth a list of all (i) material contracts (as
defined in Item 601(b)(10) of Regulation S-K promulgated under the Securities
Act) of FICS and the FICS Subsidiaries and (ii) any other contract to which FICS
or any FICS Subsidiary is obligated to pay $15,000 or more in any annual period.
Each contract, arrangement or commitment of the type described in this Section
3.12(a), whether or not set forth in Section 3.12(a) of the FICS Disclosure
Schedule, is referred to herein as a "FICS Contract," and neither FICS nor any
of its Subsidiaries has received notice of, nor do any executive officers of
such entities know of, any violation of any FICS Contract.
(b) (i) Each FICS Contract is valid and binding and in full force
and effect, (ii) FICS and each FICS Subsidiary has in all material respects
performed all obligations required to be performed by it to date under each FICS
Contract, and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a material default on the
part of FICS or any FICS Subsidiary under any such FICS Contract.
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3.13. ENVIRONMENTAL MATTERS.
(a) Each of FICS and the FICS Subsidiaries is in compliance in all
material respects with all applicable Laws and regulations relating to pollution
or protection of the environment (including without limitation, Laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Materials (as hereinafter defined)), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or, to the knowledge of FICS and the FICS Subsidiaries,
threatened (or past or present actions or events that could form the basis of
any such suit, claim, action, proceeding, investigation or notice), in which
FICS or any FICS Subsidiary has been or, with respect to threatened suits,
claims, actions, proceedings, investigations or notices may be, named as a
defendant (x) for alleged material noncompliance (including by any predecessor),
with any environmental law, rule or regulation or (y) relating to any material
release or threatened release into the environment of any Hazardous Material,
occurring at or on a site owned, leased or operated by FICS or any FICS
Subsidiary, or to the knowledge of FICS, relating to any material release or
threatened release into the environment of any Hazardous Material, occurring at
or on a site not owned, leased or operated by FICS or any FICS Subsidiary.
(c) To the knowledge of FICS and the FICS Subsidiaries, during the
period of FICS' or any FICS Subsidiary's ownership or operation of any of its
properties, there has not been any material release of Hazardous Materials in,
on, under or affecting any such property.
(d) For purposes of this Agreement, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
3.14. PROPERTIES AND ASSETS.
Section 3.14 of the FICS Disclosure Schedule lists (i) all real property,
including a description and identification of location, owned by FICS and each
FICS Subsidiary; (ii) each real property lease, sublease or installment purchase
arrangement to which FICS or any FICS Subsidiary is a party; (iii) a description
of each contract for the purchase, sale, or development of real estate to which
FICS or any FICS Subsidiary is a party; and (iv) all items of FICS' or any FICS
Subsidiary's tangible personal property and equipment with a book value of
$50,000 or more or having any annual lease payment of $50,000 or more. Except
for (a) items reflected
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in FICS' consolidated financial statements as of December 31, 1998 referred to
in Section 3.5 hereof, (b) exceptions to title that do not interfere materially
with FICS' or any FICS Subsidiary's use and enjoyment of owned or leased real
property, (c) liens for current real estate taxes not yet delinquent, or being
contested in good faith, properly reserved against (and reflected on the
financial statements referred to in Section 3.5 above), (d) properties and
assets sold or transferred in the ordinary course of business consistent with
past practices since December 31, 1998, and (e) items listed in Section 3.14 of
the FICS Disclosure Schedule, FICS and each FICS Subsidiary have good and, as to
owned real property, marketable and insurable title to all their properties and
assets, free and clear of all liens, claims, charges and other encumbrances.
FICS and each FICS Subsidiary, as lessees, have the right under valid and
subsisting leases to occupy, use and possess all property leased by them, and
neither FICS nor any FICS Subsidiary has experienced any material uninsured
damage or destruction with respect to such properties since December 31, 1998.
All properties and assets used by FICS and each FICS Subsidiary are in good
operating condition and repair suitable for the purposes for which they are
currently utilized and comply in all material respects with all Laws relating
thereto now in effect or scheduled to come into effect. FICS and each FICS
Subsidiary enjoy peaceful and undisturbed possession under all leases for the
use of all property under which they are the lessees, and all leases to which
FICS or any FICS Subsidiary is a party are valid and binding obligations in
accordance with the terms thereof. Neither FICS nor any FICS Subsidiary is in
material default with respect to any such lease, and there has occurred no
default by FICS or any FICS Subsidiary or event which with the lapse of time or
the giving of notice, or both, would constitute a material default under any
such lease. To the knowledge of FICS, there are no Laws, conditions of record,
or other impediments which interfere with the intended use by FICS or any FICS
Subsidiary of any of the property owned, leased, or occupied by them.
3.15. INSURANCE.
Section 3.15 of the FICS Disclosure Schedule contains a true, correct and
complete list of all insurance policies and bonds maintained by FICS and any
FICS Subsidiary, including the name of the insurer, the policy number, the type
of policy and any applicable deductibles, and all such insurance policies and
bonds (or other insurance policies and bonds that have, from time to time, in
respect of the nature of the risks insured against and amount of coverage
provided, been substantially similar in kind and amount to that customarily
carried by parties similarly situated who own properties and engage in
businesses substantially similar to that of FICS and any FICS Subsidiary) are in
full force and effect and have been in full force and effect since the
respective dates each such policies and bonds were first obtained. As of the
date hereof, neither FICS nor any FICS Subsidiary has received any notice of
cancellation or amendment of any such policy or bond or is in default under any
such policy or bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion. The existing insurance
carried by
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FICS and FICS Subsidiaries is and will continue to be, in respect of the
nature of the risks insured against and the amount of coverage provided,
substantially similar in kind and amount to that customarily carried by parties
similarly situated who own properties and engage in businesses substantially
similar to that of FICS and the FICS Subsidiaries, and is sufficient for
compliance by FICS and the FICS Subsidiaries with all requirements of Law and
agreements to which FICS or any of the FICS Subsidiaries is subject or is party.
True, correct and complete copies of all such policies and bonds reflected at
Section 3.15 of the FICS Disclosure Schedule, as in effect on the date hereof,
have been delivered or made available to S1.
3.16. COMPLIANCE WITH APPLICABLE LAWS.
Each of FICS and any FICS Subsidiary has complied in all material respects
with all Laws applicable to it or to the operation of its business. Neither FICS
nor any FICS Subsidiary has received any notice of any material alleged or
threatened claim, violation, or liability under any such Laws that has not
heretofore been cured and for which there is any remaining liability.
3.17. FICS INFORMATION.
The information relating to FICS and each FICS Subsidiary to be provided
by FICS to be contained in a proxy statement to be filed with the SEC in
connection with obtaining stockholder approval of the transactions contemplated
by this Agreement will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
3.18. INTELLECTUAL PROPERTY.
Except, in each case, as set forth in Section 3.18 of the FICS
Disclosure Schedule:
(a) (i) FICS and each FICS Subsidiary owns, free and clear of liens,
orders and arbitration awards, or are licensed or otherwise possess valid and
enforceable rights to use all patents, trademarks, trade names, service marks,
copyrights and any applications therefor, schematics, technology, know-how,
trade secrets, ideas, algorithms, processes, Software (as defined below), and
tangible or intangible proprietary information or material ("Intellectual
Property") that are used in the business of FICS and the FICS Subsidiaries.
"Software" means any and all (i) computer programs and applications, including
any and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the
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foregoing, (iv) the technology supporting any Internet site(s) operated by or on
behalf of FICS or any FICS Subsidiary, and (v) all documentation, including user
manuals and training materials, relating to any of the foregoing.
(ii) Except as would not be materially adverse to the business
of FICS or any FICS Subsidiary, FICS and the FICS Subsidiaries have taken
reasonable steps to protect their Intellectual Property. There is no litigation
pending or, to the knowledge of FICS and the FICS Subsidiaries, threatened or
any written claim from any person challenging the ownership, use, validity or
enforceability of any Intellectual Property, nor is there any basis for the
assertion of any such claim or challenge.
(iii) No material patent, trademark, service mark, copyright,
trade secret, computer software or other intellectual property right other than
the Intellectual Property set forth on Schedule 3.18 is necessary to conduct the
businesses of FICS and its Subsidiaries as presently conducted.
(b) Schedule 3.18(b) lists all (i) patents, patent applications,
registered and unregistered trademarks, trade names and service marks and
registered copyrights owned by FICS included in the Intellectual Property,
including the jurisdictions in which each such item of Intellectual Property
right has been issued or registered or in which any application for such
issuance and registration has been filed, (ii) material licenses, sublicenses
and other agreements as to which FICS and any FICS Subsidiary are a party and
pursuant to which any person is authorized to use any Intellectual Property, and
(iii) licenses, sublicenses and other agreements as to which FICS and any FICS
Subsidiary are a party and pursuant to which FICS and its Subsidiaries are
authorized to use any third party patents, trademarks or copyrights, including
Software ("Third Party Intellectual Property Rights") which are incorporated in,
are or form a part of any FICS or FICS Subsidiary product.
(c) (i) To the knowledge of FICS and the FICS Subsidiaries, there is
no unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of FICS or any FICS Subsidiary, any trade secret
material to FICS or its Subsidiaries, or any Intellectual Property right of any
third party to the extent licensed by or through FICS or its Subsidiaries, by
any employee of FICS or any FICS Subsidiary or third party for whom FICS is
responsible. Except as set forth in Schedule 3.18(c), there are no royalties,
fees or other payments payable by FICS or its Subsidiaries to any person by
reason of the ownership, use, sale or disposition of Intellectual Property.
(ii) To the knowledge of FICS and its Subsidiaries, there has
been no prior use of FICS's registered trademarks by any third party which would
confer upon said third party superior rights in such trademarks. FICS and its
Subsidiaries have taken reasonable steps to adequately police the trademarks
against third party infringement, and the material trademarks registered in the
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United States and in other jurisdictions where FICS or its Subsidiaries are
doing business have been continuously used in the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or any amendment, supplement or office action related thereto.
(d) FICS and its Subsidiaries are not, nor will they be as a result
of the execution and delivery of this Agreement or the performance of their
obligations under this Agreement, in breach of any material license, sublicense
or other agreement relating to the Intellectual Property or Third Party
Intellectual Property Rights, and the execution and delivery of this Agreement
or the performance of the obligations under this Agreement by FICS and its
Subsidiaries will not result in the loss or impairment of, or give rise to any
right of any third party to terminate, any of FICS' or any of its Subsidiaries'
rights to own any of its Intellectual Property or their respective rights under
any material license agreements, nor require the consent of any Governmental
Entity or third party in respect of any such Intellectual Property.
(e) FICS and its Subsidiaries (i) have no knowledge (including
knowledge of any litigation pending or threatened or any written claim from any
person) or reason to believe that the conduct of their businesses infringe any
patent, trademark, service mark, copyright, trade secret or other proprietary
right of any third party; and (ii) have not advised any third party that such
third party may be infringing any Intellectual Property or breaching any license
or agreement involving Intellectual Property and have not brought or threatened
any claim against such third party for such conduct.
(f) The Software owned or purported to be owned by FICS or any of
its Subsidiaries, was either (i) developed by employees of FICS or any of its
Subsidiaries within the scope of their employment; (ii) developed by independent
contractors or consultants who have assigned their rights to FICS or any of its
Subsidiaries pursuant to written agreements; or (iii) otherwise acquired by FICS
or its Subsidiary from a third party.
(g) All employees and independent contractors and consultants of
FICS and its Subsidiaries have executed and delivered to FICS or its
Subsidiaries, as the case may be, agreements regarding the protection of
proprietary information and the assignment to FICS or its Subsidiaries of any
Intellectual Property arising from services performed for FICS or its
Subsidiaries by such persons.
(h) FICS and its Subsidiaries have obtained or entered into written
agreements with their employees and with third parties, in transactions deemed
appropriate, in connection with the disclosure to, or use or appropriation by,
employees and third parties, of trade secret or proprietary information owned by
FICS and its Subsidiaries and not otherwise protected by a patent, a patent
application, copyright, trademark, or other registration or legal scheme ("FICS
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Confidential Information"), and do not know of any situation involving such
employee or third party use, disclosure or appropriation of FICS Confidential
Information where the lack of such a written agreement is likely to result in
any Material Adverse Effect. Except as set forth in Schedule 3.18(h) of the FICS
Disclosure Schedule, neither FICS nor any of its Subsidiaries have furnished the
source code of any of their Software products to any third party, deposited any
such source code in escrow, or otherwise provided access to such source code to
any third party.
(i) Except as would not be materially adverse to the business of
FICS or its Subsidiaries, FICS and its Subsidiaries have taken reasonable steps
with the intent of ensuring that their products (including existing products and
technology and products and technology currently under development) will, when
used in accordance with associated documentation on a specified platform or
platforms, be capable upon installation of accurately processing, providing, and
receiving date data from, into, and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and making leap-year calculations,
provided that all other non-FICS or FICS Subsidiary products (e.g., hardware,
software and firmware) used in or in combination with FICS' or its Subsidiaries'
products, properly exchange data with FICS' and its Subsidiaries products.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF S1 HOLDINGS AND S1
S1 Holdings and S1 hereby make the following representations and
warranties to each Seller as set forth in this Article IV, each of which is
being relied upon by each Seller as a material inducement to enter into and
perform this Agreement. All of the disclosure schedules of S1 referenced below
and thereby required of S1 pursuant to this Agreement, which disclosure
schedules shall be cross-referenced to the specific sections and subsections of
this Agreement and delivered herewith, are referred to herein as the "S1
Disclosure Schedule."
4.1. CORPORATE ORGANIZATION.
(a) Upon its organization, S1 Holdings shall be a corporation (N.V.)
duly organized and validly existing under the laws of Belgium. Upon its
organization, S1 Holdings shall have the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as
contemplated by this Agreement, and shall be duly licensed or qualified to do
business in each jurisdiction in which the nature of any material business
conducted by it or the character or location of any material properties or
assets owned or leased by it makes such licensing or qualification necessary.
Upon its organization, the charter and other corporate governance documents of
S1 Holdings shall be made available to
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FICS and shall be true, correct and complete copies of such documents as in
effect as of the date thereof.
(b) S1 is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. S1 has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. The Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws of S1, copies of
which have previously been made available to FICS, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
(c) Upon organization of S1 Holdings, S1 shall own, directly or
indirectly, the issued and outstanding shares of capital stock of S1 Holdings,
free and clear of all liens, charges, encumbrances and security interests
whatsoever, and all of such shares shall be duly authorized and validly issued
and shall be fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Upon its organization, S1
Holdings shall not be bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of S1
Holdings or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of S1 Holdings.
4.2. AUTHORITY; NO VIOLATION.
(a) Upon its organization, S1 Holdings shall have full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. As majority stockholder, S1 shall cause S1
Holdings (upon its organization) to assume and confirm this Agreement. Except
for required approvals of S1 stockholders, by the requisite vote of S1's
shareholder, no other corporate proceedings on the part of S1 Holdings (except
for matters related to setting the date, time, place and record date for a
shareholders' meeting, if applicable) shall be necessary to approve this
Agreement or to consummate the transactions contemplated hereby. Such execution
and delivery by S1 Holdings (assuming due authorization, execution and delivery
by S1 and FICS) shall constitute valid and binding obligations of S1 Holdings,
enforceable against S1 Holdings in accordance with the terms of this Agreement,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar law affecting creditors' rights and remedies generally.
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(b) S1 has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly approved by the
Board of Directors of S1. Except for required approvals of S1 stockholders by
the requisite vote of S1's stockholders, no other corporate proceedings on the
part of S1 (except for matters related to setting the date, time, place and
record date for the special meeting) are necessary to approve this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by S1 and (assuming due authorization,
execution and delivery by FICS and each of the Sellers) will constitute a valid
and binding obligation of S1, enforceable against S1 in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar law affecting creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement by S1 or S1
Holdings (upon its organization) nor the consummation by S1 or S1 Holdings (upon
its organization) of the transactions contemplated hereby or thereby, nor
compliance by S1 or S1 Holdings (upon its organization) with any of the terms or
provisions hereof or thereof, will (i) violate any provision of (x) the Amended
and Restated Certificate of Incorporation or Amended and Restated Bylaws of S1
or (y) the Articles of Association of S1 Holdings (upon its organization), or
(ii) assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any Laws applicable to S1 or S1 Holdings (upon its
organization) or any of their properties or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of S1 or S1 Holdings
(upon its organization) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which S1 or S1 Holdings (upon its
organization) is or will be, as the case may be, a party, or by which S1 or S1
Holdings (upon its organization) or any of their properties or assets may be
bound or affected.
4.3. CONSENTS AND APPROVALS.
(a) Except as set forth at Schedule 4.3(a), no consents or approvals
of or filings or registrations with any Governmental Entity or with any third
party are necessary in connection with (1) the execution and delivery by S1 or
S1 Holdings (upon its organization) of this Agreement, and (2) the consummation
by S1 and S1 Holdings (upon its organization) of the Transaction and the other
transactions contemplated hereby, except for such consents, approvals or filings
the failure of
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which to obtain will not have a Material Adverse Effect on the ability of S1 or
S1 Holdings (upon its organization) to consummate the transactions contemplated
thereby.
(b) S1 hereby represents to the Sellers that it has no knowledge of any
reason why approval or effectiveness of any of the applications, notices or
filings referred to in Section 4.4(a) cannot be obtained or granted on a timely
basis.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. COVENANTS RELATING TO FICS.
During the period from the date of this Agreement and continuing until the
Closing, except as expressly contemplated or permitted by this Agreement or with
the prior written consent of S1 Holdings, the Sellers shall cause FICS and each
FICS Subsidiary to carry on their respective businesses in the ordinary course
consistent with past practices. The Sellers shall cause FICS to use its
reasonable efforts to (x) preserve its business organization and that of each
FICS Subsidiary intact, (y) keep available to itself and S1 Holdings the present
services of the employees of FICS and each FICS Subsidiary and (z) preserve for
itself and S1 Holdings the goodwill of the customers of FICS and each FICS
Subsidiary and others with whom business relationships exist. Without limiting
the generality of the foregoing, and except as set forth in the FICS Disclosure
Schedule or as otherwise contemplated by this Agreement or consented to by S1
Holdings in writing, the Sellers shall not permit FICS or any FICS Subsidiary
to:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares of its capital stock
or issue, authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (ii)
repurchase, redeem or otherwise acquire, any shares of the capital stock of FICS
or any FICS Subsidiary, or any securities convertible into or exercisable for
any shares of the capital stock of FICS or any FICS Subsidiary;
(c) except for the issuance of options to purchase shares of FICS
Group Holdings, Inc. capital stock, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing;
(d) except in connection with resolutions proposed to be adopted at
the extraordinary meeting of FICS stockholders scheduled for May 25, 1999, if
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consented to by S1 Holdings, such consent not to be unreasonably withheld, amend
its Restated Articles of Association (Statuten) or other similar governing
documents;
(e) after the date hereof, directly or indirectly, through any
officer, director, employee, agent or otherwise, solicit, initiate or encourage
submission of proposals or offers from any person relating to any acquisition or
purchase of all or a substantial portion of the assets of, or any equity
interest in, FICS or any business combination with FICS (collectively, all such
events referred to herein as a "Competing Offer"), or otherwise enter into any
agreement or understanding with respect to a Competing Offer (Under any
circumstances, the Sellers shall cause FICS to promptly advise S1 Holdings if
any such proposal or offer, or any inquiry or contact with any person with
respect thereto, is made, shall promptly inform S1 Holdings of all the terms and
conditions thereof, and shall furnish to S1 Holdings copies of any such written
proposal or offer and the contents of any communications by FICS in response
thereto.);
(f) make any capital expenditure in excess of $100,000;
(g) enter into any new line of business, or, except in the ordinary
course of business, (i) enter into any material contract (as defined in Item
601(b)(10) of Regulation S-K), or other contract requiring aggregate payments
exceeding $100,000, or (ii) modify, amend or transfer in any material respect or
terminate any material contract to which FICS or any of its Subsidiaries is a
party or waive, release or assign any material rights or claims thereunder;
(h) acquire or agree to acquire, by merging or consolidating with,
or by purchasing an equity interest in or 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 any assets, other than in
the ordinary course of business;
(i) except as necessary for the issuance of options permitted
hereby, take any action that is intended or may reasonably be expected to result
in any of its representations and warranties set forth in this Agreement being
or becoming untrue or in any of the conditions to the Transaction set forth in
Article VII not being satisfied, or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable law;
(j) change its methods of accounting in effect at December 31, 1998
except as required by changes in applicable law or accounting standards, as
concurred to by S1 Holdings's independent auditors;
(k) (i) except as required by applicable law, adopt, amend, renew or
terminate any FICS Plan or any agreement, arrangement, plan or policy between
FICS or any FICS Subsidiary and one or more of its current or former directors
or officers, (ii) increase in any manner the compensation of any employee or
director or
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pay any benefit not required by any plan or agreement as in effect as of the
date hereof (including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares), (iii) enter into, modify or renew any contract, agreement,
commitment or arrangement providing for the payment to any director, officer or
employee of compensation or benefits, other than normal annual increases in pay,
consistent with past practice, (iv) hire any new employee at an annual
compensation in excess of $100,000, (v) promote to a rank of vice president or
more senior any employee, or (vi) pay any retention or other bonuses to any
employees;
(l) except for short-term borrowings with a maturity of one year or
less in the ordinary course of business consistent with past practices, incur
any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other individual,
corporation or other entity;
(m) sell, purchase, enter into a lease, relocate, open or close any
office, other than in the ordinary course of business consistent with past
practices;
(n) make any equity investment or commitment to make such an
investment in real estate;
(o) make any investments, other than in the ordinary course of
business consistent with past practices;
(p) sell, purchase or lease any real property; or
(q) agree or commit to do any of the actions set forth in (a) -
(p) above.
The consent of S1 Holdings to any action by FICS or any FICS Subsidiary that is
not permitted by any of the preceding paragraphs shall be evidenced by a writing
signed by an authorized representative of S1 Holdings.
5.2. COVENANTS OF SELLERS.
(a) After the date hereof, no Seller shall, directly or indirectly,
solicit, initiate or encourage submission of proposals or offers from any person
relating to any Competing Offer with respect to FICS. Each Seller shall promptly
advise S1 Holdings if any such Competing Offer, or any inquiry or contact with
any person with respect thereto, is made, shall promptly inform S1 Holdings of
all the terms and conditions thereof, and shall furnish to S1 Holdings copies of
any such written proposal or offer and the contents of any communications in
response thereto.
(b) After the date hereof, each Seller hereby waives and refuses any
right to purchase, acquire or otherwise obtain any equity securities of FICS
pursuant
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to the Restated Articles of Association of FICS, any preemptive right to acquire
such securities, the FICS Stock Plan or otherwise.
5.3. COVENANTS OF S1.
S1 unconditionally guarantees (as a principal and not merely as a surety)
each and all of the obligations of S1 Holdings under this Agreement. As soon as
reasonably practicable after the date hereof, S1 hereby agrees and covenants to
(i) cause S1 Holdings to be organized and incorporated as a Belgian subsidiary
N.V. of S1 under applicable Belgian laws, no later than June 30, 1999, (ii) upon
such incorporation, to take all necessary actions to cause S1 Holdings to ratify
this Agreement, and (iii) upon such incorporation, to take all necessary actions
to cause S1 Holdings to perform its obligations in accordance with this
Agreement. S1 will make available to Sellers the organizational documents for S1
Holdings, and shall cause S1 Holdings to provide Sellers with evidence that S1
Holdings has, upon its incorporation, assumed and confirmed all of its
obligations under this Agreement. S1 further agrees for at least three years
from the Closing Date that it will maintain S1 Holdings as a subsidiary and that
S1 Holdings will be operated as the holding company for S1's European
operations, providing treasury and other services to FICS, the FICS Subsidiaries
and any other European entity which becomes a subsidiary of S1 Holdings. S1
further agrees with each of the Sellers that, for at least three years from the
Closing Date, it will cause S1 Holdings not to sell or directly or indirectly
transfer or assign (including transfers in case of a merger or split-up) the
FICS Securities.
5.4. COMPLIANCE WITH ANTITRUST LAWS.
Each of the parties hereto shall make all filings of any applications,
notices or other documents required under applicable antitrust Laws and use its
reasonable best efforts to resolve objections, if any, which may be asserted
with respect to the Transaction under antitrust laws, including, without
limitation, the Hart-Scott-Rodino Act and any foreign competition laws. In the
event a suit is threatened or instituted challenging the Transaction as
violative of antitrust laws, each of the parties hereto shall use its reasonable
best efforts to avoid the filing of, or resist or resolve such suit. The parties
hereto shall use their reasonable best efforts to take such action as may be
required: (a) by the Antitrust Division of the Department of Justice or the
Federal Trade Commission in order to resolve such objections as either of them
may have to the Transaction under antitrust laws, or (b) by any federal or state
court of the United States, in any suit brought by a private party or
governmental entity challenging the Transaction as violative of antitrust laws,
in order to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order, or other order which has the effect of preventing
the consummation of the Transaction or by any foreign entity that may require
prior approval of the Transaction. Reasonable best efforts shall not include,
among other
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things and to the extent S1 so desires, the willingness of S1 to accept an order
agreeing to the divestiture, or the holding separate, of any assets of FICS or
S1.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. REGULATORY MATTERS.
(a) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. S1 Holdings and the Sellers shall have the right to review in
advance, and to the extent practicable each will consult the other on, in each
case subject to applicable laws relating to the exchange of information, all the
information relating to S1 Holdings or FICS, as the case may be, which appears
in any filing made with, or written materials submitted to, any third party or
any Governmental Entity in connection with the transactions contemplated by this
Agreement; provided, however, that nothing contained herein shall be deemed to
provide either party with a right to review any information provided to any
Governmental Entity on a confidential basis in connection with the transactions
contemplated hereby. In exercising the foregoing right, each of the parties
hereto shall act reasonably and as promptly as practicable. The parties hereto
agree that they will consult with each other with respect to the obtaining of
all permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised of
the status of matters relating to contemplation of the transactions contemplated
herein.
(b) The Sellers shall cause FICS to, upon request, furnish S1
Holdings with all information concerning FICS and its directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with any statement, filing, notice or application made by or on
behalf of S1 Holdings to any Governmental Entity in connection with the
Transaction or the other transactions contemplated by this Agreement.
(c) S1 Holdings and the Sellers shall promptly advise each other
upon receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (defined in Section 7.1(b)
hereof) will not be obtained or that the receipt of any such approval will be
materially delayed.
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6.2. ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws relating
to the exchange of information, the Sellers shall cause FICS to accord to the
officers, employees, accountants, counsel and other representatives of S1
Holdings, access, during normal business hours during the period prior to the
Closing, to all FICS's and its Subsidiaries' properties, books, contracts,
commitments and records and, during such period, FICS shall make available to S1
Holdings (i) a copy of each report, schedule, Proxy Statement and other document
filed or received by it (including its Subsidiaries) during such period pursuant
to the requirements of federal securities laws or other federal or state Laws
and (ii) all other information concerning its (including its Subsidiaries)
business, properties and personnel as S1 Holdings may reasonably request (except
as to information deemed confidential or competitively sensitive ("Confidential
Matters")) and such meetings of committees of the Board of Directors and
management of FICS which S1 Holdings desires. S1 Holdings shall receive notice
of all meetings of the FICS Board of Directors and any committees thereof, and
of any management committees (in all cases, at least as timely as all FICS
representatives to such meetings are required to be provided notice). S1
Holdings will hold all such information in confidence to the extent required by,
and in accordance with, the provisions of the Confidential Information and
Non-disclosure Agreement between FICS, Edify Corporation and S1 (by which S1
Holdings unconditionally agrees to be bound by signing this Agreement) dated
April 27, 1999 and the Confidential Information and Non-disclosure Agreement
between FICS and S1 dated March 31, 1999 (together, the "Confidentiality
Agreements"). The parties agree and acknowledge that the Confidentiality
Agreements will continue in full force and effect in accordance with their
terms.
(b) Upon reasonable notice and subject to applicable Laws relating
to the exchange of information, S1 Holdings shall afford to the officers,
employees, accountants, counsel and other representatives of FICS, access,
during normal business hours during the period prior to the Closing, to such
information regarding S1 Holdings, except as to Confidential Matters, as shall
be reasonably necessary for FICS to fulfill its obligations pursuant to this
Agreement or which may be reasonably necessary for FICS to confirm that the
representations and warranties of S1 Holdings contained herein are true and
correct and that the covenants of S1 Holdings contained herein have been
performed in all material respects. The Sellers shall cause FICS to hold all
such information in confidence to the extent required by, and in accordance
with, the provisions of the Confidentiality Agreement.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
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(d) The Sellers shall cause FICS to provide S1 Holdings with true,
correct and complete copies of all financial and other information provided to
directors of FICS in connection with meetings of its Boards of Directors or
committees thereof.
6.3. SHAREHOLDER MEETING.
S1 shall take all steps necessary to duly call, give notice of, convene
and hold a meeting of its shareholders within 45 days after the Proxy Statement
(as defined in the Stock Purchase Agreement dated even date herewith by and
among S1, the purchasers identified therein and FICS (the "S1 Stock Purchase
Agreement") is approved by the SEC for use for the purpose of voting upon the
approval of this Agreement, this Transaction and other transactions related to
this Agreement. Management and the Board of Directors of S1 shall recommend
approval of each of this Agreement and the Transaction.
6.4. RESERVED.
6.5. FICS YEAR 2000 OFFICER.
No later than 20 business days following the date of this Agreement, the
Sellers shall cause FICS to appoint an officer (the "Y2K Officer"), reasonably
acceptable to S1 Holdings, which officer shall be responsible for coordinating
matters related to any year 2000 issues of FICS and any FICS Subsidiary. Such
Y2K Officer shall, among other things, coordinate the efforts of FICS and each
FICS Subsidiary and take those steps necessary to ensure that their products
(including existing products and technology and products and technology
currently under development) will, when used in accordance with associated
documentation on a specified platform or platforms, be capable upon installation
of accurately processing, providing, and receiving date data from, into, and
between the twentieth and twenty-first centuries, including the years 1999 and
2000, and making leap-year calculations, provided that all other non-FICS or
FICS Subsidiary products (e.g., hardware, software and firmware) used in or in
combination with FICS' or its Subsidiaries' products, properly exchange data
with FICS' and its Subsidiaries products. Such year 2000 compliance shall, at a
minimum, meet the standards and guidelines established by the United States
Federal Financial Institutions Examination Council. The Y2K Officer shall also
provide monthly written reports regarding year 2000 issues of FICS and any FICS
Subsidiary, and resolution thereof, to the management of FICS and S1.
6.6. SUBSEQUENT INTERIM FINANCIAL STATEMENTS.
(a) As soon as reasonably available, but in no event more than 45
days after the end of each fiscal quarter, S1 Holdings will cause S1 to deliver
to FICS its Quarterly Reports on Form 10-Q, as filed with the SEC under the
Exchange Act.
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S1 Holdings shall cause S1 to deliver to FICS any Current Reports on Form 8-K
promptly after filing such reports with the SEC.
(b) The Sellers shall cause FICS, as soon as reasonably practicable,
but in no event more than 45 days after the end of each fiscal quarter, to
deliver to S1 Holdings its unaudited consolidated financial statements.
6.7. ADVICE OF CHANGES.
S1 Holdings, S1 and the Sellers, with respect to FICS, shall promptly
advise the other party of any change or event that, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse Effect
on it or to cause or constitute a material breach of any of its representations,
warranties or covenants contained herein. From time to time prior to the Closing
Date, each party will promptly supplement or amend its disclosure schedule
delivered in connection with the execution of this Agreement to reflect any
matter which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such disclosure
schedule or which is necessary to correct any information in such disclosure
schedule which has been rendered inaccurate thereby. No supplement or amendment
to such disclosure schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 7.2(a) or 7.3(a) hereof, as
the case may be, or the compliance by FICS with the covenants set forth in
Section 5.1 hereof.
6.8. CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the Closing
Date, the Sellers shall cause FICS to cause one or more of its designated
representatives to confer on a regular and frequent basis (not less than
monthly) with representatives of S1 Holdings and to report the general status of
the ongoing operations of FICS. The Sellers will promptly notify S1 Holdings of
any material change in the normal course of business or in the operation of the
properties of FICS and of any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of litigation involving FICS, and will keep S1
Holdings fully informed of such events.
(b) During the period from the date of this Agreement to the Closing
Date, S1 Holdings will cause one or more of its designated representatives to
confer on a regular and frequent basis (not less than monthly) with
representatives of FICS and to report the general status of the ongoing
operations of S1. S1 Holdings will promptly notify the Sellers of any material
change in the normal course of business or in the operation of the properties of
S1 and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of litigation involving S1 Holdings or S1, and will keep the
Sellers fully informed of such events.
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6.9. TRANSACTION EXPENSES OF FICS.
(a) For planning purposes, the Sellers shall cause FICS, within 15
days from the date hereof, to provide S1 Holdings with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by FICS in
connection with this transaction, including the fees and expenses of counsel,
accountants, investment bankers and other professionals. The Sellers shall cause
FICS to promptly notify S1 Holdings if or when it determines that it will expect
to exceed its budget.
(b) Promptly after the execution of this Agreement, the Sellers
shall cause FICS to ask all of its attorneys and other professionals to render
current and correct invoices for all unbilled time and disbursements. FICS shall
accrue and/or pay all of such amounts which are actually due and owing as soon
as possible.
(c) The Sellers shall cause FICS to advise S1 Holdings monthly of
all out-of-pocket expenses which FICS has incurred in connection with this
transaction.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE TRANSACTION.
The respective obligation of each party to effect the Transaction shall be
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) SHAREHOLDER APPROVALS.
This Agreement shall have been approved by any requisite shareholder
vote.
(b) OTHER APPROVALS.
All governmental and regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof shall
have expired or been terminated (all such approvals and the expiration or
termination of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals"). No Requisite Regulatory Approval shall
contain a non-customary condition that S1 Holdings or the Sellers reasonably
determines to be burdensome or otherwise alter the benefits for which it
bargained in this Agreement.
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(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Transaction or any of the other transactions (an
"Injunction") contemplated by this Agreement shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Transaction.
(d) FINANCING.
S1 Holdings shall have obtained the necessary financing contemplated
by Section 1.3(b) above no later than August 15, 1999.
7.2. CONDITIONS TO OBLIGATIONS OF S1 HOLDINGS.
The obligation of S1 Holdings to effect the Transaction is also subject to
the satisfaction or waiver by S1 Holdings at or prior to the Closing of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of S1, the Sellers and
Akkermans set forth in this Agreement shall be true and correct as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date; provided, however, that for purposes of this paragraph, such
representations and warranties shall be deemed to be true and correct, unless
the failure or failures of such representations and warranties to be so true and
correct, individually or in the aggregate, would have a Material Adverse Effect
on S1 or FICS, as the case may be. Such determination of aggregate Material
Adverse Effect shall be made as if there were no materiality qualifications in
such representations and warranties. S1 Holdings shall have received a
certificate signed on behalf of FICS by each of the President and Chief
Financial Officer of FICS to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF THE SELLERS
The Sellers shall have performed in all material respects all
covenants and agreements required to be performed by them under this Agreement
at or prior to the Closing Date. S1 Holdings shall have received a certificate
signed on behalf of each Seller to such effect.
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(c) CONSENTS UNDER AGREEMENTS.
The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(b) hereof) whose consent or
approval shall be required in order to permit the succession by S1 Holdings, to
the extent applicable, to any obligation, right or interest of FICS under any
loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument shall have been obtained except for those, the failure
of which to obtain, will not result in a Material Adverse Effect on S1 Holdings
or FICS.
(d) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(e) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes
contemplated by this Agreement, in the business, operations, condition
(financial or otherwise), assets or liabilities of FICS or any FICS Subsidiary
(regardless of whether or not such events or changes are inconsistent with the
representations and warranties given herein) that individually or in the
aggregate has had or would have a Material Adverse Effect on FICS.
(f) ACCOUNTANT'S COMFORT LETTER.
The Sellers shall have caused to be delivered on the
respective dates thereof to S1 Holdings "comfort letters" from
PricewaterhouseCoopers & Co. Bedrijfsrevisoren, FICS' independent public
accountants, dated the date the Proxy Statement (or last amendment thereto) and
dated the date of the Closing, and addressed to S1 Holdings, the Sellers and
FICS, with respect to FICS' financial data presented in the Proxy Statement,
which letters shall be based upon Statements on Auditing Standards Nos. 72 and
76.
7.3. CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligation of the Sellers to effect the Transaction is also subject to
the satisfaction or waiver by the Majority Sellers at or prior to the Closing
Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of S1 Holdings and S1 set forth
in this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however,
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that for purposes of this paragraph, such representations and warranties shall
be deemed to be true and correct, unless the failure or failures of such
representations and warranties to be so true and correct, individually or in the
aggregate, would have a Material Adverse Effect on S1 Holdings or S1, as the
case may be. Such determination of aggregate Material Adverse Effect shall be
made as if there were no materiality qualifications in such representations and
warranties. FICS and the Sellers shall have received a certificate signed on
behalf of S1 Holdings by each of the Managing Director of S1 Holdings and the
President and the Chief Financial Officer of S1 Holdings to the foregoing
effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF S1 HOLDINGS AND S1.
S1 Holdings and S1 shall have performed in all material respects all
covenants and agreements required to be performed by them under this Agreement
at or prior to the Closing Date. FICS and the Sellers shall have received a
certificate signed on behalf of S1 Holdings by each of the President and Chief
Financial Officer of S1 Holdings to such effect.
(c) TAX OPINION.
The Majority Sellers shall have received an opinion as to the
tax-free nature of the transactions contemplated hereby, in form and substance
reasonably satisfactory to them.
(d) CONSENTS UNDER AGREEMENTS.
The consent or approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(b)) whose consent or approval
shall be required in connection with the transactions contemplated hereby under
any loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument to which S1 Holdings is a party or is otherwise bound
shall have been obtained.
(e) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(f) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes contemplated by
this Agreement, in the business, operations, condition (financial or otherwise),
assets or liabilities of S1 or any S1 Subsidiary (regardless of whether or not
such events or changes are inconsistent with the representations and warranties
given
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herein) that individually or in the aggregate has had or would have a Material
Adverse Effect on S1.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. TERMINATION.
This Agreement may be terminated at any time prior to the Closing Date,
whether before or after approval of the matters presented in connection with the
Transaction by any of the Majority Sellers, if applicable:
(a) by mutual consent of S1 Holdings and each of the Sellers in a
written instrument, if the Board of Directors of S1 Holdings so determines by a
vote of a majority of the members of its entire Board and each of the Sellers so
determines in its individual judgment;
(b) by either S1 Holdings or any of the Majority Sellers upon
written notice to the other party (i) 30 days after the date on which any
request or application for a Regulatory Approval shall have been denied or
withdrawn at the request or recommendation of the Governmental Entity which must
grant such Regulatory Approval, unless within the 30-day period following such
denial or withdrawal the parties agree to file, and have filed with the
applicable Governmental Entity, a petition for rehearing or an amended
application, provided, however, that no party shall have the right to terminate
this Agreement pursuant to this Section 8.1(b), if such denial or request or
recommendation for withdrawal shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(c) by either S1 Holdings or any of the Majority Sellers if the
Transaction shall not have been consummated on or before March 31, 2000, unless
the failure of the Closing to occur by such date shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein;
(d) by either S1 Holdings (provided that S1 Holdings is not in
breach of its obligations under Section 6.3 hereof) or any of the Majority
Sellers if the approval of the S1 Holdings shareholders required for the
consummation of the Transaction shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of shareholders or at
any adjournment or postponement thereof;
(e) by either S1 Holdings or any of the Majority Sellers (provided
that the terminating party is not then in breach of any representation,
warranty, covenant or other agreement contained herein that, individually or in
the aggregate,
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would give the other party the right to terminate this Agreement) if there shall
have been a breach of any of the representations or warranties set forth in this
Agreement on the part of the other party or the Sellers (as to S1 Holdings), if
such breach, individually or in the aggregate, has had or is likely to have a
Material Adverse Effect on the breaching party, and such breach shall not have
been cured within 30 days following receipt by the breaching party of written
notice of such breach from the other party hereto or such breach, by its nature,
cannot be cured prior to the Closing;
(f) by either S1 Holdings or any of the Majority Sellers (provided
that the terminating party is not then in breach of any representation,
warranty, covenant or other agreement contained herein that, individually or in
the aggregate, would give the other party the right to terminate this Agreement)
if there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of the other party, and such breach
shall not have been cured within 30 days following receipt by the breaching
party of written notice of such breach from the other party hereto or such
breach, by its nature, cannot be cured prior to the Closing;
(g) by either S1 Holdings or any of the Majority Sellers at any time
after the termination of the S1 Stock Purchase Agreement in accordance with its
terms; and
(h) by any of the Majority Sellers in the event any requested
advance that is permitted by the terms of the Loan Agreement, dated the date
hereof, between FICS and S1, is not made by S1 within five business days after
FICS makes a written demand therefor.
8.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement by either S1 Holdings or the
Sellers as provided in Section 8.1 hereof, this Agreement shall forthwith become
void and have no effect except (i) the last sentences of Sections 6.2(a) and
6.2(b) and Sections 8.2, 9.2 and 9.3 hereof shall survive any termination of
this Agreement, and (ii) notwithstanding anything to the contrary contained in
this Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3. AMENDMENT.
Subject to compliance with applicable law, this Agreement may be amended
by the parties hereto, at any time before or after approval of the matters
presented in connection with the Transaction by the stockholders of S1. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
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8.4. EXTENSION; WAIVER.
At any time prior to the Closing, the parties hereto may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1. EXPENSES.
All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense.
9.2. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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(a) if to S1 Holdings, to:
S1 Europe Holdings N.V.
c/o Security First Technologies Corporation
3390 Peachtree Road, NE, Suite 1700
Atlanta, Georgia 30326
Attn.: Robert F. Stockwell, Chief
Financial Officer
(a Belgian address shall be added upon
incorporation of S1 Holdings)
with copies (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004-1109
Attn.: Stuart G. Stein, Esq.
and
Hogan & Hartson L.L.P.
Avenue des Arts 41
1040 Brussels, Belgium
Attn.: Claud v.S. Eley, Esq.
(b) if to FICS, to:
FICS Group N.V.
Excelsiorlaan 87
1930 Zaventem, Belgium
Attn.: Steven Sipowicz, Chief Financial Officer
with a copy (which shall not constitute notice) to:
Brown, Rudnick, Freed & Gesmer
Stanmore House
29-30 St. James's Street
London SW1A 1HB, England
Attn.: Lawrence A. Levy, Esq.
Colin Hugh Buckley, Esq.
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(c) if to any Seller, to:
The address set forth next to such Seller's name in Section
9.2 of the FICS Disclosure schedule.
9.3. INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
9.4. COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.5. ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement.
9.6. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of Delaware, without regard to any applicable conflicts of law rules.
9.7. ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the event
that the provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions thereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
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9.8. SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
9.9. PUBLICITY.
Except as otherwise required by applicable law or the rules of the NASDAQ
Stock Market National Market System (or such other exchange on which any capital
stock of S1 Holdings or any parent or subsidiary of S1 Holdings may become
listed), EASDAQ or the Belgian Banking and Finance Commission, so long as this
Agreement is in effect, neither S1 Holdings nor FICS shall, or shall permit any
of S1 Holdings, FICS or any of their Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other party, which consent shall
not be unreasonably withheld.
9.10. ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
9.11. ADDITIONAL DEFINITIONS.
References to "$" in this Agreement are to United States dollars. In
addition to any other definitions contained in this Agreement, the following
words, terms and phrases shall have the following meanings when used in this
Agreement.
"knowledge": with respect to any entity, refers to the knowledge of
such entity's directors and officers in the ordinary course of their duties
in such positions.
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"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to S1 Holdings, S1 or FICS, as the
case may be, means a condition, event, change or occurrence that is reasonably
likely to have a material adverse effect upon (A) the financial condition,
results of operations, business or properties of the relevant entity (other than
as a result of changes in laws or regulations or accounting rules of general
applicability or interpretations thereof), or , or (B) the ability of the
relevant entity to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement.
ARTICLE X
INDEMNIFICATION
10.1. SURVIVAL.
(a) None of the representations, warranties, covenants and
agreements of the Sellers (other than Akkermans in Article III), FICS or S1 in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Transaction, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Transaction.
(b) The representations and warranties of FICS and Akkermans which
are made in Article III of this Agreement or in any certificate furnished
pursuant hereto and related thereto shall survive the Transaction and shall
remain in full force and effect as follows: (i) representations and warranties
shall survive for a period of 12 months after the Transaction, and (ii) any
representation or warranty that is the subject of a claim which is asserted in a
reasonably detailed writing prior to the expiration of the applicable period set
forth in (i) above shall survive with respect to such claim or dispute until the
final resolution thereof (the latest to occur of (i) and (ii) the
"Indemnification Termination Date"). All such representations and warranties of
Akkermans shall also survive and be unaffected by (and shall not be deemed
waived by) any investigation, audit, appraisal, or inspection at any time made
by or on behalf of S1 Holdings.
10.2. INDEMNIFICATION OF THE SELLERS.
S1 Holdings agrees to indemnify, defend and hold harmless the Sellers at
all times after the Transaction from and against any and all claims, damages,
losses, liabilities, payments, costs, obligations and expenses (including,
without limitation, all legal, accounting and other professional fees and
disbursements) (collectively, "Damages") to the extent such Damages arise out
of, result from or relate to:
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(a) a breach in any respect of any representation or warranty made
by S1 Holdings contained in this Agreement; or
(b) a breach in any respect of any covenant, agreement or
undertaking made by S1 Holdings in this Agreement or in any certificate or other
instrument or agreement delivered by or on behalf of S1 Holdings pursuant to
this Agreement.
10.3. AKKERMANS INDEMNIFICATION.
Akkermans agrees to indemnify, defend and hold harmless FICS, S1 Holdings
and the officers, and directors of FICS and S1 Holdings at all times after the
Transaction from and against any and all Damages to the extent such Damages
arise out of, result from or relate to:
(a) a breach of any representation or warranty made by either FICS
or any Seller contained in this Agreement;
(b) a breach of any covenant, agreement or undertaking made by
Akkermans in this Agreement or in any certificate or other instrument or
agreement delivered by or on behalf of Akkermans pursuant to this Agreement;
(c) any liability relating to payment of any employer or employee
(ordinary or extraordinary) social security taxes, withholding taxes, or other
levies, taxes or charges, of whatever nature, on payments, of whatever nature,
made or which should have been made by FICS or any FICS Subsidiary to its
employees or independent contractors with respect to the period prior to
Closing;
(d) any liability relating to payment of any remuneration, vacation
pay or any fringe benefits of whatever nature on the basis of any laws, decrees,
ordinances, regulations, collective labor agreements or any other rules, to any
employee or independent contractor employed or hired by FICS or any FICS
Subsidiary on or prior to the Closing;
(e) any liability relating to payment of any group insurance
contributions, any related taxes, or any related social security contributions
on the basis of any laws, decrees, ordinances or regulations applicable to FICS
or any FICS Subsidiary prior to the Closing; or
(f) any liability relating to the sale by FICS or any FICS
Subsidiary of the ABACUS engine outside of Belgium, it being understood that the
indemnification provided for in paragraphs 10.3(c), (d), (e) and (f) hereof do
not relate to any particular representation or warranty, and shall survive for
the same periods specified in clauses (i) and (ii) of Section 10.1(b) above as
if such indemnification related to a representation and warranty.
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10.4. PLEDGE AGREEMENT.
As security for the indemnification provided for by this Article X,
Akkermans hereby agrees to enter into a Pledge Agreement substantially in the
form of Exhibit A hereto, pursuant to which he agrees to pledge 925,925 shares
of S1 Common Stock (the "Indemnification Amount"). S1 Holdings agrees that the
indemnification provided for under this Article X and the security offered by
the Pledge Agreement shall be S1 Holdings's sole source of indemnification for
any claims arising hereunder. Any claim for indemnification shall be paid, at
the sole discretion of Akkermans, in cash or in shares from the Indemnification
Amount based upon a per share valuation of $54.00 per share.
10.5. CLAIM FOR INDEMNIFICATION.
Any claim for indemnification must be made by a written notice to the
party against whom indemnification is sought. Such notice shall specify in
reasonable detail the particulars of the claim for indemnity and the basis upon
which indemnity is claimed. Notwithstanding anything in this Agreement to the
contrary, (i) the aggregate value of the indemnification payments made by
Akkermans (measured, in the case of indemnification paid in the form of shares
of S1 Common Stock, as of the time actually paid from time to time) shall in no
event exceed $50.0 million and (ii) the parties shall be entitled to
indemnification under Section 10.3 only for the aggregate amount of Damages
therefor in excess of $3.0 million, if any.
10.6. THIRD PARTY CLAIMS.
Each party shall cooperate with the other in determining the validity of
any third party claim or assertion and in defending the validity of any third
party claim or assertion and in defending against third parties with respect to
the same. The party seeking indemnification ("Claimant") shall promptly furnish
to the party against whom indemnification is sought ("Respondent") copies of all
notices, pleadings and other documents with respect to any third party claim for
which indemnification is sought, provided, however, that failure to so notify
the Respondent will relieve the Respondent from any liability which the Claimant
may have hereunder, if but only if, and only to the extent that, such failure to
notify the Respondent results in loss or damage to the Respondent or the
forfeiture by the Respondent of substantial rights or defenses otherwise
available to the Respondent with respect to such claim. The defense of such
litigation and choice of counsel with respect thereto shall be within the
control of the Claimant (and the fees and reimbursements of counsel for Claimant
in connection with such defense shall be at the Claimant's sole expense), unless
the Respondent, no later than 10 days before an answer or other pleading must be
served, elects to undertake the defense of such claim. The Respondent shall
always have the right to elect to participate in the defense of any such third
party claim at its sole expense. Each of the parties agrees not to settle or
compromise any third party suit, claim or proceeding with respect to
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which any of the other parties has an obligation to indemnify without the prior
written consent of such other parties, which consent shall not be unreasonably
withheld, provided such other party has acknowledged the obligation to
indemnify.
10.7. CUMULATIVE REMEDIES.
Subject to the limitations in Section 10.5 above, the remedies provided
herein shall be cumulative and shall not preclude the assertion of any other
rights or the seeking of any other remedies, whether at law or in equity, by any
party hereto.
10.8. RELEASE OF CLAIMS.
Each Seller, for himself or itself, and for his or its heirs and assigns
or his or its successors and assigns, hereby agrees that as of the Transaction
he, she or it shall remise, release, acquit and forever discharge FICS and each
FICS Subsidiary and all present or former officers, directors and employees of
FICS and each FICS Subsidiary in their capacities as such, and each of them,
from any and all actions and causes of action (whether at law or in equity),
losses, damages, costs, expenses, liabilities, obligations and claims or demands
of any kind, including, without limitation, attorneys' fees and other legal
costs and expenses, known or unknown, foreseen and unforeseen, whether now
existing or arising at any time in the future; provided, however, that this
release shall not apply to rights and claims of a Seller for indemnification
from FICS where the Seller is made a party to a proceeding because he or it was
an officer or director of FICS and to rights and claims of a Seller against FICS
as necessary to allow the Seller to make claims under any insurance policies
maintained by FICS. Notwithstanding, and without limiting the generality of the
foregoing, each Seller further agrees that he, she or it waives any right of
contribution or indemnification against FICS with respect to any claim to
Damages asserted against the such Seller pursuant to this Agreement.
[SIGNATURES PAGE FOLLOWS]
-45-
<PAGE> 50
IN WITNESS WHEREOF, the Sellers have executed and delivered this
Agreement, and S1 and FICS have caused this Agreement to be executed and
delivered by their respective representatives duly authorized, all as of the
date first above written, and S1 shall cause S1 Holdings, upon its
incorporation, to assume and confirm all rights and obligations under this
Agreement.
S1 EUROPE HOLDINGS N.V.
(in the process of incorporation, represented by
SECURITY FIRST TECHNOLOGIES CORPORATION)
By: /s/ JAMES S. MAHAN III
---------------------------------------------
Name: James S. Mahan III
Title: Chairman and Chief Executive Officer of S1
THE SELLERS
/s/ MICHEL AKKERMANS
-------------------------------------------------
Name: Michel Akkermans
/s/ PAMICA N.V.
-------------------------------------------------
Name: Pamica N.V.
Represented by:
/s/ GENERAL ATLANTIC PARTNERS 20, L.P.
-------------------------------------------------
Name: General Atlantic Partners 20, L.P.
Represented by:
/s/ GENERAL ATLANTIC PARTNERS 52, L.P.
-------------------------------------------------
Name: General Atlantic Partners 52, L.P.
Represented by:
/s/ GAP CO INVESTMENT PARTNERS, L.P.
-------------------------------------------------
Name: GAP CO Investment Partners, L.P.
Represented by:
/s/ GIMV N.V.
-------------------------------------------------
Name: GIMV N.V.
Represented by:
-46-
<PAGE> 51
/s/ GUY MOONS
-------------------------------------------------
Name: Guy Moons
/s/ ETIENNE CASTIAUX
-------------------------------------------------
Name: Etienne Castiaux
/s/ STEVEN VAN ROSSEN
-------------------------------------------------
Name: Steven Van Rossen
/s/ NADINE QUAEYHAEGENS
-------------------------------------------------
Name: Nadine Quaeyhaegens
/s/ GOORT GELTEN
-------------------------------------------------
Name: Goort Gelten
/s/ LOEK VAN Den BOOG
-------------------------------------------------
Name: Loek Van den Boog
/s/ UNICO PORTFOLIO, LTD.
-------------------------------------------------
Name: Unico Portfolio, Ltd.
Represented by:
/s/ FREDRICK DUMAS
-------------------------------------------------
Name: Fredrick Dumas
-47-
<PAGE> 52
SECURITY FIRST TECHNOLOGIES CORPORATION
(for the limited purposes set forth herein)
By: /s/ JAMES S. MAHAN III
----------------------------------------------
Name: James S. Mahan III
Title: Chairman and Chief Executive Officer
FICS GROUP N.V.
(for the limited purposes set forth herein)
By: /s/ STEVEN SIPWICZ
---------------------------------------------
Name: Steven Sipwicz
Title: Chief Financial Officer
-48-
<PAGE> 53
EXHIBIT A
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as of
______________, 1999, by and among S1 Europe Holdings N.V., a Belgian
corporation and a wholly owned subsidiary of Security First Technologies
Corporation, a Delaware corporation ("S1") ("S1 Holdings"), FICS Group N.V.
("FICS"), and Michel Akkermans ("Pledgor").
W I T N E S S E T H:
WHEREAS, pursuant to the Share Purchase Agreement dated as of May 16,
1999 (the "Purchase Agreement"), by and among S1 Holdings, the stockholders and
bondholders of FICS and, for the limited purposes stated therein, S1 and FICS,
S1 Holdings will acquire all of the outstanding securities of FICS;
WHEREAS, pursuant to the Purchase Agreement, Pledgor has agreed to
pledge 925,925 shares of S1 common stock ("S1 Common Stock"), par value $.01 per
share (the "Pledged Shares") to S1, S1 Holdings and FICS as security for
Pledgor's indemnification obligations to S1, S1 Holdings and FICS under the
Purchase Agreement; and
WHEREAS, the execution and delivery of this Agreement is an inducement
for S1's consummation of the transactions contemplated by the Purchase
Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Pledge. Pledgor hereby assigns and pledges to S1 Holdings,
and hereby grants to S1 Holdings a lien on and security interest in all of
Pledgor's right, title and interest in and to the Pledged Shares and certain
dividends thereon and other distributions described in Section 6(c) hereof (the
"Collateral").
Section 2. Security for Obligations. This Agreement secures the payment
and performance of all obligations of Pledgor now or hereafter existing under
the Purchase Agreement (collectively, the "Obligations").
Section 3. Delivery of Pledged Shares. All certificates or instruments
representing or evidencing the Pledged Shares shall be delivered to and held by
or on behalf of S1 Holdings pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to S1
Holdings.
Section 4. Representations and Warranties. Pledgor hereby represents and
warrants as follows:
<PAGE> 54
(a) This Agreement is a legal, valid and binding obligation of
Pledgor, enforceable in accordance with its terms.
(b) Pledgor is the legal and beneficial owner of his Pledged
Shares, free and clear of any lien or encumbrance on such Pledged Shares (except
as created pursuant to the terms of this Agreement or the Purchase Agreement);
and
(c) Upon the delivery of the stock certificate or certificates
representing the Pledged Shares, the pledge of the Pledged Shares pursuant to
this Agreement shall create a valid and perfected first priority security
interest in the Pledged Shares for the benefit of S1 Holdings.
Section 5. Further Assistance. Pledgor agrees that at any time and from
time to time, he will promptly execute and deliver all stock powers, proxies,
assignments, instruments and documents and take all further action, that is
reasonably necessary, at S1 Holdings's request, in order to perfect any security
interest granted hereby or to enable S1 Holdings to exercise and enforce its
rights and remedies hereunder with respect to the Pledged Shares and to carry
out the provisions and purposes hereof.
Section 6. Voting Rights; Dividends; Etc.
(a) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Shares for any purpose not
inconsistent with the terms of this Agreement and the Purchase Agreement.
(b) Pledgor shall be entitled to receive all cash dividends paid
from time to time in respect of the Pledged Shares.
(c) Cash paid, payable or otherwise distributed in redemption of,
or in exchange for, any Pledged Shares, shall in each case be delivered
forthwith to S1 Holdings to hold as Collateral and shall, if received by
Pledgor, be received in trust for the benefit of S1 Holdings, be segregated from
the other property or funds of Pledgor, and be forthwith delivered to S1
Holdings as Collateral in the same form as so received (with any necessary
endorsement); provided that the cash so held upon any such redemption or
exchange shall not exceed $54.00 per Pledged Share and any cash received in
excess of such $54.00 per Pledged Share shall be delivered to Pledgor and
further provided that following any such redemption or exchange, for purposes of
this Agreement, a "Pledged Share" shall be deemed to be a sum of $54.00 then
held as collateral.
(d) S1 Holdings shall execute and deliver to Pledgor all such
proxies and other instruments as Pledgor may reasonably request for the purpose
of enabling Pledgor to exercise the voting and other rights which he is entitled
to exercise pursuant to Section 6(a) above.
Section 7. Transfers and Other Liens; Additional Shares. Pledgor agrees
that he will not (i) sell or otherwise dispose of, or grant any option with
respect to, any of the Pledged Shares without the prior written consent of S1
Holdings, or (ii) create or permit to exist any lien upon or with respect to any
of such Pledged Shares, except for the security interest granted under this
Agreement.
-2-
<PAGE> 55
Section 8. S1 Holdings Appointed Attorney-in-Fact. Pledgor hereby
appoints S1 Holdings Pledgor's attorney-in-fact, with full authority in the
place and stead of Pledgor and in the name of Pledgor or otherwise, from time to
time to take any action and to execute any instrument which S1 Holdings may deem
necessary or advisable to further perfect and protect the security interest
granted hereby, including, without limitation, to receive, endorse and collect
all instruments made payable to Pledgor representing any dividend, interest or
principal payment or other distribution in respect of any Pledged Shares and to
give full discharge for the same; provided, however, that so long as no Default
shall have occurred and be continuing, S1 Holdings shall not take any action
contemplated in this sentence without providing to Pledgor notice of the
performance required of Pledgor and a reasonable opportunity for Pledgor to
provide such performance.
Section 9. No Assumption of Duties; Reasonable Care. The rights and
powers granted to S1 Holdings hereunder are being granted in order to preserve
and protect S1 Holdings's security interest in and to the Pledged Shares granted
hereby and shall not be interpreted to, and shall not, impose any duties on S1
Holdings in connection therewith except to exercise reasonable care in the
custody and preservation of the Pledged Shares. S1 Holdings shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Shares in its possession if the Pledged Shares are accorded treatment
substantially equal to that which S1 Holdings accords its own property, it being
understood that S1 Holdings shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Shares, whether or
not S1 Holdings has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Pledged Shares.
Section 10. Subsequent Changes Affecting Pledged Shares. Pledgor
represents to S1 Holdings that Pledgor has made his own arrangements for keeping
informed of changes or potential changes affecting the Pledged Shares
(including, but not limited to, rights to convert, rights to subscribe, payment
of dividends, payments of interest and/or principal, reorganization or other
exchanges, tender offers and voting rights), and Pledgor agrees that S1 Holdings
shall have no responsibility or liability for informing Pledgor of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereto.
Section 11. Application of Pledged Shares. In the event that Pledgor
elects to pay a claim for indemnification in Pledged Shares rather than cash, a
number of Pledged Shares equal to (x) the amount of such claim divided by (y)
$54.00 shall be transferred to S1 Holdings or any designee of S1 Holdings. Such
transferred shares shall no longer be "Pledged Shares" within the meaning of
this Agreement. Neither S1 Holdings nor FICS shall have any rights and remedies
with respect to the Pledged Shares other than as expressly set forth in this
Agreement.
Section 12. Partial Release. In the event that Pledgor satisfies any of
the Obligations by payment of cash, a number of Pledged Shares equal to (x) the
amount of such payment divided by (y) $54.00 shall be released and returned by
S1 Holdings to Pledgor.
-3-
<PAGE> 56
Section 13. Miscellaneous Provisions.
Section 13.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when (a) delivered in person, (b)
transmitted by telecopy (with written confirmation of receipt), or (c) delivered
by an express courier (with written confirmation of receipt) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to Pledgor:
Michel Akkermans
Bestuurder
Eygenstraat 35
3040 Holdenberg
Belgium
with a copy (which shall not constitute notice) to:
Brown, Rudnick, Freed & Gesmer
Stanmore House
29-30 St. James's Street
London SW1A 1HB, England
Attn.: Lawrence A. Levy, Esq.
Colin Hugh Buckley, Esq.
(b) If to S1 Holdings:
S1 Europe Holdings N.V.
c/o Security First Technologies Corporation
3390 Peachtree Road, NE, Suite 1700
Atlanta, Georgia 30326
Attn.: Robert F. Stockwell, Chief Financial Officer
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004-1109
Attn.: Stuart G. Stein, Esq.
Section 13.2 Headings. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
Section 13.3 Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and
-4-
<PAGE> 57
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 13.4 Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Agreement, and any consent to any departure by any
Pledgor from any provision of this Agreement, shall be effective only if made or
given in writing signed by each of the parties hereto.
Section 13.5 Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Pledged Shares and shall (i)
remain in full force and effect until payment in full (including after the final
maturity date) of the Obligations, (ii) be binding upon Pledgor and his
permitted assigns, and (iii) inure to the benefit of S1 Holdings and its heirs,
transferees and assigns. This Agreement shall not be assigned by operation of
law or otherwise; provided that S1 Holdings may assign this Agreement with the
prior written consent of Pledgor. It is understood that, to the extent that no
claims for damages exist as of the end of the period specified in clause (i) of
Section 10.1(b) of the Purchase Agreement, S1 Holdings shall release any and all
remaining Pledged Shares which are pledged to S1 Holdings pursuant hereto;
provided that if any claim shall have been asserted as set forth in Section
10.1(b)(ii) at such time, S1 Holdings shall have the right to retain such number
of shares of S1 Common Stock as may be required to satisfy such claim, at a per
Pledged Share value of $54.00 per share.
Section 13.6 Survival of Provisions. All representations, warranties and
covenants of Pledgor contained herein shall survive the execution and delivery
of this Agreement, and shall terminate only upon the full and final performance
by Pledgor of the Obligations.
Section 13.7 Authority of S1 Holdings. S1 Holdings shall have and be
entitled to exercise all powers hereunder which are specifically granted to S1
Holdings by the terms hereof, together with such powers as are reasonably
incident thereto. S1 Holdings may perform any of its duties hereunder or in
connection with the Pledged Shares by or through agents or employees and shall
be entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. S1 Holdings shall not be liable to Pledgor for any
action taken or omitted to be taken by him, her or it hereunder, except for its
own gross negligence or willful misconduct, nor shall S1 Holdings be responsible
for the validity, effectiveness or sufficiency hereof or of any document or
security furnished pursuant hereto. S1 Holdings shall be entitled to rely on any
communication, instrument or document reasonably believed by him, her, it or
them to be genuine and correct and to have been signed or sent by the proper
person or persons.
Section 13.8 Release; Termination of Agreement. Subject to the
provisions of Section 13.5 hereof, this Agreement shall terminate on the first
anniversary of the date of this Agreement; provided that if a claim for
indemnification under the Purchase Agreement has been asserted but not resolved
on such date, this Agreement shall terminate upon the resolution of such claim
for indemnification. At such time, S1 Holdings shall, at the request and expense
of Pledgor, reassign and redeliver to the Pledgor all of the remaining Pledged
Shares hereunder and any money, instruments or property received in respect
thereof, which has not been retained or applied by S1 Holdings in accordance
with the terms hereof.
-5-
<PAGE> 58
Section 13.9. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which shall be deemed an original and all of which taken together
constitute one and the same document.
Section 13.10.Governing Law; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without regard to its conflicts
of laws principles or rules.
(b) Pledgor and S1 Holdings hereby waive any right to jury trial
of any claim, cross-claim or counterclaim relating to or arising out of or in
connection with this Agreement or the Purchase Agreement.
-6-
<PAGE> 59
IN WITNESS WHEREOF, each of the parties has executed this Pledge
Agreement as of the date first above written.
S1 EUROPE HOLDINGS N.V.
By:
------------------------------------------
Name:
Title:
FICS GROUP N.V.
By:
------------------------------------------
Name:
Title:
---------------------------------------------
Michel Akkermans
<PAGE> 60
EXHIBIT B
S1
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of May 16, 1999, is entered into
by and among each of the stockholders of FICS Group N.V., a Belgian corporation
("FICS"), listed on the signature page of this Agreement (collectively, the
"FICS Stockholders"), and the stockholders of Security First Technologies
Corporation, a Delaware corporation ("S1"), named on Schedule I hereto
(collectively, the "Stockholders") who are directors, executive officers or
other affiliates of S1 (for purposes of Rule 145 under the Securities Act of
1933, as amended).
WHEREAS, S1, the FICS Stockholders, S1 Europe Holdings N.V., a
Belgian corporation in the process of incorporation ("S1 Holdings"), represented
by S1, and FICS have entered into that certain Share Purchase Agreement, dated
as of May 16, 1999 (the "Agreement"), which is conditioned upon, and requires,
the execution of this Stockholder Agreement and which provides for, among other
things, the acquisition of all of the capital stock of FICS by S1 Holdings (the
"Transaction"); and
WHEREAS, in order to induce the FICS Stockholders to enter into or
proceed with the Agreement, the Stockholders represent and warrant that the
facts provided herein are accurate as to each of the Stockholders set forth
herein, and each of the Stockholders agrees to, among other things, vote in
favor of the Agreement, the Transaction and the other transactions contemplated
by the Agreement in his/her capacity as a stockholder of S1.
NOW, THEREFORE in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. OWNERSHIP OF S1 COMMON STOCK. Each Stockholder represents and
warrants that the number of shares of S1 common stock, par value $.01 per share
("S1 Common Stock"), set forth opposite such Stockholder's name on Schedule I
hereto is the total number of shares of S1 Common Stock over which such person
has "beneficial ownership" within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, except that the provisions of Rule
13d-3(d)(1)(i) shall be considered without any limit as to time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and agrees
that:
(a) Such Stockholder shall, at any meeting of the holders of S1
Common Stock called for the purpose, vote or cause to be voted all shares of S1
Common Stock with respect to which such Stockholder has the right to vote
(whether owned as of the date hereof or hereafter acquired) in favor of the
Agreement, the Transaction and the other transactions contemplated by the
Agreement.
(b) Prior to the Closing Date, except as otherwise expressly
permitted hereby, such Stockholder shall not, sell, pledge, transfer or
otherwise dispose of his/her shares of S1 Common Stock; provided, however, that
this Section 2(b) shall not apply to a pledge existing as of the date hereof.
3. SUCCESSORS AND ASSIGNS. A Stockholder may sell, pledge, transfer or
otherwise dispose of his/her shares of S1 Common Stock, provided that such
Stockholder obtains the prior written consent of a number of FICS Stockholders
that together own a majority of the capital stock of FICS Group N.V. and that
any acquirer of such S1 Common Stock agrees in writing to be bound by this
Stockholder Agreement.
<PAGE> 61
4. SPECIFIC PERFORMANCE; TERMINATION. The parties agree and intend that
this Stockholder Agreement be a valid and binding agreement enforceable against
the parties hereto and that damages and other remedies at law for the breach of
this Stockholder Agreement are inadequate. Each of the Stockholders agrees that
irreparable damage to the FICS Stockholders would occur in the event that the
provisions of this Stockholder Agreement were not performed in accordance with
its specific terms or were otherwise breached by any of the Stockholders. It is
accordingly agreed that the FICS Stockholders shall be entitled to an injunction
or injunctions to prevent breaches of this Stockholder Agreement by any of the
Stockholders and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which S1 is entitled at law or in equity. This
Stockholder Agreement may be terminated at any time prior to the consummation of
the Transaction by the mutual written consent of the parties hereto and shall be
automatically terminated in the event that the Agreement is terminated in
accordance with its terms.
5. NOTICES. Notices may be provided to the FICS Stockholders and the
Stockholders in the manner specified in the Agreement, with all notices to the
Stockholders being provided to them at the addresses set forth at Schedule I.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
7. COUNTERPARTS. This Stockholder Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
8. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
9. DEFINITIONS. Capitalized Terms used but not defined herein have the
meanings ascribed to them in the Agreement.
-2-
<PAGE> 62
IN WITNESS WHEREOF, each of the FICS Stockholders and the
Stockholders have caused this Stockholder Agreement to be executed and delivered
as of the day and year first above written.
<TABLE>
<CAPTION>
The Stockholders of FICS GROUP N.V.
<S> <C>
By: By:
------------------------------------------ -------------------------------
Name: Michel Akkermans Name: Loek Van den Boog
Title:
By: By:
------------------------------------------ -------------------------------
Name: Pamica N.V. Name: Unico Portfolio, Ltd
Represented by: Represented by:
By: By:
------------------------------------------ -------------------------------
Name: General Atlantic Partners 20, L.P. Name: Frederick Dumas
Represented by:
By:
------------------------------------------
Name: General Atlantic Partners 52, L.P.
Represented by:
By:
------------------------------------------
Name: GAP CO Investment Partners, L.P..
Represented by:
By:
------------------------------------------
Name: GIMV N.V.
Represented by:
By:
------------------------------------------
Name: Guy Moons
By:
------------------------------------------
Name: Etienne Castiaux
By:
------------------------------------------
Name: Steven Van Rossen
By:
------------------------------------------
Name: Nadine Quaeyhaegens
By:
------------------------------------------
Name: Goort Gelten
</TABLE>
<PAGE> 63
STOCKHOLDERS:
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
-2-
<PAGE> 64
SCHEDULE I
<PAGE> 65
SCHEDULE A
----------
<TABLE>
<CAPTION>
STOCKHOLDERS PERCENTAGE
------------ ----------
<S> <C>
Michel Akkermans
PAMICA N.V.
General Atlantic Partners 20, L.P.
GAP Coinvestment Partners, L.P.
General Atlantic Partners 52, L.P.
GIMV N.V.
Guy Moons
Steven Van Rossen
Nadine Quaeyhaegens
Etienne Castiaux
Goort Gelten
Frederick Dumas
Leok van den Boog
UNICO PORTFOLIO Ltd.
TOTAL 100.00%
</TABLE>
<PAGE> 1
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SECURITY FIRST TECHNOLOGIES CORPORATION,
SAHARA STRATEGY CORPORATION
AND
EDIFY CORPORATION
DATED AS OF
MAY 16, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE MERGER....................................................................................................1
1.1 The Merger..................................................................................................1
1.2 Effective Time..............................................................................................1
1.3 Effects of the Merger.......................................................................................2
1.4 Conversion of Edify Common Stock............................................................................2
1.5 Conversion of Merger Sub Common Stock.......................................................................3
1.6 Options.....................................................................................................3
1.7 Certificate of Incorporation................................................................................3
1.8 By-Laws.....................................................................................................4
1.9 Directors and Officers......................................................................................4
1.10 Tax Consequences...........................................................................................4
ARTICLE II EXCHANGE OF SHARES...........................................................................................4
2.1 S1 to Make Shares Available.................................................................................4
2.2 Exchange of Shares..........................................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF EDIFY.....................................................................5
3.1 Corporate Organization......................................................................................6
3.2 Capitalization..............................................................................................6
3.3 Authority; No Violation.....................................................................................7
3.4 Consents and Approvals......................................................................................8
3.5 Financial Statements; Exchange Act Filings; Books and Records...............................................8
3.6 Broker's Fees...............................................................................................9
3.7 Absence of Certain Changes or Events........................................................................9
3.8 Legal Proceedings...........................................................................................9
3.9 Taxes and Tax Returns......................................................................................10
3.10 Employee Plans............................................................................................11
3.11 Certain Contracts.........................................................................................13
3.12 Agreements with Regulatory Agencies.......................................................................13
3.13 Certificate of Incorporation..............................................................................14
3.14 Environmental Matters.....................................................................................14
3.15 Properties and Assets.....................................................................................14
3.16 Insurance.................................................................................................15
3.17 Compliance with Applicable Laws...........................................................................15
3.18 Affiliates................................................................................................15
3.19 Ownership of S1 Common Stock..............................................................................16
3.20 Fairness Opinion..........................................................................................16
3.21 Change of Control Payments................................................................................16
3.22 Disclosure................................................................................................16
3.23 Board Approval...........................................................................................16
3.24 Section 203 of the Delaware General Corporation Law and Edify Rights Plan Not Applicable.................17
3.25 Intellectual Property.....................................................................................17
3.26 Additional Information....................................................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF S1........................................................................19
4.1 Corporate Organization.....................................................................................19
4.2 Capitalization.............................................................................................20
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4.3 Authority; No Violation....................................................................................21
4.4 Consents and Approvals.....................................................................................22
4.5 Financial Statements; Exchange Act Filings; Books and Records..............................................22
4.6 Broker's Fees..............................................................................................23
4.7 Absence of Certain Changes or Events.......................................................................23
4.8 Legal Proceedings..........................................................................................23
4.9 Taxes and Tax Returns......................................................................................23
4.10 Employee Plans............................................................................................24
4.11 Certain Contracts.........................................................................................26
4.12 Environmental Matters.....................................................................................26
4.13 Properties and Assets.....................................................................................27
4.14 Insurance.................................................................................................27
4.15 Compliance with Applicable Laws...........................................................................28
4.16 S1 Information............................................................................................28
4.17 Intellectual Property.....................................................................................28
4.18 BBRS Fairness Opinion.....................................................................................30
4.19 Merger Sub Board Approval.................................................................................30
4.20 S1 Board Approval.........................................................................................30
4.21 Agreements with Regulatory Agencies.......................................................................31
4.22 Certificate of Incorporation..............................................................................31
4.23 Affiliates................................................................................................31
4.24 Additional Information....................................................................................31
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS....................................................................31
5.1 Covenants of Edify.........................................................................................31
5.2 Covenants of S1............................................................................................34
5.3 Compliance with Antitrust Laws.............................................................................34
ARTICLE VI ADDITIONAL AGREEMENTS.......................................................................................35
6.1 Regulatory Matters.........................................................................................35
6.2 Access to Information......................................................................................36
6.3 Stockholder Meetings.......................................................................................37
6.4 Legal Conditions to Merger.................................................................................37
6.5 Stock Exchange Listing.....................................................................................37
6.6 Employees..................................................................................................37
6.7 Indemnification............................................................................................38
6.8 Subsequent Interim and Annual Financial Statements.........................................................39
6.9 Additional Agreements......................................................................................39
6.10 Advice of Changes.........................................................................................39
6.11 Current Information.......................................................................................39
6.12 Transaction Expenses of Edify.............................................................................40
6.13 Form S-8..................................................................................................40
6.14 Edify ESPP................................................................................................40
6.15 Board of Directors........................................................................................40
6.16 Bylaws....................................................................................................41
ARTICLE VII CONDITIONS PRECEDENT.......................................................................................41
7.1 Conditions to Each Party's Obligation To Effect the Merger.................................................41
7.2 Conditions to Obligations of S1 and Merger Sub.............................................................42
7.3 Conditions to Obligations of Edify.........................................................................43
ARTICLE VIII TERMINATION AND AMENDMENT.................................................................................43
8.1 Termination................................................................................................43
8.2 Effect of Termination......................................................................................45
</TABLE>
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<TABLE>
<S> <C>
8.3 Amendment..................................................................................................45
8.4 Extension; Waiver..........................................................................................45
ARTICLE IX GENERAL PROVISIONS..........................................................................................46
9.1 Closing....................................................................................................46
9.2 Nonsurvival of Representations, Warranties and Agreements..................................................46
9.3 Expenses; Breakup Fee......................................................................................46
9.4 Notices....................................................................................................46
9.5 Interpretation.............................................................................................47
9.6 Counterparts...............................................................................................47
9.7 Entire Agreement...........................................................................................47
9.8 Governing Law..............................................................................................48
9.9 Enforcement of Agreement...................................................................................48
9.10 Severability..............................................................................................48
9.11 Publicity.................................................................................................48
9.12 Assignment; Limitation of Benefits........................................................................48
9.13 Additional Definitions....................................................................................49
</TABLE>
EXHIBITS
A Option Agreement
B Certificate of Merger
C Edify Stockholder Agreement
D S1 Stockholder Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1999 (this
"Agreement"), is entered into by and among Security First Technologies
Corporation, a Delaware corporation ("S1"), Sahara Strategy Corporation, a
Delaware corporation and wholly owned subsidiary of S1 ("Merger Sub"), and Edify
Corporation, a Delaware corporation ("Edify").
WHEREAS, the Boards of Directors of S1, Merger Sub and Edify have
determined that it is in the best interests of their respective companies and
stockholders to consummate the business combination transaction provided for
herein in which Merger Sub will, subject to the terms and conditions set forth
herein, merge with and into Edify, with Edify being the Surviving Corporation
(as defined) and a wholly owned subsidiary of S1 (the "Merger");
WHEREAS, as an inducement to S1 to enter into this Agreement, Edify will
enter into an option agreement, in the form attached hereto as Exhibit A (the
"Option Agreement"), with S1 immediately following the execution of this
Agreement pursuant to which Edify will grant S1 an option to purchase, under
certain circumstances, newly issued shares of common stock, par value $0.001 per
share, of Edify (including the associated Rights (as defined in that certain
Rights Agreement (the "Edify Rights Plan") dated as of August 10, 1998 between
Edify and BankBoston, N.A.) ("Edify Common Stock"), representing up to 19.9% of
the issued and outstanding shares of Edify Common Stock as of the first date, if
any, that the option becomes exercisable, at an exercise price of $17.87 per
share, upon the terms and conditions therein contained, and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance with
the Delaware General Corporation Law (the "DGCL"), at the Effective Time (as
defined in Section 1.2 hereof), Merger Sub shall merge into Edify, with Edify
being the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger. Upon consummation of the Merger, the corporate
existence of Merger Sub shall cease and the Surviving Corporation shall continue
to exist as a Delaware corporation, and a wholly owned subsidiary of S1.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), upon the filing of the certificate of merger (the
"Certificate of Merger") in the form attached as Exhibit B hereto with the
Secretary of State of the State of Delaware (or at such later time as may be
agreed by Edify and S1 in writing and specified in the Certificate of Merger).
The term "Effective Time" shall be the date and time when the Merger becomes
effective as set forth in the Certificate of Merger.
<PAGE> 6
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL.
1.4 CONVERSION OF EDIFY COMMON STOCK.
(a) At the Effective Time, subject to Section 1.4(b) hereof,
each share of Edify Common Stock issued and outstanding prior to the Effective
Time shall, by virtue of this Agreement and without any action on the part of
the holder thereof, be converted into the right to receive, and be exchangeable
for, 0.330969 shares of S1 common stock, par value $0.01 per share ("S1 Common
Stock"). The number of shares of S1 Common Stock issuable with respect to each
share of Edify Common Stock, as determined and adjusted as set forth herein, is
called the "Exchange Ratio."
(b) At the Effective Time, all of the shares of Edify Common
Stock converted into S1 Common Stock pursuant to this Article I shall no longer
be outstanding and shall automatically be canceled and shall cease to exist, and
each certificate (each a "Certificate") previously representing any such shares
of Edify Common Stock shall thereafter represent the right to receive (i) the
number of whole shares of S1 Common Stock and (ii) cash in lieu of fractional
shares of S1 Common Stock into which the shares of Edify Common Stock
represented by such Certificate have been converted pursuant to Section 1.4(a)
hereof. Certificates previously representing shares of Edify Common Stock shall
be exchanged for certificates representing whole shares of S1 Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If prior to the Effective Time, S1 should split or combine
its common stock, or pay a dividend or other distribution in such common stock,
then the Exchange Ratio shall be appropriately adjusted to fully reflect such
split, combination, dividend or distribution.
(c) At the Effective Time, all shares of Edify Common Stock
that are owned by Edify as treasury stock and all shares of Edify Common Stock
that are owned directly or indirectly by S1 or Edify or any of their respective
Subsidiaries shall be canceled and shall cease to exist and no stock of S1 or
other consideration shall be delivered in exchange therefor. All shares of S1
Common Stock that are owned by Edify or any of its Subsidiaries shall become
treasury stock of S1.
(d) Certificates for fractions of shares of S1 Common Stock
will not be issued. In lieu of a fraction of a share of S1 Common Stock, each
holder of Edify Common Stock otherwise entitled to a fraction of a share of S1
Common Stock shall be entitled to receive an amount of cash equal to (i) the
fraction of a share of the S1 Common Stock to which such holder would otherwise
be entitled, multiplied by (ii) the actual market value of the S1 Common Stock,
which shall be deemed to be the average of the daily closing prices per share
for S1 Common Stock for the twenty consecutive trading days on which shares of
S1 Common Stock are actually traded (as reported on the Nasdaq Stock Market
National Market System) ending on the third trading day preceding the Closing
Date. Following consummation of the Merger, no holder of Edify Common Stock
shall be entitled to dividends or any other rights in respect of any such
fraction.
(e) If any shares of Edify Common Stock outstanding
immediately prior to the Effective Time are subject to a repurchase option, risk
of forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with Edify, then the shares of S1 Common Stock
issued in exchange for such shares of Edify Common Stock will also be unvested
and subject to the same repurchase option, risk of forfeiture or other
condition, and the certificates representing such shares of S1 Common Stock
accordingly may be marked with appropriate legends. Edify shall take all action
that may be necessary to ensure that, from and after the Effective Time,
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<PAGE> 7
S1 is entitled to exercise any such repurchase option or other right set forth
in any such restricted stock purchase agreement or other agreement.
1.5 CONVERSION OF MERGER SUB COMMON STOCK.
Each of the shares of the common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
become shares of the Surviving Corporation after the Merger and shall thereupon
constitute all of the issued and outstanding shares of the Surviving
Corporation.
1.6 OPTIONS.
At the Effective Time, each option granted by Edify to purchase shares of
Edify Common Stock which is outstanding and unexercised immediately prior
thereto, whether or not vested, shall be converted automatically into an option
to purchase shares of S1 Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms of the 1996
Equity Incentive Plan (the "1996 Equity Plan"), the 1996 Directors Stock Option
Plan (the "Directors Plan"), or the 1990 Stock Option Plan (the "1990 Option
Plan"), as the case may be, (the 1996 Equity Plan, the Directors Plan and the
1990 Option Plan, collectively, the "Edify Stock Plans")):
(1) The number of shares of S1 Common Stock to be subject
to the option immediately after the Effective Time shall be equal
to the product of the number of shares of Edify Common Stock
subject to the option immediately before the Effective Time,
multiplied by the Exchange Ratio, provided that any fractional
shares of S1 Common Stock resulting from such multiplication shall
be rounded down to the nearest share; and
(2) The exercise price per share of S1 Common Stock under
the option immediately after the Effective Time shall be equal to
the exercise price per share of Edify Common Stock under the
option immediately before the Effective Time divided by the
Exchange Ratio, provided that such exercise price shall be rounded
up to the nearest cent.
The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The duration, vesting schedule, exercisability
and other terms of the option immediately after the Effective Time shall be the
same as the corresponding terms in effect immediately before the Effective Time,
except that all references to Edify in the Edify Stock Plans (and the
corresponding references in the option agreement documenting such option) shall
be deemed to be references to S1. Except as set forth in Section 1.6 of the
Edify Disclosure Schedule, vesting of stock options under the Edify stock plans
shall not be accelerated as a result of the Merger. Continuous employment with
Edify or its subsidiaries shall be credited to the optionee for purposes of
determining the vesting of all assumed Edify options after the Effective Time.
It is intended that Edify options assumed by S1 shall qualify following the
Effective Time as incentive stock options are defined in Section 422 of the Code
to the extent such options qualified as such prior to the Effective Time and the
provisions of this Section 1.6 shall be applied consistently with such intent.
As soon as reasonably practicable, but in no event more than 30 days after the
Effective Time, S1 will issue to each holder of an assumed option notice of the
foregoing assumption by S1 of such Edify option.
1.7 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of Edify, as the
Surviving Corporation, shall be amended to be the same form of Certificate of
Incorporation as Merger Sub.
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<PAGE> 8
1.8 BY-LAWS.
At the Effective Time, the By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
1.9 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation.
1.10 TAX CONSEQUENCES.
It is intended that the Merger shall constitute a reorganization within
the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "plan of reorganization" for the purposes of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 S1 TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, S1 shall deposit, or shall cause to be
deposited, with S1's transfer agent, American Stock Transfer & Trust Company, or
such other bank, trust company or transfer agent as S1 may select and is
reasonably acceptable to Edify (the "Exchange Agent"), for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of S1 Common Stock, the cash in lieu of
fractional shares and any dividends or distributions pursuant to Section 2.2(b)
(such cash, dividends and certificates for shares of S1 Common Stock, being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
1.4 and paid pursuant to Section 2.2(a) hereof in exchange for outstanding
shares of Edify Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing the shares of S1 Common Stock, the cash in lieu of
fractional shares into which the shares of Edify Common Stock represented by
such Certificate or Certificates shall have been converted and any dividends or
distributions pursuant to Section 2.2(b) pursuant to this Agreement. Edify shall
have the right to review both the letter of transmittal and the instructions
prior to such documents being finalized. Upon surrender of a Certificate for
exchange and cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing that number of whole
shares of S1 Common Stock to which such holder of Edify Common Stock shall have
become entitled pursuant to the provisions of Article I hereof (with such
legends as may be required pursuant to Section 1.4(e) hereof), (y) a check
representing the amount of cash in lieu of fractional shares, if any, which such
holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II and any dividends or distributions
pursuant to Section 2.2(b), and the Certificate so surrendered shall forthwith
be canceled. No interest will be paid or accrued on the cash in lieu of
fractional shares and unpaid dividends and distributions, if any, payable to
holders of Certificates.
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<PAGE> 9
(b) No dividends or other distributions declared after the
Effective Time with respect to S1 Common Stock and payable to the holders of
record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of S1 Common Stock
represented by such Certificate. No holder of an unsurrendered Certificate shall
be entitled, until the surrender of such Certificate, to vote the shares of S1
Common Stock into which his Edify Common Stock shall have been converted.
(c) If any certificate representing shares of S1 Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of S1 Common Stock in any
name other than that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) After the close of business on the day immediately prior
to the Effective Time, there shall be no transfers on the stock transfer books
of Edify of the shares of Edify Common Stock which were issued and outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates representing such shares are presented for transfer to the Exchange
Agent, they shall be canceled and exchanged for certificates representing shares
of S1 Common Stock as provided in this Article II.
(e) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of Edify for six months after the Effective Time may be
returned to S1. Any stockholders of Edify who have not complied with this
Article II prior to such return shall thereafter look only to S1 for payment of
their shares of S1 Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on S1 Common Stock deliverable in respect of each
share of Edify Common Stock such stockholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of S1, Edify, the Exchange Agent or any other person shall be
liable to any former holder of shares of Edify Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
S1, the posting by such person of a bond in such amount as S1 may reasonably
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of S1 Common Stock, cash in lieu of
fractional shares deliverable in respect thereof and any dividends or
distributions pursuant to Section 2.2(b) pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EDIFY
Edify hereby makes the following representations and warranties to S1 and
Merger Sub as set forth in this Article III, subject to the exceptions disclosed
in writing in the Edify Disclosure Schedule as of the date hereof, each of which
is being relied upon by S1 and Merger Sub as a material inducement to enter into
and perform this Agreement. All of the disclosure schedules of Edify
5
<PAGE> 10
referenced below or otherwise required pursuant to this Agreement are referred
to herein as the "Edify Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) Edify is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Except as set
forth in Section 3.1 of the Edify Disclosure Schedule, Edify has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of any
material business conducted by it or the character or location of any material
properties or assets owned or leased by it makes such licensing or qualification
necessary. The Certificate of Incorporation and By-Laws of Edify, copies of
which have previously been made available to S1, are true, correct and complete
copies of such documents as in effect as of the date of this Agreement.
(b) No subsidiary of Edify is a "Significant Subsidiary" as
such term is defined in Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC"). Edify EMEA Ltd. and each other subsidiary of
Edify (each, an "Edify Subsidiary") has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business as it is
now being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of any material business conducted by it or the
character or the location of any material properties or assets owned or leased
by it makes such licensing or qualification necessary. The Certificate of
Incorporation and By-Laws or other corporate governance documents of each Edify
Subsidiary, copies of which have previously been made available to S1, are true,
correct and complete copies of such documents as in effect as of the date of
this Agreement.
(c) Neither Edify nor any Edify Subsidiary has agreed or is
obligated to make, or is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan or
legally binding commitment or undertaking of any nature, as in effect as of the
date hereof or as may hereinafter be in effect (each, a "Contract") under which
Contract it may become obligated to make, any future investment in or capital
contribution to any other entity. Neither Edify nor any Edify Subsidiary has, at
any time, been a general partner of any general partnership, limited partnership
or other entity.
3.2 CAPITALIZATION.
(a) The authorized capital stock of Edify consists of
55,000,000 shares of Edify Common Stock and 5,000,000 shares of preferred stock,
$0.001 par value per share (the "Edify Preferred Stock"). Except as set forth in
Section 3.2(a) of the Edify Disclosure Schedule, as of the date hereof, there
are (x) 17,696,952 shares of Edify Common Stock issued and outstanding and no
shares of Edify Common Stock held in Edify's treasury, (y) no shares of Edify
Common Stock reserved for issuance upon exercise of outstanding stock options or
otherwise, except for 5,146,790 shares of Edify Common Stock reserved for
issuance pursuant to the Edify Stock Plans (of which options for 5,027,283
shares are currently outstanding), (ii) the shares of Edify Common Stock
reserved for issuance upon exercise of the option to be issued to S1 pursuant to
the Option Agreement, and (iii) 296,885 shares of Edify Common Stock reserved
for issuance pursuant to the Edify 1996 Employee Stock Purchase Plan (the "Edify
ESPP"), and (z) no shares of Edify Preferred Stock issued or outstanding, held
in Edify's treasury or reserved for issuance upon exercise of outstanding stock
options or otherwise, other than 500,000 shares of Edify Preferred Stock
designated as Series A Junior Participating Preferred Stock pursuant to the
Edify Rights Plan. Upon consummation of the Merger, (A) the shares of S1 Common
Stock issued in exchange for any shares of Edify Common Stock that are subject
to a Contract pursuant to which Edify has the right to repurchase, redeem or
otherwise reacquire any shares of
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<PAGE> 11
Edify Common Stock will, without any further act of S1, Edify or any other
person, become subject to the restrictions, conditions and other provisions
contained in such Contract, and (B) S1 will automatically succeed to and become
entitled to exercise Edify's rights and remedies under any such Contract. All of
the issued and outstanding shares of Edify Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. Except for the Option Agreement, the Edify Rights Plan, the Edify ESPP,
the Edify Stock Plans and as disclosed in Section 3.2 of the Edify Disclosure
Schedule, Edify does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Edify Common Stock or Edify Preferred
Stock or any other equity security of Edify or any securities representing the
right to purchase or otherwise receive any shares of Edify Common Stock or any
other equity security of Edify. The names of the optionees, the date of each
option to purchase Edify Common Stock granted, the number of shares subject to
each such option, the expiration date of each such option, and the price at
which each such option may be exercised under the Edify Stock Plans are set
forth in Section 3.2(a) of the Edify Disclosure Schedule. Since December 31,
1998, Edify has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other than
(i) pursuant to the exercise of director or employee stock options granted prior
to December 31, 1998 under the Edify Stock Plans and (ii) pursuant to the Edify
ESPP.
(b) Section 3.2(b) of the Edify Disclosure Schedule sets forth
a true, correct and complete list of all Subsidiaries of Edify and their
respective jurisdictions of incorporation or organization as of the date of this
Agreement. Except as set forth in Section 3.2(b) of the Edify Disclosure
Schedule, Edify owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of its Subsidiaries, free and clear of all
liens, charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. No Edify Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) Edify has full corporate power and authority to execute and
deliver this Agreement and the Option Agreement and, subject to the adoption of
this Agreement by a majority of the outstanding shares of Edify Common Stock, to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of Edify. The Board of Directors of Edify has declared
this Agreement advisable and directed that this Agreement and the transactions
contemplated hereby be submitted to Edify's stockholders for approval at a
special meeting of such stockholders and, except for the adoption of this
Agreement by the requisite vote of Edify's stockholders, no other corporate
proceedings on the part of Edify (except for matters related to setting the
date, time, place and record date for the special meeting) are necessary to
approve this Agreement or the Option Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement and the Option Agreement have
been duly and validly executed and delivered by Edify and (assuming due
authorization, execution and delivery by S1 and Merger Sub of this Agreement and
by S1 of the Option Agreement) constitute valid and binding obligations of
Edify, enforceable against Edify in accordance with their terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
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(b) Except as set forth at Section 3.3(b) of the Edify
Disclosure Schedule, none of the execution and delivery of this Agreement and
the Option Agreement by Edify, the consummation by Edify of the transactions
contemplated hereby and thereby, or compliance by Edify with any of the terms or
provisions hereof and thereof, will (i) violate any provision of the Certificate
of Incorporation or By-Laws of Edify, or (ii) assuming that the consents and
approvals referred to in Sections 3.3(a) and 3.4 hereof are duly obtained, (x)
violate any Laws (as defined in Section 9.13) applicable to Edify or any of its
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
properties or assets of Edify under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Edify is a party, or by which it or
any of its properties or assets may be bound or affected, except, in each case,
where such violation, conflict, breach, loss, default, termination, cancellation
or acceleration would not have a Material Adverse Effect on Edify or the
Surviving Corporation.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the effectiveness of a registration
statement on Form S-4 to register the shares of S1 Common Stock to be issued in
connection with the Merger (including the shares of S1 Common Stock that may be
issued upon the exercise of the options referred to in Section 1.6 hereof), and
the filing of the joint proxy statement/prospectus to be used in soliciting the
approval of Edify's and S1's stockholders at a special meeting to be held in
connection with this Agreement and the transactions contemplated hereby (the
"Proxy Statement/Prospectus"), (ii) the approval of this Agreement by the
requisite vote of the stockholders of Edify, (iii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware pursuant to the
DGCL, (iv) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal, foreign
and state securities (or related) laws and, if applicable, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
securities or antitrust laws of any foreign country, and (v) such filings,
authorizations or approvals as may be set forth in Section 3.4 of the Edify
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity"), or with any third
party are necessary in connection with (1) the execution and delivery by Edify
of this Agreement and the Option Agreement, (2) the consummation by Edify of the
Merger and the other transactions contemplated hereby, and (3) the consummation
by Edify of the Option Agreement and the transactions contemplated thereby,
except, in each case, for such consents, approvals or filings, the failure of
which to obtain will not have (x) a material adverse effect on the ability of S1
to consummate the transactions contemplated hereby or (y) a Material Adverse
Effect on Edify, S1 or the Surviving Corporation following the Effective Time.
(b) Except as set forth in Section 3.4(b) of the Edify
Disclosure Schedule, Edify hereby represents to S1 that it has no knowledge of
any reason why approval or effectiveness of any of the applications, notices or
filings referred to in Section 3.4(a) cannot be obtained or granted on a timely
basis.
3.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Edify has previously made available to S1 true, correct and complete
copies of the consolidated balance sheets of Edify and its Subsidiary as of
December 31 for the fiscal years 1997 and 1998 and the related consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
years 1996 through 1998, inclusive, as reported in Edify's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 filed with the SEC under the
Securities Exchange Act of 1934, as amended
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(the "Exchange Act"), in each case accompanied by the audit report of KPMG LLP,
independent public accountants with respect to Edify, and the interim financial
statements of Edify as of and for the three months ended March 31, 1998 and
1999, as included in the Edify quarterly report on Form 10-Q for the period
ended March 31, 1999 as filed with the SEC. The financial statements referred to
in this Section 3.5 (including the related notes, where applicable) fairly
present, and the financial statements referred to in Section 6.8 hereof will
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of Edify and its Subsidiary for
the respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable) comply,
and the financial statements referred to in Section 6.8 hereof will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto and each of such statements (including the
related notes, where applicable) has been, and the financial statements referred
to in Section 6.8 hereof will be prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied during the periods involved,
except in each case as indicated in such statements or in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q or any successor
form. Edify's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 and all reports filed under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act since December 31, 1996 comply in all material respects with the
appropriate requirements for such reports under the Exchange Act, and Edify has
previously made available to S1 true, correct and complete copies of such
reports. The books and records of Edify have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
3.6 BROKER'S FEES.
Neither Edify nor any Edify Subsidiary nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement or the Option Agreement,
except that Edify has engaged, and will pay a fee or commission to Goldman,
Sachs & Co. ("Goldman") in accordance with the terms of a letter agreement
between Goldman and Edify, dated March 19, 1999, a true, complete and correct
copy of which has been previously delivered by Edify to S1.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Edify's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998, or any other report filed since
December 31, 1998 under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
true and correct copies of which have been made available to S1, since December
31, 1998 (i) neither Edify nor any Edify Subsidiary has incurred any material
liability, except as contemplated by the Agreement or in the ordinary course of
their business consistent with their past practices, and (ii) no event has
occurred which has had, or would have, individually or in the aggregate, a
Material Adverse Effect (as defined in Section 9.13) on Edify.
(b) Since December 31, 1998, Edify and its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
3.8 LEGAL PROCEEDINGS.
(a) Except as disclosed on Schedule 3.8 to the Edify Disclosure
Schedule, neither Edify nor any of its Subsidiaries is a party to any, and there
are no pending or threatened, legal, administrative, arbitration or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against Edify or any of its Subsidiaries.
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(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Edify, any of its Subsidiaries or the assets
of Edify or any of its Subsidiaries.
(c) No Governmental Entity has at any time challenged or
questioned in a writing delivered to Edify the legal right of Edify to design,
manufacture, offer or sell any of its products or services in the present manner
or style thereof. As of the date hereof, to the knowledge of Edify, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that would reasonably be expected to, cause or provide a bona fide
basis for a director or executive officer of Edify to seek indemnification from
Edify.
3.9 TAXES AND TAX RETURNS.
(a) For purposes of this Section 3.9, Edify shall include Edify and
each Edify Subsidiary and any other affiliated or related corporation or entity
if Edify or any Edify Subsidiary has or could have any material liability for
the Taxes of such corporation or entity. Edify has duly filed all Tax Returns
required to be filed by it on or before the date hereof (all such returns being
accurate and complete in all material respects) and has duly paid or made
provision in the financial statements referred to in Sections 3.5 and 6.8 hereof
in accordance with GAAP for the payment of all material Taxes that have been
incurred or are due or claimed to be due from it by Taxing Authorities on or
before the date hereof other than Taxes (a) that (x) are not yet delinquent or
(y) are being contested in good faith and set forth in Section 3.9 of the Edify
Disclosure Schedule and (b) that have not been finally determined. The charges,
accruals, and reserves with respect to Taxes in the financial statements
referred to in Sections 3.5 and 6.8 are adequate (determined in accordance with
GAAP) and are at least equal to its liability for Taxes. There exists no
proposed tax assessment against Edify except as disclosed in the financial
statements referred to in Sections 3.5 and 6.8 hereof in accordance with GAAP.
No consent to the application of Section 341(f)(2) of the Code has been filed
with respect to any property or assets held, acquired, or to be acquired by
Edify. All Taxes that Edify is or was required to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to the
proper Taxing Authority. All liability with respect to the Tax Returns of Edify
has been satisfied for all years to and including 1998. No Taxing Authority has
notified Edify of, or otherwise asserted, that there are any material
deficiencies with respect to the Tax Returns of Edify subsequent to 1994. There
are no material disputes pending, or claims asserted, for Taxes or assessments
of Edify, nor has Edify given or been requested to give any currently effective
waiver extending the statutory period of limitation applicable to any Tax
Return. In addition, Tax Returns that are accurate and complete in all material
respects have been filed by Edify for all periods for which returns were due
with respect to income and employment tax withholding with respect to wages and
other income and the amounts shown on such Tax Returns to be due and payable
have been paid in full or adequate provision therefor in accordance with GAAP
has been included by Edify in the financial statements referred to in Sections
3.5 and 6.8 hereto. All Edify Tax Returns have been examined by the relevant
Taxing Authorities, or closed without audit by applicable statutes of
limitations, and all deficiencies proposed as a result of such examinations have
been paid or settled, for all periods before and including the taxable year
ended December 31, 1994. Edify has provided or made available to S1 complete and
correct copies of its Tax Returns and all material correspondence and documents,
if any, relating directly or indirectly to Taxes for each taxable year or other
relevant period as to which the applicable statute of limitations has not run on
the date hereof. For this purpose, "correspondence and documents" include,
without limitation, amended Tax Returns, pending claims for refunds, notices
from Taxing Authorities of proposed changes or adjustments to Taxes or Tax
Returns that have not been finally resolved, consents to assessment or
collection of Taxes, acceptances of proposed adjustments, closing agreements,
rulings and determination letters and requests therefor, and all other written
communications to or from Taxing Authorities relating to any material Tax
liability of Edify.
(b) For purposes of this Agreement:
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"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Taxing Authority in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any law, regulation or other legal
requirement relating to any Tax.
"Taxing Authority" means any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
3.10 EMPLOYEE PLANS.
(a) For purposes of this Section 3.10, Edify shall include
each of its Subsidiaries and any other entity that together with Edify would be
deemed a "single employer" for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (determined without regard to whether
such entity conducts business in the United States). Section 3.10(a) of the
Edify Disclosure Schedule sets forth a true and complete list of each employee
benefit plan (within the meaning of Section 3(3) of ERISA) ("ERISA Plan") and
each other plan, arrangement or agreement providing benefits to the current or
former employees of Edify that as of the date of this Agreement Edify maintains,
to which Edify contributes or under which Edify has any liability, or within the
last six years that Edify has maintained, to which Edify has contributed or
under which Edify has had any liability (collectively, the "Edify Plans"). Each
Edify Plan that is an ERISA Plan is referred to as a "Edify ERISA Plan."
(b) Edify has heretofore made available to S1 true, correct
and complete copies of each of the Edify Plans and all related documents,
including but not limited to (i) the actuarial report for such Edify Plan (if
applicable) for each of the last five years, (ii) the most recent determination
letter from the Internal Revenue Service ("IRS"), if applicable, for each Edify
ERISA Plan, (iii) the current summary plan description and any summaries of
material modification for each Edify ERISA Plan and any corresponding document
for each other Edify Plan which have not been incorporated into the current
summary plan description, (iv) all annual reports for each Edify ERISA Plan
filed for the preceding five plan years and any annual or other periodical
financial information concerning any other Edify Plan filed with any
governmental agency, (v) all agreements with fiduciaries and service providers
relating to the Edify Plan, (vi) all substantive correspondence relating to any
such Edify Plan
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addressed to or received from any governmental agency or authority, (vii) all
personnel, payroll, and employment manuals and policies, and (viii) a written
description of any Edify Plan that is not otherwise in writing.
(c) Edify has performed all of its obligations under all Edify
Plans. Edify has made appropriate entries in the financial statements referred
to in Sections 3.5 and 6.8 hereof in accordance with GAAP for all obligations
and liabilities under the Edify Plans. No statement, either written or oral, has
been made by Edify with regard to any Edify Plan that was not in accordance with
the Edify Plan and that could have a Material Adverse Effect on S1. Edify has no
liability to the IRS, the U.S. Pension Benefit Guaranty Corporation or to any
other governmental or quasi-governmental agency or authority with respect to any
Edify Plan. No Edify ERISA Plan is subject to title IV of ERISA.
(d) Except as set forth at Section 3.10(d) of the Edify Disclosure
Schedule, (i) each of the Edify Plans has been operated and administered in all
material respects in compliance with applicable Laws, including, but not
limited, in the case of each Edify ERISA Plan, to ERISA and the Code, (ii) each
of the Edify ERISA Plans intended to be "qualified" within the meaning of
Section 401 of the Code is so qualified and Edify has received a determination
letter or opinion letter from the IRS to such effect, which letter remains in
full force and effect, (iii) with respect to each Edify ERISA Plan that is
subject to the funding requirements of ERISA and the Code, the present value of
accrued benefits under such Edify Plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by such
Edify Plan's actuary with respect to such Edify Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such Edify Plan
allocable to such accrued benefits, (iv) no Edify Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of Edify beyond their
retirement or other termination of service, other than (a) coverage mandated by
applicable Law, (b) death benefits or retirement benefits under an Edify Plan
that also provides post-retirement income, annuity or pension benefits
(including an "employee pension plan" as that term is defined in ERISA), (c)
deferred compensation benefits under an Edify Plan that are accrued as
liabilities in the financial statements referred to in Sections 3.5 and 6.8
hereof in accordance with GAAP, or (d) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) no liability under
Title IV of ERISA has been incurred by Edify that has not been satisfied in
full, and no condition exists that presents a material risk of Edify incurring a
material liability thereunder, (vi) no Edify ERISA Plan is a "multiemployer
pension plan," as such term is defined in ERISA and no other Edify Plan is
maintained pursuant to any collective bargaining agreement or other agreement
with a labor union or other authorized representative of labor, (vii) all
contributions or other amounts payable by Edify with respect to each Edify Plan
and all other liabilities of each such entity with respect to each Edify Plan,
in respect of current or prior plan years have been paid or accrued in the
financial statements referred to in Sections 3.5 and 6.8 hereof in accordance
with GAAP and, in the case of an Edify ERISA Plan, ERISA and the Code, (viii)
Edify has not engaged in a "prohibited transaction" as defined in ERISA or the
Code in connection with which Edify could be subject to either any material
excise tax or civil penalty assessed pursuant to ERISA or the Code, (ix) to the
knowledge of Edify, there are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of the
Edify Plans or any trusts related thereto, (x) all Edify Plans could be
terminated as of the Closing without material liability in excess of the amount
accrued therefor in the financial statements referred to in Sections 3.5 and 6.8
hereof in accordance with GAAP; (xi) no Edify Plan, either individually or
collectively, provides for any material payment by Edify that would not be
deductible for U.S. federal income tax purposes; (xii) no "accumulated funding
deficiency" as defined in ERISA or the Code, whether or not waived, and no
"unfunded current liability" as determined under the Code exists with respect to
any Edify ERISA Plan; (xiii) no Edify ERISA Plan has experienced a "reportable
event" (as such term is defined in ERISA and regulations thereunder) that is not
subject to an administrative or statutory waiver from the reporting requirement.
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3.11 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.11 of the Edify
Disclosure Schedule, neither Edify nor any of its Subsidiaries is a party to or
bound by any contract, arrangement or commitment (i) with respect to the
employment of any directors, officers, employees or consultants (other than
standard offer letters which provide for no more than at-will employment), (ii)
which, upon execution of this Agreement or the consummation of the transactions
contemplated by this Agreement, will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from S1, Edify, the Surviving Corporation or any of
their respective Subsidiaries to any director, officer or employee thereof,
(iii) with or to a labor union or guild (including any collective bargaining
agreement), (iv) (including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan) any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement, or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement, (v) containing any covenant
materially limiting the right of Edify or any of its Subsidiaries to engage in
any line of business or to compete with any person or granting any exclusive
distribution rights, (vi) relating to the disposition or acquisition by Edify or
any of its Subsidiaries after the date of this Agreement of a material amount of
assets not in the ordinary course of business or pursuant to which Edify or any
of its Subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Edify's
Subsidiaries that is material to Edify's business as currently conducted, or
(vii) to provide source code to any third party for any product or technology
that is material to Edify and its Subsidiaries taken as a whole. Edify has
previously made available to S1 true, correct and complete copies of all
employment, consulting and deferred compensation agreements to which Edify or
any of its Subsidiaries is a party. Section 3.11(a) of the Edify Disclosure
Schedule sets forth a list of all material contracts (as defined in Item
601(b)(10) of Regulation S-K) of Edify. Each contract, arrangement or commitment
of the type described in this Section 3.11(a), whether or not set forth in
Section 3.11(a) of the Edify Disclosure Schedule, is referred to herein as a
"Edify Contract," and neither Edify nor any of its Subsidiaries has received
written notice of, nor do any executive officers of such entities know of, any
violation of any Edify Contract.
(b) (i) Except as set forth in Section 3.11 of the Edify
Disclosure Schedule, each Edify Contract is valid and binding and in full force
and effect as to the obligations of Edify thereunder, and, to the knowledge of
Edify, is valid and binding and in full force and effect as to the obligations
by the third parties thereto, (ii) Edify and each of its Subsidiaries has, and
to the knowledge of Edify, each third party has, in all material respects
performed all obligations required to be performed by it to date under each
Edify Contract, and (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a material default on
the part of Edify or any of its Subsidiaries under any such Edify Contract or,
to the knowledge of Edify, any third party thereto.
3.12 AGREEMENTS WITH REGULATORY AGENCIES.
Edify (i) is not subject to any cease-and-desist or other order issued
by, (ii) is not a party to any written agreement, consent agreement or
memorandum of understanding with, and (iii) has not adopted any board
resolutions at the request of (each, whether or not set forth on Section 3.12 of
the Edify Disclosure Schedule, a "Regulatory Agreement"), any Governmental
Entity that restricts the conduct of its business or that in any manner relates
to its management or its business, nor has Edify been advised by any
Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
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3.13 CERTIFICATE OF INCORPORATION.
The Board of Directors of Edify has approved the offer of S1 to enter
into this Agreement and the Option Agreement, and has approved Edify's entering
into this Agreement and the Option Agreement, and the transactions contemplated
thereby, such that under Edify's Certificate of Incorporation the only vote of
Edify stockholders necessary to consummate the transactions contemplated hereby
(including the Merger and issuance under the Option Agreement) is the approval
of at least a majority of the outstanding shares of Edify Common Stock.
3.14 ENVIRONMENTAL MATTERS.
(a) Each of Edify and the Edify Subsidiaries is in
compliance in all material respects with all applicable federal and state laws
and regulations relating to pollution or protection of the environment
(including without limitation, laws and regulations relating to emissions,
discharges, releases and threatened releases of Hazardous Material (as
hereinafter defined), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation
or notice pending or to the knowledge of Edify's directors and executive
officers threatened (or past or present actions or events that could form the
basis of any such suit, claim, action, proceeding, investigation or notice), in
which Edify or any Edify Subsidiary has been or, with respect to threatened
suits, claims, actions, proceedings, investigations or notices may be, named as
a defendant (x) for alleged material noncompliance (including by any
predecessor), with any environmental law, rule or regulation or (y) relating to
any material release or threatened release into the environment of any Hazardous
Material, whether or not occurring at or on a site owned, leased or operated by
Edify or any Edify Subsidiary;
(c) To the knowledge of Edify's directors and executive
officers, during the period of Edify's or any Edify Subsidiary's ownership or
operation of any of its properties, there has not been any material release of
Hazardous Materials in, on, under or affecting any such property.
(d) For purposes of this Section 3.14, the term "Hazardous
Material" means any hazardous waste, petroleum product, polychlorinated
biphenyl, chemical, pollutant, contaminant, pesticide, radioactive substance, or
other toxic material, or other material or substance (in each such case, other
than small quantities of such substances in retail containers) regulated under
any applicable environmental or public health statute, law, ordinance, rule or
regulation.
3.15 PROPERTIES AND ASSETS.
Section 3.15 of the Edify Disclosure Schedule lists (i) all real property
owned by Edify and each Edify Subsidiary; (ii) each real property lease,
sublease or installment purchase arrangement to which Edify or any Edify
Subsidiary is a party; (iii) a description of each contract for the purchase,
sale, or development of real estate to which Edify or any Edify Subsidiary is a
party; and (iv) all items of Edify's or any Edify Subsidiary's tangible personal
property and equipment with a book value of $25,000 or more or having any annual
lease payment of $25,000 or more. Except for (a) items reflected in Edify's
consolidated financial statements as of December 31, 1998 referred to in Section
3.5 hereof, (b) exceptions to title that do not interfere materially with
Edify's or any Edify Subsidiary's use and enjoyment of owned or leased real
property, (c) liens for current real estate taxes not yet delinquent, or being
contested in good faith, properly reserved against (and reflected on the
financial statements referred to in Section 3.5 above), (d) properties and
assets sold or transferred in the ordinary course of business consistent with
past practices since December 31, 1998, and (e) items listed in Section 3.15 of
the Edify Disclosure Schedule, Edify and each Edify Subsidiary have good and, as
to owned real
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property, marketable and insurable title to all their properties and assets,
reflected in its consolidated financial statements of Edify as of December 31,
1998, free and clear of all liens, claims, charges and other encumbrances. Edify
and each Edify Subsidiary, as lessees, have the right under valid and subsisting
leases to occupy, use and possess all property leased by them, and there has not
occurred under any such lease any material breach, violation or default by
Edify, and neither Edify nor any Edify Subsidiary has experienced any material
uninsured damage or destruction with respect to such properties since December
31, 1998. All properties and assets used by Edify and each Edify Subsidiary are
in good operating condition and repair (subject to ordinary wear and tear) and
comply in all material respects with all Laws relating thereto now in effect.
Edify and each Edify Subsidiary enjoy peaceful and undisturbed possession under
all leases for the use of all property under which they are the lessees, and all
leases to which Edify or any Edify Subsidiary is a party are valid and binding
obligations of Edify, and to the knowledge of Edify with respect to the
respective third parties thereto, enforceable, in accordance with the terms
thereof. Neither Edify nor any Edify Subsidiary is in material default with
respect to any such lease, and there has occurred no default by Edify or event
which with the lapse of time or the giving of notice, or both, would constitute
a material default under any such lease. There are no Laws, conditions of
record, or other impediments which interfere with the intended use by Edify or
any Edify Subsidiary of any of the property owned, leased, or occupied by them.
3.16 INSURANCE.
Section 3.16 of the Edify Disclosure Schedule contains a true, correct
and complete list of all insurance policies and bonds maintained by Edify and
any Edify Subsidiary, including the name of the insurer, the policy number, the
type of policy and any applicable deductibles, and all such insurance policies
and bonds (or other insurance policies and bonds that have, from time to time,
in respect of the nature of the risks insured against and amount of coverage
provided, been substantially similar in kind and amount to that customarily
carried by parties similarly situated who own properties and engage in
businesses substantially similar to that of Edify and any Edify Subsidiary) are
in full force and effect and have been in full force and effect. As of the date
hereof, neither Edify nor any Edify Subsidiary has received any notice of
cancellation or amendment of any such policy or bond or is in default under any
such policy or bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion. The existing insurance
carried by Edify and Edify Subsidiaries is, in respect of the nature of the
risks insured against and the amount of coverage provided, substantially similar
in kind and amount to that customarily carried by parties similarly situated who
own properties and engage in businesses substantially similar to that of Edify
and the Edify Subsidiaries, and is sufficient for compliance by Edify and the
Edify Subsidiaries with all requirements of Law and agreements to which Edify or
any of the Edify Subsidiaries is subject or is party. True, correct and complete
copies of all such policies and bonds reflected at Section 3.16 of the Edify
Disclosure Schedule, as in effect on the date hereof, have been made available
to S1.
3.17 COMPLIANCE WITH APPLICABLE LAWS.
Each of Edify and any Edify Subsidiary has complied in all material
respects with all Laws applicable to it or to the operation of its business.
Neither Edify nor any Edify Subsidiary has received any written notice or to
Edify's knowledge, any other notice, of any material alleged or threatened
claim, violation, or liability under any such Laws that has not heretofore been
cured and for which there is no remaining liability.
3.18 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act")) of Edify is listed at Section 3.18 of the Edify Disclosure
Schedule, and except as indicated thereon, each such person has delivered to S1,
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concurrently with the execution of this Agreement, a stockholder agreement in
the form of Exhibit C hereto (the "Edify Stockholder Agreement").
3.19 OWNERSHIP OF S1 COMMON STOCK.
Except as set forth at Section 3.19 of the Edify Disclosure Schedule,
neither Edify nor to Edify's knowledge any of its directors or officers (i)
beneficially own, directly or indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, more than 1% of shares of the outstanding capital
stock of S1 (other than those agreements, arrangements or understandings
specifically contemplated hereby).
3.20 FAIRNESS OPINION.
Edify has received an opinion from Goldman to the effect that, in its
opinion, the consideration to be paid to stockholders of Edify hereunder is fair
to such stockholders from a financial point of view ("Fairness Opinion"), and,
except as set forth in Section 3.20 of the Edify Disclosure Schedule, Goldman
has consented to the inclusion of the Fairness Opinion in the Registration
Statement (defined below).
3.21 CHANGE OF CONTROL PAYMENTS.
Section 3.21 of the Edify Disclosure Schedule sets forth each plan or
agreement pursuant to which any amounts may become payable (whether currently or
in the future) to current or former employees and directors of Edify or any of
its Subsidiaries as a result of or in connection with the Merger.
3.22 DISCLOSURE.
None of the information supplied or to be supplied by or on behalf of
Edify for inclusion or incorporation by reference in the Registration Statement
will, at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by Edify
with respect to statements made or incorporated by reference therein about S1 or
Merger Sub supplied by S1 for inclusion or incorporation by reference in the
Registration Statement. None of the information supplied or to be supplied by or
on behalf of Edify for inclusion or incorporation by reference in the Proxy
Statement/Prospectus will, at the time the Proxy Statement/Prospectus is mailed
to the stockholders of Edify or S1, at the time of Edify stockholders' meeting
or S1 stockholders' meeting or as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act and the rules and
regulations promulgated by the SEC thereunder, except that no representation or
warranty is made by Edify with respect to statements made or incorporated by
reference therein about S1 or Merger Sub supplied by S1 for inclusion or
incorporation by reference in the Proxy Statement/Prospectus.
3.23 BOARD APPROVAL.
The Board of Directors of Edify (including any required committee or
subgroup of the Board of Directors of Edify) has, as of the date of this
Agreement, declared this Agreement advisable and determined (i) that the Merger
is fair to, and in the best interests of Edify and its stockholders, and (ii) to
recommend that the stockholders of Edify approve and adopt this Agreement and
approve the Merger.
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3.24 SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW AND EDIFY
RIGHTS PLAN NOT APPLICABLE.
The Board of Directors of Edify has taken all actions so that (a) the
restrictions contained in Section 203 of the Delaware General Corporation Law
applicable to a "business combination" (as defined in such Section 203) will not
apply to the execution, delivery or performance of this Agreement or the Option
Agreement or to the consummation of the Merger or the other transactions
contemplated by this Agreement and the Option Agreement and (b) the execution,
delivery and performance of this Agreement and the Option Agreement and the
consummation of the Merger will not cause any change, effect or result under the
Edify Rights Plan which is adverse to the interests of S1. Without limiting the
generality of the foregoing, if necessary to accomplish the foregoing, the Edify
Rights Plan has been amended to (i) render the Edify Rights Plan inapplicable to
the Merger and the other transactions contemplated by this Agreement, (ii)
ensure that (x) none of S1 or its Subsidiaries is an Acquiring Person (as
defined in the Edify Rights Plan) pursuant to the Edify Rights Plan by virtue of
the execution of this Agreement or the Option Agreement or the consummation of
the Merger or the other transactions contemplated hereby and thereby and (y) a
Distribution Date or Shares Acquisition Date (as such terms are defined in the
Edify Rights Plan) does not occur by reason of the execution of this Agreement
or the Option Agreement, the consummation of the Merger, or the consummation of
the transactions contemplated hereby or thereby, and such amendment may not be
further amended by Edify without the prior consent of S1 in its sole discretion.
3.25 INTELLECTUAL PROPERTY.
Except, in each case, as set forth in Section 3.25 of the Edify
Disclosure Schedule:
(a) (i) Edify and each Edify Subsidiary owns, free and clear
of liens, orders and arbitration awards, or are licensed or otherwise possess
valid and enforceable rights to use all patents, trademarks, trade names,
service marks, copyrights and any applications therefor, schematics, technology,
know-how, trade secrets, ideas, algorithms, processes, Software (as defined
below), and tangible or intangible proprietary information or material
("Intellectual Property") that are used in the business of Edify and the Edify
Subsidiaries. "Software" means any and all (i) computer programs and
applications, including any and all software implementations of algorithms,
models and methodologies, whether in source code or object code, (ii) databases
and compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, (iv)
the technology supporting any Internet site(s) operated by or on behalf of Edify
or any Edify Subsidiary, and (v) all documentation, including user manuals and
training materials, relating to any of the foregoing.
(ii) Except as would not be materially adverse to the
business of Edify or any Edify Subsidiary, Edify and the Edify Subsidiaries have
taken reasonable steps to protect their Intellectual Property. There is no
litigation pending or, to the knowledge of Edify and the Edify Subsidiaries,
threatened or any written claim from any person challenging the ownership, use,
validity or enforceability of any Intellectual Property, nor is there any basis
for the assertion of any such claim or challenge.
(iii) No material patent, trademark, service mark,
copyright, trade secret, computer software or other intellectual property right
other than the Intellectual Property set forth on Schedule 3.25 is necessary to
conduct the businesses of Edify and its Subsidiaries as presently conducted.
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(b) Schedule 3.25(b) lists all (i) patents, patent
applications, registered and unregistered trademarks, trade names and service
marks, and registered copyrights owned by Edify included in the Intellectual
Property, including the jurisdictions in which each such item of Intellectual
Property right has been issued or registered or in which any application for
such issuance and registration has been filed, (ii) Electronic Banking System
software licenses and value added reseller agreements, and (iii) licenses,
sublicenses and other agreements as to which Edify and any Edify Subsidiary are
a party and pursuant to which Edify and its Subsidiaries are authorized to use
any third party patents, trademarks or copyrights, including Software ("Third
Party Intellectual Property Rights") which are incorporated in, are or form a
part of any Edify or Edify Subsidiary product.
(c) (i) To the knowledge of Edify and the Edify
Subsidiaries, there is no unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights of Edify or any Edify
Subsidiary, any trade secret material to Edify or its Subsidiaries, or any
Intellectual Property right of any third party to the extent licensed by or
through Edify or its Subsidiaries, by any employee of Edify or any Edify
subsidiary or third party for whom Edify is responsible. Except as set forth in
Schedule 3.25(c), there are no royalties, fees or other payments payable by
Edify or its Subsidiaries to any person by reason of the ownership, use, sale or
disposition of Intellectual Property.
(ii) To the knowledge of Edify and its Subsidiaries, there
has been no prior use of Edify's registered trademarks by any third party which
would confer upon said third party superior rights in such trademarks. Edify and
its Subsidiaries have taken reasonable steps to adequately police the trademarks
against third party infringement, and the material trademarks registered in the
United States and in other jurisdictions where Edify or its Subsidiaries are
doing business have been continuously used in the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or any amendment, supplement or office action related thereto.
(d) Edify and its Subsidiaries are not, nor will they be as
a result of the execution and delivery of this Agreement or the performance of
their obligations under this Agreement, in breach of any material license,
sublicense or other agreement relating to the Intellectual Property or Third
Party Intellectual Property Rights, and the execution and delivery of this
Agreement or the performance of the obligations under this Agreement by Edify
and its Subsidiaries will not result in the loss or impairment of, or give rise
to any right of any third party to terminate, any of Edify's or any of its
Subsidiaries' rights to own any of its Intellectual Property or their respective
rights under any material license agreements, nor require the consent of any
Governmental Entity or third party in respect of any such Intellectual Property.
(e) Edify and its Subsidiaries (i) have no knowledge
(including knowledge of any litigation pending or threatened or any written
claim from any person) or reason to believe that the conduct of their businesses
infringe any patent, trademark, service mark, copyright, trade secret or other
proprietary right of any third party; and (ii) have not advised any third party
that such third party may be infringing any Intellectual Property or breaching
any license or agreement involving Intellectual Property and have not brought or
threatened any claim against such third party for such conduct.
(f) The Software owned or purported to be owned by Edify or
any of its Subsidiaries, was either (i) developed by employees of Edify or any
of its Subsidiaries within the scope of their employment; (ii) developed by
independent contractors or consultants who have assigned their rights to Edify
or any of its Subsidiaries pursuant to written agreements; or (iii) otherwise
acquired by Edify or its Subsidiary from a third party.
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(g) All employees and independent contractors and consultants
of Edify and its Subsidiaries have executed and delivered to Edify or its
Subsidiaries, as the case may be, agreements regarding the protection of
proprietary information and the assignment to Edify or its Subsidiaries of any
Intellectual Property arising from services performed for Edify or its
Subsidiaries by such persons.
(h) Edify and its Subsidiaries have obtained or entered into
written agreements with their employees and with third parties, in transactions
deemed appropriate, in connection with the disclosure to or use or appropriation
by, employees and third parties, of trade secret or proprietary information
owned by Edify and its Subsidiaries and not otherwise protected by a patent, a
patent application, copyright, trademark, or other registration or legal scheme
("Edify Confidential Information"), and do not know of any situation involving
such employee or third party use, disclosure or appropriation of Edify
Confidential Information where the lack of such a written agreement is likely to
result in any Material Adverse Effect. Except as set forth in Schedule 3.25(h),
neither Edify nor any of its Subsidiaries has furnished the source code of any
of their Software products to any third party, deposited any such source code in
escrow or otherwise provided access to such source code to any third party.
(i) Except as would not be materially adverse to the business
of Edify or its Subsidiaries, Edify and its Subsidiaries have taken reasonable
steps with the intent of ensuring that their products (including existing
products and technology and products and technology currently under development)
will, when used in accordance with associated documentation on a specified
platform or platforms, be capable upon installation of accurately processing,
providing, and receiving date data from, into, and between the twentieth and
twenty-first centuries, including the years 1999 and 2000, and making leap-year
calculations, provided that all other non-Edify or Edify Subsidiary products
(e.g., hardware, software and firmware) used in or in combination with Edify's
or its Subsidiaries' products, properly exchange data with Edify's and its
Subsidiaries products.
3.26 ADDITIONAL INFORMATION.
The information contained in Edify's registration statement on Form 8-A
relating to the Edify Common Stock, as filed with the SEC, and all other reports
filed subsequent thereto through the date hereof pursuant to Section 13(a) or
15(d) of the Exchange Act did not at the respective dates of filing with the SEC
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF S1
S1 hereby makes the following representations and warranties to Edify and
each Seller as set forth in this Article IV, subject to the exceptions disclosed
in writing in the S1 Disclosure Schedule as of the date hereof, each of which is
being relied upon by Edify as a material inducement to enter into and perform
this Agreement. All of the disclosure schedules of S1 referenced below or
otherwise required of S1 pursuant to this Agreement, which disclosure schedules
shall be cross-referenced to the specific sections and subsections of this
Agreement and delivered herewith, are referred to herein as the "S1 Disclosure
Schedule."
4.1 CORPORATE ORGANIZATION.
(a) S1 is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. S1 has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
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qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
The Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws of S1, copies of which have previously been made available to Edify, are
true, correct and complete copies of such documents as in effect as of the date
of this Agreement.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Subsidiary of S1 (each, a "S1 Subsidiary") and the jurisdiction of its
organization is set forth at Section 4.1(b) of the S1 Disclosure Schedule. Each
S1 Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. Each S1
Subsidiary has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of any material business conducted by it or the character or location
of any material properties or assets owned or leased by it makes such licensing
or qualification necessary. The chartering and other corporate governance
documents of each S1 Subsidiary, copies of which have previously been made
available to Edify, are true, correct and complete copies of such documents as
in effect as of the date of this Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of S1 consists of (i)
60,000,000 shares of S1 Common Stock, of which 25,428,778 shares were
outstanding at May 10, 1999 and (ii) 5,000,000 shares of serial preferred stock,
par value $.01 per share ("S1 Preferred Stock"), 1,637,832 shares of which were
designated as "Series A Convertible Preferred Stock," 749,604 of which were
designated as "Series B Redeemable Convertible Preferred Stock" and 215,000
shares of which were designated as "Series C Redeemable Convertible Preferred
Stock." At May 10, 1999, 466,450 shares of Series A Convertible Preferred Stock,
749,604 shares of Series B Redeemable Convertible Preferred Stock and 215,000
shares of Series C Redeemable Convertible Preferred Stock were outstanding. At
such date, there were 12,353,798 shares of S1 Common Stock reserved for issuance
pursuant to employee stock options (of which options for 9,607,750 shares are
currently outstanding). All of the issued and outstanding shares of S1 Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and upon issuance in accordance with the
terms hereof, the shares of S1 Common Stock to be issued in the Merger
(including, without limitation, upon exercise of options to purchase Edify
Common Stock) are duly authorized and upon issuance in accordance with the terms
hereof, will be validly issued, and fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as set forth above, S1 does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of S1 Common Stock or S1 Preferred Stock or any other
equity securities of S1 or any securities presenting the right to purchase or
otherwise receive any shares of S1 Common Stock or S1 Preferred Stock, other
than as set forth at Section 4.2(a) of the S1 Disclosure Schedule.
(b) Except as set forth at Section 4.2(b) of the S1
Disclosure Schedule, S1 owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the S1 Subsidiaries, free and
clear of all liens, charges, encumbrances and security interests whatsoever, and
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No S1 Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
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4.3 AUTHORITY; NO VIOLATION.
(a) S1 has full corporate power and authority to execute and
deliver this Agreement, and, subject to approval by the holders of a majority of
the shares of S1 Common Stock represented in person or by proxy at the meeting
of S1 stockholders at which the issuance of the shares of S1 Common Stock in the
Merger contemplated hereby (the "S1 Issuance") is considered, to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of S1. The Board of Directors of S1 has declared the S1 Issuance
and this Agreement advisable and directed that S1 Issuance be submitted to S1's
stockholders for approval at a special meeting of such stockholders and, except
for the approval of such matters by the requisite vote of S1's stockholders, no
other corporate proceedings on the part of S1 (except for matters related to
setting the date, time, place and record date for the special meeting) are
necessary to approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement and the Option Agreement have been duly and
validly executed and delivered by S1 and (assuming due authorization, execution
and delivery by Merger Sub and Edify) constitute valid and binding obligations
of S1, enforceable against S1 in accordance with their terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar law
affecting creditors' rights and remedies generally.
(b) Merger Sub has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Merger Sub. The Board of Directors
of Merger Sub has declared this Agreement advisable and directed that approval
of this Agreement and the Merger be submitted to Merger Sub's stockholder for
approval by such stockholder and, except for the approval of such matters by the
required vote of Merger Sub's stockholder, no other corporate proceedings on the
part of Merger Sub (except for matters related to setting the date, time, place
and record date for the special meeting, if applicable) are necessary to approve
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Merger Sub and
(assuming due authorization, execution and delivery by S1 and Edify) constitutes
valid and binding obligations of Merger Sub, enforceable against Merger Sub in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar law affecting creditors' rights and
remedies generally. All of the outstanding shares of Merger Sub common stock,
par value $.01 per share, have been duly authorized, validly issued and are
fully paid and non-assessable and are owned by S1. Merger Sub was formed for the
purpose of consummating the Merger and has no material liabilities.
(c) Neither the execution and delivery of this Agreement by
S1 or Merger Sub nor the consummation by S1 or Merger Sub of the transactions
contemplated hereby or thereby, nor compliance by S1 or Merger Sub with any of
the terms or provisions hereof or thereof, will (i) violate any provision of (x)
the Amended and Restated Certificate of Incorporation or Amended and Restated
Bylaws of S1 or (y) the Certificate of Incorporation or Bylaws of Merger Sub, or
(ii) assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any Laws applicable to S1 or Merger Sub or any of
their properties or assets, or (y) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of S1 or Merger Sub under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which S1 or
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Merger Sub is a party, or by which S1 or Merger Sub or any of their properties
or assets may be bound or affected, except, in each case, where such violation,
conflict, breach, loss, default, termination, cancellation or acceleration would
not have a Material Adverse Effect on S1.
4.4 CONSENTS AND APPROVALS.
(a) Except for (i) the effectiveness of the Registration
Statement containing the Proxy Statement/Prospectus in connection with obtaining
stockholder approval of the S1 Issuance by the requisite vote of stockholders of
S1, (ii) the approval of this Agreement and the issuance of S1 Common Stock in
the Merger by the requisite vote of the stockholders of S1 and Merger Sub,
respectively, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (iv) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws and, if
applicable, the HSR Act, and the securities or antitrust laws of any foreign
country, (v) such filings and approvals as are required to be made or obtained
with Nasdaq (or such other exchange as may be applicable) in connection with the
issuance of the shares of S1 Common Stock pursuant to this Agreement, and (vi)
such other consents and approvals as may be set forth in Section 4.4(a) of the
S1 Disclosure Schedule, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in connection
with (1) the execution and delivery by S1 of this Agreement and the Option
Agreement, and (2) the consummation by S1 of the Merger and the other
transactions contemplated hereby, except for such consents, approvals or filings
the failure of which to obtain will not have (x) a material adverse effect on
the ability of S1 or Merger Sub to consummate the transactions contemplated
hereby or (y) a Material Adverse Effect on Edify, S1 or the Surviving
Corporation following the Effective Time.
(b) S1 hereby represents to Edify that it has no knowledge
of any reason why approval or effectiveness of any of the applications, notices
or filings referred to in Section 4.4(a) cannot be obtained or granted on a
timely basis.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
S1 has previously made available to Edify true, correct and complete
copies of the consolidated balance sheets of S1 and its Subsidiaries as of
December 31 for the fiscal years 1998 and 1997 and the related consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
years 1996 through 1998, inclusive, as reported in S1's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, filed with the SEC under the
Exchange Act, in each case accompanied by the audit report of KPMG LLP,
independent public accountants with respect to S1, and the interim financial
statements of S1 as of and for the three months ended March 31, 1998 and 1997,
as included in S1's quarterly report on Form 10-Q for the quarter ended March
31, 1999, as filed with the SEC. The financial statements referred to in this
Section 4.5 (including the related notes, where applicable) fairly present, and
the financial statements referred to in Section 6.8 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of S1 and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable) comply,
and the financial statements referred to in Section 6.8 hereof will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements referred
to in Section 6.8 hereof will be, prepared in accordance with GAAP consistently
applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q or any
successor form. S1's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 and all subsequently filed reports under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act comply in all material respects with the
appropriate requirements for such reports under the Exchange Act, and S1
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has previously made available to Edify true, correct and complete copies of such
reports. The books and records of S1 and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements.
4.6 BROKER'S FEES.
Neither S1 nor any S1 Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement or the Option Agreement, except that
S1 has engaged, and will pay a fee or commission to BancBoston Robertson
Stephens, Inc. ("BBRS") in accordance with the terms of a letter agreement
between BBRS and S1, dated April 9, 1999, a true, complete and correct copy of
which has been provided to Edify.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in S1's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998, or any other report filed since
December 31, 1998, under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
true, correct and complete copies of which have previously been made available
to Edify, since December 31, 1998, (i) neither S1 nor any S1 Subsidiary has
incurred any material liability, except as contemplated by this Agreement, in
the ordinary course of their businesses consistent with their past practices, or
as contemplated by that certain share exchange agreement by and among S1, FICS
Group N.V. and the shareholders of FICS Group N.V., dated as of even date
herewith, and (ii) no event has occurred which has had, or would have,
individually or in the aggregate, a Material Adverse Effect on S1.
(b) Since December 31, 1998, S1 and each S1 Subsidiary has
carried on its respective businesses in the ordinary and usual course consistent
with past practices.
4.8 LEGAL PROCEEDINGS.
(a) Except as set forth at Section 4.8 of the S1 Disclosure
Schedule, neither S1 nor any of its Subsidiaries is a party to any, and there
are no pending or, to S1's knowledge, threatened, legal, administrative,
arbitration or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against S1 or any of its Subsidiaries or which
challenge the validity or propriety of the transactions contemplated by this
Agreement or the Option Agreement as to which there is a reasonable probability
of success.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon S1, any of its Subsidiaries or the assets of
S1 or any of its Subsidiaries.
(c) No Governmental Entity has at any time challenged in a
writing delivered to S1 the legal right of S1 to design, manufacture, offer or
sell any of its products or services in the present manner or style thereof. As
of the date hereof, to the knowledge of S1, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that would
reasonably be expected to, cause or provide a bona fide basis for a director or
executive officer of S1 to seek indemnification from S1.
4.9 TAXES AND TAX RETURNS.
For purposes of this Section 4.9, S1 shall include S1 and each S1
Subsidiary and each other affiliated or related corporation or entity if S1 or
any S1 Subsidiary has or could have any material liability for the Taxes of such
corporation or entity. S1 has duly filed all Tax Returns required to be filed by
it on or before the date hereof (all such returns being accurate and complete in
all
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material respects) and has duly paid or made provision in the financial
statements referred to in Sections 4.5 and 6.8 hereof in accordance with GAAP
for the payment of all material Taxes that have been incurred or are due or
claimed to be due from it by Taxing Authorities on or before the date hereof
other than Taxes (a) that (x) are not yet delinquent or (y) are being contested
in good faith and set forth in Section 4.9 of the S1 Disclosure Schedule and (b)
that have not been finally determined. The charges, accruals, and reserves with
respect to Taxes in the financial statements referred to in Sections 4.5 and 6.8
are adequate (determined in accordance with GAAP) and are at least equal to its
liability for Taxes. There exists no proposed tax assessment against S1 except
as disclosed in the financial statements referred to in Sections 3.5 and 6.8
hereof in accordance with GAAP. No consent to the application of Section
341(f)(2) of the Code has been filed with respect to any property or assets
held, acquired, or to be acquired by S1. All Taxes that S1 is or was required to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Taxing Authority. All liability with
respect to the Tax Returns of S1 has been satisfied for all years to and
including 1998. No Taxing Authority has notified S1 of, or otherwise asserted,
that there are any material deficiencies with respect to the Tax Returns of S1
subsequent to 1994. There are no material disputes pending, or claims asserted
for, Taxes or assessments of S1, nor has S1 given or been requested to give any
currently effective waiver extending the statutory period of limitation
applicable to any Tax Return. In addition, Tax Returns that are accurate and
complete in all material respects have been filed by S1 for all periods for
which returns were due with respect to income and employment tax withholding
with respect to wages and other income and the amounts shown on such Tax Returns
to be due and payable have been paid in full or adequate provision therefor in
accordance with GAAP has been included by S1 in the financial statements
referred to in Sections 4.5 and 6.8 hereto. All S1 Tax Returns have been
examined by the relevant Taxing Authorities, or closed without audit by
applicable statutes of limitations, and all deficiencies proposed as a result of
such examinations have been paid or settled, for all periods before and
including the taxable year ended December 31, 1994. S1 has provided or made
available to Edify complete and correct copies of its Tax Returns and all
material correspondence and documents, if any, relating directly or indirectly
to Taxes for each taxable year or other relevant period as to which the
applicable statute of limitations has not run on the date hereof. For this
purpose, "correspondence and documents" include, without limitation, amended Tax
Returns, pending claims for refunds, notices from Taxing Authorities of proposed
changes or adjustments to Taxes or Tax Returns that have not been finally
resolved, consents to assessment or collection of Taxes, acceptances of proposed
adjustments, closing agreements, rulings and determination letters and requests
therefor, and all other written communications to or from Taxing Authorities
relating to any material Tax liability of S1.
4.10 EMPLOYEE PLANS.
(a) For purposes of this Section 4.10, S1 shall include each of
its Subsidiaries and any other entity that together with S1 would be deemed a
"single employer" for purposes of ERISA (determined without regard to whether
such entity conducts business in the United States). Section 4.10(a) of the S1
Disclosure Schedule sets forth a true and complete list of each ERISA Plan and
each other plan, arrangement or agreement providing benefits to the current or
former employees of S1 that as of the date of this Agreement S1 maintains, to
which S1 contributes or under which S1 has any liability, or within the last six
years that S1 has maintained, to which S1 has contributed or under which S1 has
had any liability (collectively, the "S1 Plans"). Each S1 Plan that is an ERISA
Plan is referred to as a "S1 ERISA Plan."
(b) S1 has heretofore made available to S1 true, correct and complete
copies of each of the S1 Plans and all related documents, including but not
limited to (i) the actuarial report for such S1 Plan (if applicable) for each of
the last five years, (ii) the most recent determination letter from the IRS (if
applicable) for each S1 ERISA Plan, (iii) the current summary plan description
and any summaries of material modification for each S1 ERISA Plan and any
corresponding document for each other S1 Plan, (iv) all annual reports for each
S1 ERISA Plan filed for the preceding five plan years and any annual or
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other periodical financial information concerning any other S1 Plan filed with
any governmental agency, (v) all agreements with fiduciaries and service
providers relating to the S1 Plan, (vi) all substantive correspondence relating
to any such S1 Plan addressed to or received from any governmental agency or
authority, (vii) all personnel, payroll, and employment manuals and policies,
and (viii) a written description of any S1 Plan that is not otherwise in
writing.
(c) S1 has performed all of its obligations under all S1 Plans. S1
has made appropriate entries in the financial statements referred to in Sections
4.5 and 6.8 hereof in accordance with GAAP for all obligations and liabilities
under the S1 Plans. No statement, either written or oral, has been made by S1
with regard to any S1 Plan that was not in accordance with the S1 Plan and that
could have an Material Adverse Effect on S1. S1 has no liability to the IRS, the
U.S. Pension Benefit Guaranty Corporation or to any other governmental or
quasi-governmental agency or authority with respect to any S1 Plan. No S1 ERISA
Plan is subject to title IV of ERISA.
(d) Except as set forth at Section 4.10(d) of the S1 Disclosure
Schedule, (i) each of the S1 Plans has been operated and administered in all
material respects in compliance with applicable Laws, including, but not
limited, in the case of each S1 ERISA Plan, to ERISA and the Code, (ii) each of
the S1 ERISA Plans intended to be "qualified" within the meaning of Section 401
of the Code is so qualified and S1 has received a determination letter or
opinion letter from the IRS to such effect, which letter remains in full force
and effect, (iii) with respect to each S1 ERISA Plan that is subject to the
funding requirements of ERISA and the Code, the present value of accrued
benefits under such S1 Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such S1 Plan's
actuary with respect to such S1 Plan, did not, as of its latest valuation date,
exceed the then current value of the assets of such S1 Plan allocable to such
accrued benefits, (iv) no S1 Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect to
current or former employees of S1 beyond their retirement or other termination
of service, other than (a) coverage mandated by applicable Law, (b) death
benefits or retirement benefits under an S1 Plan that also provides
post-retirement income, annuity or pension benefits (including an "employee
pension plan" as that term is defined in ERISA), (c) deferred compensation
benefits under an S1 Plan that are accrued as liabilities in the financial
statements referred to in Sections 4.5 and 6.8 hereof in accordance with GAAP,
or (d) benefits the full cost of which is borne by the current or former
employee (or his beneficiary), (v) no liability under Title IV of ERISA has been
incurred by S1 that has not been satisfied in full, and no condition exists that
presents a material risk of S1 incurring a material liability thereunder, (vi)
no S1 ERISA Plan is a "multiemployer pension plan," as such term is defined in
ERISA and no other S1 Plan is maintained pursuant to any collective bargaining
agreement or other agreement with a labor union or other authorized
representative of labor, (vii) all contributions or other amounts payable by S1
with respect to each S1 Plan and all other liabilities of each such entity with
respect to each S1 Plan, in respect of current or prior plan years have been
paid or accrued in the financial statements referred to in Sections 4.5 and 6.8
hereof in accordance with GAAP and, in the case of a S1 ERISA Plan, ERISA and
the Code, (viii) S1 has not engaged in a "prohibited transaction" as defined in
ERISA or the Code in connection with which S1 could be subject to either any
material excise tax or civil penalty assessed pursuant to ERISA or the Code,
(ix) to the knowledge of S1, there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the S1 Plans or any trusts related thereto, (x) all S1 Plans could be
terminated as of the Closing without material liability in excess of the amount
accrued therefor in the financial statements referred to in Sections 4.5 and 6.8
hereof in accordance with GAAP; (xi) except with respect to nonqualified stock
options granted to employees, no S1 Plan, either individually or collectively,
provides for any material payment by S1 that would not be deductible for U.S.
federal income tax purposes; (xii) no "accumulated funding deficiency" as
defined in ERISA or the Code, whether or not waived, and no "unfunded current
liability" as determined under the Code exists with respect to any S1 ERISA
Plan; (xiii) no S1 ERISA Plan has experienced a "reportable event" (as such term
is defined in ERISA and regulations thereunder) that is not subject to an
administrative or statutory waiver from the reporting requirement.
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4.11 CERTAIN CONTRACTS.
(a) Except as set forth at Section 4.11 of the S1 Disclosure
Schedule, neither S1 nor any of its Subsidiaries is a party to or bound by any
contract, arrangement or commitment (i) with respect to the employment of any
directors, officers, employees or consultants (other than standard offer letters
which provide for not more than at-will employment), (ii) which, upon execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement will (either alone or upon the occurrence of any additional acts or
events) result in any payment (whether of severance pay or otherwise) becoming
due from S1, Edify or any of their respective Subsidiaries to any director,
officer or employee thereof, (iii) with or to a labor union or guild (including
any collective bargaining agreement), (iv) except as set forth on Section
4.11(a)(iv) of the S1 Disclosure Schedule, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement (including as to this clause
(iv), any stock option plan, stock appreciation rights plan, restricted stock
plan or stock purchase plan), (v) containing any covenant materially limiting
the right of S1 or any of its Subsidiaries to engage in any line of business or
to compete with any person or granting any exclusive distribution rights, (vi)
relating to the disposition or acquisition by S1 or any of its Subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which S1 or any of its Subsidiaries
has any material ownership interest in any corporation, partnership, joint
venture or other business enterprise other than S1's Subsidiaries that is
material to S1's business as currently conducted, or (vii) to provide source
code to any third party for any product or technology that is material to S1 and
its Subsidiaries taken as a whole. Except as set forth at Section 4.11 of the S1
Disclosure Schedule, there are no employment, consulting and deferred
compensation agreements to which S1 or any of its Subsidiaries is a party.
Section 4.11(a) of the S1 Disclosure Schedule sets forth a list of all material
contracts (as defined in Item 601(b)(10) of Regulation S-K) of S1 and its
Subsidiaries. Each contract, arrangement or commitment of the type described in
this Section 4.11(a), whether or not set forth in Section 4.11(a) of the S1
Disclosure Schedule, is referred to herein as a "S1 Contract," and neither S1
nor any of its Subsidiaries has received notice of, nor do any executive
officers of such entities know of, any violation of any S1 Contract.
(b) (i) Each S1 Contract is valid and binding and in full
force and effect as to the obligations of S1 thereunder, and to the knowledge of
S1, is valid and binding and in full force and effect as to the obligations by
the third parties thereto, (ii) S1 and each of its Subsidiaries has, and to the
knowledge of S1, each third party has, in all material respects performed all
obligations required to be performed by it to date under each S1 Contract, and
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a material default on the part of S1 or any
of its Subsidiaries under any such S1 Contract or, to the knowledge of S1, any
third party thereto.
4.12 ENVIRONMENTAL MATTERS.
(a) Each of S1 and the S1 Subsidiaries is in compliance in all
material respects with all applicable laws and regulations relating to pollution
or protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Materials (as hereinafter defined), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation
or notice pending or, to the knowledge of S1 and its Subsidiaries threatened
(or past or present actions or events that could
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form the basis of any such suit, claim, action, proceeding, investigation or
notice), in which S1 or any S1 Subsidiary has been or, with respect to
threatened suits, claims, actions, proceedings, investigations or notices may
be, named as a defendant (x) for alleged material noncompliance (including by
any predecessor), with any environmental law, rule or regulation or (y) relating
to any material release or threatened release into the environment of any
Hazardous Material, occurring at or on a site owned, leased or operated by S1 or
any S1 Subsidiary, or to the knowledge of S1, relating to any material release
or threatened release into the environment of any Hazardous Material, occurring
at or on a site not owned, leased or operated by S1 or any S1 Subsidiary;
(c) To the knowledge of S1 and its Subsidiaries, during the
period of S1's or any S1 Subsidiary's ownership or operation of any of its
properties, there has not been any material release of Hazardous Materials in,
on, under or affecting any such property.
(d) For purposes of this Section 4.12, the term "Hazardous
Material" means any hazardous waste, petroleum product, polychlorinated
biphenyl, chemical, pollutant, contaminant, pesticide, radioactive substance, or
other toxic material, or other material or substance (in each such case, other
than small quantities of such substances in retail containers) regulated under
any applicable environmental or public health statute, law, ordinance, rule or
regulation.
4.13 PROPERTIES AND ASSETS.
Except for (a) items reflected in S1's consolidated financial statements
as of December 31, 1998 referred to in Section 4.5 hereof, (b) exceptions to
title that do not interfere materially with S1's or any S1 Subsidiary's use and
enjoyment of owned or leased real property, (c) liens for current real estate
taxes not yet delinquent, or being contested in good faith, properly reserved
against (and reflected on the financial statements referred to in Section 4.5
above), (d) properties and assets sold or transferred in the ordinary course of
business consistent with past practices since December 31, 1998, and (e) items
listed in Section 4.13 of the S1 Disclosure Schedule, S1 and each S1 Subsidiary
have good and, as to owned real property, marketable and insurable title to all
their properties and assets, free and clear of all liens, claims, charges and
other encumbrances. S1 and each S1 Subsidiary, as lessees, have the right under
valid and subsisting leases to occupy, use and possess all property leased by
them, and neither S1 nor any S1 Subsidiary has experienced any material
uninsured damage or destruction with respect to such properties since December
31, 1998. All properties and assets used by S1 and each S1 Subsidiary are in
good operating condition and repair (subject to ordinary wear and tear) and
comply in all material respects with all Laws relating thereto now in effect or
scheduled to come into effect. S1 and each S1 Subsidiary enjoy peaceful and
undisturbed possession under all leases for the use of all property under which
they are the lessees, and all leases to which S1 or any S1 Subsidiary is a party
are valid and binding obligations of S1, and to the knowledge of S1, with
respect to the respective third parties thereto, enforceable in accordance with
the terms thereof. Neither S1 nor any S1 Subsidiary is in material default with
respect to any such lease, and there has occurred no default by S1 or any S1
Subsidiary or event which with the lapse of time or the giving of notice, or
both, would constitute a material default under any such lease. There are no
Laws, conditions of record, or other impediments which interfere with the
intended use by S1 or any S1 Subsidiary of any of the property owned, leased, or
occupied by them.
4.14 INSURANCE.
The existing insurance carried by S1 and S1 Subsidiaries is and will
continue to be, in respect of the nature of the risks insured against and the
amount of coverage provided, substantially similar in kind and amount to that
customarily carried by parties similarly situated who own properties and engage
in businesses substantially similar to that of S1 and the S1 Subsidiaries, and
is sufficient for compliance by S1 and the S1 Subsidiaries with all requirements
of Law and agreements to which S1 or any of the S1 Subsidiaries is subject or is
party.
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4.15 COMPLIANCE WITH APPLICABLE LAWS.
Each of S1 and any S1 Subsidiary has complied in all material respects
with all Laws applicable to it or to the operation of its business. Neither S1
nor any S1 Subsidiary has received any written notice of any material alleged or
threatened claim, violation, or liability under any such Laws that has not
heretofore been cured and for which there is no remaining liability.
4.16 S1 INFORMATION.
None of the information supplied or to be supplied by or on behalf of S1
for inclusion or incorporation by reference in the Registration Statement will,
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading, except that no representation or warranty is made by S1 with
respect to statements made or incorporated by reference therein about Edify
supplied by Edify for inclusion or incorporation by reference in the
Registration Statement. None of the information supplied or to be supplied by or
on behalf of S1 for inclusion or incorporation by reference in the Proxy
Statement/Prospectus will, at the time the Proxy Statement/Prospectus is mailed
to the stockholders of Edify or S1, at the time of Edify stockholders' meeting
or S1 stockholders' meeting or as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. The
Registration Statement and the Proxy Statement/Prospectus will comply as to form
in all material respects with the provisions of the Securities Act and the
Exchange Act and the rules and regulations promulgated by the SEC thereunder,
except that no representation or warranty is made by S1 with respect to
statements made or incorporated by reference therein about Edify supplied by
Edify for inclusion or incorporation by reference in the Proxy
Statement/Prospectus.
4.17 INTELLECTUAL PROPERTY.
Except, in each case, as set forth in Section 4.17 of the Edify
Disclosure Schedule:
(a) (i) S1 and its Subsidiaries own, free and clear of liens,
orders and arbitration awards, or are licensed or otherwise possess valid and
enforceable rights to use all patents, trademarks, trade names, service marks,
copyrights and any applications therefor, schematics, technology, know-how,
trade secrets, ideas, algorithms, processes, Software (as defined below), and
tangible or intangible proprietary information or material ("Intellectual
Property") that are used in the business of S1 and its Subsidiaries. "Software"
means any and all (i) computer programs and applications, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, (iv) the technology supporting any Internet
site(s) operated by or on behalf of S1 or any of its Subsidiaries, and (v) all
documentation, including user manuals and training materials, relating to any of
the foregoing.
(ii) Except as would not be materially adverse to the
business of S1 or its Subsidiaries, S1 and its Subsidiaries have taken
reasonable steps to protect their Intellectual Property. There is no litigation
pending or, to the knowledge of S1 and its Subsidiaries, threatened or any
written claim from any person challenging the ownership, use, validity or
enforceability of any Intellectual Property.
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(iii) No material patent, trademark, service mark,
copyright, trade secret, computer software or other intellectual property right
other than the Intellectual Property set forth on Schedule 4.17 is necessary to
conduct the businesses of S1 and its Subsidiaries as presently conducted.
(b) Schedule 4.17 lists all (i) patents, patent applications,
registered and unregistered trademarks, trade names and service marks and
registered copyrights owned by S1 included in the Intellectual Property,
including the jurisdictions in which each such item of Intellectual Property
right has been issued or registered or in which any application for such
issuance and registration has been filed, (ii) material licenses, sublicenses
and other agreements as to which S1 and its Subsidiaries are a party and
pursuant to which any person is authorized to use any Intellectual Property, and
(iii) licenses, sublicenses and other agreements as to which S1 and its
Subsidiaries are a party and pursuant to which S1 and its Subsidiaries are
authorized to use any third party patents, trademarks or copyrights, including
Software ("Third Party Intellectual Property Rights") which are incorporated in,
are or form a part of any S1 or Subsidiary product.
(c) (i) To the knowledge of S1 and its Subsidiaries, there is
no unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of S1 or its Subsidiaries, any trade secret
material to S1 or its Subsidiaries, or any Intellectual Property right of any
third party to the extent licensed by or through S1 or its Subsidiaries, by any
employee of S1 or S1 Subsidiary or third party for whom S1 is responsible.
Except as set forth in Schedule 4.17, there are no royalties, fees or other
payments payable by S1 or its Subsidiaries to any person by reason of the
ownership, use, sale or disposition of Intellectual Property.
(ii) To the knowledge of S1 and its Subsidiaries, there has
been no prior use of S1's registered trademarks by any third party which would
confer upon said third party superior rights in such trademarks. S1 and its
Subsidiaries have taken reasonable steps to adequately police the trademarks
against third party infringement, and the material trademarks registered in the
United States have been continuously used in the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or any amendment, supplement or office action related thereto.
(d) S1 and its Subsidiaries are not, nor will they be as a
result of the execution and delivery of this Agreement or the performance of
their obligations under this Agreement, in breach of any material license,
sublicense or other agreement relating to the Intellectual Property or Third
Party Intellectual Property Rights, and the execution and delivery of this
Agreement or the performance of the obligations under this Agreement by S1 and
its Subsidiaries will not result in the loss or impairment of, or give rise to
any right of any third party to terminate, any of S1's or any of its
Subsidiaries' rights to own any of its Intellectual Property or their respective
rights under any material license agreements, nor require the consent of any
Governmental Entity or third party in respect of any such Intellectual Property.
(e) S1 and its Subsidiaries (i) have no knowledge (including
knowledge of any litigation pending or threatened or any written claim from any
person) or reason to believe that the conduct of their businesses infringe any
patent, trademark, service mark, copyright, trade secret or other proprietary
right of any third party; and (ii) have not advised any third party that such
third party may be infringing any Intellectual Property or breaching any license
or agreement involving Intellectual Property and have not brought or threatened
any claim against such third party for such conduct.
(f) The Software owned or purported to be owned by S1 or any
of its Subsidiaries, was either (i) developed by employees of S1 or any of its
Subsidiaries within the scope of their employment; (ii) developed by independent
contractors or consultants who have assigned
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their rights to S1 or any of its Subsidiaries pursuant to written agreements; or
(iii) otherwise acquired by S1 or its Subsidiary from a third party.
(g) All employees and independent contractors and consultants
of S1 and its Subsidiaries have executed and delivered to S1 or its
Subsidiaries, as the case may be, agreements regarding the protection of
proprietary information and the assignment to S1 or its Subsidiaries of any
Intellectual Property arising from services performed for S1 or its Subsidiaries
by such persons.
(h) S1 and its Subsidiaries have obtained or entered into
written agreements with their employees and with third parties, in transactions
deemed appropriate, in connection with the disclosure to, or use or
appropriation by, employees and third parties, of trade secret or proprietary
information owned by S1 and its Subsidiaries and not otherwise protected by a
patent, a patent application, copyright, trademark, or other registration or
legal scheme ("S1 Confidential Information"), and do not know of any situation
involving such employee or third party use, disclosure or appropriation of S1
Confidential Information where the lack of such a written agreement is likely to
result in any Material Adverse Effect. Except as set forth in Schedule 4.17,
neither S1 nor any of its Subsidiaries have furnished the source code of any of
their Software products to any third party, deposited any such source code in
escrow, or otherwise provided access to such source code to any third party.
(i) Except as would not be materially adverse to the business
of S1 or its Subsidiaries, S1 and its Subsidiaries have taken reasonable steps
with the intent of ensuring that their products (including existing products and
technology and products and technology currently under development) will, when
used in accordance with associated documentation on a specified platform or
platforms, be capable upon installation of accurately processing, providing, and
receiving date data from, into, and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and making leap-year calculations,
provided that all other non-S1 or S1 Subsidiary products (e.g., hardware,
software and firmware) used in or in combination with S1's or its Subsidiaries'
products, properly exchange data with S1's and its Subsidiaries products.
4.18 BBRS FAIRNESS OPINION.
S1 has received an opinion from BancBoston Robertson Stephens, Inc. to
the effect that, in its opinion, the consideration to be paid to by S1 to the
stockholders of Edify hereunder is fair to such stockholders from a financial
point of view (the "BBRS Fairness Opinion"), and, except as set forth in
Schedule 4.18 of the S1 Disclosure Schedule, BancBoston Robertson Stephens, Inc.
has consented to the inclusion of the BBRS Fairness Opinion in the Registration
Statement.
4.19 MERGER SUB BOARD APPROVAL.
The Board of Directors of Merger Sub (including any required committee or
subgroup of the Board of Directors of Merger Sub) has, as of the date of this
Agreement, determined (i) that the Merger is fair to, and in the best interests
of Merger Sub and its stockholders and (ii) to recommend that the stockholders
of Merger Sub approve and adopt this Agreement and approve the Merger.
4.20 S1 BOARD APPROVAL.
The Board of Directors of S1 (including any required committee or
subgroup of the Board of Directors of S1) has, as of the date of this Agreement,
determined that it is in the best interests of S1 and its stockholders to
approve the issuance of shares of S1 Common Stock in the Merger pursuant to the
terms and conditions of this Agreement.
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4.21 AGREEMENTS WITH REGULATORY AGENCIES.
S1 (i) is not subject to any cease-and-desist or other order issued by,
(ii) is not a party to any Regulatory Agreement with, and (iii) has not adopted
any board resolutions at the request of, any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its management or
its business, nor has S1 been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
4.22 CERTIFICATE OF INCORPORATION.
The Board of Directors of S1 has approved S1's entering into this
Agreement and the Option Agreement, and the transactions contemplated thereby,
such that under S1's Certificate of Incorporation the only vote of S1
stockholders necessary to consummate the transactions contemplated hereby
(including the Merger and the S1 Issuance) is the approval of the S1 Issuance by
the holders of a majority of the shares of S1 Common Stock represented in person
or by proxy at a meeting of S1 stockholders held for such purpose.
4.23 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act) of S1 is listed at Section
4.23 of the S1 Disclosure Schedule, and except as indicated thereon each such
person has delivered to S1, concurrently with the execution of this Agreement, a
stockholder agreement in the form of Exhibit D hereto (the "S1 Stockholder
Agreement").
4.24 ADDITIONAL INFORMATION.
The information contained in S1's registration statement on Form
8-A, as filed with the SEC on September 30, 1998, and all other reports filed
subsequent thereto through the date hereof pursuant to Section 13(a) or 15(d) of
the Exchange Act, did not at the respective dates of filing with the SEC contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF EDIFY.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, except
as expressly contemplated or permitted by this Agreement or the Option Agreement
or with the prior written consent of S1, Edify and each Edify Subsidiary shall
carry on their respective businesses in the ordinary course consistent with past
practices. Edify will use its reasonable efforts to (x) preserve its business
organization and that of each Edify Subsidiary intact, (y) keep available to
itself and S1 the present services of the employees of Edify and each Edify
Subsidiary and (z) preserve for itself and S1 the goodwill of the customers of
Edify and each Edify Subsidiary and others with whom business relationships
exist. Without limiting the generality of the foregoing, and except as set forth
in the Edify Disclosure Schedule or as otherwise contemplated by this Agreement
or consented to by S1 in writing, Edify shall not, and shall not permit any
Edify Subsidiary to:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock;
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(b) (i) split, combine or reclassify any shares of its capital
stock or, except as permitted by Section 5.1(c), issue, authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock except upon the exercise or fulfillment of
rights or options issued or existing pursuant to the Edify Stock Plans in
accordance with their present terms, all to the extent outstanding and in
existence on the date of this Agreement, or pursuant to the Option Agreement, or
(ii) repurchase, redeem or otherwise acquire (except repurchases of unvested
shares at cost in connection with the termination of the employee relationship
with any employee pursuant to stock option or purchase agreements in effect on
the date of this Agreement), any shares of the capital stock of Edify or any
Edify Subsidiary, or any securities convertible into or exercisable for any
shares of the capital stock of Edify or any Edify Subsidiary;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or, except as
provided in Section 5.1(k)(ii) hereof, any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares,
or enter into any agreement with respect to any of the foregoing, other than (i)
the grant of options under the 1996 Equity Plan, not to exceed 420,000 shares in
the aggregate, to purchase Edify Common Stock to newly hired employees in
amounts and on terms consistent with prior practice and at a price not less than
the market price on the date of the grant, (ii) the issuance of Edify Common
Stock pursuant to stock options or similar rights to acquire Edify Common Stock
granted pursuant to the Edify Stock Plans outstanding prior to the date of this
Agreement or granted under Section 5.1(c)(i) hereof and the Edify ESPP, in each
case in accordance with their present terms and (iii) pursuant to the Option
Agreement;
(d) amend its Certificate of Incorporation, By-Laws or other
similar governing documents;
(e) authorize or permit any of its officers, directors,
employees or agents to, directly or indirectly, solicit, initiate or knowingly
encourage any inquiries relating to, or the making of any proposal for, hold
substantive discussions or negotiations with, knowingly provide any information
to, any person, entity or group (other than S1) concerning any Acquisition
Transaction (as defined below), or approve, endorse or recommend any such
proposal or enter into any letter of intent or similar document or any contract,
agreement or commitment relating to any Acquisition Transaction. Notwithstanding
the foregoing, Edify may enter into discussions or negotiations or knowingly
provide information in connection with a possible Acquisition Transaction if the
Board of Directors of Edify, after consultation with counsel, reasonably
determines in the exercise of its fiduciary duty that such discussions or
negotiations should be commenced or such information should be furnished. Edify
shall promptly advise S1 of any discussions or negotiations concerning any
Acquisition Transaction and communicate to S1 the material terms of any
proposal, whether written or oral, which it may receive in respect of any such
Acquisition Transaction and whether it is having discussions or negotiations
with a third party about an Acquisition Transaction with or providing
information in connection with, or which may lead to, an Acquisition Transaction
with a third party. Edify will promptly cease and cause to be terminated any
existing activities, discussions or negotiations previously conducted with any
parties other than S1 with respect to any of the foregoing. As used in this
Agreement, Acquisition Transaction shall mean any offer, proposal or expression
of interest relating to (i) any tender or exchange offer, (ii) merger (other
than the Merger), consolidation or other business combination involving Edify or
any Edify Subsidiary, or (iii) the acquisition in any manner of a substantial
equity interest in, or a substantial portion of the assets of Edify other than
the transactions contemplated or permitted by this Agreement and the Option
Agreement, involving or contemplating the acquisition or purchase of more than
20%, in the case of any class or series of capital stock or 20% in the case of
the assets of Edify, as well as any lease or sale transaction out of the
ordinary course of business of more than 20% of the assets of Edify or any
liquidation or dissolution of Edify;
(f) make capital expenditures aggregating in excess of $75,000;
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(g) enter into any new line of business or, except in the
ordinary course of business, (i) enter into any material contract (as defined in
Item 601(b)(10) of Regulation S-K), or other contract requiring aggregate
payments exceeding $100,000, or (ii) modify, amend or transfer in any material
respect, or terminate, any material contract to which Edify or any of its
Subsidiaries is a party or waive, release, or assign any material rights
thereunder;
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or a material amount of assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire any material amount of assets, other than in connection with
foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructurings, or in the ordinary course of business;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied, or in a violation of any
provision of this Agreement, except, in every case, as may be required by
applicable law;
(j) change its methods of accounting in effect at December 31,
1998 except as required by changes in GAAP as concurred to by S1's independent
auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Edify
Plan or any agreement, arrangement, plan or policy between Edify or any Edify
Subsidiary and one or more of its current or former directors or officers, (ii)
except as permitted by Section 5.1(c), increase in any manner the compensation
of any employee or director or pay any benefit not required by any plan or
agreement as in effect as of the date hereof (including, without limitation, the
granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares), (iii) enter into, modify
or renew any contract, agreement, commitment or arrangement providing for the
payment to any director, officer or employee of compensation or benefits, other
than normal annual increases in pay, consistent with past practice, (iv) hire
any new employee at a level of director or above at an annual base salary
compensation in excess of $125,000, (v) pay expenses of any employees or
directors for attending conventions or similar meetings which conventions or
meetings are held after the date hereof, other than in the ordinary course of
business consistent with past practice, (vi) promote to a rank of director or
more senior any employee, or (vii) pay any retention or other bonuses to any
employees;
(l) except for short-term borrowings with a maturity of one
year or less in the ordinary course of business consistent with past practices,
incur any indebtedness for borrowed money, assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity;
(m) sell, purchase, enter into a lease, relocate, open or close
any office;
(n) make any equity investment or commitment to make such an
investment in any entity or real estate;
(o) make any investment, other than in the ordinary course of
business consistent with past practices;
(p) sell, purchase or lease any real property;
(q) waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of any options or restricted stock, or
reprice options granted under any employee,
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consultant, director or other stock plans or authorize cash payments in exchange
for any options granted under any of such plans;
(r) transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to material
Intellectual Property other than in the ordinary course of business, or enter
into grants to future patent rights, other than as may be required by applicable
Laws;
(s) take any action (including any action by its Board of
Directors) to amend the terms of the Edify Rights Plan or otherwise to cause
Edify's representation set forth in Section 3.24 hereof to be untrue in any
respect; or
(t) agree or commit to do any of the actions set forth in
(a) - (s) above.
The consent of S1 to any action by Edify or any Edify Subsidiary that is not
permitted by any of the preceding paragraphs shall be evidenced by a writing
signed by the President or any Executive Vice President of S1.
5.2 COVENANTS OF S1.
During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement or with Edify's prior written consent, S1 shall not (i) take any
action that would materially adversely affect S1's or Merger Sub's ability to
consummate the transactions contemplated by this Agreement or materially delay
consummation of the transaction contemplated by this Agreement or (ii) take any
action that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue or in any of the conditions to the Merger set forth in Article VII not
being satisfied, or in a violation of any provision of this Agreement, except,
in every case, as may be required by applicable law.
5.3 COMPLIANCE WITH ANTITRUST LAWS.
Each of S1 and Edify shall use its reasonable best efforts to resolve
objections, if any, which may be asserted with respect to the Merger under
antitrust laws, including, without limitation and if applicable, the HSR Act. In
the event a suit is threatened or instituted challenging the Merger as violative
of antitrust laws, each of S1 and Edify shall use its reasonable best efforts to
avoid the filing of, or resist or resolve such suit. S1 and Edify shall use
their reasonable best efforts to take such action as may be required by: (a) the
Antitrust Division of the Department of Justice or the Federal Trade Commission
in order to resolve such objections as either of them may have to the Merger
under antitrust laws, or (b) any federal or state court of the United States, in
any suit brought by a private party or Governmental Entity challenging the
Merger as violative of antitrust laws, in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining order, or other
order which has the effect of preventing the consummation of the Merger.
Reasonable best efforts shall not include the willingness of S1 to accept an
order agreeing to the divestiture, or the holding separate, of any assets of S1
or Edify which S1 reasonably determines to be material to S1 or to benefits of
the transaction for which it has bargained for hereunder.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement, S1 and
Edify (as to information to be included therein pertaining to Edify) shall
promptly cause to be prepared and filed with the SEC a registration statement of
S1 on Form S-4, including the Proxy Statement/Prospectus (the "Registration
Statement") for the purpose of registering the S1 Common Stock to be issued in
the Merger, and for soliciting the approval of this Agreement and the Merger by
the stockholders of Edify and S1. S1 and Edify shall use their reasonable best
efforts to have the Registration Statement declared effective by the SEC as soon
as possible after the filing. The parties shall each promptly notify the other
upon the receipt of any comments from the SEC or its staff, or any other
governmental officials, supply each other with all such correspondence with any
Governmental Entity other than confidential information, and cooperate in
responding to and considering any questions or comments from the SEC staff
regarding the information contained in the Registration Statement. If at any
time after the Registration Statement is filed with the SEC, and prior to the
Closing Date, any event relating to S1 or Edify is discovered by such party
which should be set forth in an amendment of, or a supplement to, the
Registration Statement, including the Prospectus/Proxy Statement (including,
without limitation, any change in the Fairness Opinion), such party shall
promptly inform the other, and shall furnish all necessary information relating
to such event whereupon the appropriate party shall promptly cause an
appropriate amendment to the Registration Statement or supplement to the
Prospectus/Proxy Statement to be filed with the SEC. Upon the effectiveness of
such amendment or supplement, the parties (if prior to the meetings of
stockholders pursuant to Section 6.3 hereof) will take all necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to their stockholders entitled to vote at such meetings. S1 shall
also use reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Each party shall furnish all information as may
be reasonably requested by the other in connection with any such action.
(b) As promptly as practicable following the execution and
delivery of this Agreement, if applicable, each of Edify and S1 will prepare and
file with the United States Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the "DOJ")
Notification and Report Forms relating to the transactions contemplated herein
and by the Option Agreement if and as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed by the
parties (the "Antitrust Filings"). The parties will comply with any requests for
additional information relating to the Antitrust Filings and will use their
reasonable best efforts to secure all required approvals of the Antitrust
Filings.
(c) The parties hereto shall cooperate with each other and use
their reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings (which
shall include the Antitrust Filings), and to obtain as promptly as practicable
all permits, consents, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement (including without limitation the
Merger). Edify and S1 shall have the right to review in advance, and to the
extent practicable each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to Edify or S1 and Merger Sub, as the case may be, which appears in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement and will promptly notify each other of any communication with any
Governmental Entity and provide the other with an opportunity to participate in
any meetings with a Governmental Entity relating thereto; provided, however,
that nothing contained herein shall be deemed to provide either party with a
right to
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review any information provided to any Governmental Entity on a confidential
basis in connection with the transactions contemplated hereby. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
contemplation of the transactions contemplated herein.
(d) S1 and Edify shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (defined in Section 7.1(c)
hereof) will not be obtained or that the receipt of any such approval will be
materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, Edify shall provide to the officers,
employees, accountants, counsel and other representatives of S1 and Merger Sub,
access, during normal business hours during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records and,
during such period, Edify shall make available to S1 (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws or
other federal or state Laws and (ii) all other information concerning its
business, properties and personnel as S1 may reasonably request (except as to
information which is confidential or competitively sensitive ("Confidential
Matters")). S1 will hold all such information in confidence to the extent
required by, and in accordance with, the provisions of the Confidential
Information and Non-disclosure Agreement between the parties dated April 12,
1999 (the "Confidentiality Agreement"). The parties agree and acknowledge that
the Confidentiality Agreement will continue in full force and effect in
accordance with its terms.
(b) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, S1 shall, and shall cause Merger Sub
to, provide to the officers, employees, accountants, counsel and other
representatives of Edify, access, during normal business hours during the period
prior to the Effective Time, to such information regarding S1 (except as to
Confidential Matters), as shall be reasonably necessary for Edify to fulfill its
obligations pursuant to this Agreement or which may be reasonably necessary for
Edify to confirm that the representations and warranties of S1 contained herein
are true and correct and that the covenants of S1 contained herein have been
performed in all material respects. S1 also will provide a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws or
other federal or state banking Laws and all other information concerning its
business as Edify may reasonably request (except Confidential Matters). Edify
will hold all such information in confidence to the extent required by, and in
accordance with, the provisions of the Confidentiality Agreement.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and warranties of
the other set forth herein.
(d) Edify shall provide S1 with true, correct and complete
copies of all financial information provided to directors of Edify in connection
with meetings of its Boards of Directors or committees thereof, except as to
Confidential Matters.
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6.3 STOCKHOLDER MEETINGS.
(a) Edify shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its stockholders within 45 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger (the "Edify Special Meeting"). The
Board of Directors of Edify shall recommend to Edify's stockholders approval of
this Agreement, including the Merger, and the transactions contemplated hereby,
together with any matters incident thereto, and shall oppose any third party
proposal or other action that is inconsistent with this Agreement or the
consummation of the transactions contemplated hereby, unless the Board of
Directors of Edify reasonably determines, following consultation with Edify's
legal counsel, that to withdraw such recommendation or opposition, as the case
may be, would be required in the exercise of its fiduciary duties.
(b) S1 shall take all steps necessary to duly call, give notice
of, convene and hold a meeting of its stockholders within 45 days after the
Registration Statement becomes effective for the purpose of voting upon the
approval of the S1 Issuance (the "S1 Special Meeting"). The Board of Directors
of S1 shall recommend to S1's stockholders approval of the S1 Issuance.
(c) Edify and S1 will coordinate and cooperate with respect
to the timing of, calling, mailing notice and convening the Edify Special
Meeting and the S1 Special Meeting.
6.4 LEGAL CONDITIONS TO MERGER.
Each of S1 and Edify shall use their reasonable best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party with
respect to the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by Edify or S1
in connection with the Merger and the other transactions contemplated by this
Agreement.
6.5 STOCK EXCHANGE LISTING.
S1 shall cause the shares of S1 Common Stock to be issued in the Merger
and pursuant to options referred to herein to be approved for quotation on the
Nasdaq Stock Market National Market System (or such other national securities
exchange on which the S1 Common Stock has become listed, or approved for
listing) prior to the Closing.
6.6 EMPLOYEES.
(a) S1 agrees that, at the Effective Time, it will grant options
pursuant to one or more of the S1 stock option plans existing as of the date
hereof to the individuals (provided, in each case, that such person is an
officer of the rank of director or more senior at Edify immediately prior to the
Effective Time) at such price and in such amounts as are specified in Section
6.6(a) of the Edify Disclosure Schedule. Such options will vest no less than 25%
per year, will have no performance criteria (other than as to employment with S1
or any of its Subsidiaries) and otherwise be subject to the terms and conditions
of the S1 stock option plan under which they are granted.
(b) S1 will have no obligation to retain any employee or group of
employees of Edify following the Effective Time. As soon as practicable after
the execution of this Agreement, Edify and S1 shall confer and work together in
good faith to agree upon mutually acceptable employee benefit and compensation
arrangements (and terminate Edify employee plans immediately prior to the
Effective Time, if appropriate) so as to provide benefits to Edify employees
initially upon the Merger which are
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generally equivalent to those being provided to employees of Edify immediately
preceding the Effective Time, as well as to determine appropriate termination
benefits for Edify employees generally and certain members of Edify management
in particular in addition to any and all severance, separation, retention and
salary continuation plans, programs or arrangements disclosed on the Edify
Disclosure Schedule. Continuous employment with Edify or its subsidiaries shall
be credited to Edify employees who become S1 employees for all purposes of
eligibility and vesting of benefits but not for purposes of accrual of benefits.
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative, in
which any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Edify (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
Edify or any of their respective predecessors or (ii) this Agreement or any of
the transactions contemplated hereby, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto to the extent
permitted by applicable law and the Certificate of Incorporation and By-Laws of
Edify. It is understood and agreed that after the Effective Time, S1 shall
indemnify and hold harmless, as and to the fullest extent permitted by
applicable law and the Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of S1 or the Certificate of Incorporation and Bylaws
of Merger Sub, as may be the case, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to S1;
provided, however, that (1) S1 shall have the right to assume the defense
thereof and upon such assumption S1 shall not be liable to any Indemnified Party
for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if S1 elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues which
raise conflicts of interest between S1 and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to S1, and S1
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) S1 shall be obligated pursuant to this paragraph to pay for only
one firm of counsel for each Indemnified Party and one firm of local counsel,
and (3) S1 shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld or delayed).
S1 shall have no obligation to advance expenses incurred in connection with a
threatened or pending action, suit or preceding in advance of final disposition
of such action, suit or proceeding, unless (i) S1 would be permitted to advance
such expenses pursuant to the DGCL and S1's Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws, and (ii) S1 receives an
undertaking by the Indemnified Party to repay such amount if it is determined
that such party is not entitled to be indemnified by S1 pursuant to the DGCL and
S1's Amended and Restated Certificate of Incorporation or Amended and Restated
Bylaws, Edify's Certificate of Incorporation or Bylaws, or this Agreement. Any
Indemnified Party wishing to claim indemnification under this Section 6.7, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify S1 thereof; provided, however, that the failure to so notify shall not
affect the obligations of S1 under this Section 6.7 except to the extent such
failure to notify materially prejudices S1. S1's obligations under this Section
6.7 continue in full force and effect for a period of six years from the
Effective Time; provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the final
disposition of such claim.
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(b) S1 shall use commercially reasonable efforts to cause the
persons serving as officers and directors of Edify immediately prior to the
Effective Time to be covered by a directors' and officers' liability insurance
policy ("Tail Insurance") of substantially the same coverage and amounts
containing terms and conditions which are generally not less advantageous than
Edify's current policy with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and directors in their
capacity as such for an aggregate premium cost for the Tail Insurance of not
more than 120% of premium for current coverage, and for a period not less than
two years.
(c) In the event S1 or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of S1 assume
the obligations set forth in this section.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days after
the end of each fiscal quarter (other than the fourth fiscal quarter), S1 will
deliver to Edify and Edify will deliver to S1 their respective Quarterly Reports
on Form 10-Q, as filed with the SEC under the Exchange Act. Each party shall
deliver to the other any Current Reports on Form 8-K promptly after filing such
reports with the SEC.
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger, the
proper officers and directors of each party to this Agreement and S1's and
Edify's Subsidiaries shall take all such necessary action as may be reasonably
requested by either party or any such person. S1 shall cause Merger Sub to
perform all of its obligations under this Agreement and the transactions
contemplated hereby.
6.10 ADVICE OF CHANGES.
S1 and Edify shall promptly advise the other party of any change or event
that, individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect on it or to cause or constitute a material breach
of any of its representations, warranties or covenants contained herein. From
time to time prior to the Closing Date, each party will promptly supplement or
amend its disclosure schedule delivered in connection with the execution of this
Agreement to reflect any matter which, if existing, occurring or known at the
date of this Agreement, would have been required to be set forth or described in
such disclosure schedule or which is necessary to correct any information in
such disclosure schedule which has been rendered inaccurate thereby. No
supplement or amendment to such disclosure schedule shall have any effect for
the purpose of determining satisfaction of the conditions set forth in Sections
7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by Edify or S1,
as the case may be, with the respective covenants set forth in Sections 5.1 and
5.2 hereof.
6.11 CURRENT INFORMATION.
Each party will promptly notify the other of any material change in the
normal course of its business or in the operation of its properties and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of litigation involving it, and will keep the other fully informed of such
events.
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6.12 TRANSACTION EXPENSES OF EDIFY.
(a) For planning purposes, Edify shall, within 15 days from the
date hereof, provide S1 with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by Edify in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. Edify shall promptly notify S1 if or when it
determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, Edify shall
ask all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. Edify shall accrue and/or pay
all of such amounts promptly thereafter.
(c) S1, in reasonable consultation with Edify, shall make all
arrangements with respect to the printing and mailing of the Joint Proxy
Statement/Prospectus. S1, if it deems necessary, also shall engage (at S1's
expense) a proxy solicitation firm to assist in the solicitation of proxies for
the special meetings of S1's and/or Edify's stockholders. Edify agrees to
cooperate as to such matters.
6.13 FORM S-8.
S1 agrees to file a registration statement on Form S-8 for the shares of
S1 Common Stock issuable with respect to assumed Edify stock options, as
described in Section 1.6 of this Agreement as soon as reasonably practicable
after the Effective Time and shall maintain the effectiveness of such
registration statement thereafter for so long as any of such options or other
rights remain outstanding.
6.14 EDIFY ESPP.
At the Effective Time, each outstanding purchase right with respect to
all open Offering Periods under the Edify ESPP (each an "Assumed Purchase
Right") shall be assumed by S1. Each Assumed Purchase Right shall continue to
have, and be subject to, the terms and conditions set forth in the Edify ESPP
and the documents governing the Assumed Purchase Right, except that the purchase
price of such shares of S1 Common Stock for each respective Purchase Date under
each Assumed Purchase Right shall be the lower of (i) the quotient determined by
dividing eighty-five percent (85%) of the fair market value of Edify Common
Stock on the Offering Date of each assumed Offering Period by the Exchange Ratio
or (ii) eighty-five percent (85%) of the fair market value of the S1 Common
Stock on each Purchase Date of each assumed Offering Period occurring after the
Effective Time (with the number of shares rounded down to the nearest whole
share and the purchase price rounded up to the nearest whole cent). The Assumed
Purchase Rights shall be exercised at such times following the Effective Time as
set forth in the Edify ESPP, and each participant shall, accordingly, be issued
shares of S1 Common Stock at such times. The Edify ESPP shall terminate with the
exercise of the last Assumed Purchase Right, and no additional purchase rights
shall be granted under the Edify ESPP following the Effective Time. S1 agrees
that from and after the Effective Time, employees of Edify may participate in
S1's employee stock purchase plan, subject to the terms and conditions of such
plan. Capitalized terms in this Section 6.14 if not otherwise defined in this
Agreement, have the meanings ascribed to them in the Edify ESPP.
6.15 BOARD OF DIRECTORS.
Promptly following the Effective Time, the Board of Directors of S1 will
take all actions necessary in order for Jeffrey M. Crowe to be appointed
promptly to S1's Board of Directors for a three-year term; provided, however,
that S1 shall have no obligation to invite Mr. Crowe to serve on S1's Board of
Directors if Mr. Crowe is not both Chief Executive Officer and a member in good
standing of Edify's Board of Directors immediately prior to the Effective Time.
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6.16 BYLAWS.
Prior to the Effective Time, S1 shall amend its Bylaws to create an
office of Vice Chairman, the holder of which shall report directly to the Chief
Executive Officer of S1.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) STOCKHOLDER APPROVALS.
This Agreement, including the Certificate of Merger and the Merger
shall have been approved and adopted at the Edify Special Meeting by the
affirmative vote of the holders of at least a majority of the outstanding shares
of Edify Common Stock entitled to vote thereon. The S1 Issuance shall have been
approved by the holders of a majority of the outstanding Shares of S1 Common
Stock represented at the S1 Special Meeting in person or by proxy.
(b) STOCK EXCHANGE LISTING.
The shares of S1 Common Stock which shall be issued in the Merger
(including the S1 Common Stock that may be issued upon exercise of the options
referred to in Section 1.6 hereof) upon consummation of the Merger shall have
been authorized for quotation on the Nasdaq Stock Market National Market System
(or such other national securities exchange on which the S1 Common Stock may
become listed).
(c) REGISTRATION STATEMENT.
The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY; HSR ACT.
No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger or any of the other transactions
contemplated by this Agreement or the Certificate of Merger shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger. All waiting
periods, if any, under the HSR Act or foreign merger notification requirements,
if applicable, relating to the transactions contemplated hereby will have
expired or been terminated early and all material foreign antitrust approvals
required to be obtained prior to the Merger in connection with the transactions
contemplated hereby shall have been obtained.
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(e) FEDERAL TAX OPINION.
S1 and Edify shall each have received from Hogan & Hartson L.L.P.,
S1's special counsel, an opinion to S1 and Edify, in form and substance
reasonably satisfactory to them, substantially to the effect that on the basis
of facts, representations, and assumptions set forth in such opinion which are
consistent with the state of facts existing at the time of such opinion, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinion,
such counsel may require and, to the extent such counsel deems necessary or
appropriate, may rely upon representations made in certificates of officers of
Edify, S1, Merger Sub, their respective affiliates and others. If Hogan &
Hartson L.L.P. does not render such opinion, this condition may be satisfied if
Fenwick & West LLP renders such opinion, relying upon such representations.
7.2 CONDITIONS TO OBLIGATIONS OF S1 AND MERGER SUB.
The obligation of S1 and Merger Sub to effect the Merger is also subject
to the satisfaction or waiver by S1 at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Edify set forth in this
Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date; provided, however, that for purposes of this paragraph, such
representations and warranties shall be deemed to be true and correct, unless
the failure or failures of such representations and warranties to be so true
and correct, individually or in the aggregate, would have a Material Adverse
Effect on Edify. Such determination of aggregate Material Adverse Effect shall
be made as if there were no materiality qualifications in such representations
and warranties. S1 shall have received a certificate signed on behalf of Edify
by each of the President and Chief Executive Officer and the Chief Financial
Officer of Edify to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF EDIFY.
Edify shall have performed in all material respects all covenants
and agreements required to be performed by it under this Agreement at or prior
to the Closing Date, except in each case where such nonperformance does not or
would not have a Material Adverse Effect on any of Edify, S1 or the Surviving
Corporation. S1 shall have received a certificate signed on behalf of Edify by
each of the President and Chief Executive Officer and the Chief Financial
Officer of Edify to such effect.
(c) CONSENTS UNDER AGREEMENTS.
The consent, approval or waiver of each person whose consent or
approval shall be required in order to permit the succession by S1, to the
extent applicable, to any obligation, right or interest of Edify under any loan
or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument shall have been obtained except for those, the failure
of which to obtain, will not result in a Material Adverse Effect on S1 or Edify.
(d) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction preventing consummation of the Merger shall be pending or shall have
been threatened in writing.
(e) NO MATERIAL ADVERSE CHANGE.
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There shall have been no Material Adverse Effect with respect to
Edify, which is continuing.
(f) ACCOUNTANT'S COMFORT LETTER.
Edify shall have caused to be delivered on the respective dates
thereof to S1 "comfort letters" from KPMG LLP, Edify's independent public
accountants, dated the date on which the Registration Statement or last
amendment thereto shall become effective, and dated the date of the Closing
(defined in Section 9.1 hereof), and addressed to S1 and Edify, with respect to
Edify's financial data presented in the Proxy Statement/Prospectus, which
letters shall be based upon Statements on Auditing Standards Nos. 72 and 76.
7.3 CONDITIONS TO OBLIGATIONS OF EDIFY.
The obligation of Edify to effect the Merger is also subject to the
satisfaction or waiver by Edify at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of S1 and Merger Sub set forth
in this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on S1.
Such determination of aggregate Material Adverse Effect shall be made as if
there were no materiality qualifications in such representations and warranties.
Edify shall have received a certificate signed on behalf of S1 by each of the
President and Chief Executive Officer and the Chief Financial Officer of S1 to
the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF S1.
S1 and Merger Sub shall have each performed in all material
respects all covenants and agreements required to be performed by it
under this Agreement at or prior to the Closing Date, except in each case where
such nonperformance does not or would not have a Material Adverse Effect on any
of Edify, S1 or the Surviving Corporation. Edify shall have received a
certificate signed on behalf of S1 by each of the President and Chief Executive
Officer and the Chief Financial Officer of S1 to such effect.
(c) NO MATERIAL ADVERSE EFFECT.
There shall have been no Material Adverse Effect with respect to
S1, which is continuing.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of Edify or S1, if applicable:
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(a) by mutual consent of S1 and Edify in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either S1 or Edify if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
(c) by either S1 or Edify if the Merger shall not have been
consummated on or before March 31, 2000, unless the failure of the Closing to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such party
set forth herein;
(d) by either S1 or Edify (provided that the terminating party
is not in breach of its obligations under Section 6.3 hereof) if the approval of
the stockholders of either party required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of stockholders or at any adjournment or
postponement thereof, respectively;
(e) by either S1 or Edify (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a breach of any of the representations or warranties set forth in this Agreement
on the part of the other party, if such breach, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
the breaching party, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto or such breach, by its nature, cannot be cured prior to
the Closing or within 30 days, whichever is longer;
(f) by either S1 or Edify (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, and such breach shall not have been
cured within 30 days following receipt by the breaching party of written notice
of such breach from the other party hereto or such breach, by its nature, cannot
be cured prior to the Closing or within 30 days, whichever is longer, except in
each case where such breach does not or would not have a Material Adverse Effect
on any of Edify, S1 or the Surviving Corporation;
(g) by S1, if Edify's Board of Directors, for any reason,
(i) fails to call and hold within 45 days of the effectiveness of the
Registration Statement a special meeting of Edify's stockholders to consider and
approve this Agreement and the transactions contemplated hereby, (ii) withdraws
or amends or modifies in a manner adverse to S1 or fails to recommend to
stockholders the approval of this Agreement and the transactions contemplated
hereby, (iii) approves or recommends any third party proposal for an Acquisition
Transaction that is inconsistent with the transactions contemplated by this
Agreement, (iv) fails to recommend rejection of a tender or exchange offer
relating to Edify's securities which is commenced by a third party not
affiliated with S1, within ten business days from the date the tender or
exchange offer commenced, or (v) violates Section 5.1(e) of this Agreement;
(h) by Edify, if S1's Board of Directors, for any reason, (i)
fails to call and hold within 45 days of the effectiveness of the Registration
Statement a special meeting of S1's stockholders to consider and approve the
issuance of shares of S1 Common Stock in the Merger, or (ii) withdraws or
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<PAGE> 49
amends or modifies in a manner adverse to Edify or fails to recommend to
stockholders the approval of the issuance of shares of S1 Common Stock in the
Merger; and
(i) by Edify, on or after December 1, 1999, if, (1) Edify's
Board of Directors authorizes Edify to enter into an agreement concerning an
Acquisition Transaction on terms that Edify's Board of Directors reasonably
determines, after consultation with its financial advisor, to be more favorable
to Edify's stockholders than the Merger (a "Superior Proposal") and Edify
notifies S1 in writing that it intends to enter into such an agreement,
attaching the agreement so authorized to such notice, (2) S1 does not make,
within five business days after receipt of such notice, a written offer that
Edify's Board of Directors reasonably determines, after consultation with its
financial advisor, to be at least as favorable to Edify's stockholders as the
Superior Proposal, it being understood that Edify may not enter into any such
agreement during such five business day period, and (3) Edify pays the
applicable break-up fee under Section 9.3 hereof.
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either S1 or Edify as
provided in Section 8.1 hereof, this Agreement shall forthwith become void and
have no effect except (i) the last sentence of Sections 6.2(a) and Sections 8.2
and 9.3 hereof shall survive any termination of this Agreement, and (ii)
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
willful or intentional breach of any provision of this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Board
of Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Edify or S1; provided,
however, that after any approval of the transactions contemplated by this
Agreement by Edify's stockholders, there may not be, without further approval of
such stockholders, any amendment of this Agreement which (i) alters or changes
the amount or kind of shares, securities, cash, property and/or rights to be
received in exchange for or on conversion of all or any of the shares of any
class or series thereof of Edify, (ii) alters or changes any term of the
Certificate of Incorporation of the Surviving Corporation to be effected by the
Merger, or (iii) alters or changes any of the terms and conditions of this
Agreement if such alteration or change would adversely affect the holders of any
class or series thereof of Edify. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. at the main offices of S1
on (i) the fifth business day following the receipt of the last Requisite
Regulatory Approval or stockholder approval after all applicable waiting periods
have expired or been terminated or (ii) such other date, place and time as the
parties may agree in writing (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement (other than
pursuant to the Option Agreement, which shall terminate in accordance with its
terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 EXPENSES; BREAKUP FEE.
Except as provided below, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense, provided that all filing and other fees paid
to the SEC shall be borne by S1. If this Agreement is terminated by S1 (1) under
Section 8.1(d) due to the failure of the Edify stockholders to give their
required approval at the Edify Special Meeting, or (2) under Sections 8.1(e) or
8.1(f) by reason of a breach of Edify's representations or warranties or failure
of Edify to perform its covenants under this Agreement, or (3) under Section
8.1(g), Edify shall pay all documented, reasonable costs and expenses up to
$500,000 incurred by S1 in connection with this Agreement and the transactions
contemplated hereby, plus a breakup fee of (x) $1,000,000, in the case of a
termination under clause (1) of this sentence, or (y) $5,000,000, in the case of
a termination under clause (2) or (3) of this sentence. If this Agreement is
terminated by Edify under Section 8.1(i), Edify shall pay all documented,
reasonable costs and expenses up to $500,000 incurred by S1 in connection with
this Agreement and the transactions contemplated hereby, plus a breakup fee of
$5,000,000. If this Agreement shall be terminated by Edify (1) under Section
8.1(d) due to the failure of S1 stockholders to give their required approval at
the S1 Special Meeting, (2) under Sections 8.1(e) or (f) by reason of a breach
of S1's representations or warranties or failure of S1 to perform its covenants
under this Agreement, or (3) under Section 8.1(h), S1 shall pay all documented,
reasonable costs and expenses up to $500,000 incurred by Edify in connection
with this Agreement and the transactions contemplated hereby, plus a breakup fee
of (x) $1,000,000, in the case of a termination under clause (1) of this
sentence, or (y) $5,000,000, in the case of a termination under clause (2) or
(3) of this sentence.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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(a) if to S1, to:
Security First Technologies Corporation
3390 Peachtree Road, NE
Suite 1700
Atlanta, GA 30326
Attn.: Robert F. Stockwell
Chief Financial Officer
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004
Attn.: Stuart G. Stein, Esq.
and
(b) if to Edify, to:
Edify Corporation
2840 San Tomas Expressway
Santa Clara, CA 95051
Attn.: Jeffrey M. Crowe
President and Chief Executive Officer
with a copy (which shall not constitute notice) to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attn.: Gordon K. Davidson, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
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Confidentiality Agreement, the Certificate of Merger, the Option Agreement, the
Edify Stockholder Agreement and the S1 Stockholder Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the event
that the provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions thereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of The Nasdaq Stock
Market (or such other exchange on which the S1 Common Stock may become listed),
so long as this Agreement is in effect, neither S1 nor Edify shall, or shall
permit any of S1's or Edify's Subsidiaries to, issue or cause the publication of
any press release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated by this
Agreement, the Certificate of Merger, the Option Agreement, the Edify
Stockholder Agreement or the S1 Stockholder Agreement without the consent of the
other party, which consent shall not be unreasonably withheld. S1 and Edify
agree that the joint press release announcing the signing of this Agreement
shall contain a statement regarding the use of Edify's technology in such form
and content as the parties shall mutually agree in their sole and absolute
discretion.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
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9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater stockholder,
spouse or other person living in the same household of such director, officer or
stockholder, or any company, partnership or trust in which any of the foregoing
persons is an officer, 5% or greater stockholder, general partner or 5% or
greater trust beneficiary.
"knowledge" or "know" means with respect to a party hereto, with respect
to a matter in question, that the directors or any executive officer of such
party has actual knowledge of such matter.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to S1 or Edify, as the case may
be, means a condition, event, change or occurrence that has had or would have a
material adverse effect upon Edify and its Subsidiaries, taken as a whole, or S1
and its Subsidiaries, taken as a whole, as the case may be, taking into account
(A) the business, customers, assets, capitalization, financial condition and
results of operations of S1 or Edify and their respective Subsidiaries (in each
case, taken as a whole), other than as a result primarily of (i) the direct
effect of the public announcement, pendency or consummation of the Merger, (ii)
changes in general economic conditions or changes affecting the industry
generally in which such entity operates, or (iii) changes in the respective
trading prices for S1 Common Stock or Edify Common Stock, or (B) the ability of
S1 or Edify to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement, the Certificate of Merger and, in the case of
Edify, the Option Agreement.
"Subsidiary": with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
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IN WITNESS WHEREOF, S1, Merger Sub and Edify have caused this Agreement
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
SECURITY FIRST TECHNOLOGIES CORPORATION
By: /s/ JAMES S. MAHAN III
----------------------------------
James S. Mahan III
Chairman and Chief Executive Officer
SAHARA STRATEGY CORPORATION
By: /s/ ROBERT F. STOCKWELL
----------------------------------
Robert F. Stockwell
President
EDIFY CORPORATION
By: /s/ JEFFREY M. CROWE
----------------------------------
Jeffrey M. Crowe
President and Chief Executive Officer
<PAGE> 55
Exhibit A
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This OPTION AGREEMENT, dated as of May 16, 1999 (this
"Agreement"), is entered into between Edify Corporation, a Delaware corporation
("Issuer"), and Security First Technologies Corporation, a Delaware corporation
("Grantee").
WITNESSETH:
WHEREAS, Grantee, Sahara Strategy Corporation, a Delaware
corporation, and Issuer have entered into an Agreement and Plan of Merger, dated
as of May 16, 1999 (the "Plan"), which was executed by the parties thereto prior
to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering into
the Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to a number of fully paid
and nonassessable shares of common stock, par value $.001 per share of Issuer
("Issuer Common Stock") equal to 19.9% of the total of the number of outstanding
shares of Issuer Common Stock as of the first date that the Option becomes
exercisable, at a price per share equal to $17.87 (the "Option Price").
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at
any time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase Event;
(iii) 12 months after the termination of the Plan following the
occurrence of a Preliminary Purchase Event (as defined below);
(iv) upon the termination of the Plan, if no Purchase Event or
Preliminary Purchase Event has occurred prior to such termination, by
Issuer pursuant to Sections 8.1(e), (f) or (h) of the Plan, both parties
pursuant to Section 8.1(a) of the Plan, or by either party pursuant to
Section 8.1(b) or (c) of the Plan;
(v) upon termination of the Plan, by either party pursuant to
Section 8.1(d) of the Plan based on (A) the required vote of Grantee's
stockholders not being obtained for any reason at the S1 Special Meeting
or (B) the required vote of Issuer's stockholders not being received at
the Edify Special Meeting, if no Purchase Event or Preliminary Purchase
Event
<PAGE> 56
has occurred prior to the meeting of Issuer's stockholders (or any
adjournment or postponement thereof) held to vote on the Plan; or
(vi) 12 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a breach by
Issuer, by Grantee pursuant to Section 8.1(g) of the Plan, or by Issuer
pursuant to Section 8.1(i) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and prior
to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior written
consent, shall have entered into any letter of intent or definitive
agreement to engage in an Acquisition Transaction (as defined below) with
any person (as defined below) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the stockholders of Issuer approve or
accept any Acquisition Transaction with any Person (as the term "person"
is defined in Section 3(a)9 and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder) other than Grantee or any Grantee
Subsidiary. For purposes of this Agreement "Acquisition Transaction"
shall mean (x) a merger, consolidation or other business combination
involving Issuer, (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer, (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of Beneficial Ownership (as the term "beneficial ownership" is
defined in Regulation 13d-3(a) of the Exchange Act) of securities
representing 20% or more of the voting power of Issuer; provided,
however, that "Acquisition Transaction" shall not include a transaction
entered into after the termination of the Plan in which the Issuer is the
surviving entity, if in connection with such transaction, no person
acquires Beneficial Ownership of 20% or more of the total voting power of
the Issuer to be outstanding after giving effect to such transaction and
in which the aggregate voting power of Issuer acquired by all persons is
less than 33% of the total voting power of Issuer;
(ii) Any Person (other than Grantee, any Grantee Subsidiary or
any current affiliate of Issuer) shall have acquired Beneficial Ownership
of 20% or more of the outstanding shares of Issuer Common Stock;
(iii) (a) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a bona fide proposal to Issuer or, by a
public announcement or written communication that is or becomes the
subject of public disclosure, to Issuer's stockholders prior to the Edify
Special Meeting to engage in an Acquisition Transaction (including,
without limitation, any situation in which any Person other than Grantee
or any Grantee Subsidiary shall have commenced (as such term is defined
in Rule 14d-2 under the Exchange Act of 1934, as amended (the "Exchange
Act"), or shall have filled a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to a tender
offer or exchange offer to purchase any shares of Issuer Common Stock
such that, upon consummation of such offer, such person would have
Beneficial Ownership of 20% or more of the then outstanding shares of
Issuer Common Stock (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer", respectively) and (b) the stockholders of
Issuer do not approve the Merger, as defined in the Plan, at the Edify
Special Meeting, as defined in the Plan;
(iv) There shall exist a willful or intentional breach under the
Plan by Issuer and such breach would entitle Grantee to terminate the
Plan; or
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<PAGE> 57
(v) The special meeting of Issuers' stockholders held for the
purpose of voting on the Plan shall not have been held pursuant to the
Plan or shall have been canceled prior to termination of the Plan, or for
any reason whatsoever Issuer's Board of Directors shall have failed to
recommend, or shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors, that Issuer's
stockholders approve the Plan, or if Issuer or Issuer's Board of
Directors fails to oppose any proposal of the type described at Section
2(b)(iii)(a) above by any Person (other than Grantee or any Grantee
Subsidiary).
(c) The term "Purchase Event" shall mean any of the following
events or transactions occurring on or after the date hereof and prior to an
Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee or any
Grantee Subsidiary) of Beneficial Ownership (other than on behalf of the
Issuer) of 20% or more of the then outstanding Issuer Common Stock;
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i); or
(iii) The termination of the Plan by Grantee pursuant to Section
8.1(e) or (f) thereof as a result of a willful or intentional breach by
Issuer, by Grantee pursuant to Section 8.1(g) of the Plan, or by Issuer
pursuant to Section 8.1(i) of the Plan.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event known to Issuer;
provided, however, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice," the date of which being hereinafter referred to as the "Notice Date")
specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than 10 business days from the
Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, however, that, if prior notification to or approval of the
Federal Trade Commission (the "FTC"), the Antitrust Division of the Department
of Justice ("DOJ") or any other Governmental Authority is required in connection
with such purchase (each, a "Notification" or an "Approval," as the case may
be), at Grantee's sole expense, (a) Grantee shall promptly file the required
notice or application for approval ("Notice/Application"), (b) Grantee shall
expeditiously process the Notice/Application and (c) for the purpose of
determining the Closing Date pursuant to clause (ii) of this sentence, the
period of time that otherwise would run from the Notice Date shall instead run
from the later of (x) in connection with any Notification, the date on which any
required notification periods have expired or been terminated and (y) in
connection with any Approval, the date on which such approval has been obtained
and any requisite waiting period or periods shall have expired. For purposes of
Section 2(a) hereof, any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto. On or prior to the Closing Date, Grantee shall
have the right to revoke its exercise of the Option by written notice to the
Issuer given not less than three business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee
shall pay to Issuer the aggregate purchase price for the number of shares of
Issuer Common Stock specified in the Option Notice in immediately available
funds by wire transfer to a bank account designated by
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<PAGE> 58
Issuer; provided, however, that failure or refusal of Issuer to designate such a
bank account shall not preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f) hereof, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock specified in the Option Notice and, if the Option
should be exercised in part only, a new Option evidencing the rights of Grantee
thereof to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder.
(h) Certificates for Issuer Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate
is subject to resale restrictions arising under the Securities Act
of 1933, as amended, and applicable state securities laws and to
certain provisions of an agreement between Edify Corporation and
Security First Technologies Corporation dated as of May 16, 1999.
A copy of such agreement is on file at the principal office of
Edify, and will be provided to the holder hereof without charge
upon receipt by Edify of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC") or Governmental Authority responsible for administering
any applicable state securities laws or an opinion of counsel, in form and
substance satisfactory to Issuer's counsel, to the effect that such legend is
not required for purposes of the Securities Act or applicable state securities
laws; (ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In addition
such certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, unless prohibited by applicable law, Grantee shall be
deemed to be the holder of record of the number of shares of Issuer Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Issuer Common Stock shall not then actually be delivered to Grantee. Issuer
shall pay all expenses and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee.
(j) Promptly following any sale or other disposition of Issuer
Common Stock acquired pursuant to the Option, or the Option or any portion
thereof, Grantee shall promptly remit in cash to Issuer, the amount, if any, by
which (x) the sum of (A) the amount of the "breakup fee" received by Grantee
pursuant to Section 9.3 of the Plan plus (B) all proceeds received by Grantee in
connection with any and all sales or other dispositions of (1) Issuer Common
Stock acquired pursuant to the Option, and (2) the Option or any portion
thereof, plus (C) any dividends received by Grantee declared on Issuer Common
Stock acquired pursuant to the Option, exceeds (y) the sum of (X) $18.2 million
plus (Y) the Option Price multiplied by the number of shares of Issuer Common
Stock purchased by Grantee pursuant to the Option.
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<PAGE> 59
SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and reserved shares of Issuer Common Stock
equal to the maximum number of shares of Issuer Common Stock at any time and
from time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid, non-assessable,
and delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all reasonable action as may from time to time be
requested by Grantee, at Grantee's expense (including (x) complying with all
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. Section 18a and regulations promulgated thereunder and (y) in the
event prior approval of or notice to the FTC, DOJ or any other Governmental
Authority, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or any other applicable federal or state law, is necessary before the
Option may be exercised), cooperating with Grantee in preparing such
applications or notices and providing such information to each such Governmental
Authority as it may require in order to permit Grantee to exercise the Option
and Issuer duly and effectively to issue shares of Issuer Common Stock pursuant
hereto; and (iv) to take all action provided herein to protect the rights of
Grantee against dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any agreements and related options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable
upon the exercise of the Option shall be subject to adjustment from time to time
as follows:
(a) In the event of any change in the type or number of shares
of Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer Common Stock
are to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the prior partial
exercise of the Option (as adjusted on account of any of the foregoing changes
in the Issuer Common Stock), such number of shares shall equal the sum of 19.9%
of the total of the number of shares of Issuer Common Stock issued and
outstanding on the date the Option first becomes exercisable.
(b) Whenever the number of shares of Issuer Common Stock
purchasable upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of
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<PAGE> 60
shares of Issuer Common Stock purchasable prior to the adjustment and the
denominator of which shall be equal to the number of shares of Issuer Common
Stock purchasable after the adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
with the SEC, under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its reasonable best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period not in excess of 90 days from the day such registration statement
first becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall have the right to demand two such registrations, which
demand right shall be transferable but in no event shall Issuer be required to
effect more than two registrations in the aggregate pursuant to this Option or
any subdivision hereof. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. In connection with any such registration statement, Issuer and
Grantee shall provide each other with representations, warranties, indemnities
and other agreements customarily given in connection with such registration. If
requested by Grantee in connection with such registration, Issuer and Grantee
shall become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating themselves in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements and reasonably acceptable to Issuer.
Notwithstanding the foregoing, if Grantee revokes any exercise notice or fails
to exercise any Option with respect to any exercise notice pursuant to Section
2(e) hereof, Issuer shall not be obligated to continue any registration process
with respect to the sale of Option Shares issuable upon the exercise of such
Option and Grantee shall not be deemed to have demanded registration of Option
Shares. If Issuer withdraws a registration statement which has been declared
effective at the request of Grantee, or any subsequent holder, then such filing
shall be deemed an effective registration for all purposes hereunder. The Issuer
will not be required to file any such registration statement during any period
of time (not to exceed 30 days in the case of clauses (A) or (C) below or 45
days in the case of clause (B) below) when (A) the Issuer is in possession of
material non-public information which it reasonably believes would be
detrimental to be disclosed at such time and such information would have to be
disclosed if a registration statement were filed at that time; (B) the Issuer is
required under the Securities Act and the rules and regulations thereunder to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion in
such registration statement; or (C) the Issuer reasonably determines that such
registration would interfere with any financing, acquisition or material
transaction involving the Issuer. The registration rights set forth in this
Section 6 are subject to the condition that the Grantee or subsequent holder
shall provide the Issuer with such information with respect to the holder's
securities, the plan for distribution thereof, and such other information with
respect to the holder that is required under applicable securities laws to
enable the Issuer to include in a registration statement all material facts
required to be disclosed with respect to a registration thereunder, including
the identity of the holder and the holder's plan of distribution. The Grantee
shall not be able to exercise its registration rights hereunder if Grantee can
rely on Rule 144 promulgated under the Securities Act to sell such number of
shares of Issuer Common Stock that the Grantee otherwise would seek to register.
(b) Concurrently with the preparation and filing of a
registration statement under Section 6(a) hereof, Issuer shall also make all
filings required to comply with state securities laws in such number of states
as Grantee may reasonably request; provided, that Issuer shall not be
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<PAGE> 61
required to qualify to do business in, or consent to service of process in, any
jurisdiction by reason of this provision.
SECTION 7. Notwithstanding Sections 2 and 6 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the FTC, DOJ
or any other Governmental Authority despite the reasonable best efforts of
Grantee and Issuer to obtain such approvals, the exercise of the rights shall be
deemed to have been rescinded as of the related notice date. In the event (a)
Grantee receives official notice that an approval of the FTC, DOJ or any other
Governmental Authority required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a closing date has not occurred within 12
months after the related notice date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise the Option in
connection with the concurrent resale of the Option Shares pursuant to a
registration statement as provided in Section 6 hereof.
SECTION 8. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
SECTION 9. (a) Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the beginning
thereof substantially as follows:
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<PAGE> 62
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising under
the Securities Act of 1933, as amended, and applicable state securities
laws and to certain provisions of an agreement between Edify Corporation
and Security First Technologies Corporation, dated as of May 16, 1999. A
copy of such agreement is on file at the principal office of Edify
Corporation, and will be provided to any permitted assignee of the Option
without charge upon receipt of a written request therefor.
SECTION 10. Each of Grantee and Issuer will use its reasonable efforts
to make all filings with, and to obtain consents of, all third parties
including, if applicable, the FTC, DOJ and other Governmental Authorities
necessary to the consummation of the transactions contemplated by this
Agreement.
SECTION 11. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
SECTION 12. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 13. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
SECTION 14. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 15. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement and shall be effective at the time of execution and
delivery.
SECTION 16. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
SECTION 17. Except as otherwise expressly provided herein or in the
Plan, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their
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<PAGE> 63
respective successors except as assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
SECTION 18. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned therein.
SECTION 19. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 20. In the event that any selection or determination is to be
made by Grantee or a subsequent holder hereunder and at the time of such
selection or determination there is more than one Grantee or holders, such
selection shall be made by a majority in interest of such Grantees or holders.
SECTION 21. In the event of any exercise of the option by Grantee,
Issuer and such Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
SECTION 22. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 64
IN WITNESS WHEREOF, each of the parties has caused this Option Agreement
to be executed and delivered on its behalf by their respective officers
thereunto duly authorized, all as of the date first above written.
EDIFY CORPORATION
By:
------------------------------
Jeffrey M. Crowe
President and Chief Executive Officer
SECURITY FIRST TECHNOLOGIES CORPORATION
By:
------------------------------
James S. Mahan III
Chairman and Chief Executive Officer
<PAGE> 65
Exhibit B
CERTIFICATE OF MERGER
SAHARA STRATEGY CORPORATION
into
EDIFY CORPORATION
Pursuant to Title 8, Section 251 of the General Corporation Law of
the State of Delaware, Sahara Strategy Corporation, a corporation organized and
existing under the law of the State of Delaware ("Sahara"), and Edify
Corporation, a corporation organized and existing under the law of the State of
Delaware ("Edify"), do hereby certify to the following facts relating to the
merger of Sahara Sub with and into Edify:
FIRST: The name and state of incorporation of each constituent
entity that is a party to the Merger is as follows:
<TABLE>
<CAPTION>
Name State of Incorporation
---- ----------------------
<S> <C>
Sahara Strategy Corporation Delaware
Edify Corporation Delaware
</TABLE>
SECOND: An Agreement and Plan of Merger, dated as of May 16, 1999,
by and among Security First Technologies Corporation, Sahara and Edify (the
"Agreement and Plan of Merger"), has been approved, adopted, certified, executed
and acknowledged by each of the constituent corporations in accordance with the
requirements of Section 251 of the General Corporation Law of the State of
Delaware.
THIRD: Pursuant to the Agreement and Plan of Merger, the surviving
corporation of the Merger is Edify, a Delaware corporation (the "Surviving
Corporation"). The Surviving Corporation shall continue its existence under its
present name pursuant to the provisions of the General Corporation Law of the
State of Delaware.
FOURTH: At the "Effective Time" of the Merger, as defined in and
pursuant to the Agreement and Plan of Merger, the certificate of incorporation,
as amended, of the Surviving Corporation shall be amended to read in its
entirety as set forth in Exhibit I hereto.
FIFTH: The executed Agreement and Plan of Merger is on file at the
office of the Surviving Corporation at the following address:
<PAGE> 66
3390 Peachtree Road, NE
Suite 1700
Atlanta, GA 30326
SIXTH: A copy of the Agreement and Plan of Merger will be
furnished by the Surviving Corporation, on request and without cost, to any
shareholder of any constituent corporation.
2
<PAGE> 67
IN WITNESS WHEREOF, Sahara and Edify have caused this Certificate
of Merger to be duly executed as of this ___ day of ______, 1999 to be effective
upon filing.
EDIFY CORPORATION
By:
-----------------------------------
Name:
Title:
3
<PAGE> 68
Exhibit C
EDIFY
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of May 16, 1999, is entered
into by and among Security First Technologies Corporation, a Delaware
corporation ("S1"), and the stockholders of Edify Corporation, a Delaware
corporation ("Edify"), named on Schedule I hereto (collectively, the
"Stockholders") who are directors, executive officers or other affiliates of
Edify (for purposes of Rule 145 under the Securities Act of 1933, as amended).
WHEREAS, S1, Sahara Strategy Corporation, a Delaware corporation
("S1 Sub"), and Edify have entered into an Agreement and Plan of Merger, dated
as of May 16, 1999 (the "Agreement"), which is conditioned upon, and requires,
the execution of this Stockholder Agreement and which provides for, among other
things, the acquisition of Edify by S1, to be effected by the merger of S1 Sub
with and into Edify, in a stock-for-stock transaction (the "Merger"); and
WHEREAS, in order to induce S1 to enter into or proceed with the
Agreement, the Stockholders represent and warrant as to that the facts provided
herein are accurate as to each of the Stockholders set forth herein, and each of
the Stockholders agrees to, among other things, vote in favor of the Agreement,
the Merger and the other transactions contemplated by the Agreement in his/her
capacity as a stockholder of Edify;
NOW, THEREFORE in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. OWNERSHIP OF EDIFY COMMON STOCK. Each Stockholder represents and
warrants that the number of shares of Edify common stock, par value $.001 per
share ("Edify Common Stock"), set forth opposite such Stockholder's name on
Schedule I hereto is the total number of shares of Edify Common Stock over which
such person has "beneficial ownership" within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, except that the provisions of
Rule 13d-3(d)(1)(i) shall be considered without any limit as to time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and
agrees that:
(a) Such Stockholder shall, at any meeting of the holders of
Edify Common Stock called for the purpose, vote or cause to be voted all shares
of Edify Common Stock with respect to which such Stockholder has the right to
vote (whether owned as of the date hereof or hereafter acquired) (i) in favor of
the Agreement, the Merger and the other transactions contemplated by the
Agreement and (ii) against any Acquisition Transaction (as defined in the
Agreement) with any party other than S1 or one of its Subsidiaries (as defined
in the Agreement) or affiliates, or any other transaction inconsistent with the
Agreement or the transactions contemplated thereby.
(b) Prior to the Effective Time (as defined in the Agreement),
except as otherwise expressly permitted hereby, such Stockholder shall not,
sell, pledge, transfer or otherwise dispose of his/her shares of Edify Common
Stock; provided, however, that this Section 2(b) shall not apply to a pledge
existing as of the date hereof; and provided further that each Stockholder shall
be permitted to sell prior to the Effective Time up to 25% of the aggregate
amount of (i) all shares of Edify Common Stock owned by such Stockholder on the
date hereof, plus (ii) all shares which may be
<PAGE> 69
purchased by such Stockholder pursuant to such Stockholder's then vested and
exercisable options to purchase shares of Edify Common Stock. For each
Stockholder who is an officer of Edify, during the period beginning on the
Effective Time and ending on the earlier of (x) the date which is 180 days after
the Effective Time and (y) the date such Stockholder is no longer employed by
any of Edify, S1 or any of their respective subsidiaries (the "Restricted
Period"), no such Stockholder shall sell, pledge (other than as required by a
pledge of Edify Common Stock existing as of the date hereof), transfer or
otherwise dispose of the shares of S1 common stock, par value $.01 per share
(the "S1 Common Stock"), to be received by such Stockholder for such
Stockholder's shares of Edify Common Stock upon consummation of the Merger.
Notwithstanding the foregoing, if during the Restricted Period a registration
statement of S1 shall be declared effective by the U.S. Securities and Exchange
Commission for the registration of S1 Common Stock, each Stockholder shall be
permitted to sell under such registration statement a percentage of such
Stockholder's S1 Common Stock equal to the maximum percentage of S1 Common Stock
beneficially owned and being sold by any executive officer of S1 in such
registration (including all shares subject to options without regard to whether
such options are vested) on the same terms and conditions permitted to the
executive officers of S1.
(c) Except to the same extent Edify is permitted to do so
pursuant to Section 5.1(e) of the Agreement, such Stockholder shall not in
his/her capacity as a stockholder of Edify directly or indirectly knowingly
encourage or solicit or hold discussions or negotiations with, or knowingly
provide any information to, any person, entity or group (other than S1 or an
affiliate thereof) concerning any merger, sale of all or substantially all of
the assets or liabilities not in the ordinary course of business, sale of shares
of capital stock or similar transaction involving Edify or any other transaction
inconsistent with the Agreement or the transactions contemplated thereby.
Nothing herein shall impair (i) such Stockholder's fiduciary obligations as a
director of Edify, or (ii) the ability of such Stockholder to perform his/her
obligations as an officer of Edify.
(d) Such Stockholder shall comply with all applicable federal
and state securities laws in connection with any sale of S1 Common Stock
received in exchange for Edify Common Stock in the Merger, including the trading
and volume limitations as to sales by affiliates contained in Rule 145 under the
Securities Act of 1933, as amended.
(e) If, in the reasonable opinion of Fenwick & West LLP,
counsel to Edify, the Stockholders are not, due to the public unavailability of
material information regarding Edify or S1 (including, without limitation,
information regarding the Merger, any other transaction or event, or financial
information regarding any of them), able to sell shares of Edify Common Stock,
as would otherwise be permitted by Section 2(b) above, for at least 15 trading
days between the third day following Edify's public release of its financial
results for the second fiscal quarter of 1999 and August 31, 1999 (or such fewer
days as there may actually be between the release of such earnings and August
31, 1999) (the "Trading Period"), then, at each Stockholder's irrevocable
election by written notice given to S1 no later than the last business day of
the Trading Period, S1, within 5 business days following the Effective Time,
shall purchase for cash the S1 Common Stock into which such number of shares of
Edify Common Stock, as is specified in such notice, were converted, at a per
share price equal to (x) the average of the closing prices of Edify Common Stock
for each trading day during the Trading Period multiplied by (y) the Exchange
Ratio.
3. SUCCESSORS AND ASSIGNS. A Stockholder may sell, pledge, transfer
or otherwise dispose of his/her shares of Edify Common Stock, provided that such
Stockholder obtains the prior written consent of S1 and that any acquirer of
such Edify Common Stock agrees in writing to be bound by this Stockholder
Agreement.
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<PAGE> 70
4. SPECIFIC PERFORMANCE; TERMINATION. The parties agree and intend
that this Stockholder Agreement be a valid and binding agreement enforceable
against the parties hereto and that damages and other remedies at law for the
breach of this Stockholder Agreement are inadequate. The parties agree that
irreparable damage would occur in the event that the provisions of this
Stockholder Agreement were not performed in accordance with its specific terms
or were otherwise breached by any of the Stockholders or S1. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Stockholder Agreement by any of the Stockholders, or
S1, as the case may be, and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which S1 and the Stockholders are
entitled at law or in equity. This Stockholder Agreement may be terminated at
any time prior to the consummation of the Merger by the mutual written consent
of the parties hereto and shall be automatically terminated in the event that
the Agreement is terminated in accordance with its terms.
5. NOTICES. Notices may be provided to S1 and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by
the laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
7. COUNTERPARTS. This Stockholder Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same and each
of which shall be deemed an original.
8. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
-3-
<PAGE> 71
IN WITNESS WHEREOF, S1, by its respective duly authorized officer,
and each of the Stockholders have caused this Stockholder Agreement to be
executed and delivered as of the day and year first above written.
SECURITY FIRST TECHNOLOGIES CORPORATION
By:
-----------------------------
Name: Robert F. Stockwell
Title: Chief Financial Officer
STOCKHOLDERS:
- ------------------------------------ -------------------------------------
- ------------------------------------ -------------------------------------
- ------------------------------------ -------------------------------------
- ------------------------------------ -------------------------------------
- ------------------------------------ -------------------------------------
- ------------------------------------ -------------------------------------
<PAGE> 72
SCHEDULE I
<TABLE>
<S> <C>
Number of Shares of Edify Common
Name and Address of Stockholder Stock Beneficially Owned
- ------------------------------- --------------------------------
</TABLE>
<PAGE> 73
Exhibit D
S1
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of May 16, 1999, is entered
into by and among Edify Corporation, a Delaware corporation ("Edify"), and the
stockholders of Security First Technologies Corporation, a Delaware corporation
("S1"), named on Schedule I hereto (collectively, the "Stockholders") who are
directors, executive officers or other affiliates of S1 (for purposes of Rule
145 under the Securities Act of 1933, as amended).
WHEREAS, S1, Sahara Strategy Corporation, a Delaware corporation
("S1 Sub"), and Edify have entered into an Agreement and Plan of Merger, dated
as of May 16, 1999 (the "Agreement"), which is conditioned upon, and requires,
the execution of this Stockholder Agreement and which provides for, among other
things, the acquisition of Edify by S1, to be effected by the merger of S1 Sub
with and into Edify, in a stock-for-stock transaction (the "Merger"); and
WHEREAS, in order to induce Edify to enter into or proceed with
the Agreement, the Stockholders represent and warrant as to that the facts
provided herein are accurate as to each of the Stockholders set forth herein,
and each of the Stockholders agrees to, among other things, vote in favor of the
issuance of S1 Common Stock (as defined below) in the Merger pursuant to the
Agreement in his/her capacity as a stockholder of S1;
NOW, THEREFORE in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. OWNERSHIP OF S1 COMMON STOCK. Each Stockholder represents and
warrants that the number of shares of S1 common stock, par value $.01 per share
("S1 Common Stock"), set forth opposite such Stockholder's name on Schedule I
hereto is the total number of shares of S1 Common Stock over which such person
has "beneficial ownership" within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, except that the provisions of Rule
13d-3(d)(1)(i) shall be considered without any limit as to time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and
agrees that such Stockholder shall, at any meeting of the holders of S1 Common
Stock called for the purpose, vote or cause to be voted all shares of S1 Common
Stock with respect to which such Stockholder has the right to vote (whether
owned as of the date hereof or hereafter acquired) in favor of the issuance of
S1 Common Stock in the Merger pursuant to the Agreement.
3. SUCCESSORS AND ASSIGNS. A Stockholder may sell, pledge,
transfer or otherwise dispose of his/her shares of S1 Common Stock, provided
that such Stockholder obtains the prior written consent of Edify and that any
acquirer of such S1 Common Stock agrees in writing to be bound by this
Stockholder Agreement.
4. SPECIFIC PERFORMANCE; TERMINATION. The parties agree and intend
that this Stockholder Agreement be a valid and binding agreement enforceable
against the parties hereto and that damages and other remedies at law for the
breach of this Stockholder Agreement are inadequate. Each of the Stockholders
agree that irreparable damage to Edify would occur in the event that the
provisions of this Stockholder Agreement were not performed in accordance with
its specific
<PAGE> 74
terms or were otherwise breached by any of the Stockholders. It is accordingly
agreed that Edify shall be entitled to an injunction or injunctions to prevent
breaches of this Stockholder Agreement by any of the Stockholders and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which Edify is entitled at law or in equity. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by the mutual
written consent of the parties hereto and shall be automatically terminated in
the event that the Agreement is terminated in accordance with its terms.
5. NOTICES. Notices may be provided to Edify and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by
the laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
7. COUNTERPARTS. This Stockholder Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same and each
of which shall be deemed an original.
8. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
-2-
<PAGE> 75
IN WITNESS WHEREOF, Edify, by its respective duly authorized
officer, and each of the Stockholders have caused this Stockholder Agreement to
be executed and delivered as of the day and year first above written.
EDIFY CORPORATION
By:
--------------------------------
Name:
-------------------------
Title:
-------------------------
STOCKHOLDERS:
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
<PAGE> 76
SCHEDULE I
<PAGE> 1
EXHIBIT 2.3
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This OPTION AGREEMENT, dated as of May 16, 1999 (this
"Agreement"), is entered into between Edify Corporation, a Delaware corporation
("Issuer"), and Security First Technologies Corporation, a Delaware corporation
("Grantee").
WITNESSETH:
WHEREAS, Grantee, Sahara Strategy Corporation, a Delaware
corporation, and Issuer have entered into an Agreement and Plan of Merger, dated
as of May 16, 1999 (the "Plan"), which was executed by the parties thereto prior
to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering into
the Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to a number of fully
paid and nonassessable shares of common stock, par value $.001 per share of
Issuer ("Issuer Common Stock") equal to 19.9% of the total of the number of
outstanding shares of Issuer Common Stock as of the first date that the Option
becomes exercisable, at a price per share equal to $17.87 (the "Option Price").
SECTION 2. (a) Grantee may exercise the Option, in whole or part,
at any time and from time to time following the occurrence of a Purchase Event
(as defined below); provided, however, that the Option shall terminate and be of
no further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase Event;
(iii) 12 months after the termination of the Plan following the
occurrence of a Preliminary Purchase Event (as defined below);
(iv) upon the termination of the Plan, if no Purchase Event or
Preliminary Purchase Event has occurred prior to such termination, by
Issuer pursuant to Sections 8.1(e), (f) or (h) of the Plan, both parties
pursuant to Section 8.1(a) of the Plan, or by either party pursuant to
Section 8.1(b) or (c) of the Plan;
(v) upon termination of the Plan, by either party pursuant to
Section 8.1(d) of the Plan based on (A) the required vote of Grantee's
stockholders not being obtained for any reason at the S1 Special Meeting
or (B) the required vote of Issuer's stockholders not being received at
the Edify Special Meeting, if no Purchase Event or Preliminary Purchase
Event has occurred prior to the meeting of Issuer's stockholders (or any
adjournment or postponement thereof) held to vote on the Plan; or
<PAGE> 2
(vi) 12 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a breach by
Issuer, by Grantee pursuant to Section 8.1(g) of the Plan, or by Issuer
pursuant to Section 8.1(i) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and prior
to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior written
consent, shall have entered into any letter of intent or definitive
agreement to engage in an Acquisition Transaction (as defined below) with
any person (as defined below) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the stockholders of Issuer approve or
accept any Acquisition Transaction with any Person (as the term "person"
is defined in Section 3(a)9 and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder) other than Grantee or any Grantee
Subsidiary. For purposes of this Agreement "Acquisition Transaction"
shall mean (x) a merger, consolidation or other business combination
involving Issuer, (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer, (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of Beneficial Ownership (as the term "beneficial ownership" is
defined in Regulation 13d-3(a) of the Exchange Act) of securities
representing 20% or more of the voting power of Issuer; provided,
however, that "Acquisition Transaction" shall not include a transaction
entered into after the termination of the Plan in which the Issuer is the
surviving entity, if in connection with such transaction, no person
acquires Beneficial Ownership of 20% or more of the total voting power of
the Issuer to be outstanding after giving effect to such transaction and
in which the aggregate voting power of Issuer acquired by all persons is
less than 33% of the total voting power of Issuer;
(ii) Any Person (other than Grantee, any Grantee Subsidiary or
any current affiliate of Issuer) shall have acquired Beneficial Ownership
of 20% or more of the outstanding shares of Issuer Common Stock;
(iii) (a) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a bona fide proposal to Issuer or, by a
public announcement or written communication that is or becomes the
subject of public disclosure, to Issuer's stockholders prior to the Edify
Special Meeting to engage in an Acquisition Transaction (including,
without limitation, any situation in which any Person other than Grantee
or any Grantee Subsidiary shall have commenced (as such term is defined
in Rule 14d-2 under the Exchange Act of 1934, as amended (the "Exchange
Act"), or shall have filled a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to a tender
offer or exchange offer to purchase any shares of Issuer Common Stock
such that, upon consummation of such offer, such person would have
Beneficial Ownership of 20% or more of the then outstanding shares of
Issuer Common Stock (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer", respectively) and (b) the stockholders of
Issuer do not approve the Merger, as defined in the Plan, at the Edify
Special Meeting, as defined in the Plan;
(iv) There shall exist a willful or intentional breach under the
Plan by Issuer and such breach would entitle Grantee to terminate the
Plan; or
(v) The special meeting of Issuers' stockholders held for the
purpose of voting on the Plan shall not have been held pursuant to the
Plan or shall have been canceled prior to
-2-
<PAGE> 3
termination of the Plan, or for any reason whatsoever Issuer's Board of
Directors shall have failed to recommend, or shall have withdrawn or
modified in a manner adverse to Grantee the recommendation of Issuer's
Board of Directors, that Issuer's stockholders approve the Plan, or if
Issuer or Issuer's Board of Directors fails to oppose any proposal of the
type described at Section 2(b)(iii)(a) above by any Person (other than
Grantee or any Grantee Subsidiary).
(c) The term "Purchase Event" shall mean any of the following
events or transactions occurring on or after the date hereof and prior to an
Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee or any
Grantee Subsidiary) of Beneficial Ownership (other than on behalf of the
Issuer) of 20% or more of the then outstanding Issuer Common Stock;
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i); or
(iii) The termination of the Plan by Grantee pursuant to Section
8.1(e) or (f) thereof as a result of a willful or intentional breach by
Issuer, by Grantee pursuant to Section 8.1(g) of the Plan, or by Issuer
pursuant to Section 8.1(i) of the Plan.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event known to Issuer;
provided, however, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice," the date of which being hereinafter referred to as the "Notice Date")
specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than 10 business days from the
Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, however, that, if prior notification to or approval of the
Federal Trade Commission (the "FTC"), the Antitrust Division of the Department
of Justice ("DOJ") or any other Governmental Authority is required in connection
with such purchase (each, a "Notification" or an "Approval," as the case may
be), at Grantee's sole expense, (a) Grantee shall promptly file the required
notice or application for approval ("Notice/Application"), (b) Grantee shall
expeditiously process the Notice/Application and (c) for the purpose of
determining the Closing Date pursuant to clause (ii) of this sentence, the
period of time that otherwise would run from the Notice Date shall instead run
from the later of (x) in connection with any Notification, the date on which any
required notification periods have expired or been terminated and (y) in
connection with any Approval, the date on which such approval has been obtained
and any requisite waiting period or periods shall have expired. For purposes of
Section 2(a) hereof, any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto. On or prior to the Closing Date, Grantee shall
have the right to revoke its exercise of the Option by written notice to the
Issuer given not less than three business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee
shall pay to Issuer the aggregate purchase price for the number of shares of
Issuer Common Stock specified in the Option Notice in immediately available
funds by wire transfer to a bank account designated by Issuer; provided,
however, that failure or refusal of Issuer to designate such a bank account
shall not preclude Grantee from exercising the Option.
-3-
<PAGE> 4
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f) hereof, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock specified in the Option Notice and, if the Option
should be exercised in part only, a new Option evidencing the rights of Grantee
thereof to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder.
(h) Certificates for Issuer Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate
is subject to resale restrictions arising under the Securities Act
of 1933, as amended, and applicable state securities laws and to
certain provisions of an agreement between Edify Corporation and
Security First Technologies Corporation dated as of May 16, 1999. A
copy of such agreement is on file at the principal office of Edify,
and will be provided to the holder hereof without charge upon
receipt by Edify of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC") or Governmental Authority responsible for administering
any applicable state securities laws or an opinion of counsel, in form and
substance satisfactory to Issuer's counsel, to the effect that such legend is
not required for purposes of the Securities Act or applicable state securities
laws; (ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In addition
such certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, unless prohibited by applicable law, Grantee shall be
deemed to be the holder of record of the number of shares of Issuer Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Issuer Common Stock shall not then actually be delivered to Grantee. Issuer
shall pay all expenses and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee.
(j) Promptly following any sale or other disposition of Issuer
Common Stock acquired pursuant to the Option, or the Option or any portion
thereof, Grantee shall promptly remit in cash to Issuer, the amount, if any, by
which (x) the sum of (A) the amount of the "breakup fee" received by Grantee
pursuant to Section 9.3 of the Plan plus (B) all proceeds received by Grantee in
connection with any and all sales or other dispositions of (1) Issuer Common
Stock acquired pursuant to the Option, and (2) the Option or any portion
thereof, plus (C) any dividends received by Grantee declared on Issuer Common
Stock acquired pursuant to the Option, exceeds (y) the sum of (X) $18.2 million
plus (Y) the Option Price multiplied by the number of shares of Issuer Common
Stock purchased by Grantee pursuant to the Option.
SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and
-4-
<PAGE> 5
reserved shares of Issuer Common Stock equal to the maximum number of shares of
Issuer Common Stock at any time and from time to time issuable hereunder, all of
which shares will, upon issuance pursuant hereto, be duly authorized, validly
issued, fully paid, non-assessable, and delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights; (ii) that it will not, by amendment of its certificate of incorporation
or through reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by Issuer; (iii) promptly to take all reasonable action
as may from time to time be requested by Grantee, at Grantee's expense
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event prior approval of or notice to the
FTC, DOJ or any other Governmental Authority, under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or any other applicable federal
or state law, is necessary before the Option may be exercised), cooperating with
Grantee in preparing such applications or notices and providing such information
to each such Governmental Authority as it may require in order to permit Grantee
to exercise the Option and Issuer duly and effectively to issue shares of Issuer
Common Stock pursuant hereto; and (iv) to take all action provided herein to
protect the rights of Grantee against dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any agreements and related options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable
upon the exercise of the Option shall be subject to adjustment from time to time
as follows:
(a) In the event of any change in the type or number of shares
of Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer Common Stock
are to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the prior partial
exercise of the Option (as adjusted on account of any of the foregoing changes
in the Issuer Common Stock), such number of shares shall equal the sum of 19.9%
of the total of the number of shares of Issuer Common Stock issued and
outstanding on the date the Option first becomes exercisable.
(b) Whenever the number of shares of Issuer Common Stock
purchasable upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of shares of Issuer Common
Stock purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Issuer Common Stock purchasable after the
adjustment.
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<PAGE> 6
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
with the SEC, under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its reasonable best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period not in excess of 90 days from the day such registration statement
first becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall have the right to demand two such registrations, which
demand right shall be transferable but in no event shall Issuer be required to
effect more than two registrations in the aggregate pursuant to this Option or
any subdivision hereof. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. In connection with any such registration statement, Issuer and
Grantee shall provide each other with representations, warranties, indemnities
and other agreements customarily given in connection with such registration. If
requested by Grantee in connection with such registration, Issuer and Grantee
shall become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating themselves in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements and reasonably acceptable to Issuer.
Notwithstanding the foregoing, if Grantee revokes any exercise notice or fails
to exercise any Option with respect to any exercise notice pursuant to Section
2(e) hereof, Issuer shall not be obligated to continue any registration process
with respect to the sale of Option Shares issuable upon the exercise of such
Option and Grantee shall not be deemed to have demanded registration of Option
Shares. If Issuer withdraws a registration statement which has been declared
effective at the request of Grantee, or any subsequent holder, then such filing
shall be deemed an effective registration for all purposes hereunder. The Issuer
will not be required to file any such registration statement during any period
of time (not to exceed 30 days in the case of clauses (A) or (C) below or 45
days in the case of clause (B) below) when (A) the Issuer is in possession of
material non-public information which it reasonably believes would be
detrimental to be disclosed at such time and such information would have to be
disclosed if a registration statement were filed at that time; (B) the Issuer is
required under the Securities Act and the rules and regulations thereunder to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion in
such registration statement; or (C) the Issuer reasonably determines that such
registration would interfere with any financing, acquisition or material
transaction involving the Issuer. The registration rights set forth in this
Section 6 are subject to the condition that the Grantee or subsequent holder
shall provide the Issuer with such information with respect to the holder's
securities, the plan for distribution thereof, and such other information with
respect to the holder that is required under applicable securities laws to
enable the Issuer to include in a registration statement all material facts
required to be disclosed with respect to a registration thereunder, including
the identity of the holder and the holder's plan of distribution. The Grantee
shall not be able to exercise its registration rights hereunder if Grantee can
rely on Rule 144 promulgated under the Securities Act to sell such number of
shares of Issuer Common Stock that the Grantee otherwise would seek to register.
(b) Concurrently with the preparation and filing of a
registration statement under Section 6(a) hereof, Issuer shall also make all
filings required to comply with state securities laws in such number of states
as Grantee may reasonably request; provided, that Issuer shall not be required
to qualify to do business in, or consent to service of process in, any
jurisdiction by reason of this provision.
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<PAGE> 7
SECTION 7. Notwithstanding Sections 2 and 6 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the FTC, DOJ
or any other Governmental Authority despite the reasonable best efforts of
Grantee and Issuer to obtain such approvals, the exercise of the rights shall be
deemed to have been rescinded as of the related notice date. In the event (a)
Grantee receives official notice that an approval of the FTC, DOJ or any other
Governmental Authority required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a closing date has not occurred within 12
months after the related notice date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise the Option in
connection with the concurrent resale of the Option Shares pursuant to a
registration statement as provided in Section 6 hereof.
SECTION 8. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
SECTION 9. (a) Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the beginning
thereof substantially as follows:
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising under
the Securities Act of 1933, as amended, and applicable state securities
laws and to certain provisions of an agreement
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<PAGE> 8
between Edify Corporation and Security First Technologies Corporation,
dated as of May 16, 1999. A copy of such agreement is on file at the
principal office of Edify Corporation, and will be provided to any
permitted assignee of the Option without charge upon receipt of a written
request therefor.
SECTION 10. Each of Grantee and Issuer will use its reasonable efforts
to make all filings with, and to obtain consents of, all third parties
including, if applicable, the FTC, DOJ and other Governmental Authorities
necessary to the consummation of the transactions contemplated by this
Agreement.
SECTION 11. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
SECTION 12. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 13. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
SECTION 14. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 15. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement and shall be effective at the time of execution and
delivery.
SECTION 16. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
SECTION 17. Except as otherwise expressly provided herein or in the
Plan, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
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<PAGE> 9
SECTION 18. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned therein.
SECTION 19. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 20. In the event that any selection or determination is to be
made by Grantee or a subsequent holder hereunder and at the time of such
selection or determination there is more than one Grantee or holders, such
selection shall be made by a majority in interest of such Grantees or holders.
SECTION 21. In the event of any exercise of the option by Grantee,
Issuer and such Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
SECTION 22. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 10
IN WITNESS WHEREOF, each of the parties has caused this Option Agreement
to be executed and delivered on its behalf by their respective officers
thereunto duly authorized, all as of the date first above written.
EDIFY CORPORATION
By: /s/ JEFFREY M. CROWE
----------------------------------
Jeffrey M. Crowe
President and Chief Executive Officer
SECURITY FIRST TECHNOLOGIES CORPORATIOXN
By: /s/ JAMES S. MAHAN III
----------------------------------
James S. Mahan III
Chairman and Chief Executive Officer
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AND OPTION AGREEMENT
BY AND BETWEEN
SECURITY FIRST TECHNOLOGIES CORPORATION
AND
INTUIT INC.
DATED AS OF MAY 16, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 1. PURCHASE AND SALE OF THE SHARES.............................................1
1.1 Sale and Issuance of the Shares............................................1
1.2 Closing....................................................................1
SECTION 2. STOCK OPTION................................................................2
2.1 Grant of Option............................................................2
2.2 The Per Share Option Exercise Price........................................2
2.3 Exercise of the Option.....................................................3
2.4 Transferability............................................................4
2.5 Requirements of Law........................................................4
2.6 Changes in Capitalization..................................................4
2.7 Mergers, Consolidations and Asset Sales....................................5
2.8 Certificate as to Adjustments..............................................5
2.9 Reservation of Common Stock................................................5
2.10 Notices of Record Date....................................................6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION...........................6
3.1 Organization and Standing..................................................6
3.2 Authorization; Binding Obligation..........................................6
3.3 Capitalization.............................................................7
3.4 Validity of Shares; Issuance...............................................7
3.5 No Consents................................................................7
3.6 Non-Contravention..........................................................8
3.7 Additional Information.....................................................8
3.8 Financial Statements.......................................................8
3.9 Absence of Change of Events................................................9
3.10 Bank Regulation...........................................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................9
4.1 Organization and Standing..................................................9
4.2 Authorization..............................................................9
4.3 Non-Contravention..........................................................10
4.4 No Consents................................................................10
4.5 Adequate Resources.........................................................10
4.6 Investment Experience......................................................10
4.7 Investment Intent..........................................................11
4.8 Registration or Exemption Requirements.....................................11
4.9 No Legal, Tax or Investment Advice.........................................11
4.10 Passive Investor..........................................................12
SECTION 5. ADDITIONAL AGREEMENTS.......................................................12
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
5.1 Nonsolicitation............................................................12
5.2 Lock-up Covenant..........................................................12
5.3 Commercially Reasonable Efforts............................................12
5.4 SEC Filings................................................................13
SECTION 6. CONDITIONS TO CLOSING.......................................................13
6.1 Conditions to Obligations of All Parties...................................13
6.2 Conditions to the Obligations of Purchaser.................................14
6.3 Conditions to Obligations of the Corporation...............................14
SECTION 7. CLOSING.....................................................................15
7.1 Deliveries by the Corporation..............................................15
7.2 Deliveries by Purchaser....................................................16
SECTION 8. LEGEND......................................................................16
8.1 Endorsement................................................................16
8.2 Removal of Legend..........................................................17
SECTION 9. REGISTRATION RIGHTS.........................................................17
9.1 Demand Registration Rights.................................................17
9.2 Registration Procedures....................................................18
9.3 Registration Expenses......................................................19
9.4 Indemnity and Contribution.................................................20
SECTION 10. TERMINATION................................................................22
10.1 Mutual Consent............................................................22
10.2 Other Termination.........................................................22
10.3 Effect of Termination.....................................................22
SECTION 11. MISCELLANEOUS..............................................................23
11.1 Additional Actions and Documents..........................................23
11.2 Expenses..................................................................23
11.3 Notices...................................................................23
11.4 Waiver....................................................................24
11.5 Binding Effect............................................................24
11.6 Entire Agreement; Amendment...............................................24
11.7 Severability..............................................................24
11.8 Headings..................................................................25
11.9 Governing Law.............................................................25
11.10 Signature in Counterparts................................................25
11.11 No Third Party Beneficiaries.............................................25
11.12 Assignability............................................................25
11.13 Parties Not Partners.....................................................26
11.14 Non-Survival of Representations and Warranties...........................26
SCHEDULE 3.3...........................................................................1
</TABLE>
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<PAGE> 4
STOCK PURCHASE AND OPTION AGREEMENT
This Stock Purchase and Option Agreement (this "Agreement"), dated
as of the 16th day of May, 1999, is entered into by and between Security First
Technologies Corporation, a Delaware corporation (the "Corporation") and Intuit
Inc., a Delaware corporation ("Purchaser").
WHEREAS, Purchaser desires to subscribe for, and acquire from the
Corporation, such number of shares (the "Shares") of the Corporation's common
stock, par value $.01 per share ("Common Stock"), as determined by dividing
$50,000,000 by the applicable per share price of the Shares (as described below
in Section 1.1), on the terms and under the conditions specified herein, and to
acquire the Option (as defined below in Section 2.1); and
WHEREAS, the Corporation desires to sell and issue to Purchaser
the Shares and issue to Purchaser the Option on the terms and under the
conditions specified herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the sufficiency of which is hereby acknowledged, the parties mutually
agree as follows:
SECTION 1. PURCHASE AND SALE OF THE SHARES.
1.1 SALE AND ISSUANCE OF THE SHARES.
At the Closing (as defined below in Section 1.2) and subject to
the terms and conditions of this Agreement, Purchaser hereby subscribes for, and
agrees to purchase, the Shares at a price per share equal to $51.5032, which
equals the average closing asking price per share of the Common Stock, as quoted
on the Nasdaq Stock Market National Market System, for each of the 10 trading
days preceding the date hereof (the "Per Share Purchase Price"). The number of
Shares shall be 970,813, as determined by dividing $50,000,000 by the Per Share
Purchase Price and rounding down to the nearest whole share. The Corporation
agrees to sell and issue to Purchaser at the Closing for $50,000,000, the
Shares.
1.2 CLOSING.
The closing (the "Closing") of the transaction shall take place
within ten calendar days after the satisfaction or waiver of the conditions set
forth in Section 6, or on such other date as the parties shall mutually agree.
The Closing shall take place at the offices of Hogan & Hartson L.L.P., 555 13th
Street, N.W.,
<PAGE> 5
Washington, D.C. 20004, or at such other time and place as the parties shall
mutually agree.
SECTION 2. STOCK OPTION
2.1 GRANT OF OPTION.
The Corporation does hereby grant to Purchaser an option (the
"Option") to subscribe for and purchase 4,000,000 shares of Common Stock, less
the number of Shares purchased hereby; provided, however, that (1) if the
Corporation closes on the "Merger," as contemplated by and defined in that
certain Agreement and Plan of Merger dated as of May 16, 1999 by and among the
Corporation, Sahara Strategy Corporation and Edify Corporation (the "Edify
Business Combination Transaction") on or before March 31, 2000, the number of
shares constituting the Option Shares shall be increased by 600,000; and (2) if
the Corporation closes on the "Transaction," as contemplated by and defined in
that certain Share Purchase Agreement dated as of May 16, 1999, by and among S1
Europe Holdings N.V. (a Belgian corporation in the process of incorporation,
represented by Security First Technologies Corporation), the Stockholders of
FICS Group N.V. and, for the limited purposes stated herein, the Corporation and
FICS Group N.V. ("FICS"), and the "S1 Issuance" as contemplated by and defined
in that certain Stock Purchase Agreement dated as of May 16, 1999 by and among
the Corporation, the individuals identified therein and, for the limited
purposes set forth therein, FICS, on or before March 31, 2000, the number of
shares constituting the Option Shares shall be increased by 1,800,000; and (3)
the maximum number of shares constituting the Option Shares shall never exceed
the difference between (A) 6,400,000 and (B) the total number of shares of
Common Stock "beneficially owned" as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), by Purchaser or any
"affiliate" as defined in Rule 405 under the Securities Act of 1933, as amended
(the "Securities Act"), of Purchaser, excluding the Option Shares. The Option
shall vest and therefore become exercisable, if at all, only upon the closing of
the Edify Business Combination Transaction (the "Edify Closing"). If the Edify
Closing does not occur on or before March 31, 2000, the Option will be void in
all respects. If vested, the Option shall be exercisable, in whole or in part,
at any time from the date of the Edify Closing until 5:00 p.m. Eastern time on
the fifth anniversary of the Closing hereunder.
2.2 THE PER SHARE OPTION EXERCISE PRICE.
The maximum number of Option Shares issuable without stockholder
approval pursuant to Rule 4310 of the Rules of the Nasdaq Stock Market shall be
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<PAGE> 6
called the "4310 Limit." Under the Option, the exercise price per share of
Common Stock for which the Option may be exercised (the "Per Share Option
Exercise Price") shall equal the Per Share Purchase Price specified in Section
1.1 above; provided, however, that if the grant and exercise of the Option, in
light of the vesting and anti-dilution provisions set forth in Section 2.1
above, exceeds the 4310 Limit, then (a) for that number of Option Shares in
excess of the 4310 Limit, but only for such number of Option Shares, the Per
Share Option Exercise Price shall equal $53.625 and (b) the Purchaser may elect
to exercise any Option Shares for which the Per Share Option Exercise Price is
$53.625 after all other Option Shares have been exercised. The determination of
whether the grant and exercise of the Option exceeds the 4310 Limit shall be
made after consultation by both parties with the Nasdaq Stock Market prior to
the Closing and shall be set forth in a written instrument signed by both
parties.
2.3 EXERCISE OF THE OPTION.
2.3(a). General. The Option may be exercised in whole or in part
by delivery to the Corporation on any business day, at its principal office,
addressed to the attention of the Corporate Secretary of the Corporation, of a
written notice of exercise, which notice shall specify the number of shares with
respect to which the Option is being exercised. The minimum number of shares of
Common Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of 100 shares or the maximum number of
shares available for purchase under the Option at the time of exercise.
2.3(b). Cash Payment. Unless the Corporation elects to require
Purchaser to effect a net exercise in accordance with Section 2.3(c), payment of
the aggregate Per Share Option Exercise Price for the shares of Common Stock
purchased pursuant to the exercise of an Option shall be made in cash (whether
by check, wire transfer or other reasonably acceptable means).
2.3(c). Net Exercise. At the Corporation's election, in lieu of
paying cash upon the exercise of the Option, Purchaser shall receive a number of
shares of Common Stock calculated according to the following formula without the
payment of any cash in consideration for the cancellation of the Option:
X = [(V - E) x N] / V
where "X" equals the number of shares of Common Stock to be received upon
cancellation of the Option pursuant to this Section 2.3(c); "N" equals the
number of shares of Common Stock issuable upon Option exercise if exercised for
cash; "E" equals the Per Share Option Exercise Price; and "V" equals the closing
sales price
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<PAGE> 7
for such stock or the closing bid if no sales were reported, as quoted on the
Nasdaq National Market System or any other established stock exchange or
national market system (or the largest such exchange or system) for the trading
day immediately preceding the exercise date (or if there are no sales for such
date, then for the last preceding trading day on which there were sales), as
reported in the Wall Street Journal or similar publication. Within one business
day of receiving a notice of exercise described in Section 2.3(a), the
Corporation shall inform Purchaser in writing of its intention to require
Purchaser to effect a net exercise under this Section 2.3(c).
2.3(d). Issuance of Shares. Promptly after the exercise of the
Option (or any portion thereof) and, if Purchaser is not effecting a net
exercise under Section 2.3(c), the payment in full of the aggregate Per Share
Option Exercise Price of the shares of Common Stock covered thereby, Purchaser
shall be entitled to the issuance of a stock certificate or certificates
evidencing ownership of the Option Shares so acquired.
2.4 TRANSFERABILITY.
Except to the extent provided in Section 11.12, the Option shall
not be assignable or transferable.
2.5 REQUIREMENTS OF LAW.
The Corporation shall not be required to sell or issue any shares
of Common Stock under the Option if the sale or issuance of such shares would
constitute a violation by the Purchaser or the Corporation of any provisions of
any law or regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations.
2.6 CHANGES IN CAPITALIZATION.
If the outstanding shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Corporation by reason of any recapitalization,
reclassification, stock split, reverse split, or stock dividend, or other
increase or decrease in such shares effected without receipt of consideration by
the Corporation, occurring after the date hereof, the number and kind of shares
for which Options are outstanding (including all share numbers in Section 2.1)
shall be adjusted proportionately and accordingly so that the proportionate
interest of the holder of the Option immediately following such event shall, to
the extent practicable, be the same as immediately prior to such event. Any such
adjustment in outstanding Option shall
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<PAGE> 8
not change the aggregate Per Share Option Price payable with respect to shares
subject to the unexercised portion of the Option outstanding but shall include a
corresponding proportionate adjustment in the Per Share Option Price.
2.7 MERGERS, CONSOLIDATIONS AND ASSET SALES.
If at any time there shall be a merger or consolidation of the
Corporation with or into another corporation, or the sale of the Corporation's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such merger, consolidation or sale, lawful provision shall be
made so that Purchaser shall thereafter be entitled to receive upon exercise of
the Option, during the period specified in the Option and upon payment of the
purchase price or by effecting a net exercise, the number of shares of stock or
other securities or property of the Corporation or the successor corporation
resulting from such merger, consolidation or sale, to which a holder of the
Common Stock deliverable upon exercise of the Option would have been entitled
under the provisions of the agreement in such merger, consolidation or sale if
the Option had been exercised immediately before that merger, consolidation or
sale. In any such case, appropriate adjustment (as determined in good faith by
the Corporation's Board of Directors) shall be made in the application of the
provisions of the Option with respect to the rights and interests of Purchaser
after the merger, consolidation or sale to the end that the provisions of the
Option (including adjustment of the Per Share Option Exercise Price then in
effect and the number of Option Shares) shall be applicable after that event, as
near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of the Option.
2.8 CERTIFICATE AS TO ADJUSTMENTS.
In the case of each adjustment or readjustment of the number of
Option Shares subject to this Agreement and the Per Share Option Exercise Price
pursuant to this Section 2, the Corporation will promptly compute such
adjustment or readjustment in accordance with the terms hereof and cause a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based to be delivered to
the Purchaser. The Corporation will, upon the written request at any time of
Purchaser, furnish or cause to be furnished to Purchaser a certificate setting
forth: (a) such adjustments and readjustments; (b) the Per Share Option Exercise
Price at the time in effect; and (c) the number of Option Shares and the amount,
if any, of other property at the time receivable upon the exercise of the
Option.
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<PAGE> 9
2.9 RESERVATION OF COMMON STOCK.
The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Option, such number of shares of Common Stock as
shall from time to time be sufficient to effect the exercise of the Option in
full.
2.10 NOTICES OF RECORD DATE.
In the event of any taking by the Corporation of a record of the
holders of any class of securities of the Corporation for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right, the Corporation will mail to Purchaser at least five
business days prior to the record date, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right;
provided, however, that the Corporation shall have no obligation under this
Section 2.10 with respect to the taking of any such record which is publicly
disclosed by the Corporation at least five business days prior to the record
date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation represents, warrants and covenants to Purchaser as
follows:
3.1 ORGANIZATION AND STANDING.
The Corporation is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
the full corporate power and authority to own and operate its properties and
assets and to carry on its business as currently conducted. The Corporation
holds all licenses and permits required for the conduct of its business as now
conducted which, if not in the Corporation's possession, could have a material
adverse effect on the Corporation's financial condition or results of
operations, taken as a whole. The Corporation is duly qualified as a foreign
corporation and is in good standing in all jurisdictions where the conduct of
its business or its ownership or leasing of property requires such
qualification, except where the failure to so qualify would
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not have a material adverse effect on the Corporation's financial condition or
results of operations, taken as a whole.
3.2 AUTHORIZATION; BINDING OBLIGATION.
The Corporation has all requisite corporate power and authority to
enter into and to deliver this Agreement and perform its obligations hereunder.
The execution, delivery and performance of this Agreement by the Corporation and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Corporation.
This Agreement, when executed and delivered by the Corporation, shall constitute
a valid and binding obligation of the Corporation enforceable in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws effecting the enforcement of
creditor's rights.
3.3 CAPITALIZATION.
The authorized capital stock of the Corporation consists of
60,000,000 shares of Common Stock, of which 25,428,778 were issued and
outstanding as of May 10, 1999, and 5,000,000 shares of preferred stock, of
which 466,450 of the 1,637,832 shares designated Series A Convertible Preferred
Stock were issued and outstanding as of May 10, 1999, of which 749,064 of the
749,064 shares designated Series B Redeemable Convertible Preferred Stock were
issued and outstanding as of May 10, 1999, and of which 215,000 of the 215,000
shares designated at Series C Redeemable Convertible Preferred Stock were issued
and outstanding as of May 10, 1999. At such date, there were 12,353,798 shares
of Common Stock reserved for issuance pursuant to employee stock options, of
which options for 9,607,750 shares are currently outstanding. All of the
Corporation's outstanding shares of capital stock were validly issued and are
fully paid and nonassessable. Except as described on Schedule 3.3, there are no
shares of the Corporation's capital stock reserved for issuance or any options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase from the Corporation of any shares of its capital stock or
securities exercisable for or convertible into its capital stock.
3.4 VALIDITY OF SHARES; ISSUANCE.
The Shares and the Option Shares, when issued upon payment of the
consideration therefor in compliance with the provisions of this Agreement will
be validly issued, fully paid and nonassessable, and free of any liens or
encumbrances, and will be issued in compliance with all applicable laws.
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3.5 NO CONSENTS.
No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained by the Corporation and no filings are
required to be made by the Corporation in connection with the execution and
delivery of this Agreement and the issuance of the Shares and the Option Shares
hereunder, except as have been so obtained or made prior to the Closing or, with
respect to any that need to be obtained or made subsequent to the Closing, as
will be obtained or made in a timely manner after the Closing, except where the
failure to obtain such orders, permissions, consents, approvals or
authorizations or to make such filings would not affect the Corporation's
ability to issue the Shares or the Option Shares or have a material adverse
effect on the Corporation's financial condition or results of operations or
business prospects, taken as a whole.
3.6 NON-CONTRAVENTION.
The execution, delivery and performance of, and compliance with,
this Agreement will not (a) violate any provision of the certificate of
incorporation or bylaws of the Corporation; (b) conflict with or result in a
breach of, or default under, or result in the creation of any lien, claim,
charge or other encumbrance upon any of the assets or properties of the
Corporation pursuant to the provisions of any material agreement, mortgage,
indenture or other document or instrument to which the Corporation is a party or
by which the Corporation or any of its properties or assets is bound, or (c)
violate any existing statutes, laws, ordinances, regulations, orders and other
rules of law applicable to the Corporation or any of its properties or assets,
or applicable to the Corporation's power or authority to perform its obligations
under this Agreement.
3.7 ADDITIONAL INFORMATION.
The information contained in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1998, and all other reports filed
subsequent thereto through the date of the Closing (collectively, the "SEC
Reports") pursuant to Section 13(a) or 15(d) of the Exchange Act, did not and
will not, as the case may be, at the respective dates of filing with the
Securities and Exchange Commission (the "SEC"), contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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3.8 FINANCIAL STATEMENTS.
Each of the consolidated financial statements (including, in each
case any related notes thereto) contained in the SEC Reports (the "Financial
Statements"), (x) 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 interim financial statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act) and (y) fairly
presented the consolidated financial position of the Corporation and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated consistent with the
books and records of the Corporation, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not, or are not expected to be, material in amount. The
balance sheet of the Corporation contained in the Corporation's Form 10-K for
the year ended December 31, 1998 is referred to in this Agreement as the
"Balance Sheet."
3.9 ABSENCE OF CHANGE OF EVENTS.
Except as described in the SEC Reports, between December 31, 1998
and the date of this Agreement no change or event has occurred which would be
reasonably likely to have a material adverse effect on the Corporation's
financial condition or results of operations, taken as a whole.
3.10 BANK REGULATION
The Corporation is not a "bank holding company" as defined under
the Bank Holding Company Act of 1956 or a "savings and loan holding company" as
defined under the Home Owners' Loan Act.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents, warrants and covenants to the Corporation as
follows:
4.1 ORGANIZATION AND STANDING.
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Purchaser has the full
corporate power and authority to own and operate its properties and assets and
to carry on its
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business as currently conducted. Purchaser holds all licenses and permits
required for the conduct of its business as now conducted which, if not in
Purchaser's possession, could have a material adverse effect on Purchaser's
financial condition or results of operations, taken as a whole. Purchaser is
duly qualified as a foreign corporation and is in good standing in all
jurisdictions where the conduct of its business or its ownership or leasing of
property requires such qualification, except where the failure to so qualify
would not have a material adverse effect on Purchaser's financial condition or
results of operations, taken as a whole.
4.2 AUTHORIZATION.
Purchaser has all requisite corporate power and authority to enter
into and to deliver this Agreement. The execution, delivery and performance of
this Agreement by Purchaser and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Purchaser. This Agreement, when executed and delivered by
Purchaser, shall constitute a valid and binding obligation of Purchaser
enforceable in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
effecting the enforcement of creditor's rights.
4.3 NON-CONTRAVENTION.
The execution, delivery and performance of, and compliance with,
this Agreement will not (a) violate any provision of the certificate of
incorporation or bylaws of Purchaser; (b) conflict with or result in a breach
of, or default under, or result in the creation of any lien, claim, charge or
other encumbrance upon any of the assets or properties of Purchaser pursuant to
the provisions of any material agreement, mortgage, indenture or other document
or instrument to which Purchaser is a party or by which Purchaser or any of its
properties or assets is bound, or (c) violate any existing statutes, laws,
ordinances, regulations, orders and other rules of law applicable to Purchaser
or any of its properties or assets, or applicable to Purchaser's power or
authority to perform its obligations under this Agreement.
4.4 NO CONSENTS.
No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained by Purchaser and no filings are
required to be made by Purchaser in connection with the execution and delivery
of this Agreement and the purchase of the Shares and the Option Shares, if any,
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hereunder, except as have been so obtained or made prior to the Closing or, with
respect to any that need to be obtained or made subsequent to the Closing, as
will be obtained or made in a timely manner after the Closing, except where the
failure to obtain such orders, permissions, consents, approvals or
authorizations or to make such filings would not have a material adverse effect
on Purchaser's financial condition or results of operations or business
prospects, taken as a whole.
4.5 ADEQUATE RESOURCES.
Purchaser has sufficient cash and other resources to perform its
obligations hereunder.
4.6 INVESTMENT EXPERIENCE.
Purchaser is an "accredited investor" as defined in Rule 501(a)
under the Securities Act. Purchaser is aware of the Corporation's business
affairs and financial condition and has had access to and has acquired
sufficient information about the Corporation to reach an informed and
knowledgeable decision to acquire the Shares, and the Option Shares, if any.
Purchaser has such business and financial experience as is required to give it
the capacity to protect its own interests in connection with the purchase of the
Shares, and the Option Shares, if any. Purchaser is able to bear the economic
risk of holding the Shares, and the Option Shares, if any, for an indefinite
period, including the loss of Purchaser's entire investment. The Shares were
not, and, in the case of the Option Shares, if any, will not be, offered or sold
to Purchaser by any form of general solicitation or advertising.
4.7 INVESTMENT INTENT.
Purchaser is purchasing the Shares, and the Option Shares, if any,
for its own account as principal, for investment purposes only, and not with a
view to, or for, resale, distribution or fractionalization thereof, in whole or
in part, within the meaning of the Securities Act. Purchaser understands that
its acquisition of the Shares has not been, and, in the case of the Option
Shares, if any, will not be, registered under the Securities Act or registered
or qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed herein.
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4.8 REGISTRATION OR EXEMPTION REQUIREMENTS.
Purchaser further acknowledges and understands that the Shares,
and the Option Shares, if any, may be required to be held indefinitely, and they
may not be resold or otherwise transferred except in a transaction registered
under the Securities Act or where an exemption from such registration is
available. Purchaser understands that the certificate(s) evidencing the Shares,
and the Option Shares, if any, will be imprinted with a legend that prohibits
the transfer of the Shares, and the Option Shares, if any, unless (a) they are
registered or such registration is not required, and (b) if the transfer is
pursuant to an exemption from registration other than Rule 144 promulgated under
the Securities Act and, if the Corporation shall so request in writing, an
opinion of counsel satisfactory to the Corporation is obtained to the effect
that the transaction is so exempt and in compliance with applicable state law.
4.9 NO LEGAL, TAX OR INVESTMENT ADVICE.
Purchaser understands that nothing in this Agreement or any other
materials presented to Purchaser in connection with the purchase and sale of the
Shares and the Option Shares, if any, constitutes legal, tax or investment
advice. Purchaser has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in connection with
its purchase of the Shares, and the Option Shares, if any.
4.10 PASSIVE INVESTOR.
Purchaser represents that Purchaser is acquiring the Shares and
the Option without intention of participating in the formulation, determination
or direction of the basic business decisions of the Corporation.
SECTION 5. ADDITIONAL AGREEMENTS.
5.1 NONSOLICITATION.
From the date hereof through and including until five years
after the date of the Closing, each party hereto agrees that it will not,
without the other party's prior written consent, solicit for employment any
person who is now employed by the other party (it being understood that this
Section 5.1 shall not prohibit the placing of general employment advertisements
or solicitations not specifically targeted to any employee or employees of the
other party).
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5.2 LOCK-UP COVENANT.
During the period beginning on the date hereof and ending on the
date 12 months after the date of the Closing (or such earlier date described
below), Purchaser covenants that it will not, without the prior written consent
of the Corporation, offer, sell or otherwise dispose of, directly or indirectly,
any capital stock of the Corporation which Purchaser may own directly,
indirectly or beneficially; provided, however, that Purchaser may transfer some
or all of the Shares or the Option Shares either (A) to a corporation,
partnership or other legal entity that is controlled by Purchaser, if such
transferee agrees in writing to hold any Shares or Option Shares received
subject to the provisions of this Agreement and to transfer such Shares or
Option Shares back to Purchaser if such transferee ceases to be controlled by
Purchaser or (B) pursuant to Section 11.12.
5.3 COMMERCIALLY REASONABLE EFFORTS.
Purchaser and the Corporation shall use commercially reasonable
efforts to take, or cause to be taken, all actions and do, or cause to be done,
all things necessary, proper or appropriate under applicable laws and
regulations to consummate and make effective the purchase and sale of the Shares
contemplated hereby and any exercise by Purchaser of all or any part of the
Option, including, without limitation, (i) promptly filing Notification and
Report Forms, if any are required, under the Hart Scott Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act") with the Federal Trade
Commission ("FTC") and the Antitrust Division of the Department of Justice (the
"Antitrust Division"), and responding as promptly as practicable to any
inquiries received from the FTC or the Antitrust Division for additional
information or documentation, and (ii) making all other necessary filings and
obtaining all other necessary governmental and private party consents, approvals
or waivers, required to consummate the transactions hereunder. Notwithstanding
anything to the contrary in this Agreement, neither Purchaser, nor the
Corporation, nor any of their subsidiaries shall be required to (i) divest, hold
separate or license any material business(es), product line(s) or asset(s), (ii)
take any action or accept any limitation that could reasonably be expected to
have a material adverse effect on the financial condition or results of
operations, of Purchaser or the Corporation and their respective subsidiaries,
taken as a whole, as applicable or (iii) agree to any of the foregoing.
5.4 SEC FILINGS.
Until the Option has been exercised in full or expired in
accordance with its terms, the Corporation agrees to timely file all forms,
reports and documents which the Corporation is required to file with the SEC,
which forms,
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reports and documents shall not 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 were made, not misleading.
SECTION 6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
date of the Closing, of each of the following conditions precedent:
6.1(a). Termination. This Agreement shall not have been terminated
in accordance with its terms.
6.1(b). No Governmental Action. No action or proceeding by or
before any governmental authority shall have been instituted or threatened (and
not subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions contemplated by
this Agreement.
6.1(c). Technology Agreements. Each of (i) the certain
Cross-License Agreement dated as of May 16, 1999 by and between Venture Finance
Software Corporation and the Corporation (ii) and the certain Distribution
Agreement dated as of May 16, 1999 by and between the Corporation and Purchaser
has been executed and delivered and all of the conditions precedent to its
effectiveness shall have been satisfied or waived.
6.1(d) Governmental Clearances. The HSR Act waiting period, if
any, related to this Agreement shall have expired or been terminated, and any
other required authorizations, consents, orders or approvals of, or declarations
or filings with, or expirations of waiting periods imposed by, any government
entity shall have been obtained or filed.
6.2 CONDITIONS TO THE OBLIGATIONS OF PURCHASER.
The obligations of Purchaser to purchase the Shares as
contemplated by this Agreement are subject to the satisfaction, on or before the
date of the Closing, of each of the following conditions precedent, any one or
more of which may be waived by Purchaser, in its sole and absolute discretion:
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6.2(a). Representations and Warranties. The representations and
warranties of the Corporation contained in this Agreement shall be true, correct
and complete in all material respects when made and shall be true and correct as
of the date of the Closing, with the same force and effect as if made on the
date of the Closing.
6.2(b). Compliance with Covenants. The Corporation shall have in
all material respects performed all obligations and agreements and complied with
all covenants contained in this Agreement to be performed and complied with by
the Corporation on or prior to the date of the Closing.
6.2(c). Material Adverse Event. No change, event or effect that
could reasonably be expected to have a material adverse effect on the
Corporation's financial condition or results of operations, taken as a whole,
shall have occurred.
6.2(d). Legal Opinion. Purchaser shall have received from Hogan &
Hartson L.L.P., legal counsel for the Corporation, an opinion dated the date of
the Closing regarding due authorization and valid issuance of the Shares and the
Option Shares by the Corporation.
6.3 CONDITIONS TO OBLIGATIONS OF THE CORPORATION.
The obligations of the Corporation to sell the Shares as
contemplated by this Agreement are subject to the satisfaction, on or before the
date of the Closing, of each of the following conditions precedent, any one or
more of which may be waived by the Corporation, in its sole and absolute
discretion:
6.3(a). Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement shall be true, correct and
complete in all material respects when made and shall be true and correct as of
the date of the Closing, with the same force and effect as if made on the date
of the Closing.
6.3(b). Compliance with Covenants. Purchaser shall have in all
material respects performed all obligations and agreements and complied with all
covenants contained in this Agreement to be performed and complied with by
Purchaser on or prior to the date of the Closing.
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SECTION 7. CLOSING.
7.1 DELIVERIES BY THE CORPORATION.
At the Closing, the Corporation shall deliver to Purchaser the
following:
(1) A certificate or certificates registered in Purchaser's
name, representing all of the Shares.
(2) A copy of the resolutions of the Board of Directors of
the Corporation, as certified as of the date of the Closing by the Secretary of
the Corporation, as being true, correct and complete and in full force and
effect, authorizing the execution, delivery and performance of this Agreement by
the Corporation, the authorization, sale, issuance and delivery of the Shares,
and the performance of the Corporation's obligations hereunder.
(3) A certificate of the Corporation signed by an
authorized officer of the Corporation certifying that the representations and
warranties of the Corporation made herein are true, complete and correct in all
material respects as of the date of this Agreement and are true and correct as
of the date of the Closing, and the Corporation has in all material respects
performed all obligations and agreements and complied with all covenants
required to be performed or complied with by the Corporation on or prior to the
Closing.
(4) The legal opinion required by Section 6.2(d) and such
other certificates, instruments or documents as Purchaser may reasonably request
in order to effect and document the transactions contemplated hereby.
7.2 DELIVERIES BY PURCHASER.
At the Closing, Purchaser shall deliver to the Corporation the
following:
(1)$50,000,000, in cash or by wire transfer or certified or
bank cashier's check, payable to the order of the Corporation.
(2) A certificate of Purchaser signed by an authorized
officer of Purchaser certifying that the representations and warranties of
Purchaser made herein are true, complete and correct in all material respects as
of the date of this Agreement and are true and correct as of the date of the
Closing (if different), and Purchaser has in all material respects performed all
obligations and agreements
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and complied with all covenants required to be performed or complied with by
Purchaser on or prior to the Closing.
(3) Such other certificates, instruments or documents as
the Corporation may reasonably request in order to effect and document the
transaction contemplated hereby.
SECTION 8. LEGEND.
8.1 ENDORSEMENT.
Each certificate representing the Shares and the Option Shares, if
any, shall bear the following legend (in addition to any legend required by
applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR ANY OTHER FEDERAL OR STATE SECURITIES LAWS, AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY OTHER
APPLICABLE FEDERAL SECURITIES LAWS COVERING SUCH SECURITIES OR THE
CORPORATION RECEIVES AN OPINION OF COUNSEL IN FORM SATISFACTORY TO
THE CORPORATION THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
Each certificate representing the Shares and any Option Shares issued on
or before May 16, 2000 shall bear the following additional legend:
ADDITIONALLY, THE TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
THAT EXPIRE ON MAY 16, 2000 SPECIFIED IN THE STOCK PURCHASE AND
OPTION AGREEMENT DATED MAY 16, 1999 (THE "AGREEMENT") BETWEEN THE
CORPORATION AND THE ORIGINAL PURCHASER, AND NO TRANSFER OF SHARES
SHALL BE VALID OR EFFECTIVE ABSENT COMPLIANCE WITH SUCH
RESTRICTIONS. ALL SUBSEQUENT HOLDERS OF THIS CERTIFICATE PRIOR TO
MAY 16, 2000 WILL HAVE AGREED TO BE BOUND BY CERTAIN OF THE TERMS
OF THE AGREEMENT, INCLUDING SECTION 5.2 OF THE AGREEMENT. COPIES OF
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THE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE REGISTERED HOLDER OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION.
8.2 REMOVAL OF LEGEND.
The legend endorsed on a stock certificate pursuant to Section 8.1
of this Agreement, insofar as it relates to registration under the Securities
Act, shall be removed and the Corporation shall issue a certificate without such
legend to the holder of such Shares, if such Shares are registered under
applicable federal securities laws and a prospectus meeting the requirements of
the rules and regulations of the SEC is available or if such holder provides to
the Corporation an opinion of counsel to such holder reasonably satisfactory to
the Corporation, to the effect that a public sale, transfer or assignment of
such Shares may be made without registration and without compliance with any
restrictions. The legend endorsed on a stock certificate pursuant to Section 8.1
of this Agreement, insofar as it relates to additional restrictions specified in
this Agreement, shall be removed upon the expiration of the applicable
provisions referenced therein.
SECTION 9. REGISTRATION RIGHTS
9.1 DEMAND REGISTRATION RIGHTS.
9.1(a). At any time after the first anniversary of the Closing,
Purchaser may request registration for sale under the Securities Act of any
Common Stock owned by Purchaser (a "Demand Registration"), provided, however,
that the Corporation shall only be obligated to effect one Demand Registration
for Purchaser. A Demand Registration shall specify the approximate number of
shares of Common Stock that Purchaser requests be registered.
9.1(b). A Demand Registration shall be deemed to occur when such
registration becomes effective under the Securities Act, except that if, after
it becomes effective, such Demand Registration is interfered with by any stop
order, injunction or other order or requirement of the SEC (or any successor
regulator thereto as to federal securities laws) or any other governmental
authority, such registration shall not be deemed to have been effected unless
such stop order, injunction or other order shall have been subsequently vacated
or removed.
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9.2 REGISTRATION PROCEDURES.
9.2(a). The Corporation shall have no obligation to include Common
Stock owned by Purchaser in a registration statement unless and until Purchaser
has furnished the Corporation with all information and statements about or
pertaining to Purchaser in such reasonable detail and on such timely basis as is
reasonably deemed by the Corporation to be necessary or appropriate for the
preparation of the registration statement.
9.2(b). Whenever Purchaser has requested that its Common Stock be
registered pursuant to Section 9.1 hereof, the Corporation shall, subject to the
provisions of Section 9.1 and Section 9.2:
(1) prepare and file with the SEC a registration statement
with respect to such Common Stock covered by the Demand Registration and use its
reasonable efforts to cause such registration statement to become effective as
soon as practicable after the filing thereof (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Corporation shall furnish counsel for Purchaser with copies of all such
documents proposed to be filed);
(2) prepare and file with the SEC such amendments and
supplements to such registration statement and prospectus contained therein as
may be necessary to keep such registration statement effective for a period of
not less than three months or until Purchaser has completed the distribution
described in such registration statement, whichever occurs first;
(3) furnish to Purchaser the number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
contained in such registration statement (including each preliminary
prospectus), and such other documents as Purchaser may reasonably request;
(4) if required by applicable law, use reasonable efforts
to register or qualify such shares under the state blue sky or securities laws
("Blue Sky Laws") of such jurisdictions as Purchaser reasonably requests (and to
keep such registrations and qualifications effective for a period of three
months, or until Purchaser has completed the distribution of such shares,
whichever occurs first), and to do any and all other acts and things that may be
reasonably necessary or advisable to enable Purchaser to consummate the
disposition of such shares in such jurisdictions; provided, however, that the
Corporation will not be required to do any of the following: (i) qualify
generally to do business in any jurisdiction where it would not be required but
for this Section 9.2(b), (ii) subject itself to taxation in any
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such jurisdiction, or (iii) file any general consent to service of process in
any such jurisdiction;
(5) promptly notify Purchaser at any time when a prospectus
relating thereto is required to be delivered under applicable federal securities
laws during the period that the Corporation is required to keep the registration
statement effective, of the occurrence of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and prepare a supplement or amendment to the prospectus so that, as thereafter
delivered to the purchasers of such shares, the prospectus will not contain an
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and
9.2(c). The Corporation will use reasonable efforts to cause all
Shares and Option Shares to be listed on the Nasdaq Stock Market National Market
System (or such other securities exchange on which the Common Stock is then
listed).
9.3 REGISTRATION EXPENSES.
9.3(a). If, pursuant to Section 9.1 hereof, Common Stock owned by
Purchaser is included in a registration statement, then Purchaser shall pay all
transfer taxes, if any, relating to the sale of its Common Stock, the fees and
expenses of its own counsel, and its pro rata portion of any underwriting
discounts or commissions or the equivalent thereof.
9.3(b). Except for the fees and expenses specified in Section
9.3(a) hereof and except as provided below in this Section 9.3(b), the
Corporation shall pay all expenses incident to the registration and to the
Corporation's performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, fees and expenses of
compliance with Blue Sky Laws, printing expenses, messenger and delivery
expenses, and fees and expenses of counsel for the Corporation and all
independent certified public accountants and other persons retained by the
Corporation. With respect to any registration pursuant to Section 9.3 hereof,
the Corporation shall pay its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties) and the expenses and fees for listing the securities to be
registered on the Nasdaq Stock Market National Market System, if applicable.
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9.4 INDEMNITY AND CONTRIBUTION.
9.4(a). In the event that any Common Stock owned by Purchaser is
sold by means of a registration statement pursuant to Section 9.1 hereof,
Purchaser (for the purposes of this paragraph 9.4(a), the "Indemnifying Person")
agrees to indemnify and hold harmless the Corporation, each of the Corporation's
officers and directors, and each person, if any, who controls or may control the
Corporation within the meaning of the Securities Act (for the purposes of this
paragraph 9.4(a), the Corporation, its officers and directors, and any such
other persons being hereinafter referred to individually as an "Indemnified
Person" and collectively as "Indemnified Persons") from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs, and expenses, including, without limitation, interest, penalties, and
reasonable attorneys' fees and disbursements, asserted against, resulting to,
imposed upon, or incurred by such Indemnified Person, directly or indirectly
(collectively, hereinafter referred to in the singular as a "Claim" and in the
plural as "Claims"), based upon, arising out of, or resulting from (i) any
untrue statement of a material fact contained in the registration statement or
any omission to state therein a material fact necessary in order to make the
statements made therein not misleading, or (ii) any untrue statement of a
material fact contained in the prospectus, or any supplement or amendment
thereto, or any omission to state therein a material fact necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, in each case, only to the extent that such Claim
is based upon, arises out of or results from information furnished to the
Corporation by Purchaser for use in connection with the registration statement.
9.4(b). The Corporation (for the purposes of this paragraph
9.4(b), the "Indemnifying Person") agrees to indemnify and hold harmless
Purchaser, its officers and directors, each person, if any, who controls or may
control Purchaser within the meaning of the Securities Act (for the purposes of
this paragraph 9.4(b), Purchaser, its officers and directors, and any such other
persons also being hereinafter referred to individually as an "Indemnified
Person" and collectively as "Indemnified Persons") from and against all Claims
based upon, arising out of, or resulting from (i) any untrue statement of a
material fact contained in the registration statement or any omission to state
therein a material fact necessary in order to make the statement made therein
not misleading, or (ii) any untrue statement of a material fact contained in the
prospectus, or any supplement or amendment thereto, or any omission to state
therein a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading,
except to the extent that such Claim is based upon, arises out of or results
from information furnished to the Corporation by Purchaser for use in the
registration statement.
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<PAGE> 25
9.4(c). The indemnification set forth herein shall be in addition
to any liability the Corporation or Purchaser may otherwise have in connection
with any registration of such Common Stock. Within a reasonable time after
receiving definitive notice of any Claim in respect of which an Indemnified
Person may seek indemnification under this Section 9.4, such Indemnified Person
shall submit written notice thereof to Indemnifying Person. The failure of the
Indemnified Person so to notify the Indemnifying Person of any such Claim shall
not relieve the Indemnifying Person from any liability it may have hereunder
except to the extent that (a) such liability was caused or increased by such
failure, or (b) the ability of the Indemnifying Person to reduce such liability
was materially adversely affected by such failure. In addition, the failure of
the Indemnified Person to so notify the Indemnifying Person of any such Claim
shall not relieve the Indemnifying Person from any liability it may have
otherwise than hereunder. The Indemnifying Person shall have the right to
undertake, by counsel or representatives of its own choosing, the defense,
compromise, or settlement (without admitting liability of the Indemnifying
Person or the Indemnified Person) of any such Claim asserted, such defense,
compromise, or settlement to be undertaken at the expense and risk of the
Indemnifying Person, and the Indemnified Person shall have the right to engage
separate counsel, at its own expense, which counsel for the Indemnifying Person
shall keep informed and consult with in a reasonable manner. In the event the
Indemnifying Person shall fail to undertake such defense by its own
representatives, the Indemnifying Person shall give prompt written notice of
such election to the Indemnified Person, and the Indemnified Person shall
undertake the defense, compromise, or settlement (without admitting liability of
the Indemnified Person or the Indemnifying Person) thereof on behalf of and for
the account and risk of the Indemnifying Person by counsel or other
representatives designated by the Indemnified Person. In the event that any
Claim shall arise out of a transaction or cover any period or periods wherein
the Corporation and Purchaser shall each be liable hereunder for part of the
liability or obligation arising therefrom, then the parties shall, each choosing
its own counsel and bearing its own expenses, defend such Claim, and no
settlement or compromise of such Claim may be made without the joint consent or
approval of the Corporation and Purchaser. Notwithstanding the foregoing, no
Indemnifying Person shall be obligated hereunder with respect to amounts paid in
settlement of any Claim if such settlement is effected without the consent of
such Indemnifying Person (which consent shall not be unreasonably withheld).
SECTION 10. TERMINATION.
10.1 MUTUAL CONSENT.
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<PAGE> 26
The parties may terminate this Agreement at any time by mutual
written agreement.
10.2 OTHER TERMINATION.
The Corporation or the Purchaser may terminate this Agreement
prior to the Closing by giving notice (a "Termination Notice") to the other
party at the time designated in this Section or, in the absence of such
designation, at any time up to and including the date of the Closing, if any one
or more of the following shall have occurred and be continuing:
10.2(a). Termination By Any Party. Any party may terminate this
Agreement if a court or other governmental authority of competent jurisdiction
shall have issued an order, writ, injunction or decree or shall have taken any
other action permanently restraining or otherwise prohibiting the purchase of
the Shares or the exercise of the Option contemplated hereby and such order,
writ, injunction, decree or other action shall have become final and
nonappealable.
10.2(b). Termination By Purchaser. Purchaser may terminate this
Agreement prior to the Closing, if any condition precedent set forth in Sections
6.1 or 6.2 shall not have been satisfied by October 31, 1999.
10.2(c). Termination By the Corporation. The Corporation may
terminate this Agreement prior to the Closing, if any condition precedent set
forth in Sections 6.1 or 6.3 shall not have been satisfied by October 31,1999.
10.3 EFFECT OF TERMINATION.
Termination of this Agreement pursuant to this Section shall not
relieve any party of any liability for a default or other breach, default or
nonperformance under this Agreement. Notwithstanding the foregoing, no party
hereto shall be liable for consequential or punitive damages in connection with
such termination.
SECTION 11. MISCELLANEOUS.
11.1 ADDITIONAL ACTIONS AND DOCUMENTS.
Each of the parties hereto agrees that it will, at any time, prior
to, at or after the Closing, take or cause to be taken such further actions, and
execute, deliver and file or cause to be executed, delivered and filed such
further documents
-23-
<PAGE> 27
and instruments (including export license applications) as may be necessary or
reasonably requested in connection with the consummation of the purchase and
sale contemplated by this Agreement or in order to fully effectuate the
purposes, terms and conditions of this Agreement.
11.2 EXPENSES.
Except as specified in Section 9, each party hereto shall pay its
own expenses incurred in connection with this Agreement and in the preparation
for and consummation of the transactions contemplated hereby.
11.3 NOTICES.
All notices, demands, requests, or other communications which may
be or are required to be given or made by any party to any other party pursuant
to this Agreement shall be in writing and shall be hand delivered, mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, or delivered by overnight air courier, addressed as follows:
(i) if to the Corporation:
Security First Technologies Corporation
3390 Peachtree Road, NE, Suite 1700
Atlanta, GA 30326
Attn.: President
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn.: Stuart G. Stein, Esq.
(ii) if to Purchaser:
Intuit Inc.
2535 Garcia Avenue
Mountain View, CA 94043
Attn.: General Counsel
with a copy (which shall not constitute notice) to:
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<PAGE> 28
Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, CA 94301
Attn.: Sarah O'Dowd, Esq.
or such other address as the addressee may indicate by written notice to the
other parties. Each notice, demand, request, or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt, or the affidavit of messenger being
deemed conclusive but not exclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation.
11.4 WAIVER.
No waiver by any party of any failure or refusal of any other
party to comply with its obligations under this Agreement shall be deemed a
waiver of any other or subsequent failure or refusal to so comply by such other
party. No waiver shall be valid unless in writing signed by the party to be
charged and only to the extent therein set forth.
11.5 BINDING EFFECT.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
11.6 ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the other instruments and documents
referred to herein or delivered pursuant hereto, contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior oral or written agreements, commitments or understandings with respect to
such matters. No amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification or discharge is sought.
11.7 SEVERABILITY.
If any part of any provision of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective to the extent
of
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<PAGE> 29
such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provisions or the remaining provisions of said
Agreement.
11.8 HEADINGS.
The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
11.9 GOVERNING LAW.
This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by and construed
under and in accordance with the laws of the State of Delaware, excluding the
choice of law rules thereof.
11.10 SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts, none of
which need contain the signatures of all parties, each of which shall be deemed
to be an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
11.11 NO THIRD PARTY BENEFICIARIES.
Except as expressly provided herein, this Agreement is made and
entered into for the sole protection and benefit of the parties hereto, and no
other person or entity shall have any right of action hereon, right to claim any
right or benefit from the terms contained herein or be deemed a third party
beneficiary hereunder.
11.12 ASSIGNABILITY.
All terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto, and their respective
transferees, successors and assigns; provided, however, that neither this
Agreement nor any rights, privileges, duties and obligations of the parties
hereto may be assigned or delegated by any party hereto without the prior
written consent of all the parties to this Agreement and any such purported or
attempted assignment shall be null and
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<PAGE> 30
void ab initio and of no force or effect; provided, further that Purchaser may
assign this Agreement, including the Option and other rights, privileges, duties
and obligations hereunder to (i) any affiliate of Purchaser, which is wholly or
substantially owned directly or indirectly by Purchaser so long as such
assignment does not in any way materially delay or otherwise materially
adversely impact the ability of the parties hereto to effect the transactions
contemplated hereby, or (ii) any acquiror of all or substantially all of the
assets or stock of Purchaser whether by merger, tender offer, asset sale or
other transaction.
11.13 PARTIES NOT PARTNERS.
Nothing contained in this Agreement shall constitute any party as
a partner with, agent for or principal of any one or more of the other parties
or their successors and assigns.
11.14 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Except for the representations and warranties of the Corporation
set forth in Section 3.2 hereof, none of the representations, warranties,
covenants and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Closing, except for those covenants
and agreements contained herein and therein which by their terms apply in whole
or in part after the Closing.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
SECURITY FIRST TECHNOLOGIES CORPORATION
By:/s/ JAMES S. MAHAN III
--------------------------------
Name: James S. Mahan III
Title: Chairman and Chief Executive
Officer
INTUIT INC.
By:/s/ WILLIAM HARRIS
--------------------------------
Name: William Harris
Title: President and CEO
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<PAGE> 1
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
BY AND AMONG
SECURITY FIRST TECHNOLOGIES CORPORATION,
THE INDIVIDUALS IDENTIFIED ON
SCHEDULE 1 HERETO
AND
FICS GROUP N.V.
DATED AS OF MAY 16, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. PURCHASE AND SALE OF THE SHARES.....................................1
-------------------------------
1.1 Sale and Issuance of the Shares.........................................1
-------------------------------
1.2 Closing.................................................................2
-------
SECTION 2. STOCK OPTIONS.......................................................2
-------------
SECTION 3. REPRESENTATIONS AND WARRANTIES OF S1................................3
------------------------------------
3.1 Corporate Organization..................................................3
3.2 Capitalization..........................................................4
3.3 Authority; No Violation.................................................5
3.4 Consents and Approvals..................................................5
3.5 Financial Statements; Exchange Act Filings; Books and Records...........6
3.6 Broker's Fees...........................................................6
3.7 Absence of Certain Changes or Events....................................7
3.8 Legal Proceedings.......................................................7
3.9 Taxes and Tax Returns...................................................7
3.10 Employee Plans.........................................................9
3.11 Certain Contracts......................................................11
3.12 Environmental Matters..................................................12
3.13 Properties and Assets..................................................13
3.14 Insurance..............................................................13
3.15 Compliance with Applicable Laws........................................14
3.16 S1 Information.........................................................14
3.17 Intellectual Property..................................................14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS........................17
--------------------------------------------
4.1 Organization of Purchasers..............................................17
--------------------------
4.2 Authorization of Transaction............................................17
----------------------------
4.3 Non-Contravention.......................................................18
-----------------
4.4 Broker's Fees...........................................................18
-------------
4.5 Adequate Resources......................................................19
------------------
4.6 Investment Experience...................................................19
---------------------
4.7 Investment Intent.......................................................19
-----------------
4.8 Registration or Exemption Requirements..................................20
--------------------------------------
4.9 No Legal, Tax or Investment Advice......................................20
----------------------------------
SECTION 5. ADDITIONAL AGREEMENTS...............................................20
---------------------
5.1 Lock-up Covenant........................................................20
----------------
5.2 S1 Board of Directors...................................................20
---------------------
5.3 Compliance with Antitrust Laws..........................................21
------------------------------
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
5.4 Regulatory Matters......................................................22
------------------
5.5 Stockholder Meeting.....................................................24
-------------------
5.6 Legal Conditions........................................................24
----------------
5.7 Stock Exchange Listing..................................................24
----------------------
5.8 Registration of S1 Common Stock.........................................24
-------------------------------
5.9 Conduct of S1's Business................................................29
------------------------
5.10 Advice of Changes......................................................30
-----------------
SECTION 6. CONDITIONS TO CLOSING...............................................30
---------------------
6.1 Conditions to Obligations of All Parties................................30
----------------------------------------
6.2 Conditions to the Obligations of Purchasers.............................30
-------------------------------------------
6.3 Conditions to Obligations of S1.........................................31
-------------------------------
SECTION 7. CLOSING.............................................................32
-------
7.1 Deliveries by S1........................................................32
----------------
7.2 Deliveries by Purchasers................................................32
------------------------
SECTION 8. LEGEND..............................................................33
------
8.1 Endorsement.............................................................33
-----------
8.2 Removal of Legend.......................................................34
-----------------
SECTION 9. TERMINATION.........................................................34
-----------
9.1 Mutual Consent..........................................................34
--------------
9.2 Other Termination.......................................................34
-----------------
9.3 Effect of Termination...................................................35
---------------------
SECTION 10. MISCELLANEOUS......................................................36
-------------
10.1 Additional Actions and Documents.......................................36
--------------------------------
10.2 Expenses...............................................................36
--------
10.3 Notices................................................................36
-------
10.4 Waiver.................................................................37
------
10.5 Binding Effect.........................................................38
--------------
10.6 Entire Agreement; Amendment............................................38
---------------------------
10.7 Severability...........................................................38
-----------
10.8 Headings...............................................................38
--------
10.9 Governing Law..........................................................38
-------------
10.10 Signature in Counterparts.............................................39
-------------------------
10.11 No Third Party Beneficiaries..........................................39
----------------------------
10.12 Assignability.........................................................39
-------------
10.13 Parties Not Partners..................................................39
--------------------
10.14 Non-Survival of Representations and Warranties........................39
----------------------------------------------
10.15 Certain Definitions...................................................40
-------------------
</TABLE>
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<PAGE> 4
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement"), dated as of the 16th day of
May, 1999, is entered into by and among Security First Technologies Corporation,
a Delaware corporation ("S1"), the individuals identified on Schedule 1 hereto
(each, a "Purchaser" and collectively, "Purchasers") and FICS Group N.V., a
Belgian corporation ("FICS") (for the limited purposes set forth in Section 5
and Section 6.3(b) hereof).
WHEREAS, the Board of Directors of S1 and each Purchaser has determined
it is in their best interests, or in the best interests of their respective
companies and stockholders, to complete the transaction described in this
Agreement whereby S1 will sell and issue to each Purchaser, and each Purchaser
will subscribe for and acquire, a number of shares of S1's common stock, par
value $0.01 per share ("S1 Common Stock"), as described below.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, the
sufficiency of which is hereby acknowledged, the parties mutually agree as
follows:
SECTION 1. PURCHASE AND SALE OF THE SHARES.
1.1 SALE AND ISSUANCE OF THE SHARES.
1.1(a). At the Closing (as defined below in Section 1.2(a)) and subject
to the terms and conditions of this Agreement, each Purchaser hereby subscribes
for, and agrees to purchase, for aggregate consideration (the "Transaction
Consideration") of the lower of either (i) $1,080,000,000 or (ii) the product of
(a) the stock price, as quoted on the Nasdaq Stock Market or such other national
exchange on which the S1 Common Stock is then traded, of a share of S1 Common
Stock at the close of business on the date which is three business days prior to
the date of the Closing (the "Closing Market Price") multiplied by (b)
20,000,000 (after adjustment for any stock splits, combinations or dividends or
distributions in such common stock between the date of this Agreement and the
date three business days prior to the Closing Date), an aggregate number of
shares of S1 Common Stock (such number, the "Shares") equal to the difference
between (i) 20,000,000 and (ii) the number of shares of S1 Common Stock issuable
upon exercise of the Successor Options (as defined below) to be offered by S1 to
Purchasers pursuant to Section 2 of this Agreement. The number of Shares
received by each individual Purchaser shall equal (x) the aggregate number of
the Shares multiplied by (y) the applicable percentage for such Purchaser as set
forth on Schedule A hereto. If prior to the Closing, S1 should split or combine
its common stock, or pay a dividend or other
<PAGE> 5
distribution in such common stock, then the number of Shares shall be
appropriately adjusted to reflect such split, combination, dividend or
distribution. S1 agrees to sell and issue the Shares to Purchasers at the
Closing for the Transaction Consideration. The sale and issuance of the Shares
by S1 to Purchasers is sometimes referred to herein as the "S1 Issuance."
1.1(b). The Transaction Consideration shall be payable in cash in the
amount of the Transaction Consideration.
1.2 CLOSING.
1.2(a). The closing (the "Closing") of the transaction shall take place
concurrently with the closing of the "Transaction," as defined in the certain
Share Purchase Agreement (the "Holdings Purchase Agreement"), dated as of May
16, 1999 by and among S1 Europe Holdings N.V., a Belgian corporation (naamloze
vennootschap ("N.V.")) in the process of incorporation, represented by S1,
Purchasers, and for the limited purposes stated therein, S1 and FICS.
1.2(b). The Closing shall take place on the Closing Date at 10:00 a.m.,
Washington, D.C. time, at the offices of Hogan & Hartson L.L.P., 555 13th
Street, N.W., Washington, D.C. 20004, or at such other time and place as the
parties shall mutually agree.
SECTION 2. STOCK OPTIONS.
Upon the Closing, S1 shall offer in exchange for each option (a "FICS
Option") which is outstanding and unexercised immediately prior thereto, and
granted by FICS under the 1998 Stock Plan of FICS Group Holdings, Inc., a
Delaware corporation ("FICS Holding") (the "FICS Stock Plan"), or otherwise, an
option to purchase shares of S1 Common Stock (each, a "Successor Option") in an
amount and at an exercise price determined as provided below:
(1) a number the ("Conversion Number") of shares of S1 Common Stock
equal to (x) 20,000,000 (after adjustment for any stock splits,
combinations or dividends or distributions in the S1 Common Stock
between the date of this Agreement and the Closing) divided by (y) the
sum of 162,284.5 plus the number of shares subject to options granted by
FICS Holdings, between the date hereof and the Closing Date multiplied
by (z) the number of shares of FICS Holding subject to such FICS Option;
and
(2) The exercise price per share of S1 Common Stock under the option
immediately after the Transaction shall be equal to the exercise price
per share of FICS Subsidiary Stock under the option immediately before
the Closing divided by the Conversion Number,
- 2 -
<PAGE> 6
provided that such exercise price shall be rounded down to the nearest
cent.
The parties hereto understand that the number of shares of S1 Common
Stock subject to Successor Options and the price thereof shall be adjusted
appropriately for any stock splits, combinations or dividends or distributions
in the FICS capital stock, as of the date hereof. The duration and other terms
of the Successor Options immediately after the Closing shall be the same as the
corresponding terms of the FICS Options in effect immediately before the
Closing, except that all references to FICS in the FICS Stock Plan (and the
corresponding references in the option agreement documenting such FICS Option)
shall be deemed to be references to S1.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF S1.
S1 hereby makes the following representations and warranties to each
Purchaser as set forth in this Section 3, each of which is being relied upon by
each Purchaser as a material inducement to enter into and perform this
Agreement. All of the disclosure schedules of S1 referenced below and thereby
required of S1 pursuant to this Agreement, which disclosure schedules shall be
cross-referenced to the specific sections and subsections of this Agreement and
delivered herewith, are referred to herein as the "S1 Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) S1 is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. S1 has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. The Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws of S1, copies of
which have previously been made available to the Purchasers, are true, correct
and complete copies of such documents as in effect as of the date of this
Agreement.
(b) Each Subsidiary of S1 (each, a "S1 Subsidiary") and the jurisdiction
of its organization is set forth at Section 3.1(b) of the S1 Disclosure
Schedule. Each S1 Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization.
Each S1 Subsidiary has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of any material business conducted by it or the character or
location of any material properties or assets owned or leased by it makes such
licensing or qualification necessary. The charter and other corporate governance
documents of each S1 Subsidiary, copies of which have previously been delivered
to the Purchasers, are
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<PAGE> 7
true, correct and complete copies of such documents as in effect as of the date
of this Agreement.
3.2 CAPITALIZATION.
(a) The authorized capital stock of S1 consists of (i) 60,000,000 shares
S1 Common Stock, of which 25,428,778 shares were outstanding at May 10, 1999 and
(ii) 5,000,000 shares of serial preferred stock, par value $.01 per share ("S1
Preferred Stock"), 1,637,832 shares of which were designated as "Series A
Convertible Preferred Stock," 749,604 of which were designated as "Series B
Redeemable Convertible Preferred Stock" and 215,000 shares of which were
designated as "Series C Redeemable Convertible Preferred Stock." At May 10,
1999, 466,450 shares of Series A Convertible Preferred Stock, 749,604 shares of
Series B Redeemable Convertible Preferred Stock and 215,000 shares of Series C
Redeemable Convertible Preferred Stock were outstanding. At such date, there
were 12,353,798 shares of S1 Common Stock reserved for issuance pursuant to
employee stock options (of which options to purchase 9,607,750 shares are
currently outstanding). All of the issued and outstanding shares of S1 Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and upon issuance in accordance with the
terms hereof, the Shares will be duly authorized and validly issued, and fully
paid, nonassessable and free of preemptive rights. As of the date of this
Agreement, except as set forth above, S1 does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of S1 Common
Stock or S1 Preferred Stock or any other equity securities of S1 or any
securities presenting the right to purchase or otherwise receive any shares of
S1 Common Stock or S1 Preferred Stock, other than as set forth at Section 3.2(a)
of the S1 Disclosure Schedule.
(b) S1 owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of the S1 Subsidiaries, free and clear of all
liens, charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. No S1 Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
- 4 -
<PAGE> 8
3.3 AUTHORITY; NO VIOLATION.
(a) S1 has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of S1. Except for the approval of the S1 Issuance as contemplated by
this Agreement by the requisite vote of S1's stockholders, no other corporate
proceedings on the part of S1 (except for matters related to setting the date,
time, place and record date for the special meeting) are necessary to approve
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by S1 and (assuming
due authorization, execution and delivery by FICS and each of the Purchasers)
will constitute a valid and binding obligation of S1, enforceable against S1 in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar law affecting creditors' rights and
remedies generally.
(b) Neither the execution and delivery of this Agreement by S1, nor the
consummation by S1 of the transactions contemplated hereby, nor compliance by S1
with any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Amended and Restated Certificate of Incorporation or Amended
and Restated Bylaws of S1, or (ii) assuming that the consents and approvals
referred to in Section 3.4 are duly obtained, (x) violate any Laws (as defined
below) applicable to S1 or any of its properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of S1 under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
S1 is or will be, as the case may be, a party, or by which S1 or any of its
properties or assets may be bound or affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for such filings, notices, authorizations or approvals as set
forth on Section 3.4 of the S1 Disclosure Schedule, no consents or approvals of
or filings or registrations with any court, administrative agency or commission
or other governmental authority or instrumentality (each a "Governmental
Entity") or with any third party are necessary in connection with (1) the
execution and delivery by S1 of this Agreement, and (2) the consummation by S1
of the S1 Issuance and the other transactions contemplated hereby, except for
such consents, approvals or filings the
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failure of which to obtain will not have a Material Adverse Effect (as defined
below) on the ability of S1 to consummate the transactions contemplated hereby.
(b) S1 hereby represents to Purchasers that it has no knowledge of
any reason why approval or effectiveness of any of the applications, notices or
filings referred to in Section 3.4(a) cannot be obtained or granted on a timely
basis.
3.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
S1 has previously delivered to representatives of Purchasers true,
correct and complete copies of the consolidated balance sheets of S1 and its
Subsidiaries as of December 31 for the fiscal years 1998 and 1997 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the fiscal years 1996 through 1998, inclusive, as reported in S1's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998, filed
with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of KPMG LLP,
independent public accountants with respect to S1, and the interim financial
statements of S1 as of and for the three months ended March 31, 1998 and 1997,
as included in S1's quarterly report on Form 10-Q for the quarter ended March
31, 1999, as filed with the SEC. The financial statements referred to in this
Section 3.5 (including the related notes, where applicable) fairly present
(subject, in the case of the unaudited statements, to normal recurring audit
adjustments) the results of the consolidated operations and consolidated
financial condition of S1 and its Subsidiaries for the respective fiscal periods
or as of the respective dates therein set forth; each of such statements
(including the related notes, where applicable) comply with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been prepared in accordance with US GAAP consistently
applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q. S1's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 and all
subsequently filed reports under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act comply in all material respects with the appropriate requirements
for such reports under the Exchange Act, and S1 has previously delivered to FICS
true, correct and complete copies of such reports. The books and records of S1
and its Subsidiaries have been, and are being, maintained in all material
respects in accordance with US GAAP and any other applicable legal and
accounting requirements.
3.6 BROKER'S FEES.
Neither S1 nor any S1 Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions
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contemplated by this Agreement, except that S1 has engaged, and will pay a fee
or commission to BancBoston Robertson Stephens, Inc. ("BBRS") in accordance with
the terms of a letter agreement between BBRS and S1, dated April 9, 1999, a
true, complete and correct copy of which has been provided to Purchasers.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in S1's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, or any other report filed under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, true, correct and complete copies
of which have previously been delivered or made available to representatives of
Purchasers, since December 31, 1998, (i) neither S1 nor any S1 Subsidiary has
incurred any material liability, except as contemplated by this Agreement or in
the ordinary course of their businesses consistent with their past practices,
and (ii) no event has occurred which has had, or is likely to have, individually
or in the aggregate, a Material Adverse Effect on S1.
(b) Since December 31, 1998, S1 and each S1 Subsidiary has carried on
its respective businesses in the ordinary and usual course consistent with past
practices.
3.8 LEGAL PROCEEDINGS.
(a) Neither S1 nor any of its Subsidiaries is a party to any, and
there are no pending or, to S1's knowledge, threatened, legal, administrative,
arbitration or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against S1 or any of its Subsidiaries or which
challenge the validity of the transactions contemplated by this Agreement as to
which there is a reasonable probability of success.
(b) There is no injunction, order, judgment or decree imposed upon S1,
any of its Subsidiaries or the assets of S1 or any of its Subsidiaries.
3.9 TAXES AND TAX RETURNS.
For purposes of this Section 3.9, S1 shall include S1, each S1 Subsidiary
and each other affiliated or related corporation or entity if S1 or any S1
Subsidiary has or could have any material liability for the taxes of such
corporation or entity. S1 has duly filed all Tax Returns required to be filed by
it on or prior to the date hereof (all such returns being accurate and complete
in all material respects) and has duly paid or made provision on the financial
statements referred to in Section 3.5 hereof in accordance with United States
generally accepted accounting principles ("US GAAP") for the payment of all
material Taxes which have been incurred or are due or claimed to be due from it
by Taxing Authorities on or prior to the date hereof other than Taxes
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(a) which (x) are not yet delinquent or (y) are being contested in good faith
and set forth in Section 3.9 of the S1 Disclosure Schedule and (b) which have
not been finally determined. The charges, accruals, and reserves with respect to
Taxes on the books of S1 are adequate (as determined in accordance with US GAAP)
and are at least equal to its liability for Taxes. There exists no proposed tax
assessment against S1 except as disclosed in the S1 financial statements. No
consent to the application of Section 341(f)(2) of the Code has been filed with
respect to any property or assets held, acquired, or to be acquired by S1. All
Taxes that S1 is or was required to withhold or collect have been duly withheld
or collected and, to the extent required, have been paid to the proper
Governmental Body. All liability with respect to the Tax Returns of S1 has been
satisfied for all years to and including 1998. No Taxing Authority has notified
S1 of, or otherwise asserted, that there are any material deficiencies with
respect to the Tax Returns of S1 subsequent to 1994. There are no material
disputes pending, or claims asserted for, Taxes or assessments upon S1, nor has
S1 been requested to give any currently effective waivers extending the
statutory period of limitation applicable to any Tax Return for any period. In
addition, Tax Returns that are accurate and complete in all material respects
have been filed by S1 for all periods for which returns were due with respect to
income tax withholding with respect to wages and other income and the amounts
shown on such Tax Returns to be due and payable have been paid in full or
adequate provision therefor in accordance with US GAAP has been included by S1
in the financial statements referred to in Section 3.5. All S1 Tax Returns have
been examined by the relevant Taxing Authorities, or closed without audit by
applicable statutes of limitations, and all deficiencies proposed as a result of
such examinations have been paid or settled, for all periods before and
including the taxable year ended December 31, 1994. S1 has not consented to any
waiver or extension of any statute of limitations with respect to any Tax. S1
has provided or made available to S1 complete and correct copies of its Tax
Returns and all material correspondence and documents, if any, relating directly
or indirectly to taxes for each taxable year or other relevant period as to
which the applicable statute of limitations has not run on the date hereof. For
this purpose, "correspondence and documents" include, without limitation,
amended Tax Returns, pending claims for refunds, notices from Taxing Authorities
of proposed changes or adjustments to Taxes or Tax Returns that have not been
finally resolved, consents to assessment or collection of Taxes, acceptances of
proposed adjustments, closing agreements, rulings and determination letters and
requests therefor, and all other written communications to or from Taxing
Authorities relating to any material Tax liability of S1.
(b) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate
tax), levy, assessment, tariff, duty (including any customs duty), deficiency,
or other fee, and any related charge or amount (including any fine, penalty,
interest, or addition to tax), imposed,
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assessed, or collected by or under the authority of any Taxing Authority or
payable pursuant to any tax-sharing agreement or any other contract relating to
the sharing or payment of any such tax, levy, assessment, tariff, duty,
deficiency, or fee.
"Tax Return" means any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Taxing
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any law, regulation or other legal requirement
relating to any Tax.
"Taxing Authority" means any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
3.10 EMPLOYEE PLANS.
(a) For purposes of this Section 3.10, S1 shall include each of its
Subsidiaries and any other entity that together with S1 would be deemed a
"single employer" within for purposes of ERISA (determined without regard to
whether such entity conducts business in the United States). Section 3.10(a) of
the S1 Disclosure Schedule sets forth a true and complete list of each U.S. Plan
and each other plan, arrangement or agreement providing benefits to the current
or former employees of S1 that S1 maintains or contributes to as of the date of
this Agreement, or that S1 has within the last six years maintained or
contributed to or under which S1 has any liability (collectively, the "S1
Plans").
(b) S1 has heretofore delivered or made available to S1 true,
correct and complete copies of each of the S1 Plans and all related documents
(other than S1 Plans established by a governmental agency or authority to which
S1 is required to contribute under applicable law), including but not limited to
(i) the actuarial report
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for such S1 Plan (if applicable) for each of the last five years, (ii) the most
recent determination letter from the IRS (if applicable) for each U.S. Plan,
(iii) the current summary plan description and any summaries of material
modification for each U.S. Plan and any corresponding document for each other S1
Plan, (iv) all annual reports for each U.S. Plan filed for the preceding five
plan years and any annual or other periodical financial information concerning
any other S1 Plan filed with any governmental agency or authority or provided to
employees or beneficiaries of such S1 Plan, (v) all agreements with fiduciaries
and service providers relating to the S1 Plan, (vi) all substantive
correspondence relating to any such S1 Plan addressed to or received from any
governmental agency or authority, (vii) all personnel, payroll, and employment
manuals and policies, (viii) a written description of any S1 Plan that is not
otherwise in writing.
(c) S1 has performed all of its obligations under all S1 Plans. S1 has
made appropriate entries in its financial records and statements for all
obligations and liabilities under the S1 Plans that have accrued but are not
due. No statement, either written or oral, has been made by S1 with regard to
any S1 Plan that was not in accordance with the S1 Plan and that could have an
adverse economic consequence to S1. S1 has no liability to the IRS, the U.S.
Pension Benefit Guaranty Corporation or to any other governmental or
quasi-governmental agency or authority with respect to any S1 Plan. No S1 Plan
is subject to Title IV of ERISA.
(d) Except as set forth at Section 3.10(d) of the S1 Disclosure Schedule,
(i) each of the S1 Plans has been operated and administered in all material
respects in compliance with applicable Laws, including, but not limited, in the
case of each U.S. Plan, to ERISA and the Code, (ii) each of the U.S. Plans
intended to be "qualified" within the meaning of Section 401 of the Code is so
qualified and S1 has received a determination letter or opinion letter from the
IRS to such effect, which letter remains in full force and effect, (iii) with
respect to each U.S. Plan that is subject to the funding requirements of ERISA
and the Code, the present value of accrued benefits under such S1 Plan, based
upon the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such S1 Plan's actuary with respect to such S1
Plan, did not, as of its latest valuation date, exceed the then current value of
the assets of such S1 Plan allocable to such accrued benefits, (iv) no S1 Plan
provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees of S1
beyond their retirement or other termination of service, other than (a) coverage
mandated by applicable Law, (b) death benefits or retirement benefits under an
S1 Plan that also provides post-retirement income, annuity or pension benefits
(including an "employee pension plan" as that term is defined in ERISA), (c)
deferred compensation benefits under an S1 Plan that are accrued as liabilities
on the books of S1 , or (d) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), (v) no liability under ERISA or
any other law relating to employee
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benefits or employees or their beneficiaries has been incurred by S1 that has
not been satisfied in full, and no condition exists that presents a material
risk of S1 incurring a material liability thereunder, (vi) no U.S. Plan is a
"multiemployer pension plan," as such term is defined in ERISA and no other S1
Plan is maintained pursuant to any collective bargaining agreement or other
agreement with a labor union or other authorized representative of labor, (vii)
all contributions or other amounts payable by S1 with respect to each S1 Plan
and all other liabilities of each such entity with respect to each S1 Plan, in
respect of current or prior plan years have been paid or accrued in accordance
with generally accepted accounting practices and, in the case of a U.S. Plan,
ERISA and the Code, (viii) S1 and each S1 Subsidiary have not engaged in a
"prohibited transaction" as defined in ERISA or the Code in connection with
which S1 could be subject to either any material excise tax or civil penalty
assessed pursuant to ERISA or the Code, (ix) to the knowledge of S1, there are
no pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the plans or any trusts related
thereto, (x) all S1 Plans could be terminated as of the Closing without material
liability in excess of the amount accrued therefor on the S1 financial
statements; (xi) no S1 Plan, either individually or collectively, provides for
any payment by S1 that would not be deductible for U.S. federal income tax
purposes; (xii) no "accumulated funding deficiency" as defined in ERISA or the
Code, whether or not waived, and no "unfunded current liability" as determined
under the Code exists with respect to any U.S. Plan; (xiii) no U.S. Plan has
experienced a "reportable event" (as such term is defined in ERISA and
regulations thereunder) that is not subject to an administrative or statutory
waiver from the reporting requirement.
3.11 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.11 of the S1 Disclosure
Schedule, neither S1 nor any of its Subsidiaries is a party to or bound by any
contract, arrangement or commitment (i) with respect to the employment of any
directors, officers, employees or consultants, (ii) which, upon the consummation
of the transactions contemplated by this Agreement will (either alone or upon
the occurrence of any additional acts or events) result in any payment (whether
of severance pay or otherwise), becoming due from S1 or any of its respective
Subsidiaries to any director, officer or employee thereof, (iii) which
materially restricts the conduct of any line of business by S1 or any of its
Subsidiaries, (iv) with or to a labor union or guild (including any collective
bargaining agreement) or (v) except as set forth on Section 3.11(a)(v) of the S1
Disclosure Schedule, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated by the occurrence of any of
the transactions contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement (including as to this clause (v), any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan). Except as set forth at Section 3.11 of the S1 Disclosure
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Schedule, there are no employment, consulting and deferred compensation
agreements to which S1 or any of its Subsidiaries is a party. Section 3.11(a) of
the S1 Disclosure Schedule sets forth a list of all material contracts (as
defined in Item 601(b)(10) of Regulation S-K) of S1 and its Subsidiaries. Each
contract, arrangement or commitment of the type described in this Section
3.11(a), whether or not set forth in Section 3.11(a) of the S1 Disclosure
Schedule, is referred to herein as a "S1 Contract," and neither S1 nor any of
its Subsidiaries has received notice of, nor do any executive officers of such
entities know of, any violation of any S1 Contract.
(b) (i) Each S1 Contract is valid and binding and in full force and
effect, (ii) S1 and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each S1
Contract, and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a material default on the
part of S1 or any of its Subsidiaries under any such S1 Contract.
3.12 ENVIRONMENTAL MATTERS.
(a) Each of S1 and the S1 Subsidiaries is in compliance in all material
respects with all applicable Laws and regulations relating to pollution or
protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Materials (as hereinafter defined)), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation or notice
pending or, to the knowledge of S1 and its Subsidiaries threatened (or past or
present actions or events that could form the basis of any such suit, claim,
action, proceeding, investigation or notice), in which S1 or any S1 Subsidiary
has been or, with respect to threatened suits, claims, actions, proceedings,
investigations or notices may be, named as a defendant (x) for alleged material
noncompliance (including by any predecessor), with any environmental law, rule
or regulation or (y) relating to any material release or threatened release into
the environment of any Hazardous Material, occurring at or on a site owned,
leased or operated by S1 or any S1 Subsidiary, or to the knowledge of S1,
relating to any material release or threatened release into the environment of
any Hazardous Material, occurring at or on a site not owned, leased or operated
by S1 or any S1 Subsidiary;
(c) To the knowledge of S1 and its Subsidiaries, during the period of
S1's or any S1 Subsidiary's ownership or operation of any of its properties,
there has not been any material release of Hazardous Materials in, on, under or
affecting any such property; and
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(d) For purposes of this Agreement, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
3.13 PROPERTIES AND ASSETS.
Except for (a) items reflected in S1's consolidated financial statements
as of December 31, 1998 referred to in Section 3.5 hereof, (b) exceptions to
title that do not interfere materially with S1's or any S1 Subsidiary's use and
enjoyment of owned or leased real property, (c) liens for current real estate
taxes not yet delinquent, or being contested in good faith, properly reserved
against (and reflected on the financial statements referred to in Section 3.5
above), and (d) properties and assets sold or transferred in the ordinary course
of business consistent with past practices since December 31, 1998, S1 and each
S1 Subsidiary have good and, as to owned real property, marketable and insurable
title to all their properties and assets, free and clear of all liens, claims,
charges and other encumbrances. S1 and each S1 Subsidiary, as lessees, have the
right under valid and subsisting leases to occupy, use and possess all property
leased by them, and neither S1 nor any S1 Subsidiary has experienced any
material uninsured damage or destruction with respect to such properties since
December 31, 1998. All properties and assets used by S1 and each S1 Subsidiary
are in good operating condition and repair suitable for the purposes for which
they are currently utilized and comply in all material respects with all Laws
relating thereto now in effect or scheduled to come into effect. S1 and each S1
Subsidiary enjoy peaceful and undisturbed possession under all leases for the
use of all property under which they are the lessees, and all leases to which S1
or any S1 Subsidiary is a party are valid and binding obligations in accordance
with the terms thereof. Neither S1 nor any S1 Subsidiary is in material default
with respect to any such lease, and there has occurred no default by S1 or any
S1 Subsidiary or event which with the lapse of time or the giving of notice, or
both, would constitute a material default under any such lease. To the knowledge
of S1, there are no Laws, conditions of record, or other impediments which
interfere with the intended use by S1 or any S1 Subsidiary of any of the
property owned, leased, or occupied by them.
3.14 INSURANCE.
The existing insurance carried by S1 and S1 Subsidiaries is and will
continue to be, in respect of the nature of the risks insured against and the
amount of coverage provided, substantially similar in kind and amount to that
customarily carried by parties similarly situated who own properties and engage
in businesses substantially similar to that of S1 and the S1 Subsidiaries, and
is sufficient for compliance by S1
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and the S1 Subsidiaries with all requirements of Law and agreements to which S1
or any of the S1 Subsidiaries is subject or is party.
3.15 COMPLIANCE WITH APPLICABLE LAWS.
Each of S1 and any S1 Subsidiary has complied in all material respects
with all Laws applicable to it or to the operation of its business. Neither S1
nor any S1 Subsidiary has received any notice of any material alleged or
threatened claim, violation, or liability under any such Laws that has not
heretofore been cured and for which there is any remaining liability.
3.16 S1 INFORMATION.
The information relating to S1 and each S1 Subsidiary to be provided by
S1 to be contained in the S1 Proxy Statement (as defined below) will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading.
3.17 INTELLECTUAL PROPERTY.
Except, in each case, as set forth in Section 3.17 of the S1
Disclosure Schedule:
(a) (i) S1 and its Subsidiaries own, free and clear of liens, orders
and arbitration awards, or are licensed or otherwise possess valid and
enforceable rights to use all patents, trademarks, trade names, service marks,
copyrights and any applications therefor, schematics, technology, know-how,
trade secrets, ideas, algorithms, processes, Software (as defined below), and
tangible or intangible proprietary information or material ("Intellectual
Property") that are used in the business of S1 and its Subsidiaries. "Software"
means any and all (i) computer programs and applications, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, (iv) the technology supporting any Internet
site(s) operated by or on behalf of S1 or any of its Subsidiaries, and (v) all
documentation, including user manuals and training materials, relating to any of
the foregoing.
(ii) Except as would not be materially adverse to the business of
S1 or its Subsidiaries, S1 and its Subsidiaries have taken reasonable steps to
protect their Intellectual Property. There is no litigation pending or, to the
knowledge of S1 and its Subsidiaries, threatened or any written claim from any
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person challenging the ownership, use, validity or enforceability of any
Intellectual Property, nor is there any basis for the assertion of any such
claim or challenge.
(iii) No material patent, trademark, service mark, copyright, trade
secret, computer software or other intellectual property right other than the
Intellectual Property set forth on Schedule 3.17 is necessary to conduct the
businesses of S1 and its Subsidiaries as presently conducted.
(b) Schedule 3.17 lists all (i) patents, patent applications, registered
and unregistered trademarks, trade names and service marks and registered
copyrights, owned by S1 included in the Intellectual Property, including the
jurisdictions in which each such item of Intellectual Property right has been
issued or registered or in which any application for such issuance and
registration has been filed, (ii) material licenses, sublicenses and other
agreements as to which S1 and its Subsidiaries are a party and pursuant to which
any person is authorized to use any Intellectual Property, and (iii) licenses,
sublicenses and other agreements as to which S1 and its Subsidiaries are a party
and pursuant to which S1 and its Subsidiaries are authorized to use any third
party patents, trademarks or copyrights, including Software ("Third Party
Intellectual Property Rights") which are incorporated in, are or form a part of
any S1 or Subsidiary product.
(c) (i) To the knowledge of S1 and its Subsidiaries, there is no
unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of S1 or its Subsidiaries, any trade secret
material to S1 or its Subsidiaries, or any Intellectual Property right of any
third party to the extent licensed by or through S1 or its Subsidiaries, by any
employee of S1 or any S1 Subsidiary or third party for whom S1 is responsible.
Except as set forth in Schedule 3.17, there are no royalties, fees or other
payments payable by S1 or its Subsidiaries to any person by reason of the
ownership, use, sale or disposition of Intellectual Property.
(ii) To the knowledge of S1 and its Subsidiaries, there has been no
prior use of S1's registered trademarks by any third party which would confer
upon said third party superior rights in such trademarks. S1 and its
Subsidiaries have taken reasonable steps to adequately police the trademarks
against third party infringement, and the material trademarks registered in the
United States have been continuously used in the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or any amendment, supplement or office action related thereto.
(d) S1 and its Subsidiaries are not, nor will they be as a result of the
execution and delivery of this Agreement or the performance of their obligations
under this Agreement, in breach of any material license, sublicense or other
agreement relating to the Intellectual Property or Third Party Intellectual
Property Rights, and the execution and delivery of this Agreement or the
performance of the
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obligations under this Agreement by S1 and its Subsidiaries will not result in
the loss or impairment of, or give rise to any right of any third party to
terminate, any of S1's or any of its Subsidiaries' rights to own any of its
Intellectual Property or their respective rights under any material license
agreements, nor require the consent of any Governmental Entity or third party in
respect of any such Intellectual Property.
(e) S1 and its Subsidiaries (i) have no knowledge (including knowledge of
any litigation pending or threatened or any written claim from any person) or
reason to believe that the conduct of their businesses infringe any patent,
trademark, service mark, copyright, trade secret or other proprietary right of
any third party; and (ii) have not advised any third party that such third party
may be infringing any Intellectual Property or breaching any license or
agreement involving Intellectual Property and have not brought or threatened any
claim against such third party for such conduct.
(f) The Software owned or purported to be owned by S1 or any of its
Subsidiaries, was either (i) developed by employees of S1 or any of its
Subsidiaries within the scope of their employment; (ii) developed by independent
contractors or consultants who have assigned their rights to S1 or any of its
Subsidiaries pursuant to written agreements; or (iii) otherwise acquired by S1
or its Subsidiary from a third party.
(g) All employees and independent contractors and consultants of S1 and
its Subsidiaries have executed and delivered to S1 or its Subsidiaries, as the
case may be, agreements regarding the protection of proprietary information and
the assignment to S1 or its Subsidiaries of any Intellectual Property arising
from services performed for S1 or its Subsidiaries by such persons.
(h) S1 and its Subsidiaries have obtained or entered into written
agreements with their employees and with third parties, in transactions deemed
appropriate, in connection with the disclosure to, or use or appropriation by,
employees and third parties, of trade secret or proprietary information owned by
S1 and its Subsidiaries and not otherwise protected by a patent, a patent
application, copyright, trademark, or other registration or legal scheme ("S1
Confidential Information"), and do not know of any situation involving such
employee or third party use, disclosure or appropriation of S1 Confidential
Information where the lack of such a written agreement is likely to result in
any Material Adverse Effect. Except as set forth in Schedule 3.17(h) of the S1
Disclosure Schedule, neither S1 nor any of its Subsidiaries have furnished the
source code of any of their Software products to any third party, deposited any
such source code in escrow, or otherwise provided access to such source code to
any third party.
(i) Except as would not be materially adverse to the business of S1 or
its Subsidiaries, S1 and its Subsidiaries have taken reasonable steps with the
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intent of ensuring that their products (including existing products and
technology and products and technology currently under development) will, when
used in accordance with associated documentation on a specified platform or
platforms, be capable upon installation of accurately processing, providing, and
receiving date data from, into, and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and making leap-year calculations,
provided that all other non-S1 or S1 Subsidiary products (e.g., hardware,
software and firmware) used in or in combination with S1's or its Subsidiaries'
products, properly exchange data with S1's and its Subsidiaries products.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Each of the Purchasers severally and not jointly hereby makes the
following representations and warranties to S1 as set forth in this Section 4,
each of which is being relied upon by S1 as a material inducement to enter into
and perform this Agreement. All of the disclosure schedules of the Purchasers
referenced below and thereby required of the Purchasers pursuant to this
Agreement, which disclosure schedules shall be cross-referenced to the specific
sections and subsections of this Agreement and delivered herewith, are referred
to herein as the "Purchasers' Disclosure Schedule."
4.1 ORGANIZATION OF PURCHASERS.
Such Purchaser not a natural person is duly organized and validly
existing under the laws of the jurisdiction of its formation.
4.2 AUTHORIZATION OF TRANSACTION.
(a) If such Purchaser is not a natural person, such Purchaser has full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite action on the part of such Purchaser and no other proceedings
on the part of such Purchaser are necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by such Purchaser and (assuming due authorization, execution and
delivery by S1 and FICS of this Agreement) will constitute a valid and legally
binding obligation of such Purchaser, enforceable in accordance with its terms,
except as enforcement may be limited by general principles of equity, whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally. Except as set
forth in Section 4.2(a) of the Purchasers' Disclosure Schedule, no Purchaser
need give any notice to, make any filing with, or obtain any authorization,
consent, or approval of
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<PAGE> 21
any government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(b) Such Purchaser acknowledges that he, she or it has read this
Agreement and has been provided with, or been granted access to, all information
necessary to make his or her decision to execute this Agreement. Such Purchaser
acknowledges that his, her or its signature on this Agreement shall be deemed
his, her or its written consent to the execution of this Agreement and to the
consummation of all of the transactions contemplated by this Agreement, except
for such consents, approvals or filings the failure of which to obtain will not
have a Material Adverse Effect on the ability of such Purchaser to consummate
the transactions contemplated hereby.
4.3 NON-CONTRAVENTION.
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (A) assuming that the
consents and approvals referred to in Section 4.2(a) are duly obtained, (x)
violate any Laws applicable to such Purchaser or any of its properties or
assets, or (y) violate, conflict with, result in a breach of any provision of or
the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of such Purchaser under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which such Purchaser is or
will be, as the case may be, a party, or by which such Purchaser or any of its
properties or assets may be bound or affected or (B) if such Purchaser is not a
natural person, violate any provisions of its organizational documents.
4.4 BROKER'S FEES.
Except for the fee payable to Credit Suisse First Boston ("CSFB") in
accordance with the terms of a letter agreement between CSFB and FICS, dated
May 16, 1999, such Purchaser has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement nor has such Purchaser created any such liability
or obligation which, upon consummation of the transactions contemplated by this
Agreement or the Transaction, will become an obligation of S1 or any subsidiary.
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<PAGE> 22
4.5 ADEQUATE RESOURCES.
Each Purchaser will have, at the time of Closing, sufficient cash or
other resources to perform its obligations hereunder.
4.6 INVESTMENT EXPERIENCE.
Such Purchaser is aware of S1's business affairs and financial condition
and has had access to and has acquired sufficient information about S1 to reach
an informed and knowledgeable decision to acquire the Shares. Such Purchaser has
such business and financial experience as is required to give it the capacity to
protect its own interests in connection with the purchase of the Shares. Such
Purchaser is able to bear the economic risk of holding the Shares for an
indefinite period, including the loss of such Purchaser's entire investment. The
Shares were not offered or sold to such Purchaser by any form of general
solicitation or advertising.
4.7 INVESTMENT INTENT.
Such Purchaser is purchasing the Shares for its own account as principal,
for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, within the
meaning of the Securities Act of 1933 as amended (the "Securities Act"). Such
Purchaser understands that its acquisition of the Shares has not been registered
under the Securities Act or registered or qualified under any state securities
law in reliance on specific exemptions therefrom, which exemptions may depend
upon, among other things, the bona fide nature of such Purchaser's investment
intent as expressed herein.
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<PAGE> 23
4.8 REGISTRATION OR EXEMPTION REQUIREMENTS.
Such Purchaser further acknowledges and understands that the Shares may
be required to be held indefinitely, and they may not be resold or otherwise
transferred except in a transaction registered under the Securities Act or where
an exemption from such registration is available. Such Purchaser understands
that the certificate(s) evidencing the Shares will be imprinted with a legend
that prohibits the transfer of the Shares unless (a) they are registered or such
registration is not required, and (b) if the transfer is pursuant to an
exemption from registration other than Rule 144 promulgated under the Securities
Act and, if S1 shall so request in writing, an opinion of counsel satisfactory
to S1 is obtained to the effect that the transaction is so exempt and in
compliance with applicable state law.
4.9 NO LEGAL, TAX OR INVESTMENT ADVICE.
Such Purchaser understands that nothing in this Agreement or any other
materials presented to such Purchaser in connection with the purchase and sale
of the Shares or the Transaction constitutes legal, tax or investment advice.
Such Purchaser has consulted such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Shares.
SECTION 5. ADDITIONAL AGREEMENTS.
5.1 LOCK-UP COVENANT.
During the period beginning on the Closing and ending on the date 180
days after the Closing, except as contemplated by paragraph 5.8(a), the Majority
Purchasers (as defined in Section 5.9 below) covenant that they will not,
without the prior written consent of S1, offer, sell or otherwise dispose of,
directly or indirectly, any capital stock of S1 which Purchasers may own
directly, indirectly or beneficially; provided, however, that any such Purchaser
may transfer some or all of the Shares to a corporation, partnership or other
legal entity controlled by such Purchaser if such transferee agrees in writing
to hold any Shares received subject to the provisions of this Agreement and to
transfer such Shares back to such Purchaser if such transferee ceases to be
controlled by such Purchaser.
5.2 S1 BOARD OF DIRECTORS.
5.2(a). Effective upon the Closing, S1 shall have adopted a resolution
pursuant to Section 3.2 of its Amended and Restated Bylaws to increase the size
of its Board of Directors by at least four members to an aggregate size of no
more than 11
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<PAGE> 24
members, and shall thereupon invite four individuals, designated by Michel
Akkermans ("Akkermans"), to serve as additional members (the "FICS Members") of
the Board of Directors of S1 to serve for a term expiring at the third
successive annual meeting following the Closing; provided, however, that S1
shall have no obligation to invite any FICS Member to serve on S1's Board if
such person is not a member in good standing of the FICS Board of Directors
immediately prior to the Closing. For purposes of this Section 5.2, the members
of the S1 Board of Directors immediately prior to the Closing are referred to as
the "S1 Members." In addition, S1 shall have amended its Amended and Restated
Bylaws to provide that for the three-year period beginning upon the Closing, the
nominating committee for additional members of the Board of Directors shall
consist of James S. Mahan III ("Mahan") and Akkermans, acting together, unless
such additional member is to replace a FICS Member, in which case the nominating
committee shall consist of the remaining FICS Members only, and unless (except
as provided in paragraph 5.2(b) below) such additional member is to replace an
S1 Member, in which case the nominating committee shall consist of the remaining
S1 Members only. Any person elected as a member of the S1 Board of Directors to
replace an S1 Member or a FICS Member shall thereupon be deemed to be an S1
Member or a FICS Member, as the case may be.
5.2(b). The parties intend that two S1 Members will tender their
resignations from the S1 Board of Directors, such resignations to take effect no
later than the second anniversary of the Closing. Notwithstanding paragraph
5.2(a), Mahan and Akkermans shall use their good faith efforts to nominate for
appointment two mutually acceptable individuals to fill such vacancies by no
later than the second anniversary of the Closing. If Akkermans and Mahan fail to
agree to nominate two individuals to serve as such replacement directors on or
before the second anniversary of the Closing, the parties intend such slots to
remain vacant until after the taking of the action described in paragraph
5.2(c).
5.2(c). The parties agree that at the first regularly scheduled meeting
of the S1 Board of Directors following the second anniversary of the Closing,
the directors then in office will consider and vote upon a resolution that
Akkermans be elected to the position of Chief Executive Officer of S1.
5.2(d). The parties agree that, as of the date of the Closing, Akkermans
shall be appointed to hold the offices of President and Chairman of the Board of
Directors of S1.
5.3 COMPLIANCE WITH ANTITRUST LAWS.
Each of FICS, the Purchasers and S1 shall make all filings of any
applications, notices or other documents required under applicable antitrust
Laws and use its reasonable best efforts to resolve objections, if any, which
may be
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<PAGE> 25
asserted with respect to the transactions contemplated by this Agreement or the
Transaction under antitrust laws, including, without limitation, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). In the event a suit is threatened or instituted challenging the
transactions contemplated by this Agreement or the Transaction as violative of
antitrust laws, each of the Purchasers and S1 shall use its reasonable best
efforts to avoid the filing of, or resist or resolve such suit. The Purchasers
and S1 shall use their reasonable best efforts to take such action as may be
required: (a) by the Antitrust Division of the Department of Justice or the
Federal Trade Commission in order to resolve such objections as either of them
may have to the transactions contemplated by this Agreement or the Transaction
under antitrust laws, or (b) by any federal or state court of the United States,
in any suit brought by a private party or Governmental Entity challenging the
transactions contemplated by this Agreement or the Transaction as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order, or other order which has the effect
of preventing the consummation of the transactions contemplated by this
Agreement or the Transaction. Reasonable best efforts shall not include, among
other things and to the extent S1 so desires, the willingness of S1 to accept an
order agreeing to the divestiture, or the holding separate, of any assets of
FICS or S1.
5.4 REGULATORY MATTERS.
5.4(a). Upon the execution and delivery of this Agreement, S1 and the
Purchasers shall promptly cause to be prepared and filed with the SEC the S1
Proxy Statement for soliciting the approval of this Agreement and the S1
Issuance by the stockholders of S1. The S1 Proxy Statement can be included in a
registration statement on Form S-4 prepared in connection with the Agreement and
Plan of Merger by and among S1, Sahara Strategy Corporation and Edify
Corporation dated as of May 16, 1999. S1 shall use its reasonable best efforts
to have the S1 Proxy Statement cleared for use by the SEC as soon as possible
after the filing. The parties shall cooperate in responding to and considering
any questions or comments from the SEC staff regarding the information contained
in the S1 Proxy Statement. If at any time after the S1 Proxy Statement is filed
with the SEC, and prior to the date of the Closing, any event relating to FICS
is discovered by the Purchasers which should be set forth in an amendment of,
or a supplement to, the S1 Proxy Statement, the Purchasers shall promptly
inform S1, and shall furnish S1 with all necessary information relating to such
event whereupon S1 shall promptly cause an appropriate amendment to the S1
Proxy Statement to be filed with the SEC. S1 (if prior to the meeting of
stockholders pursuant to Section 4.5 hereof) shall take all necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to its stockholders entitled to vote at such meeting. If at any
time after the S1 Proxy Statement is filed with the SEC, and prior to the date
of the Closing, any event relating to S1 is discovered by S1 which should be
set forth in an
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<PAGE> 26
amendment of, or a supplement to, the S1 Proxy Statement, S1 shall promptly
inform the Purchasers, and S1 shall promptly cause an appropriate amendment to
the Proxy Statement to be filed with the SEC. S1 (if prior to the meeting of
stockholders pursuant to Section 4.5 hereof) shall take all necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to its stockholders entitled to vote at such meeting.
5.4(b). The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. S1 and the Purchasers shall have the right to review in advance, and
to the extent practicable each will consult the other on, in each case subject
to applicable laws relating to the exchange of information, all the information
relating to S1 or the Purchasers, as the case may be, which appears in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement; provided, however, that nothing contained herein shall be deemed to
provide either party with a right to review any information provided to any
Governmental Entity on a confidential basis in connection with the transactions
contemplated hereby; and further provided that S1 and Akkermans shall mutually
agree on any such information regarding the structure or purpose of the
structure of the transactions contemplated by this Agreement and the Holdings
Purchase Agreement prior to its appearance. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to contemplation of the transactions
contemplated herein.
5.4(c). The Purchasers shall, upon request, furnish S1 with all
information concerning FICS and its directors, officers and stockholders and
such other matters as may be reasonably necessary or advisable in connection
with the S1 Proxy Statement or any other statement, filing, notice or
application made by or on behalf of S1 to any Governmental Entity in connection
with the transactions contemplated by this Agreement or the Transaction.
5.4(d). S1 and the Purchasers shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (defined in the Holdings
Purchase
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<PAGE> 27
Agreement) will not be obtained or that the receipt of any such approval will be
materially delayed.
5.5 STOCKHOLDER MEETING.
S1 shall take all steps necessary to duly call, give notice of, convene
and hold a meeting of its stockholders within 45 days after the S1 Proxy
Statement is approved by the SEC for use for the purpose of voting upon the
approval of this Agreement and the S1 Issuance. Management and the Board of
Directors of S1 shall recommend approval of each of this Agreement, the S1
Issuance and the Transaction.
5.6 LEGAL CONDITIONS.
Each of S1 and the Purchasers shall use their reasonable best efforts (a)
to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
with respect to the transactions contemplated by this Agreement or the
Transaction and, subject to the conditions set forth in Section 6 hereof, to
consummate the transactions contemplated by this Agreement and (b) to obtain
(and to cooperate with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity and any other
third party which is required to be obtained by the Purchasers or S1 in
connection with transactions contemplated by this Agreement or the Transaction.
5.7 STOCK EXCHANGE LISTING.
S1 shall cause the Shares to be approved for quotation on the Nasdaq
Stock Market National Market System ("Nasdaq") (or such other exchange on which
the S1 Common Stock has become listed, or approved for listing) prior to
Closing.
5.8 REGISTRATION OF S1 COMMON STOCK.
5.8(a). S1 shall file as soon as practicable after the date the S1 Proxy
Statement is cleared for use (unless S1 shall then be required to restate
financial statements or otherwise provide pro forma financial data, in which
case S1 shall file as soon as reasonably practicable) a registration statement
on an appropriate form (the "Akkermans Registration Statement") with the SEC and
use its commercially reasonable efforts to cause the Akkermans Registration
Statement to be declared effective upon the Closing (or such later date as
Akkermans may request) to effect the registration under the Securities Act of
the Akkermans Registration Statement for the resale by Akkermans of such amount
of shares of S1 Common Stock as determined by Akkermans no later than the day
before Closing, but in no event greater than an amount of shares the net
proceeds from the sale of which (after
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<PAGE> 28
giving effect to underwriting fees, expenses, commissions and discounts) equal
(i) (x) 0.18 multiplied by (y) the Closing Market Price (as defined in Section
1.1(a) above), multiplied by (z) the number of shares of S1 Common Stock he
beneficially acquires pursuant to this Agreement and the transactions
contemplated hereby, plus (ii) $15,000,000, on customary terms and under then
prevailing market conditions, at a per share offering price to the public as
determined by S1 in its reasonable judgment to be fair and adequate to
Akkermans. The Akkermans Registration Statement may, in S1's sole and absolute
discretion, also provide for the issuance by S1 of a number of newly issued
shares of S1 Common Stock in a primary offering as well as shares of other
selling stockholders, if any. S1 may elect to conduct an underwritten offering,
in its sole and absolute discretion, whether or not it desires to make a primary
offering. S1 agrees to consult with Akkermans and reasonably consider his views
with respect to the selection of the underwriter to be used in connection with
the offering to be made pursuant to the prospectus constituting a part of the
Akkermans Registration Statement. Of the Purchasers, only Akkermans shall be
permitted to participate in the offering of S1 Common Stock provided for by the
Akkermans Registration Statement contemplated by this paragraph 5.8(a). S1 shall
use its commercially reasonable efforts to keep the Akkermans Registration
Statement effective for 30 days after Closing or such shorter time as necessary
for the sale of shares registered thereunder.
5.8(b). S1 shall file and cause to be declared effective promptly
following the Closing a registration statement on Form S-3 or another
appropriate form for secondary offerings pursuant to Rule 415 promulgated under
the Securities Act, registering for resale on a delayed or continuous basis all
of the Shares (other than shares sold by Akkermans pursuant to paragraph 5.8(a))
issued pursuant to this Agreement and all of the shares of S1 Common Stock
issuable upon exercise by Purchasers of Successor Options (such registration
statement, the "Resale Registration Statement"). S1 shall use its reasonable
best efforts to keep this Resale Registration Statement effective for no less
than one year following Closing.
5.8(c). S1 shall conduct all registration proceedings in accordance with
the following:
(1) S1 shall use its commercially reasonable efforts, but shall
not be required, to conduct an underwritten offering.
(2) If, after it becomes effective, such registration statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental authority, such registration shall not be
deemed to have been effected unless such stop order, injunction or other order
shall have been subsequently vacated or removed.
(3) S1 shall have no obligation to include S1 Common Stock owned
by a Purchaser in a registration statement unless and until such Purchaser
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<PAGE> 29
has furnished S1 with all information and statements about or pertaining to such
Purchaser in such reasonable detail and on such timely basis as is reasonably
deemed by S1 to be necessary or appropriate for the preparation of the
registration statement.
(4) S1 shall, subject to the other provisions of this Section 5.8:
(A) use its commercially reasonable efforts to cause the registration
statement to become effective as soon as practicable after the filing thereof;
(B) prepare and file with the SEC as promptly as is reasonably
practicable (and in any event within 60 days after such amendment or supplement
becomes necessary) such amendments and supplements to the registration statement
contained therein as may be necessary to keep such registration statement
effective for the respective periods specified or until each Purchaser has
completed the distribution described in such registration statement, whichever
occurs first;
(C) furnish to Purchasers such number of copies of such registration
statement, each amendment and supplement thereto as they may reasonably request;
(D) use its commercially reasonable efforts to register or qualify
such shares under the state blue sky or securities or banking laws ("Blue Sky
Laws") of such jurisdictions as Purchasers reasonably request (and to keep such
registrations and qualifications effective for a period of no less than one year
following Closing, or until Purchasers have completed the distribution of such
shares, whichever occurs first), and to do any and all other acts and things
that may be reasonably necessary or advisable to enable such Purchasers to
consummate the disposition of such shares in such jurisdictions; provided,
however, that S1 will not be required to do any of the following: (i) qualify
generally to do business in any jurisdiction where it would not be required but
for this Section 5.8, (ii) subject itself to taxation in any such jurisdiction,
or (iii) file any general consent to service of process in any such
jurisdiction;
(E) promptly notify Purchasers at any time during the period that S1
is required to keep the registration statement effective, of the occurrence of
any event as a result of which such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein in the light of the circumstances under which they were made, not
misleading, and prepare a supplement or amendment to the registration statement
so that, as thereafter delivered to the purchasers of such shares, the
registration statement will not contain an untrue statement of a material fact
or
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<PAGE> 30
omit to state any fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(F) use commercially reasonable efforts to cause all such shares to be
listed on Nasdaq or such other national exchange on which S1 Common Stock shall
then be listed; and
(G) provide a transfer agent and registrar (if S1 does not already
have such an agent) for all such shares not later than the effective date of
such registration statement.
(5) If, pursuant to this Section 5.8, S1 Common Stock owned by a
Purchaser is included in a registration statement, then such Purchaser shall pay
all transfer taxes, if any, relating to the sale of its S1 Common Stock, the
fees and expenses of its own counsel, and its pro rata portion of any
underwriting discounts or commissions or the equivalent thereof.
(6) Except for the fees and expenses specified in paragraph (5) of this
Section 5.8(c) and except as provided this paragraph (6), S1 shall pay all
expenses incident to the registration and to S1's performance of or compliance
with this Agreement, including, without limitation, all SEC registration and
filing fees, fees and expenses of compliance with Blue Sky Laws, underwriting
discounts, fees, and expenses (other than a Purchaser's pro rata portion of any
underwriting discounts or commissions or the equivalent thereof), printing
expenses, messenger and delivery expenses, and fees and expenses of counsel for
S1 and all independent certified public accountants and other persons retained
by S1.
(7) In the event that any shares of S1 Common Stock owned by a Purchaser
are sold by means of a registration statement pursuant to this Section 5.8, such
Purchaser (for the purposes of this paragraph (7), the "Indemnifying Person")
agrees to indemnify and hold harmless S1, each of S1's officers and directors,
and each person, if any, who controls or may control S1 within the meaning of
the Securities Act (for the purposes of this paragraph (7), S1, its officers and
directors, and any such other persons being referred to individually as an
"Indemnified Person" and collectively as "Indemnified Persons") from and against
all demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs, and expenses, including, without limitation, interest,
penalties, and reasonable attorneys' fees and disbursements, asserted against,
resulting to, imposed upon, or incurred by such Indemnified Person, directly or
indirectly (collectively, referred to for purposes of this paragraph (vii) and
the corresponding provision of paragraph (viii) below in the singular as a
"Claim" and in the plural as "Claims"), based upon, arising out of, or resulting
from any untrue statement of a material fact contained in the registration
statement or any omission to state therein a material fact necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not
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<PAGE> 31
misleading, to the extent that such Claim is based upon, arises out of or
results from any untrue statement or omission based upon information furnished
to S1 by such Purchaser in a written document provided by such Purchaser for use
in connection with the Registration Statement; provided that such Purchaser will
not be liable in any such case to the extent that any such Claim arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement in reliance upon or in
conformity with written information furnished to such Purchaser by S1 or an
underwriter in connection with the registration statement specifically for use
in the preparation thereof.
(8) S1 (for the purposes of this paragraph (8), the "Indemnifying
Person") agrees to indemnify and hold harmless such Purchaser and any
underwriters participating in the distribution of S1 Common Stock pursuant to a
registration statement (for the purposes of this paragraph (8), such Purchaser
and any such other persons also being referred to individually as an
"Indemnified Person" and collectively as "Indemnified Persons") from and against
all Claims based upon, arising out of, or resulting from any untrue statement of
a material fact contained in the registration statement or any omission to state
therein a material fact necessary in order to make the statement made therein,
in the light of the circumstances under which they were made, not misleading,
provided that S1 will not be liable in any such case to the extent that any such
Claim arises out of or results from any untrue statement or omission based upon
information furnished to S1 by such Purchaser in a written document provided by
such Purchaser for use in connection with the registration statement.
(9) The indemnification set forth herein shall be in addition to any
liability S1 or such Purchaser may otherwise have in connection with any
registration of S1 Common Stock. Within a reasonable time after receiving
definitive notice of any Claim in respect of which an Indemnified Person may
seek indemnification under this Section 5.8(c), such Indemnified Person shall
submit written notice thereof to such Indemnifying Person. The failure of the
Indemnified Person so to notify the Indemnifying Person of any such Claim shall
not relieve the Indemnifying Person from any liability it may have hereunder
except to the extent that (a) such liability was caused or increased by such
omission, or (b) the ability of the Indemnifying Person to reduce such liability
was materially adversely affected by such omission. In addition, the omission of
the Indemnified Person so to notify the Indemnifying Person of any such Claim
shall not relieve the Indemnifying Person from any liability it may have
otherwise than hereunder. The Indemnifying Person shall have the right to
undertake, by counsel or representatives of its own choosing, the defense,
compromise, or settlement (without admitting liability of the Indemnifying
Person) of any such Claim asserted, such defense, compromise, or settlement to
be undertaken at the expense and risk of the Indemnifying Person, and the
Indemnified Person shall have the right to engage separate counsel, at its
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<PAGE> 32
own expense, which counsel for the Indemnifying Person shall keep informed and
consult with in a reasonable manner. In the event the Indemnifying Person shall
fail to undertake such defense by its own representatives, the Indemnifying
Person shall give prompt written notice of such election to the Indemnified
Person, and the Indemnified Person shall undertake the defense, compromise, or
settlement (without admitting liability of the Indemnified Person) thereof on
behalf of and for the account and risk of the Indemnifying Person by counsel or
other representatives designated by the Indemnified Person. In the event that
any Claim shall arise out of a transaction or cover any period or periods
wherein S1 and such Purchaser shall each be liable hereunder for part of the
liability or obligation arising therefrom, then the parties shall, each choosing
its own counsel and bearing its own expenses, defend such Claim, and no
settlement or compromise of such Claim may be made without the joint consent or
approval of S1 and such Purchaser. Notwithstanding the foregoing, no
Indemnifying Person shall be obligated hereunder with respect to amounts paid in
settlement of any Claim if such settlement is effected without the consent of
such Indemnifying Person (which consent shall not be unreasonably withheld).
(10) If the indemnification provided for in this Section 5.8(c) is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party (as defined in either paragraph (7) or (8)) with respect to any Claim,
then such Purchaser or S1, as applicable and as the case may be (each an
"Indemnifying Party"), in lieu of indemnifying an Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Claim in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions which resulted
in such claim.
5.9 CONDUCT OF S1'S BUSINESS.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Closing, except with
respect to (i) the certain Agreement and Plan of Merger dated as of May 16, 1999
by and among S1, Sahara Strategy Corporation and Edify Corporation, and (ii) the
certain Stock Purchase and Option Agreement dated as of May 16, 1999 by and
between S1 and Intuit Inc., prior to entering into any such agreement S1 agrees
to consult with Akkermans, General Atlantic Partners 20, L.P., GAP Coinvestment
Partners, L.P., General Atlantic Partners 52, L.P. and GIMV N.V. (together, the
"Majority Purchasers") and reasonably consider their views with respect to any
transactions having a value over $50,000,000 in which S1 proposes to engage.
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<PAGE> 33
5.10 ADVICE OF CHANGES.
S1 and the Purchasers shall promptly advise the other party of any change
or event that, individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect on it or to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein. From time to time prior to the Closing Date, each party will promptly
supplement or amend its disclosure schedule delivered in connection with the
execution of this Agreement to reflect any matter which, if existing, occurring
or known at the date of this Agreement, would have been required to be set forth
or described in such disclosure schedule or which is necessary to correct any
information in such disclosure schedule which has been rendered inaccurate
thereby. No supplement or amendment to such disclosure schedule shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Sections 6.2(a) or 6.3(a) hereof, as the case may be.
SECTION 6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligations of each party to consummate the transactions contemplated
by this Agreement are subject to the satisfaction, on or before the date of the
Closing, of each of the following conditions precedent:
6.1(a). Termination. Neither this Agreement nor the Holdings Purchase
Agreement shall have been terminated in accordance with its terms.
6.1(b). No Governmental Action. No action or proceeding by or before any
governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions contemplated by
this Agreement or to affect adversely the financial condition and business
prospects of S1.
6.2 CONDITIONS TO THE OBLIGATIONS OF PURCHASERS.
The obligations of Purchasers to purchase the Shares as contemplated by
this Agreement are subject to the satisfaction, on or before the date of the
Closing, of each of the following conditions precedent, any one or more of which
(other than those in Sections 6.2(d) and 6.2(e)) may be waived by the written
consent of the Majority Purchasers and which, as to those in Sections 6.2(d) and
6.2(e), may be waived by the written consent of Akkermans:
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<PAGE> 34
6.2(a). Representations and Warranties. The representations and
warranties of S1 contained in this Agreement shall be true, correct and complete
in all material respects when made and shall be true and correct on the date of
the Closing, with the same force and effect as if made on the date of the
Closing.
6.2(b). Compliance with Covenants. S1 shall have in all material respects
performed all obligations and agreements and complied with all covenants
contained in this Agreement to be performed and complied with by S1 on or prior
to the date of the Closing.
6.2(c) Registrations of S1 Directors. S1 shall have received letters of
resignation from two of its incumbent directors, such resignations to take
effect prior to the second anniversary of the Closing.
6.2(d) Registration Statement. The Akkermans Registration Statement shall
be able to be declared effective by the SEC, subject only to completion of the
Closing (and the action of the SEC thereafter to declare said Registration
Statement effective).
6.2(e) Akkermans Underwriting Agreement. At the Closing, an underwriting
agreement in reasonable and customary form shall have been prepared and executed
by S1 and the lead underwriter for the offering of S1 Common Stock described in
the prospectus constituting a part of the Akkermans Registration Statement, and
shall be ready for use upon execution by Akkermans.
6.2(f) Transaction. The Transaction contemplated by the Holdings Purchase
Agreement shall have been consummated.
6.3 CONDITIONS TO OBLIGATIONS OF S1.
The obligations of S1 to sell the Shares as contemplated by this
Agreement are subject to the satisfaction, on or before the date of the Closing,
of each of the following conditions precedent, any one or more of which may be
waived by S1, in its sole and absolute discretion:
6.3(a). Representations and Warranties. The representations and
warranties of Purchasers contained in this Agreement shall be true, correct and
complete in all material respects when made and shall be true and correct as of
the date of the Closing with the same force and effect as if made on the date of
the Closing.
6.3(b). Compliance with Covenants. Purchasers and FICS shall have in all
material respects performed all obligations and agreements and complied with all
covenants contained in this Agreement to be performed and complied with by it on
or prior to the date of the Closing.
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<PAGE> 35
SECTION 7. CLOSING.
7.1 DELIVERIES BY S1.
At the Closing, S1 shall deliver to Purchasers the following:
(1) Certificates registered in Purchasers' names, representing
all of the Shares in the amounts set forth in Section 1.1 above.
(2) A copy of the resolutions of the Board of Directors of S1, as
certified as of the Closing Date by the Secretary or other appropriate officer
of S1, as being true, correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement by S1, the
authorization, sale, issuance and delivery of the Shares, and the performance of
S1's obligations hereunder.
(3) A certificate of S1 signed by an authorized officer of S1
certifying that the representations and warranties of S1 made herein are true,
complete and correct in all material respects as of the date of this Agreement
and are true and correct as of the date of the Closing, and S1 has in all
material respects performed all obligations and agreements and complied with all
covenants required to be performed or complied with by S1 on or prior to the
Closing.
(4) Successor Options and related option agreements for each
option delivered pursuant to Section 2 above.
(5) Such other certificates, instruments or documents as
Purchasers may reasonably request in order to effect and document the
transactions contemplated hereby.
(6) An update of S1's Disclosure Schedule reflecting any change
required as if the Agreement were being executed as of the date of the Closing.
7.2 DELIVERIES BY PURCHASERS.
At the Closing, Purchasers shall deliver to S1 the following:
(1) The Transaction Consideration, in the form determined
pursuant to Section 1.1(b) hereof.
(2) A certificate of each Purchaser signed by such Purchaser or
an authorized officer of such Purchaser certifying that the representations and
warranties of such Purchaser made herein are true, complete and correct in all
material respects as of the date of this Agreement and are true and correct as
of the
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<PAGE> 36
date of the Closing, and such Purchaser has in all material respects performed
all obligations and agreements and complied with all covenants required to be
performed or complied with by Purchaser on or prior to the Closing.
(3) If the Purchaser is not a natural person, a copy of the
resolutions or other corporate documentation, certified by the Secretary of such
Purchaser as being true, correct and complete and then in full force and effect,
authorizing the execution, delivery and performance by Purchaser of this
Agreement, Purchaser's obligations hereunder and the Transaction.
(4) Such other certificates, instruments or documents as S1 may
reasonably request in order to effect and document the transaction contemplated
hereby.
(5) An update of the Purchasers' Disclosure Schedule reflecting
any change required as if the Agreement were being executed as of the date of
the Closing.
SECTION 8. LEGEND.
8.1 ENDORSEMENT.
Each certificate representing the Shares shall bear the first
paragraph of the following legend (in addition to any legend required by
applicable state securities laws) and certificates representing the Shares
delivered to the Purchasers identified on Schedule 5.1 shall bear, in addition,
the second paragraph of the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
ANY OTHER FEDERAL OR STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY OTHER APPLICABLE FEDERAL
SECURITIES LAWS COVERING SUCH SECURITIES OR S1 RECEIVES AN OPINION OF
COUNSEL IN FORM REASONABLY SATISFACTORY TO S1 THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
ADDITIONALLY, THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SPECIFIED IN THE STOCK
PURCHASE AGREEMENT DATED MAY 16, 1999 (THE
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<PAGE> 37
"AGREEMENT") BETWEEN S1 AND THE ORIGINAL PURCHASER, AND NO TRANSFER OF
SHARES SHALL BE VALID OR EFFECTIVE ABSENT COMPLIANCE WITH SUCH
RESTRICTIONS. ALL SUBSEQUENT HOLDERS OF THIS CERTIFICATE WILL HAVE
AGREED TO BE BOUND BY CERTAIN OF THE TERMS OF THE AGREEMENT. COPIES OF
THE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
REGISTERED HOLDER OF THIS CERTIFICATE TO THE SECRETARY OF S1.
8.2 REMOVAL OF LEGEND.
The first paragraph of the legend endorsed on a stock certificate
pursuant to Section 8.1 of this Agreement, insofar as it relates to registration
under the Securities Act, shall be removed and S1 shall issue a certificate
without such legend to the holder of such Shares, if such Shares are registered
under applicable federal securities laws and a prospectus meeting the
requirements of the rules and regulations of the SEC is available or if such
holder provides to S1 an opinion of counsel to such holder reasonably
satisfactory to S1, to the effect that a public sale, transfer or assignment of
such Shares may be made without registration and without compliance with any
restrictions. The second paragraph of the legend endorsed on a stock certificate
pursuant to Section 8.1 of this Agreement, insofar as it relates to additional
restrictions specified in this Agreement, shall be removed upon the expiration
of the six-month lock-up period described in Section 5.1.
SECTION 9. TERMINATION.
9.1 MUTUAL CONSENT.
The parties may terminate this Agreement at any time by mutual written
agreement.
9.2 OTHER TERMINATION.
S1 or the Majority Purchasers may terminate this Agreement by giving
notice (a "Termination Notice") to the other parties at the time designated in
this Section or, in the absence of such designation, at any time up to and
including the date of the Closing, if any one or more of the following shall
have occurred and be continuing:
9.2(a). Termination By Any Party. Any party may terminate this
Agreement under any one or more of the following circumstances:
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<PAGE> 38
(1) at any time after termination of the Holdings Purchase
Agreement in accordance with its terms;
(2) a court or other governmental authority of competent
jurisdiction shall have issued an order, writ, injunction or decree or shall
have taken any other action permanently restraining or otherwise prohibiting the
purchase of the Shares contemplated hereby and such order, writ, injunction,
decree or other action shall have become final and nonappealable.
9.2(b). Termination By Majority Purchasers. Majority Purchasers may
terminate this Agreement
(1) on the date of the Closing, if any condition precedent set
forth in Sections 6.1 or 6.2 shall not have been satisfied;
(2) at any time prior to or on the date of the Closing, if S1
engages in any transaction (i) in which S1 proposes to issue, deliver or sell,
or authorize or propose the issuance, delivery or sale of, a number of shares of
voting capital stock greater than 50% of its shares of its outstanding shares of
voting capital stock, (ii) involving or contemplating the acquisition or
purchase of more than 50% of any class or series of capital stock, or 50% of the
assets of S1, (iii) any lease or sale transaction out of the ordinary course of
business of more than 50% of the assets of S1, or (iv) any liquidation or
dissolution of S1, without obtaining the prior written consent of the Majority
Purchasers (which consent shall not be unreasonably withheld); and
(3) provided that the Majority Purchasers are not then in breach
of any representation, warranty, covenant or other agreement contained herein
that, individually or in the aggregate, would give S1 the right to terminate
this Agreement, if there shall have been a breach of any of the representations
or warranties set forth in this Agreement on the part of S1, if such breach,
individually or in the aggregate, has had or is likely to have a Material
Adverse Effect on S1, and such breach shall not have been cured within 30 days
following receipt by the S1 of written notice of such breach from the Majority
Purchasers or such breach, by its nature, cannot be cured prior to the Closing
9.2(c). Termination By S1. S1 may terminate this Agreement on the date of
the Closing, if any condition precedent set forth in Sections 6.1 or 6.3 shall
not have been satisfied.
9.3 EFFECT OF TERMINATION.
Termination of this Agreement pursuant to this Section shall not relieve
any party of any liability for a default or other breach, default or
nonperformance under this Agreement. Notwithstanding the foregoing, no party
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<PAGE> 39
hereto shall be liable for consequential or punitive damages in connection with
such termination.
SECTION 10. MISCELLANEOUS.
10.1 ADDITIONAL ACTIONS AND DOCUMENTS.
Each of the parties hereto agrees that it will, at any time, prior to, at
or after the Closing, take or cause to be taken such further actions, and
execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments (including export license applications) as may
be necessary or reasonably requested in connection with the consummation of the
purchase and sale contemplated by this Agreement or in order to fully effectuate
the purposes, terms and conditions of this Agreement.
10.2 EXPENSES.
Except as specified in Section 5.8, each party hereto shall pay its own
expenses incurred in connection with this Agreement and in the preparation for
and consummation of the transactions contemplated hereby.
10.3 NOTICES.
All notices, demands, requests, or other communications which may be or
are required to be given or made by any party to any other party pursuant to
this Agreement shall be in writing and shall be hand delivered, mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, or delivered by overnight air courier, addressed as follows:
(i) if to S1:
Security First Technologies Corporation
3390 Peachtree Road, NE, Suite 1700
Atlanta, Georgia 30326
Attn.: President
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn.: Stuart G. Stein, Esq.
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<PAGE> 40
and
Hogan & Hartson L.L.P.
Avenue des Arts 41
1040 Brussels, Belgium
Attn.: Claud V. S. Eley, Esq.
(b) if to FICS, to:
FICS Group N.V.
Excelsiorlaan 87
1930 Zaventem, Belgium
Attn.: Steven Sipowicz, Chief Financial Officer
with a copy (which shall not constitute notice) to:
Brown, Rudnick, Freed & Gesmer
Stanmore House
29-30 St. James's Street
London SW1A 1HB, England
Attn.: Lawrence A. Levy, Esq.
Colin Hugh Buckley, Esq.
(c) if to any Purchaser, to the address set forth
opposite such Purchaser's name on Schedule 1
attached hereto.
or such other address as the addressee may indicate by written notice to the
other parties. Each notice, demand, request, or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt, or the affidavit of messenger being
deemed conclusive but not exclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation.
10.4 WAIVER.
No waiver by any party of any failure or refusal of any other party to
comply with its obligations under this Agreement shall be deemed a waiver of any
other or subsequent failure or refusal to so comply by such other party. No
waiver shall be valid unless in writing signed by the party to be charged and
only to the extent therein set forth.
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<PAGE> 41
10.5 BINDING EFFECT.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
10.6 ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the other instruments and documents referred to
herein or delivered pursuant hereto, contains the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior oral
or written agreements, commitments or understandings with respect to such
matters. No amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification or discharge is sought.
10.7 SEVERABILITY.
If any part of any provision of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective to the extent
of such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provisions or the remaining provisions of said
Agreement.
10.8 HEADINGS.
The headings of the sections and subsections contained in this Agreement
are inserted for convenience only and do not form a part or affect the meaning,
construction or scope thereof.
10.9 GOVERNING LAW.
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes relating thereto, shall be governed by and construed under
and in accordance with the laws of the State of Delaware, excluding the choice
of law rules thereof.
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<PAGE> 42
10.10 SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts, none of which
need contain the signatures of all parties, each of which shall be deemed to be
an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
10.11 NO THIRD PARTY BENEFICIARIES.
Except as expressly provided herein, this Agreement is made and entered
into for the sole protection and benefit of the parties hereto, and no other
person or entity shall have any right of action hereon, right to claim any right
or benefit from the terms contained herein or be deemed a third party
beneficiary hereunder.
10.12 ASSIGNABILITY.
All terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective transferees,
successors and assigns; provided, however, that neither this Agreement nor any
rights, privileges, duties and obligations of the parties hereto may be assigned
or delegated by any party hereto without the prior written consent of all the
parties to this Agreement and any such purported or attempted assignment shall
be null and void ab initio and of no force or effect provided, further that a
Purchaser may assign this Agreement, including rights, privileges, duties and
obligations hereunder to any affiliate of such Purchaser which is wholly or
substantially owned directly or indirectly by such Purchaser so long as such
assignment does not in any way materially delay or otherwise materially
adversely impact the ability of the parties hereto to effect the transactions
contemplated hereby.
10.13 PARTIES NOT PARTNERS.
Nothing contained in this Agreement shall constitute any party as a
partner with, agent for or principal of any one or more of the other parties or
their successors and assigns.
10.14 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
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<PAGE> 43
survive the Closing, except for those covenants and agreements contained herein
and therein which by their terms apply in whole or in part after the Closing.
10.15 CERTAIN DEFINITIONS.
References to "$" in this Agreement are to United States dollars. In
addition to any other definitions contained in this Agreement, the following
words, terms and phrases shall have the following meanings when used in this
Agreement.
"Affiliated Person": any director, officer or 5% or greater shareholder,
spouse or other person living in the same household of such director, officer or
shareholder, or any company, partnership or trust in which any of the foregoing
persons is an officer, 5% or greater shareholder, general partner or 5% or
greater trust beneficiary.
"knowledge": with respect to any entity, refers to the knowledge of such
entity's directors and officers in the ordinary course of their duties in such
positions.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to S1, means a condition, event,
change or occurrence that is reasonably likely to have a material adverse effect
upon (A) the financial condition, results of operations, business or properties
of the relevant entity (other than as a result of changes in laws or regulations
or accounting rules of general applicability or interpretations thereof), or ,
or (B) the ability of the relevant entity to perform its obligations under, and
to consummate the transactions contemplated by, this Agreement.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
SECURITY FIRST TECHNOLOGIES CORPORATION
By: /s/ JAMES S. MAHAN III
----------------------------------------------
Name: James S. Mahan III
Title: Chairman and Chief Executive Officer
THE PURCHASERS
/s/ MICHEL AKKERMANS
--------------------------------------------------------
Name: Michel Akkermans
/s/ PAMICA N.V.
--------------------------------------------------------
Name: Pamica N.V.
Represented by:
/s/ GENERAL ATLANTIC PARTNERS 20, L.P.
--------------------------------------------------------
Name: General Atlantic Partners 20, L.P.
Represented by:
/s/ GENERAL ATLANTIC PARTNERS 52, L.P.
--------------------------------------------------------
Name: General Atlantic Partners 52, L.P.
Represented by:
/s/ GAP CO INVESTMENT PARTNERS, L.P.
--------------------------------------------------------
Name: GAP CO Investment Partners, L.P.
Represented by:
/s/ GIMV N.V.
--------------------------------------------------------
Name: GIMV N.V.
Represented by:
<PAGE> 45
/s/ GUY MOONS
--------------------------------------------------------
Name: Guy Moons
/s/ ETIENNE CASTIAUX
--------------------------------------------------------
Name: Etienne Castiaux
/s/ STEVEN VAN ROSSEN
--------------------------------------------------------
Name: Steven Van Rossen
/s/ NADINE QUAEYHAEGENS
--------------------------------------------------------
Name: Nadine Quaeyhaegens
/s/ GOORT GELTEN
--------------------------------------------------------
Name: Goort Gelten
/s/ LOEK VAN DeN BOOG
--------------------------------------------------------
Name: Loek Van den Boog
/s/ UNICO PORTFOLIO, LTD.
--------------------------------------------------------
Name: Unico Portfolio, Ltd.
Represented by:
/s/ FREDRICK DUMAS
--------------------------------------------------------
Name: Fredrick Dumas
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<PAGE> 46
FICS GROUP N.V.
(for the limited purposes set forth herein)
By: /s/ STEVEN SIPWICZ
---------------------------------------------
Name: Steven Sipwicz
Title: Chief Financial Officer
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<PAGE> 47
Schedule 1
The Purchasers:
1. Michel Akkermans
2. Pamica N.V.
3. General Atlantic Partners 20, L.P.
4. General Atlantic Partners 52, L.P.
5. GAP CO Investment Partners, L.P.
6. GIMV N.V.
7. Guy Moons
8. Etienne Castiaux
9. Steven Van Rossen
10. Nadine Quaeyhaegens
11. Goort Gelten
12. Loek Van den Boog
13. Unico Portfolio, Ltd.
14. Fredrick Dumas
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<PAGE> 1
EXHIBIT 99.1
FOR MORE INFORMATION CONTACT:
Marcy Theobald, Security First Technologies Jeff Larsen, Intuit
404-812-6254 650-944-5106
[email protected] [email protected]
Tracey Frederickson, Sterling Hager PR Lauren Lum, Thomas Associates
617-926-6665 ext. 126 650-596-2700
[email protected] [email protected]
SECURITY FIRST TECHNOLOGIES AND INTUIT TEAM TO PROVIDE
FINANCIAL INSTITUTIONS BEST-OF-BREED
ONLINE FINANCIAL SOLUTIONS
Security First Technologies to Offer Specific Intuit Web-based Products to
Financial Institutions on an FI-branded or Co-branded Basis
Intuit Invests $50 Million, Secures Options for Additional Stake in
Security First Technologies
ATLANTA and MOUNTAIN VIEW, Calif. - May 17, 1999 - Security First
Technologies (NASDAQ: SONE), and Intuit Inc. (NASDAQ: INTU) and its affiliates
announced today that the companies have entered into a strategic relationship to
deliver online financial software and services to financial institutions. In
addition, Intuit has agreed to make a $50 million investment in Security First
Technologies.
Under the terms of the multi-faceted agreement, Security First
Technologies will be able to offer some of the world's leading interactive
financial management software and Internet-based financial tools to financial
institutions. The agreement enables Security First Technologies to equip
innovative institutions with many of the same e-services capabilities, such as
income tax preparation and electronic filing, which users can receive directly
from Intuit. The expanded offering adds significant value to the web
relationship between the financial institution and its consumers and small
business customers, thus improving brand value, enhancing customer retention,
increasing revenue opportunities and creating new competitive advantages.
<PAGE> 2
"This alliance accelerates our delivery of complete financial portal
solutions to our customers, who represent some of the world's largest and most
innovative financial institutions," said James S. Mahan III, chief executive
officer of Security First Technologies. "We are pleased to have secured the
rights to distribute on an FI-branded or co-branded basis, many of Intuit's
web-based offerings to financial services organizations. The combined package,
ranging from tax preparation to payroll services, clearly positions our
organization as a defining force in the rapidly expanding marketplace of online
financial services."
According to Bill Harris, president and CEO of Intuit, "Intuit's vision
of electronic finance links individuals and businesses with the financial
institutions they know and trust. Our relationship with Security First
Technologies will allow leading financial services companies to offer their
customers integrated access to many of the best interactive financial tools
available."
Security First Technologies delivers enterprise-wide Internet
applications for financial institutions. Intuit creates financial software and
Internet services for use by individuals and small businesses. Today's agreement
provides the basis for seamless integration between the two product lines and
provides a single distribution source for the combined product lines.
SEAMLESS DATA INTEGRATION
The companies intend integrate their product lines to allow seamless
exchange of data between Security First Technologies' Internet-based
applications and Intuit's:
- Personal financial management products, such as Quicken(R) and
Quicken.com(R)
- Tax preparation products, such as TurboTax(R) and WebTurboTax(R)
- Small business accounting products, such as QuickBooks(R)
SINGLE DISTRIBUTION SOURCE
In addition to its current products, this agreement allows Security First
Technologies to offer a complete range of financial management software and
services to financial institutions, including the following services from
Intuit:
<PAGE> 3
- WebTurboTax, Internet-based income tax preparation service
- QuickBooks Online Payroll(R), Internet-based small business
payroll service
- Quicken.com Financial Planners, Internet-based financial
planning applications
- QuickenMortgage(R), Internet-based mortgage marketplace
- QuickenInsureMarket(R), Internet-based insurance marketplace
When combined with Security First Technologies' server-centric model,
which maintains consumer data for multiple years, these applications bring
additional convenience and value to the institution's customer. For example,
relevant financial data could be automatically transferred into the tax return
functionality that WebTurboTax provides.
Security First Technologies and Intuit's web-based finance joint venture
have also agreed to cross-license various technologies for multi-year periods.
In addition, Intuit will purchase, subject to customary closing conditions,
970,813 shares of Security First Technologies stock for $50 million. Intuit also
received an option for additional shares of Security First Technologies, which
will become exercisable if Security First Technologies completes its planned
acquisition of Edify Corporation. The option covers 3,629,187 shares if Security
First Technologies completes its acquisition of Edify and an additional
1,800,000 shares if Security First Technologies completes its planned
acquisition of FICS Group N.V. The option provides for a per share purchase
price of $51.5032.
SECURITY FIRST TECHNOLOGIES ALSO JOINS FORCES WITH FICS AND EDIFY
In a separate agreement announced today, Security First Technologies has
agreed to join forces with FICS Group N.V., a privately held Belgium-based
provider of regulatory financial reporting and remote electronic banking
software, and Edify Corporation, a Santa Clara-based provider of Internet and
voice e-Commerce solutions, to create the preeminent provider of financial
portal solutions for financial institutions worldwide. Under the agreement,
Security First Technologies' Belgian subsidiary has
<PAGE> 4
agreed to acquire FICS. In addition, Security First Technologies has agreed to
acquire Edify Corporation (NASDAQ:EDFY). The newly formed company will operate
and market under the name of S1 Corporation. The terms of the Intuit
relationship will also benefit the combined entity.
ABOUT SECURITY FIRST TECHNOLOGIES
Security First Technologies builds, delivers and operates integrated,
transactional and brandable Internet applications for financial institutions.
The company's secure solutions are available for in-house implementation or can
be outsourced to the S1 Data Center. Security First Technologies also offers
training, production integration and customer service center outsourcing.
Through direct sales and channel partnerships, Security First Technologies
provides software applications and services to more than 100 financial entities,
including 14 of the top 100 US financial institutions. The company has more than
375 employees worldwide and can be reached at www.s1.com.
ABOUT INTUIT
Intuit Inc., a financial software and Web-based services company,
develops and markets Quicken, the leading personal finance software; TurboTax,
the best-selling tax preparation software; and QuickBooks, the most popular
small business accounting software.
Intuit's Quicken.com Web site (www.quicken.com) is a leading financial
Web site, offering a comprehensive set of financial news, information and tools,
including insurance, mortgage, investment and tax preparation services. Intuit's
products and services enable individuals, small businesses and financial
professionals to better manage their financial lives and businesses.
# # #
FORWARD-LOOKING STATEMENTS
Statements in this news release concerning future results, performance,
expectations or intentions are forward-looking statements. Actual results,
performance or developments may differ materially from forward-looking
statements as a result of known or unknown risks, uncertainties and other
factors, including those identified in the Company's filings
<PAGE> 5
with the Securities and Exchange Commission, press releases and other public
communications.
Security First Technologies is a registered trademark and S1 is a trademark of
Security First Technologies Corporation. All other Company and product names may
be trademarks of their respective owners.
<PAGE> 1
EXHIBIT 99.2
<TABLE>
<S> <C> <C>
Marcy Theobald Tracey Frederickson
Public Relations Manager Sr. Account Manager Eric Berman
Security First Technologies Sterling Hager, Inc. Kekst and Company
(404) 812- 6254 (617) 926-6665 x126 212-521-4800
[email protected] [email protected] [email protected]
Aliki Steen
Renee Wildman, Director PR FICS Group
Edify Corporation Head of Corporate Marketing & Communication
(408) 982-2014 +32 2 714 42 20
[email protected] [email protected]
</TABLE>
SECURITY FIRST TECHNOLOGIES, FICS AND EDIFY JOIN FORCES
TO PROVIDE FINANCIAL PORTAL SOLUTIONS FOR FINANCIAL
INSTITUTIONS WORLDWIDE
Security First Technologies to Acquire FICS and Edify; Combined Transactions
Valued at Approximately US$1.4 Billion
New Company to Accelerate Delivery of Financial Portal Solutions to Financial
Services Industry
ATLANTA, BRUSSELS, SANTA CLARA, May 17, 1999 -- Security First Technologies
(NASDAQ:SONE), a premier provider of Internet-based applications for the
financial services industry, today announced that its has agreed to join forces
with FICS and Edify to create the preeminent provider of transactional financial
portal solutions for financial institutions worldwide. Under the agreement, a
Security First Technologies' Belgian subsidiary will acquire FICS Group N.V., a
privately held company based in Brussels, Belgium. In addition, Security First
Technologies has agreed to acquire Edify Corporation (NASDAQ:EDFY) of Santa
Clara, California.
In connection with the FICS transaction, Security First Technologies will
issue 20 million shares of its stock. In the Edify transaction, Security First
Technologies and Edify have agreed to a fixed exchange ratio whereby Security
First Technologies will issue 0.330969 shares for each share of Edify stock or
approximately 6.4 million shares in total. Based on Security First Technologies'
closing price of US$54.00 on May 14, 1999, the value of the FICS transaction is
approximately US$1.08 billion, and the value of the Edify transaction is
approximately US$345 million.
James S. Mahan III, Security First Technologies' chief executive officer,
commented, "By combining these three organizations, we are creating the world's
most complete financial portal solutions provider that is well positioned to
take advantage of the explosive growth of the online financial services market.
This strategic business combination will be the
<PAGE> 2
catalyst for accelerating the e-commerce revolution and propelling the value of
financial portal capabilities throughout the financial services industry."
Collectively, the new organization will deliver a complete set of
solutions that span a financial institution's enterprise, from consumer banking,
brokerage and insurance applications to small business and corporate electronic
banking products to financial reporting solutions. These applications can be
delivered across multiple access devices and channels, such as Internet,
wireless, and interactive voice response (IVR). The new organization will have
strategic relationships with more than 35 of the top 100 financial institutions
worldwide, including organizations such as: ABN-AMRO BancBoston Bank One Bank of
America Bank of East Asia BNP Chase Manhattan Citibank National Australia Bank
Royal Bank of Canada United Overseas Bank.
- ABN-AMRO
- BancBoston
- Bank One
- Bank of America
- Bank of East Asia
- BNP
- Chase Manhattan
- Citibank
- National Australia Bank
- Royal Bank of Canada
- United Overseas Bank.
ADDITIONAL TERMS OF THE AGREEMENT
The corporate headquarters for the new company will be in Atlanta, Georgia, with
major operational centers in Brussels, Belgium and Santa Clara, California. As
soon as the acquisitions are complete, the three organizations will be combined
under the name of S1 Corporation.
Mahan will remain CEO of S1. Michel Akkermans, FICS's founder, CEO and
Chairman of the Board, will serve as President and manage field operations,
product strategy, product development, and corporate marketing. Jeffrey Crowe,
Edify's CEO and President, will be responsible for corporate development
strategy, finance and administration. Both Akkermans and Crowe will join the S1
Board of Directors, with Akkermans named as Chairman and Crowe as Vice Chairman.
The transactions, both of which will be accounted for on a purchase accounting
basis, are expected to be completed in the fourth quarter of 1999. Both
transactions are subject to customary regulatory filings and Security First
Technologies' shareholder approval. The Edify transaction also is subject to
approval by Edify shareholders. The acquisition of FICS by the Belgian
subsidiary of S1 is also subject to the subsidiary obtaining financing for the
acquisition.
STRENGTHS OF THE NEW ORGANIZATION
The worldwide retail Internet banking applications market was US$500
million in 1998 and is expected to grow 40 percent annually to approximately,
US$2.7 billion by 2003, according to Dove Associates, a Boston-based
international management consulting firm. The companies expect that the combined
organization will accelerate this growth and industry expansion.
<PAGE> 3
According to Akkermans, "Together, the new organization will consist of
the most comprehensive set of resources available, including a combined total of
more than 400 developers, more than 600 implementation professionals, and more
than US$50 million in R&D investments on an annual basis. This powerful
combination will give financial institutions a more robust, turn-key financial
portal solution with outsourcing options for greater cost efficiency and faster
time to market, as well as a wide portfolio of additional software products and
services."
Shortly after completion of the acquisitions, customers of the new
organization will begin realizing key benefits, including new product
availability, services for new market segments and data center hosting
capabilities. While the long-term strategy of the new organization will be to
converge to common technology, there are several points of integration that will
be made possible immediately through the existing S1 Data Center in the U.S.
According to Crowe, "This powerful combination will enable us to create
world class financial portal solutions, incorporating transactional
capabilities, content and one-to-one marketing. We will be unique in our ability
to deliver additional functionality that helps our financial institutions
enhance customer retention, increase revenue opportunities and create new
competitive advantages."
INTUIT CORPORATION TO INVEST US$50 MILLION IN SECURITY FIRST TECHNOLOGIES
In a separate agreement announced today, Security First Technologies and
Intuit Inc. (NASDAQ:INTU) and its affiliates announced that the companies have
entered into a strategic alliance to deliver online personal financial software
and services to financial institutions. Under the terms of the multi-faceted
agreement, the companies will exchange technologies in an effort to deliver the
world's leading interactive financial management software and Internet-based
financial tools to financial institutions. The two companies also agreed that in
exchange for an investment of US$50 million, Intuit will receive approximately
971,000 shares of Security First Technologies stock at an average 10-day
trailing price of US$51.50 per share. Additionally, Intuit receives options to
purchase 5,429,000 shares of Security First Technologies.
SECURITY FIRST TECHNOLOGIES INFORMATION
Consistently delivering on its original vision of providing an end-to-end
financial portal solution to financial institutions and a consolidated view of
an end user's financial landscape, Security First Technologies is recognized as
an industry leader in providing Internet-based applications for the U.S.
financial services industry. Its applications served as the backbone for the
world's first Internet bank, Security First Network Bank, which provided
Security First Technologies with a strategic insight into a financial
institutions' needs as it expands into this alternative delivery channel. The
company's unique, long-term revenue model and a market capitalization exceeding
US$2.0 billion have contributed significantly to Security First Technologies'
leadership position in these transactions. For the year ended December 31, 1998,
Security First Technologies reported revenues were US$24.2 million.
The company builds, delivers and operates integrated, transactional and
brandable Internet applications for financial institutions. Security First
Technologies' secure solutions are available for in-house implementation or can
be outsourced to its Data Center. Security First Technologies also offers
training, product integration and customer service center outsourcing. Through
direct sales and channel partnerships, Security First Technologies provides
software
<PAGE> 4
applications and technology to more than 100 financial entities, including 14 of
the top 100 U.S. financial institutions. Security First Technologies has more
than 375 employees worldwide and can be reached at www.s1.com..
FICS INFORMATION
FICS enriches the enterprise-wide solution set to be delivered by the new
organization in several key areas: corporate electronic banking, Java-based
Internet banking and central bank reporting software. FICS also brings expertise
in smart card development and wireless technology. In addition, the company's
worldwide presence gives the new entity an immediate operational presence in 10
countries, and a customer base in 26 countries.
FICS was founded in 1989 by Michel Akkermans, current CEO and Chairman.
FICS has since grown exponentially to become one of the world's leading software
companies in the field of regulatory financial reporting and remote electronic
banking. FICS today employs more than 650 people across 12 locations in 10
countries: Australia, Belgium (headquarters), France, Luxembourg, Portugal, the
Netherlands, Spain, the United Kingdom and the United States. FICS' website is
at www.ficsgrp.com .
EDIFY INFORMATION
Edify is a global leader in Internet and voice e-Commerce solutions, and
brings S1 the means to automate, integrate, and personalize interactions with
customers through multiple channels. Edify also brings an extensive customer
base of both large and mid-sized financial institutions, including more than 300
financial services institutions and more than 1,250 organizations. In addition,
Edify's Electronic Banking System will remain the on-premise solution for the
combined companies.
Edify's Electronic Workforce server software provides a scalable, Windows
NT-based platform for building applications that span speech recognition, IVR,
fax and Internet. Additionally, through Edify's 470 employees, the new company
will gain increased knowledge of NT-based and small businesses programming
capabilities and additional project management bench strength to more
effectively develop Internet banking applications and enhancements. Furthermore,
through Edify's Santa Clara offices, the new company will have a valuable
Silicon Valley presence. Edify also brings strategic partnerships with
technology leaders such as Microsoft, IBM, NCR and BellSouth. Edify software is
distributed directly and through leading solutions providers, application
partners, and distributors worldwide.
# # #
BancBoston Robertson Stephens is acting as financial adviser to Security First;
Goldman Sachs is advising Edify; CS First Boston is advising FICS.
FORWARD-LOOKING STATEMENTS
Statements in this news release concerning future results, performance,
expectations or intentions are forward-looking statements. Actual results,
performance or developments may differ materially from forward-looking
statements as a result of known or unknown risks, uncertainties and other
factors, including those identified in the Company's filings with the Securities
and Exchange Commission, press releases and other public communications.
<PAGE> 5
Security First Technologies is a registered trademark and S1 is a trademark of
Security First Technologies Corporation. All other Company and product names may
be trademarks of their respective owners.
Edify and Electronic Workforce are registered trademarks, and Electronic Banking
System and Employee Service System are trademarks of Edify Corporation. All
other Company and product names may be trademarks of their respective owners.
<PAGE> 1
Script of Analyst Presentation EXHIBIT 99.3
Slide 1: TITLE
Bob Stockwell:
Good morning, everyone. Thank you for joining us.
My name is Bob Stockwell and I'm the CFO of Security First Technologies.
Before we get started, I want to tell you that you can find this presentation on
our web site at www.s1.com /invest. If you have not received a faxed copy,
please call Anita Mazur at 602-614-3021.
Early this morning, we issued a press release announcing what we believe are
very exciting transactions.
As a result of this transaction, our new enterprise will focus on one of the
fastest growing segments of the emerging e-Services marketplace, providing
privately labeled financial portals to institutions around the world.
We believe that today's announcement will give the combined Company pre-eminent
leadership in this explosive market.
With me here today is Chip Mahan, the CEO of Security First Technologies, Jeff
Crowe, the President and CEO of Edify Corporation, and Michel Akkermans, the
Chairman and CEO of FICS.
Before we begin, I'd like to read this short statement: Statements in this
conference call concerning future results, performance, expectations or
intentions are forward-looking statements. Actual results, performance or
developments may differ materially from forward-looking statements as a result
of known or unknown risks, uncertainties and other factors, including those
identified in the Companies' filings with the Securities and Exchange
Commission, press releases and other public communications.
Now, I'd like to turn the call over to Chip Mahan. Chip?
Chip Mahan: Thanks, Bob.
Five years ago, S1's vision was to provide financial institutions, or FI's,
customized, on-line products that, in turn, would enable them to empower their
customers with tools to better manage their finances electronically and, in
doing so, maximize their net worth.
Internet technology, as everyone knows, has opened up vast new opportunities for
FI's and consumers. It has also attracted a new wave of competitors, who are
successfully targeting customers of banks and other FI's. FI's are looking for
ways to fight back.
<PAGE> 2
Slide 2: COMMON STRATEGIC VISION
For the last several years, three companies in the e-Services industry serving
FI's, have shared a common vision.
That vision has been - and continues to be - to provide our FI clients with
technologies that not only attract, but also help them retain and expand the
scope of services they provide to their customers.
FI's, having been the target of successful competition, are rapidly embracing
this vision.
They understand the urgent need to develop online strategies as the Internet
revolution is taking shape and to find value-added ways to better serve their
customers.
<PAGE> 3
Slide 3: AN INDUSTRY-DEFINING DEAL
As we were pursuing this strategic vision, two other companies in the
marketplace were pursuing it as well - two companies whose managements, products
and technological expertise I have long admired.
Therefore, I am delighted to announce today that we have signed what I consider
to be an "industry-defining deal," bringing together three companies with unique
and complementary products and services that will create the leading provider of
financial portal solutions to FI's around the world.
Let me describe each transaction:
First, S1 is acquiring the privately-held FICS Group N.V. of Brussels, Belgium,
for 20 million shares or an exchange offering valued at approximately $1.1
billion on Friday's closing price.
Through the vision of FICS's founder, Michel Akkermans, S1 is acquiring a
leading global solutions provider that already serves more than 600 FI's
worldwide, including thirty of the top 100 global banks, as well as leading
insurance companies.
In addition, we are acquiring Edify Corporation of Santa Clara, California, for
6 million shares, or $366 million, based on Friday's closing price.
Through the vision of Edify's founder, Jeff Crowe, this company has established
itself as one of the true leaders in Internet and voice e-commerce solutions to
a broad range of major FI's.
<PAGE> 4
Slide 4: REPRESENTATIVE CUSTOMERS
This slide shows you some of the impressive customers for each of the companies.
<PAGE> 5
Slide 5: DREAM TEAM
Upon completion of this transaction, both Jeff Crowe and Michel Akkermans have
agreed to join me in the formation of what I call a management "dream team."
As my partners for the future, Michel will serve as S1's Chairman and President
and Jeff will serve as S1's Vice Chairman. Michel will oversee field operations,
product development and corporate marketing. Jeff will oversee corporate
strategy and development, finance and administration.
I am very excited about the prospects of this new partnership and about what I
believe we can accomplish together.
Each of us has an intimate knowledge of the marketplace and tremendous
experience in this emerging market. In addition, we are all entrepreneurs who
have served as pioneers in a new business, and, most importantly, we all share
the same vision for the future.
<PAGE> 6
Slide 6: MARKET OPPORTUNITY
The market potential for the retail Internet banking space is tremendous.
According to Dove Associates, the worldwide retail Internet banking applications
market was $500 million in 1998 and is expected to grow 40 percent annually to
approximately, $2.7 billion by 2003.
<PAGE> 7
Slide 7: FINANCIAL PORTAL REQUIREMENTS
Why did we decide to join together?
If you look at the portal requirements for FI's around the world, you will
understand that there are three customer markets that institutions are targeting
- - consumers, small businesses and large corporations.
Institutions also need to be able to provide access for their customers across a
broad and growing range of communication channels and devices.
Further, there are a number of capabilities required for world-class portals,
including the combination of content and personalization, as well as a number of
deployment options.
<PAGE> 8
Slide 8: WHY WE CAME TOGETHER
As an independent company, S1 provided many, but not all, of the portal
requirements that FI's demand.
As you can see from the logos, the combination of S1, Edify and FICS provides
virtually all the customized portal requirements for FI's around the world.
In the world of financial portals, the ability to attract customers and to keep
them coming back is called "stickiness." By integrating these companies and our
products, we create a greater stickiness for the FI's sites. History dictates
that if a customer has two accounts with an FI, the odds of retaining that
customer is about 70% annually. However, if the customer has three accounts with
an FI, the odds of retaining that customer increases to about 97%.
As you can see by this graph, the new company's products still lacks a few
pieces like accounting, payroll, tax, mortgage and financial planning advice.
Which brings us to Intuit.
<PAGE> 9
Slide 9: INTUIT ENHANCES THE OFFERING
Undoubtedly, customer attraction and retention is a critical element to success
in the financial portal marketplace.
For financial portals, there are three key applications that serve as points of
stickiness. Those three are: transaction applications (which we currently
provide), tax applications (or products like Intuit's Web TurboTax) and what we
call "Small Business In a Box."
Small Business in a Box offers small business customers a complete suite of
"back office applications" delivered over the Internet, including financial
accounting services, cash management services, and many more services we'll
discuss in the future.
Thus, to realize our full business potential, we also announced today an
agreement to strategically partner with Intuit Corporation, the world's leading
provider of personal finance, small business accounting and tax preparation
software.
Intuit enhances S1's portal services with Intuit capabilities, such as TurboTax
and Web TurboTax, QuickBooks, and financial planning and advice through
Quicken.com.
With this agreement, S1 becomes a distributor of Intuit's Web applications and
content to FI's. In addition, S1 has been given exclusive rights to create
FI-branded versions of Intuit's web-based products. This is one of the first
times that Intuit has ever done this.
This agreement provides our customers access to high-quality Intuit server-based
applications and content for private branding through the customers' portals.
Specifically, Intuit will make a $50 million equity investment in S1. Intuit has
options to purchase up to 9.9% of the new company.
<PAGE> 10
Slide 10: S1: THE COMPLETE FINANCIAL PORTAL SERVICE PROVIDER
Therefore, the combination of S1, Edify and FICS - plus the investment and
business relationship with Intuit - rounds out the requirements for financial
portals.
That, in a nutshell, is the strategic rationale and business logic for this
combination.
<PAGE> 11
Slide 11: THE NEW S1
By bringing these three companies together, we are creating the preferred
provider of enterprise-wide, financial portal solutions for institutions around
the world.
Now, I'd like to hand the call back over to Bob Stockwell, S1's CFO who will
provide a brief financial overview of the new company.
Bob?
<PAGE> 12
Slide 12: The 'New S1' Key Facts
Bob Stockwell:
Thanks, Chip.
A few key facts illustrate why we are so excited about this new company and its
potential in this explosive growth market.
First of all, the new S1 will have a global presence, including more than 1500
employees in twelve countries on four continents. We will also have a
significant presence in Silicon Valley.
The combined Company has customers in 26 countries, including 36 of the top 100
global FI's and 26 of the top 50 banks in the United States.
<PAGE> 13
Slide 13: STRONG BASE OF FINANCIAL PARTNERS
Bob Stockwell (continues):
In addition, we have industry-leading partners, include such prestigious names
as Andersen Consulting, ACI, BroadVision, Hewlett-Packard and IBM.
<PAGE> 14
Slide 14: THE NEW S1 - Pro Forma
Bob Stockwell (continues):
I would like to briefly review the powerful financial picture for the combined
organizations.
On a pro forma basis, in the first quarter 1999 the combined entity generated
approximately $43 million in revenues. As we look beyond 1999, we will be moving
the company away from the traditional software revenue model of up front license
fees and ongoing maintenance fees, towards a recurring revenue model that has
driven S1's growth to date.
Central to establishing recurring revenues will be our ability to host many of
our new product offerings in S1's data center. Also, we anticipate that we will
establish recurring revenue steams from those customers who choose to run our
products themselves based upon per customer per month fees on direct licenses.
As Chip noted earlier, the new Company will have products that cross the
spectrum of the financial portal model. We will incorporate the retail, small
business and corporate banking products into S1's data center solution. Further,
we will now be able to offer a full product line to those FI's that desire to
run the technology themselves.
During the transition period to a deferred revenue stream, we anticipate that
growth in revenues will moderate in the year 2000.
Looking beyond the year 2000, as the deferred revenues begin to build up
momentum, we are anticipating that overall revenue growth will all begin to
accelerate in line with industry growth.
We, as a team, believe that a move towards establishing deferred revenue model
across the entire organization will create the greatest amount of shareholder
value. As I just noted, during the transition period, there is a short-term
impact on the growth of revenues.
However, this brief slowing of revenue growth combined with the additional
investment required in research and development to bring our powerful technology
platforms together, will result in the entire company reaching a neutral cash
flow position in the latter part of the year 2000.
The acquisitions will be accounted for as purchased and S1 will record a
goodwill charge of approximately $1.3 billion, which will be amortized over the
next several years. The goodwill charge, along with the $200 million charge for
the option granted to Intuit will result in significant non-cash charges in
future income statements.
<PAGE> 15
However, as in the past, the combined management team will continue to focus on
generating cash and cash per share.
On a pro-forma basis, upon closing the transactions in the fourth quarter, the
combined entity will have approximately $100 million in cash available to fund
operations. This amount should provide adequate funding for the organization
until we reach the cash flow neutral milestone in 2000.
Now I'd like to turn it back over to Chip Mahan. Chip?
<PAGE> 16
Slide 15: JEFF CROWE - PRESIDENT AND CEO [Edify Logo]
Chip Mahan:
Thanks again, Bob.
Before Jeff says a few words about his company, let me say that no other
domestic company has impressed us as much as Edify, which is personified by
its founder, President and CEO Jeff Crowe.
Jeff and I have shared the same goals and objectives for many years and have
concluded that it's in the best interests of both companies to combine forces
rather than compete separately.
I look forward to his counsel, his insights and his high intellect as we pursue
new business strategies together.
Jeff...
<PAGE> 17
Slide 16: EDIFY SNAPSHOT
Jeff Crowe:
Thanks, Chip. I'm really excited about this being the first unofficial day of
working together. I'm looking forward to a long and productive partnership.
It's been clear to me that our visions are very well aligned. Together, we can
approach the market more effectively and efficiently - and achieve together more
than we would separately - making this a 1 + 1 + 1 = 5 deal.
I'm also excited about the role of FICS, which builds on my own goals of driving
the online banking revolution globally.
For those of you who do not follow Edify, let me spell out for you what we bring
to the table in this transaction. Edify is a leading provider of Internet and
voice e-commerce solutions that's been in business over 8 years.
We've built a substantial base of customers including ANZ Bank, Chase Manhattan
Bank, Safeco, and over 300 other FI's. Additionally, we have a total of over
1250 corporate customers including many other household names like Home Shopping
Network, MCI, Sears and Sprint.
We've got 470 employees, revenues over $70M, and leading market positions in the
Internet banking and voice e-commerce markets.
We've also brought out the first products to market in the emerging areas of
business Internet banking and electronic bill presentment.
Our strengths are highly complementary those of to S1 and FICS. When we combine
the best of these companies together, we will have a very strong position to
approach the market for financial portals.
Chip?
<PAGE> 18
Slide 17: MICHEL AKKERMANS - CEO AND CHAIRMAN [FICS Logo]
Chip Mahan: Thanks, Jeff.
As S1 pursued what can best be described as a domestic strategy, we consistently
had our eyes on the world. Few, if any, competitors understand the financial
service landscape and their business requirements for the 21st century as well
as one of the true entrepreneurs of the industry today, Michel Akkermans.
Ever since meeting Michel, I have been truly impressed with his keen management
abilities and the success he has had in not only penetrating the international
markets, but also beginning to make a major footprint here in the U.S.
Michel will play an integral role in the senior management team we are
assembling here at S1 and I am glad to welcome him as my new partner and friend.
Michel...
<PAGE> 19
Slide 18: FICS SNAPSHOT
Michel Akkermans:
Thanks, Chip.
I am very excited about the combination of these three fine companies and I am
delighted to partner with two leaders in this new industry - Chip Mahan and Jeff
Crowe.
In this three-way transaction, my Company - FICS - really brings the new S1 a
global perspective, which is increasingly important as Internet banking and
online financial services rapidly become a global industry.
Let me tell you a little bit about FICS.
The Company was founded in 1989 with the express vision of focusing on FI's. We
are a global information technologies company that has grown rapidly over the
last ten years. Last year, our revenues totaled more than $55 million and we now
have more than 650 employees in ten countries around the globe.
We are a world leader in our two core areas - Financial Reporting Services and
Electronic Services Delivery.
In Electronic Services Delivery, we provide financial electronic commerce
solutions across a range of technologies and devices that link FI's both
internationally and in the U.S. with their customers.
In the Financial Reporting Systems area, we provide software products and
services that enable banks around the world to interface with their regulators.
I believe that the combination of these three companies will create a global
leader in the rapidly growing Internet banking market, and I am thrilled to be a
part of it.
Chip...
<PAGE> 20
Slide 19: GLOBAL INTEGRATION STRATEGY
Chip Mahan:
Thank you, Michel.
I'm sure many of you are now asking how these three companies will be integrated
and how we will communicate that to the marketplace.
Let me tell you that we are focused on this issue.
In short, the principles guiding our integration strategy are these: We will be
decisive, move fast and go deep.
Our integration team leaders are in place. Additionally, valued partners such as
Andersen Consulting, ACI, Broadvision, HP and IBM, will be available to assist
us in this integration in order to maintain our high level of customer focus.
The key areas we are focused on are:
- - Products and platforms
- - Sales
- - Services
- - Finance and Administration
The integration execution plan will be complete at the time of the transaction's
closing. We will update you on a regular basis about the progress of those
plans.
<PAGE> 21
Slide 20: SUMMARY
So, in summary:
1. We are creating a uniquely positioned, leading provider of enterprise-wide
financial portal solutions to institutions worldwide.
2. By doing this, we will become the preferred choice for FI's around the world
in providing their clients online financial services.
3. We are excited by the tremendous growth potential this industry has to offer
and will aggressively pursue it.
4. The $50 million equity investment by Intuit is a "win-win" for us and our
banking customers and will significantly complement other business
relationships.
5. And, finally, when this transaction is completed, we intend to name the new
company S1 Corporation and will brand that name in the marketplace.
As you can see, we are very excited about this business combination. And now,
we're ready to take your questions.
Operator...
<PAGE> 22
Description of Analyst Presentation Slides
<PAGE> 23
Slide 1
-------
The "New" S1
Three logos appear just below this text. The FICS logo and the Edify logo are
shown in an elliptical pattern leading to the S1 logo.
[S1 logo]
<PAGE> 24
Slide 2
-------
Common Strategic Vision
- - Provide our clients world-class solutions to attract and retain customers
- - Help financial institutions (FI's) combat new wave of Internet-based
competitors
- - Find solutions for FI's who embrace the vision
[S1 logo]
<PAGE> 25
Slide 3
-------
An Industry Defining Deal
- - The New S1 brings together three companies with unique and complementary
products & services
- - Combination creates preeminent provider of Financial Portal Solutions for
financial institutions worldwide
- - Acquiring FICS Group, N.V. of Brussels, Belgium:
- $1.08 B as of 5/14 close
- - Acquiring Edify Corporation of Santa Clara, CA
- 6.7 million shares
- $366 M as of 5/14 close
[S1 logo]
<PAGE> 26
Slide 4
-------
Strong Base of Customers
(Representative List)
<TABLE>
<CAPTION>
S1 Edify FICS
<S> <C> <C>
Bank of America Aetna
Citigroup Chase Manhattan ABN-AMRO
Huntington CompuBank Bank One
Republic National First American BancBoston
Royal Bank of Canada FirstUSA Bank of East Asia
Principal Mercantile BNP
Teleb@nk Net.Bank Credit Lyonnais
Wachovia Safeco CIBC
Scudder/Kemper Deutsche Bank
Bank National Australia
Bank
United Overseas
Bank
</TABLE>
[S1 logo]
<PAGE> 27
Slide 5
-------
The Dream Team
- - Chip Mahan-CEO
- - Michel Akkermans-Chairman and President
- - Jeffrey Crowe-Vice Chairman
Combined talent of three companies:
- Intimate knowledge of marketplace
- Advantage of global experience
- Pioneers in new and emerging growth business
- Shared vision for future
[S1 logo]
<PAGE> 28
Slide 6
---------
Market Opportunities
- - 1998 worldwide retail Internet banking applications market was $500 million
- - 40% growth expected annually
- - *2003 worldwide retail Internet banking applications market will be $2.7
billion
*Source: Dove Associates, a Boston-based international management consulting
firm
[S1 logo]
<PAGE> 29
Slide 7
-------
<TABLE>
<CAPTION>
Financial Portal Requirements
<S> <C> <C> <C>
Customers
Products Consumer Small Business Corporate
Credit Cards Cash Mgt. Cash Mgt.
Checking Reporting Reporting
Loans Accounting Trade
Brokerage Payroll Finance
Insurance Custody
Bill Presentment
Tax
Mortgage
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Capabilities Relationship Mgt. Content Advice
Channels Internet Telephone
Smart Cards Wireless Speech recognition
Options Outsourcing Global On-premise
Custom Applications
</TABLE>
[S1 Logo]
<PAGE> 30
Slide 8
-------
<TABLE>
<CAPTION>
Why We Came Together
<S> <C> <C> <C> <C>
Customers
Products Consumer Small Business Corporate
X Credit Cards Y Z Cash Mgt. Y Cash Mgt.
X Y Z Z Reporting Y Reporting
Checking Accounting Y Trade
X Loans Payroll Finance
X Y Brokerage Y Custody
X Insurance
Z Bill Presentment
Tax
Mortgage
</TABLE>
<TABLE>
<S> <C>
Capabilities X Relationship Mgt. X Content Advice
Channels X Y Z Internet Z Telephone
Y Smart Cards Y Wireless Z Speech recognition
Options X Outsourcing Y Global Z On-premise
Z Custom Applications
X=Security First Y=FICS Z=Edify
</TABLE>
[S1 Logo]
<PAGE> 31
Slide 9
-------
Intuit Enhances the Offering
- - Points of "stickiness"
- - Enhances S1's portal services with Intuit capabilities:
- TurboTax and Web TurboTax
- QuickBooks
- Financial Planning and Advice (Quicken.com)
- - Distributor of Intuit's Web applications and content to FI's
- - Rights to create FI-branded versions of Intuit's web-based products
- - Intuit makes $50M equity investment and receives options to buy up to 9.9%
of new company
[S1 logo]
<PAGE> 32
Slide 10
--------
<TABLE>
<CAPTION>
S1: The Complete Financial Portal Services Provider
<S> <C> <C> <C> <C>
Customers
Products Consumer Small Business Corporate
X Credit Cards Y Z Cash Mgt. Y Cash Mgt.
X Y Z Z Reporting Y Reporting
Checking K Accounting Y Trade
X Loans K Payroll Finance
X Y Brokerage Y Custody
X Insurance
Z Bill Presentment
K Tax
K Mortgage
</TABLE>
<TABLE>
<S> <C>
Capabilities X Relationship Mgt. X Content K Advice
Channels X Y Z Internet Z Telephone
Y Smart Cards Y Wireless Z Speech recognition
Options X Outsourcing Y Global Z On-premise
Z Custom Applications
X=Security First Y=FICS Z=Edify K=Intuit
</TABLE>
[S1 logo]
<PAGE> 33
Slide 11
--------
This slide shows a graphic map of the world with the words "The "New" S1--The
Preeminent Provider of Enterprise-Wide Financial Portal Solutions for
Institutions Worldwide" superimposed on it.
[S1 logo]
<PAGE> 34
Slide 12
--------
The "New" S1---Key facts
- Over 1,500 employees
- Offices in 10 countries on 4 continents
- Silicon Valley presence
- Customers in 26 countries
- 36 of the top 100 global financial institutions
- 26 of the top 50 banks in the US
- Nearly 1,000 financial institution customers
[S1 logo]
<PAGE> 35
Slide 13
--------
<TABLE>
<CAPTION>
Strong Base of Partners
<S> <C>
ACI Intuit
Andersen Consulting KPMG
BellSouth M&I
BroadVision Microsoft
CheckFree NCR
FIServ PriceWaterhouseCoopers
Forte RightPoint
Hewlett Packard Sun Microsystems
IBM TransPoint
Informix WebTone
</TABLE>
[S1 logo]
<PAGE> 36
Slide 14
--------
The "New" S1--Combined Pro Forma
- Shift to recurring revenue model
- Revenues:
- 1Q99: US$43M pro-forma
- 1998: US$150M
- Cash flow neutral end 2000
[S1 logo]
<PAGE> 37
Slide 15
--------
Jeff Crowe
President & CEO
the logo of Edify appears here
[S1 logo]
<PAGE> 38
Slide 16
--------
Edify--A Snapshot
- Founded in 1990
- Over US$70M revenues; 470 employees
- Leader in on-premise Internet Banking
- Leader in Internet and voice e-commerce solutions
- First to market with Small Business Internet Banking and Bill
Presentment solutions
- Over 1200 corporate customers; 300 financial institutions
[S1 logo]
<PAGE> 39
Slide 17
--------
Michel Akkermans
Chairman and CEO
FICS logo appears here
[S1 logo]
<PAGE> 40
Slide 18
--------
FICS--A Snapshot
- Founded in 1989 to focus on FI's
- Revenues over US$55M; more than 650 employees
- Presence in 10 countries
- Strong presence in Europe and Asia Pacific
- Global leader in Electronic Services Delivery and Financial
Reporting solutions
- Presence in 600 financial institutions worldwide, including 30
of the top 100 global institutions
- Financial e-commerce solutions across a range of devices
including smart cards and wireless devices
[S1 logo]
<PAGE> 41
Slide 19
--------
Global Integration Strategy
- Strategy: we will be decisive, move fast, go deep
- Integration teams in place
- Integration points:
- Products & Platforms
- Sales
- Services
- Finance & Admin
- Timeline: execution plan complete at closing
[S1 logo]
<PAGE> 42
Slide 20
--------
Summary
- New S1- The preeminent provider of financial portal solutions
worldwide
- The preferred choice for FI's worldwide
- Uniquely positioned for explosive Internet financial portal growth
- Intuit deal is a "win-win" for S1, FI's and their customers
Name of the new company: S1 Corporation
[S1 logo]
<PAGE> 43
Slide 21
--------
Thank you for your time.
[S1 logo]
