(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies of communications to:
Roy W. Tucker
M. Christopher Hall
Perkins Coie LLP
1120 NW Couch Street, 10th Floor Portland, Oregon97209
(503) 727-2000
David M. Carter
Hunton & Williams LLP
Bank of America Plaza, Suite 4100
600 Peach Street, NE Atlanta, Georgia30308
(404) 888-4000
Approximate date of commencement of proposed sale to the
public: As soon as practicable after this Registration
Statement becomes effective and upon consummation of the merger
described in the enclosed proxy statement/ prospectus.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check
the following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until this
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
THE INFORMATION
IN THIS PROXY STATEMENT/ PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. CORILLIAN MAY NOT ISSUE THE COMMON STOCK TO BE ISSUED
IN CONNECTION WITH THE TRANSACTIONS DESCRIBED IN THIS PROXY
STATEMENT/ PROSPECTUS UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROXY STATEMENT/ PROSPECTUS IS NEITHER AN OFFER TO SELL THESE
SECURITIES, NOR A SOLICITATION OF AN OFFER TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Dear Stockholders of InteliData Technologies Corporation:
You are cordially invited to attend an Annual Meeting of
Stockholders of InteliData Technologies Corporation, which will
be held on
[ ],
2005 beginning at
[ ]
local time at InteliData’s corporate headquarters at 11600
Sunrise Valley Drive, Reston, Virginia20191. At the annual
meeting, InteliData stockholders will be asked to adopt the
Agreement and Plan of Merger, dated as of March 31, 2005,
among InteliData Technologies Corporation, Corillian Corporation
and Wizard Acquisition Corporation, a wholly owned subsidiary of
Corillian (“Merger Sub”), and to approve the
transactions contemplated thereby. The agreement provides for
the combination of InteliData and Merger Sub into a single
corporation through the merger of InteliData with and into
Merger Sub, with Merger Sub being the surviving entity of the
merger as a wholly owned subsidiary of Corillian. The
stockholders will also be asked to elect three directors to
InteliData’s board of directors, to ratify the selection of
Deloitte & Touche LLP as the independent registered
public accounting firm for the year ending December 31,2005, and to transact such other business as may properly come
before the meeting or any adjournment or postponement thereof.
After careful consideration, the board of directors of
InteliData has unanimously determined that the proposed merger
is advisable and in the best interests of InteliData and its
stockholders and unanimously recommends that you vote
“FOR” the proposal to adopt the merger agreement and
to approve the transactions contemplated thereby.
The board of directors of InteliData also unanimously
recommends that you vote “FOR” the election of
directors, and “FOR” the ratification of the
independent registered public accounting firm.
At the time the merger becomes effective, you will receive cash
and shares of Corillian common stock in exchange for your shares
of InteliData common stock in an amount equal to approximately:
•
0.0956 shares of Corillian common stock and
•
$0.0841 in cash for each share of InteliData common stock,
subject to adjustment (as discussed below). Corillian will issue
an aggregate of 4,918,032 shares of its common stock and
pay an estimated aggregate of $4.3 million in cash, in
exchange for all of the outstanding shares of InteliData common
stock. The number of shares of Corillian common stock issuable
in the merger was determined by an agreement to provide
$15.0 million of Corillian common stock based on an average
stock price over a period of time prior to the signing of the
merger agreement, or $3.05 per share. Because the aggregate
number of shares of Corillian common stock to be issued in the
merger is fixed, the specific dollar value of the
stock consideration that InteliData stockholders will receive
upon completion of the merger will depend on the market value of
Corillian common stock at that time. The closing price of
Corillian common stock on the date of this proxy statement/
prospectus was
$[ ],
reflecting aggregate stock merger consideration of
$[ ] million.
The per share merger consideration may be adjusted depending on
the disposition of outstanding InteliData options prior to
closing, as described more fully in the section titled
“Merger Consideration” beginning on page 57 in
the accompanying proxy statement/ prospectus. Corillian and
InteliData do not anticipate that the disposition of options
will materially affect the combined stock and cash per share
merger consideration that each InteliData stockholder receives.
Only stockholders who hold shares of InteliData common stock at
the close of business on June 27, 2005, will be entitled to
vote at the annual meeting. Details of the business to be
conducted at the annual meeting are given in the attached Notice
of Annual Meeting of Stockholders and in the balance of this
proxy statement/ prospectus. In particular, you should carefully
consider the discussion in the section entitled “Risk
Factors” beginning on page 20 of the proxy statement/
prospectus.
Regardless of the number of shares you own or whether you plan
to attend the annual meeting, it is important that your shares
be represented and voted at the annual meeting. Whether or not
you plan to attend the annual meeting, please complete, sign,
date and promptly return the accompanying proxy in the enclosed
postage paid envelope. Returning the proxy does not deprive you
of your right to attend our annual meeting. If you decide to
attend our annual meeting and wish to change your proxy vote,
you may do so by voting in person at the meeting.
The proxy statement/ prospectus attached to this letter provides
you with detailed information about the proposed merger, the
merger consideration, and the procedures you must follow to
elect the form of merger consideration you wish to receive. The
Annual Report on Form 10-K accompanying the proxy
statement/prospectus provides you with additional information
about InteliData. We encourage you to read the proxy statement/
prospectus and the Annual Report on Form 10-K carefully.
On behalf of the board of directors, I would like to express our
appreciation for your continued interest in the affairs of
InteliData. We look forward to seeing you at the annual meeting.
To the Stockholders of InteliData Technologies Corporation:
NOTICE IS HEREBY GIVEN that an annual meeting of InteliData
stockholders will be held on
[ ],
2005 beginning at
[ ]
local time at InteliData’s corporate headquarters at 11600
Sunrise Valley Drive, Reston, Virginia20191 to vote to:
(a) adopt the Agreement and Plan of Merger, dated as of
March 31, 2005, among InteliData Technologies Corporation,
Corillian Corporation and Wizard Acquisition Corporation, a
wholly owned subsidiary of Corillian (“Merger Sub”),
and approve the transactions contemplated thereby
(Proposal 1);
(b) elect two Class III members and one Class II
member to InteliData’s board of directors (Proposal 2);
(c) ratify the selection of Deloitte & Touche LLP
as independent registered public accounting firm for InteliData
for the year ending December 31, 2005
(Proposal 3); and
(d) transact such other business as may properly come
before the meeting or any adjournment or postponement of the
meeting.
The merger agreement provides for the combination of InteliData
and Merger Sub into a single corporation through the merger of
InteliData with and into Merger Sub, with Merger Sub being the
surviving entity of the merger as a wholly owned subsidiary of
Corillian. The proposed merger is described in more detail in
the accompanying proxy statement/ prospectus, which you should
read carefully in its entirety before voting. A copy of the
merger agreement is attached as Appendix A to the
proxy statement/ prospectus.
Only InteliData stockholders of record at the close of business
on June 27, 2005, the record date fixed by
InteliData’s board of directors, are entitled to notice of
and to vote at the annual meeting, or any adjournment or
postponement thereof.
All InteliData stockholders are cordially invited to attend the
annual meeting. However, we encourage you to vote by written
proxy card so that your shares will be represented and voted at
the meeting even if you cannot attend. Of course, this will not
prevent you from voting in person at the meeting. Your failure
to vote your shares is the same as voting against the proposal
to adopt the merger agreement and to approve the transactions
contemplated thereby.
All InteliData stockholders are cordially invited to attend
the annual meeting. Whether or not you expect to attend the
annual meeting, please complete, date, sign and return the
enclosed proxy card as promptly as possible (a return addressed
envelope, postage prepaid, is enclosed for this purpose) in
order to ensure your representation at the annual meeting. Even
if you have given your proxy, you may still vote in person if
you attend the annual meeting. Please note, however, that if
your shares are held of record by a broker, bank or other
nominee and you wish to vote in person at the annual meeting,
you must obtain a proxy from the record holder issued in your
name.
ADDITIONAL INFORMATION
The accompanying proxy statement/ prospectus incorporates
important business and financial information about Corillian
Corporation and InteliData Technologies Corporation from other
documents that are not included in, or delivered with, the proxy
statement/ prospectus. This information is available to you
without charge upon request. You can obtain the documents
incorporated by reference in the accompanying proxy statement/
prospectus by requesting them in writing or by telephone from
Corillian or InteliData at the following addresses and telephone
numbers:
If you would like to request documents, Corillian or InteliData
must receive your request by
[ ],
2005 (which is five business days prior to the date of the
annual meeting) in order to ensure that you receive them prior
to the annual meeting.
You may also obtain the documents incorporated by reference in
the accompanying proxy statement/ prospectus from the Securities
and Exchange Commission (the “SEC”) through its
website. The address of the SEC website is www.sec.gov.
See “Where You Can Find More Information” beginning on
page 99.
This proxy statement/ prospectus is being furnished to the
stockholders of InteliData Technologies Corporation in
connection with the solicitation of proxies by the board of
directors of InteliData for use at the annual meeting of
stockholders of InteliData to be held on
[],
2005, including any adjournment or postponement thereof. At the
annual meeting, InteliData stockholders will be asked to:
(a) adopt the Agreement and Plan of Merger, dated as of
March 31, 2005, among InteliData Technologies Corporation,
Corillian Corporation and Wizard Acquisition Corporation, a
wholly owned subsidiary of Corillian (“Merger Sub”),
and approve the transactions contemplated thereby
(Proposal 1);
(b) elect two Class III members and one Class II
member to InteliData’s board of directors (Proposal 2);
(c) ratify the selection of Deloitte & Touche LLP
as the independent registered public accounting firm for
InteliData for the year ending December 31, 2005
(Proposal 3); and
(d) transact such other business as may properly come
before the meeting or any adjournment or postponement of the
meeting.
The merger agreement provides for the combination of InteliData
and Merger Sub into a single corporation through the merger of
InteliData with and into Merger Sub, with Merger Sub being the
surviving entity of the merger as a wholly owned subsidiary of
Corillian. This proxy statement/ prospectus also constitutes a
prospectus of Corillian with respect to up to
4,918,032 shares of Corillian common stock, no par value,
that may be issued in connection with the merger. Upon
consummation of the merger, each then outstanding share of
InteliData common stock, $0.001 par value, will be
converted into the right to receive approximately
0.0956 shares of Corillian common stock and $0.0841 in
cash, subject to adjustment.
The per share merger consideration may be adjusted depending on
the disposition of outstanding InteliData options prior to
closing, as described more fully in the section titled
“Merger Consideration” beginning on page 57 in
the accompanying proxy statement/prospectus. Corillian and
InteliData do not anticipate that the disposition of options or
other factors will materially affect the combined stock and cash
merger consideration that each InteliData stockholder receives.
The specific dollar value of the Corillian common stock that
InteliData stockholders will receive upon completion of the
merger depends on the market value of Corillian common stock at
that time. The closing price of Corillian common stock on
[],
2005, the date of this proxy statement/ prospectus, was
$[].
Shares of Corillian common stock are quoted on the Nasdaq
National Market System under the trading symbol
“CORI.” Any fractional shares resulting from the
exchange of shares will be paid a cash equivalent.
This proxy statement/ prospectus provides you with detailed
information about the proposed merger, the merger consideration,
the procedures you must follow to exchange your shares of
InteliData common stock, and the annual meeting. Corillian
provided the information concerning Corillian. InteliData
provided the information concerning InteliData. Please see
“Where You Can Find More Information” beginning on
page 99 for additional information about Corillian and
InteliData, “Information About Corillian” beginning on
page 68 for additional information about Corillian and
“Information About InteliData” beginning on
page 68 for additional information about InteliData.
We strongly urge you to read and consider carefully this
proxy statement/ prospectus in its entirety, including the
matters referred to under “Risk Factors” beginning on
page 20.
Neither the Securities and Exchange Commission (the
“SEC”) nor any state securities commission has
approved or disapproved of these securities or determined if
this proxy statement/ prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
This proxy statement/ prospectus is dated
[],
2005, and is first being mailed to InteliData stockholders on or
about
[],
2005.
THE INFORMATION IN THIS PROXY STATEMENT/ PROSPECTUS IS NOT
COMPLETE AND MAY BE CHANGED. CORILLIAN MAY NOT ISSUE THE COMMON
STOCK TO BE ISSUED IN CONNECTION WITH THE TRANSACTIONS DESCRIBED
IN THIS PROXY STATEMENT/ PROSPECTUS UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROXY STATEMENT/ PROSPECTUS IS NEITHER AN OFFER
TO SELL THESE SECURITIES, NOR A SOLICITATION OF AN OFFER TO BUY
THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
What is the proposed transaction for which I am being asked
to vote?
A1:
You are being asked to vote to approve and adopt a merger
agreement among InteliData Technologies Corporation, Corillian
Corporation, and a wholly owned subsidiary of Corillian. The
merger agreement provides for the merger of InteliData with and
into Wizard Acquisition Corporation, a newly formed, wholly
owned subsidiary of Corillian (“Merger Sub”), with
Merger Sub surviving the merger as a wholly owned subsidiary of
Corillian. When this merger occurs, InteliData stockholders will
be entitled to receive the merger consideration. See “The
Merger Agreement — Merger Consideration”
beginning on page 57.
Q2:
What will I receive in the merger?
A2:
Upon completion of the merger, each share of InteliData common
stock will be converted only into the right to receive
approximately 0.0956 shares of Corillian common stock and
$0.0841 in cash, subject to adjustment. Corillian will issue an
aggregate of 4,918,032 shares of its common stock and pay
an estimated aggregate of $4,330,383 in cash in exchange for all
of the outstanding shares of InteliData common stock. The
specific dollar value of the Corillian common stock that
InteliData stockholders will receive upon completion of the
merger depends on the market value of Corillian common stock at
that time.
The per share merger consideration may be adjusted depending on
the disposition of outstanding InteliData options prior to
closing, as described more fully in the section titled
“Merger Consideration” beginning on page 57 in
the accompanying proxy statement/ prospectus. The per share
merger consideration stated above assumes the exercise of all
options to purchase InteliData common stock that were
outstanding and “in-the-money” as of the date of this
proxy statement/ prospectus, and the termination of all options
to purchase InteliData common stock that were outstanding
and “out-of-the-money” as of the date of this proxy
statement/ prospectus, as described in the section titled
“Treatment of InteliData Stock Options” beginning on
page 58. If all of the options are not treated this way,
the cash or stock per share merger consideration may be more or
less than as stated above; however, any such changes are not
expected to materially adversely affect the combined stock and
cash merger consideration that each InteliData stockholder
receives.
You will not receive any fractional shares of Corillian common
stock in the merger. Instead, you will receive a cash payment,
without interest, rounded up to the nearest whole cent,
determined by multiplying the fractional share interest to which
you would otherwise be entitled by the average closing price for
a share of Corillian common stock as reported on the Nasdaq
National Market System for the 20 trading days ending on and
including the third trading day prior to the closing of the
merger.
Q3:
Will I be able to trade the shares of Corillian common stock
I receive in the merger?
A3:
You may freely trade the shares of Corillian common stock issued
in the merger, unless you are an affiliate of InteliData. The
shares will be quoted on the Nasdaq National Market under the
symbol “CORI.” Persons who are considered affiliates
(generally directors, officers and 10% or greater stockholders)
of InteliData must comply with Rule 145 under the
Securities Act of 1933, as amended (the “Securities
Act”), if they wish to sell or otherwise transfer any of
the shares of Corillian common stock they receive in the merger.
Q4:
What will happen to InteliData’s outstanding stock
options in the merger?
A4:
InteliData stock options issued under InteliData stock option
plans will be terminated effective immediately prior to the
merger. Holders of InteliData stock options who exercise their
options prior
to the effective time of the merger will receive a portion of
the merger consideration based upon the number of shares of
InteliData common stock received upon exercise of such stock
options, just like other InteliData stockholders. Holders of
InteliData stock options with an exercise price greater than the
value of the per share cash and stock merger consideration are
expected to surrender their options to InteliData prior to
consummation of the merger and InteliData will pay them
(i) $0.02 per share for each share of common stock
underlying options with an exercise price of $2.00 or less
and/or (ii) $0.01 per share for each share of common
stock underlying options with an exercise price of greater than
$2.00, in cash, less applicable tax withholdings.
Q5:
What are the material federal income tax consequences of the
merger to me?
A5:
The parties intend that the merger will qualify as a
“reorganization” for United States federal income tax
purposes pursuant to Section 368(a) of the Internal Revenue
Code. Assuming that the merger qualifies as a
“reorganization,” an InteliData stockholder generally
will recognize gain in an amount equal to the lesser of
(a) the amount of cash received in the exchange or
(b) the amount, if any, by which the sum of the fair market
value, as of the effective date of the merger, of the Corillian
common stock and the amount of cash received in the exchange
exceeds the tax basis of the shares of InteliData common stock
surrendered in the exchange. No loss may be recognized on the
exchange.
This tax treatment may not apply to all InteliData stockholders.
We strongly urge you to consult your own tax advisor for a full
understanding of the tax consequences of the merger to you. See
“The Merger — Material United States Federal
Income Tax Consequences” beginning on page 49.
Q6:
What vote is required for approval of the merger proposal
under consideration at the annual meeting?
A6:
The merger agreement must be approved by a majority of the
outstanding shares of InteliData common stock. Therefore, if you
abstain or fail to vote, it will be the same as voting against
the merger agreement. You are entitled to vote on the merger
agreement if you held InteliData common stock at the close of
business on the record date, which is June 27, 2005. On
that date,
[ ] shares
of InteliData common stock were outstanding and entitled to vote.
Q7:
Are there any stockholders already committed to voting in
favor of the merger?
A7:
Yes. InteliData directors and officers, who collectively held
approximately 0.7% of the outstanding shares of InteliData
common stock on the record date, have entered into agreements
requiring them to vote all of their shares in favor of the
adoption and approval of the merger agreement. See
“Agreements to Facilitate Merger” beginning on
page 67 and the form of Agreement to Facilitate Merger,
attached as Appendix B to the proxy statement/
prospectus.
Q8:
How does the InteliData board of directors recommend that I
vote on the merger proposal?
A8:
The board of directors of InteliData unanimously recommends that
you vote “FOR” adoption of the merger agreement and
the transactions contemplated thereby.
Q9:
Do persons involved in the merger have interests that may
conflict with mine as an InteliData stockholder?
A9:
Yes. When considering the recommendations of InteliData’s
board of directors, you should be aware that certain InteliData
directors and officers have interests in the merger that are
different from, or are in addition to, yours. These interests
include the receipt of change of control and severance payments,
the receipt of indemnification and liability insurance benefits
by directors and officers of InteliData from Corillian, and
employment of certain InteliData officers by Corillian after the
merger. In addition, certain InteliData directors and officers
are stockholders and/or optionholders. In connection with the
merger, these directors and officers will receive a portion of
the merger
consideration for their shares of InteliData common stock and/or
consideration for their cancellation of InteliData stock options.
Q10:
Are there risks I should consider in deciding whether to vote
for the merger?
A10:
Yes. In evaluating the merger, you should carefully consider the
factors discussed in the section titled “Risk Factors”
beginning on page 20.
Q11:
When do you expect the merger to be completed?
A11:
We expect to complete the merger promptly after we receive
InteliData stockholder approval at the annual meeting. We
anticipate closing on or about
[ ],
2005.
Q12:
Why are the InteliData stockholders also being asked to elect
InteliData’s directors and ratify InteliData’s
independent registered public accounting firm?
A12:
Because this stockholder meeting is also InteliData’s
regularly scheduled annual meeting of stockholders, the
stockholders are being asked to consider proposals for the
election of directors and ratification of InteliData’s
independent registered public accounting firm. If the merger is
approved by the stockholders and consummated as contemplated by
the merger agreement, passage of these proposals will not have
any effect following the closing of the merger because the
directors of Merger Sub will be the directors of the surviving
entity following the merger with InteliData, and the surviving
entity’s accounting will be consolidated with
Corillian’s. Corillian has engaged KPMG LLP to act as its
independent registered public accounting firm. If, however, the
InteliData stockholders do not approve the merger proposal,
their approval of the other proposals will allow InteliData to
continue its normal operations without the added expense of an
additional stockholder meeting.
Q13:
If my shares are held in “street name” by my
broker, will my broker vote my shares for me?
A13:
You should instruct your broker to vote your shares, following
the directions your broker provides. Your broker will generally
not have the discretion to vote your shares without your
instructions. Because the proposals in this proxy statement/
prospectus require an affirmative vote of a majority of the
outstanding shares of InteliData common stock for approval, any
so-called “broker non-votes” have the same effect as
votes cast against the merger agreement.
Q14:
What is the difference between holding shares as a
stockholder of record and as a beneficial owner?
A14:
Many InteliData stockholders hold their shares through a broker,
bank or other nominee rather than directly in their own name. As
summarized below, there are some distinctions between shares
held of record and shares beneficially owned.
Stockholder of Record. If your shares are registered
directly in your name with InteliData’s transfer agent, you
are considered the stockholder of record with respect to those
shares and this proxy statement/ prospectus is being sent
directly to you by InteliData. If you are an InteliData
stockholder, as stockholder of record, you have the right to
grant your proxy directly to InteliData or to vote in person at
the InteliData annual meeting of stockholders. InteliData has
enclosed a proxy card for your use.
Beneficial Owner. If your shares are held in a brokerage
account, bank account or by another nominee, you are considered
the beneficial owner of shares held in “street name,”
and this proxy statement/ prospectus is being forwarded to you
by your broker, bank or nominee together with a voting
instruction card. As the beneficial owner, you have the right to
direct your broker, bank or other nominee how to vote and are
also invited to attend the annual meeting.
However, since you are not the stockholder of record, you may
not vote your shares in person at the annual meeting unless you
obtain a legal proxy from the broker, bank or nominee that holds
your shares, giving you the right to vote the shares instead of
the broker, bank or nominee holding your
shares. Your broker, bank or nominee has enclosed or provided
voting instructions for your use in directing your broker, bank
or nominee how to vote your shares.
Q15:
What do I need to do now?
A15:
After carefully reading and considering the information
contained in this proxy statement/ prospectus, please fill out
and sign the proxy card, and follow the instructions on the
proxy card to return your signed proxy card as soon as possible
so that your shares may be voted at the annual meeting. Your
proxy card will instruct the persons named on the card to vote
your shares at the stockholders meeting as you direct on the
card. If you sign and send in your proxy card and do not
indicate how you want to vote, your proxy will be voted
“FOR” the adoption and approval of the merger,
“FOR” the election of directors and “FOR”
the ratification of the independent registered public accounting
firm. If you do not vote or if you abstain, the effect will be a
vote against the merger agreement and the ratification of the
independent registered public accounting firm, but no effect on
the election of directors. Your vote is very important.
Q16:
May I change my vote after I have mailed my signed proxy
card?
A16:
You may change your vote at any time before your proxy is voted
at the annual meeting. You can do this in one of three ways.
First, you can send a written notice stating that you want to
revoke your proxy. Second, you can complete and submit a new
proxy card. If you choose either of these two methods, you must
submit your notice of revocation or your new proxy card to:
Third, you can attend the InteliData annual meeting and vote in
person. Simply attending the meeting, however, will not revoke
your proxy; you must vote at the meeting.
If you have instructed a broker to vote your shares, you must
follow directions received from your broker to change your vote.
Q17:
Should I send in my stock certificates now?
A17:
No. After the merger is completed, you will receive written
instructions for exchanging your stock certificates.
Q18:
Where can I find more information about the companies?
A18:
You can find more information about Corillian and InteliData
from the various sources described under “Where You Can
Find More Information” beginning on page 99.
Q19:
Who can help answer my questions?
A19:
If you have questions about the merger, including procedures for
voting your shares, or if you need additional copies of this
proxy statement/ prospectus or the enclosed proxy, you should
contact Morrow & Co., Inc., which is assisting InteliData in
the solicitation of proxies, as follows:
This summary highlights selected information included in this
document and does not contain all of the information that may be
important to you. You should read this entire document and its
appendices and the other documents to which we refer you before
you decide how to vote with respect to the merger agreement and
the other proposals to be voted upon at the annual meeting. In
addition, we incorporate by reference important business and
financial information about Corillian and InteliData into this
document. For a description of this information, see
“Incorporation of Certain Documents by Reference”
beginning on page 98. You may obtain the information
incorporated by reference into this document without charge by
following the instructions in the section titled “Where You
Can Find More Information” beginning on page 99. Each
item in this summary includes a page reference directing you to
a more complete description of that item.
This document, including information included or incorporated by
reference in this document, contains forward-looking statements
within the meaning of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements include, but are
not limited to, statements about (i) the financial
condition, results of operations and business of Corillian and
InteliData; (ii) the benefits of the merger between
Corillian and InteliData, including increased market presence,
projections, cost savings and accretion to reported earnings
that may be realized from the merger;
(iii) Corillian’s and InteliData’s plans,
objectives, expectations and intentions and other statements
contained in this filing that are not historical facts; and
(iv) other statements identified by words such as
“expects,”“anticipates,”“intends,”“plans,”“believes,”“seeks,”“estimates,” or words of similar
meaning. These forward-looking statements are based on current
beliefs and expectations of Corillian and InteliData and are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
beyond Corillian’s and InteliData’s control. In
addition, these forward-looking statements are subject to
assumptions with respect to future business strategies and
decisions that are subject to change. Factors that could cause
actual results to differ materially from those expressed in such
forward-looking statements are discussed in the “Risk
Factors” section beginning on page 20. Because such
statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by
such statements. InteliData stockholders are cautioned not to
place undue reliance on such statements, which speak only as of
the date of this proxy statement/ prospectus or the date of any
document incorporated by reference.
Corillian is a leading provider of solutions that enable banks,
credit unions and other financial service providers to rapidly
deploy Internet-based financial services. Corillian’s
solutions allow consumers to conduct financial transactions,
view personal and market financial information, pay bills and
access other financial services on the Internet. Corillian
Voyager is a software platform combined with a set of
applications for Internet banking, electronic bill presentment
and payment, identity management, targeted marketing, data
aggregation, alerts and online customer relationship management.
Corillian’s solutions integrate into existing database
applications and systems and enable its customers to monitor
transactions across all systems in real time. Corillian’s
solutions are also designed to support multiple lines of
business, including small business banking, corporate banking
and credit card management, and to scale to support millions of
users. Current Corillian customers include J.P. Morgan
Chase, the Huntington National Bank, Wachovia Bank and SunTrust
Bank.
Founded in 1997 and incorporated in Oregon, Corillian had
revenues of $50.8 million and net income of
$10.5 million for the year ended December 31, 2004 and
revenues of $11.2 million and net income of
$654 thousand for the three months ended March 31,2005.
Corillian common stock is quoted on the Nasdaq National Market
System under the symbol “CORI.”
Corillian maintains a site on the Internet at www.corillian.com;
however, information found on Corillian’s website is not
part of this proxy statement/ prospectus.
InteliData Technologies Corporation and its subsidiaries provide
electronic bill payment and presentment and online banking
solutions to the financial services industry. InteliData’s
products provide financial institutions with the real-time
financial processing infrastructure needed to provide their
customers with payment and presentment services and online
banking via the Internet and other online delivery channels.
InteliData markets its products and services to banks, credit
unions, brokerage firms, financial institution processors and
credit card issuers.
Founded in 1996 and incorporated in Delaware, InteliData had
revenues of $13.7 million and net loss of
$33.2 million for the year ended December 31, 2004 and
revenues of $2.9 million and net loss of $1.9 million
for the three months ended March 31, 2005.
InteliData common stock is listed on the Nasdaq SmallCap Market
under the symbol “INTD.”
InteliData maintains a site on the Internet at
www.intelidata.com; however, information found on
InteliData’s website is not part of this proxy statement/
prospectus.
Merger Sub is a wholly owned subsidiary of Corillian and was
incorporated on March 29, 2005, in the state of Delaware.
Merger Sub has not engaged in any operations and was formed
solely for the purpose of engaging in the transactions
contemplated by the merger agreement. InteliData will merge with
and into Merger Sub in the merger.
C:
The Merger (see page 33)
The merger agreement is attached to this document as
Appendix A. You should read this agreement
carefully, as it is the legal document that governs the merger
of InteliData with and into a wholly owned subsidiary of
Corillian, with the surviving company being a wholly owned
subsidiary of Corillian.
The representations and warranties of InteliData contained in
the merger agreement are qualified by information in
confidential disclosure schedules delivered by InteliData to
Corillian in connection with signing the merger agreement, which
modify and create exceptions to the representations and
warranties in the merger agreement. The representations and
warranties of Corillian and InteliData contained in the merger
agreement speak only as of March 31, 2005, the date on
which the merger agreement was executed. Therefore, information
concerning the subject matter of the representations and
warranties may have changed since the date of the merger
agreement. These representations and warranties are also
intended to allocate risk between the parties. Accordingly, the
representations and warranties contained in the merger agreement
should not be taken as assertions of facts by either Corillian
or InteliData and should not be relied upon by you. Such
information can be found elsewhere in this proxy statement/
prospectus and in the public filings each of Corillian and
InteliData makes with the Securities and Exchange Commission
(the “SEC”), which are available without charge at
www.sec.gov.
C:
What InteliData Stockholders Will Receive in the Merger (see
page 57)
Each share of InteliData common stock that is outstanding at the
effective time of the merger will receive approximately
0.0956 shares of Corillian common stock and $0.0841 in
cash, subject to adjustment. Corillian will issue an aggregate
of 4,918,032 shares of its common stock and pay an
estimated aggregate of $4,330,383 in cash in exchange for all of
the outstanding shares of InteliData common stock. The number of
shares of Corillian common stock issuable in the merger was
determined by an agreement to provide $15.0 million of
Corillian common stock based on an average stock price over a
period of time prior to the signing of the merger agreement, or
$3.05 per share. The specific dollar value of the Corillian
common stock that InteliData stockholders will receive upon
completion of the merger depends on the market value of
Corillian common stock at that time. The closing price of
Corillian common stock on the date of this proxy statement/
prospectus was
$[ ],
reflecting aggregate stock merger consideration of
$[ ] million.
The per share merger consideration will be adjusted depending on
the disposition of outstanding InteliData options prior to
closing, as described more fully in the section titled
“Merger Consideration” beginning on page 57 in
the accompanying proxy statement/ prospectus. The per share
merger consideration stated above assumes the exercise of all
options to purchase InteliData common stock that were
outstanding and “in-the-money” as of the date of this
proxy statement/ prospectus, and the termination of all options
to purchase InteliData common stock that were outstanding
and “out-of-the-money” as of the date of this proxy
statement/ prospectus, as described in the section titled
“Treatment of InteliData Stock Options” beginning on
page 58. If all of the options are not treated this way,
the cash or stock per share merger consideration may be more or
less than as stated above; however, any such changes are not
expected to materially affect the combined stock and cash merger
consideration that each InteliData stockholder receives.
Shares of InteliData common stock held by InteliData
stockholders who have perfected appraisal rights will not be
exchanged for the merger consideration at the effective time of
the merger.
C:
No Fractional Shares (see page 59)
No fractional shares of Corillian stock will be issued in the
merger. Instead of fractional shares, InteliData stockholders
will receive a cash payment, without interest, rounded up to the
nearest whole cent, determined by multiplying the fractional
share interest to which you would otherwise be entitled by the
average closing price for a share of Corillian common stock as
reported on the Nasdaq National Market System for the 20 trading
days ending on and including the third trading day preceding the
effective time of the merger.
On March 31, 2005, Wachovia Capital Markets, LLC, which is
sometimes referred to in this document as “Wachovia
Securities” or “Wachovia,” rendered its oral
opinion, subsequently confirmed in writing, to the board of
directors of InteliData that, as of the date of that opinion,
the merger consideration to be received by holders of shares of
InteliData common stock pursuant to the merger agreement was
fair, from a financial point of view, to such holders.
The full text of the written opinion of Wachovia that sets forth
the assumptions made, matters considered and limitations on the
opinion and on the review undertaken in connection with the
opinion is attached as Appendix C to, and is
incorporated by reference in, this proxy statement/ prospectus.
The opinion of Wachovia does not constitute a recommendation as
to how any holder of shares of InteliData common stock should
vote in connection with the merger agreement or any other matter
related to the merger. You should carefully read the opinion in
its entirety.
Recommendation of InteliData’s Board of Directors (see
page 36)
After careful consideration, the InteliData board of directors,
on March 31, 2005, unanimously determined that the terms of
the merger agreement and the transactions contemplated thereby
are advisable and in the best interests of InteliData and its
stockholders and approved the merger agreement and the
transactions contemplated thereby. The InteliData board of
directors recommends that the stockholders of InteliData vote
“FOR” the adoption of the merger agreement and
approval of the transactions contemplated thereby.
In considering the recommendation of the InteliData board of
directors with respect to the merger agreement and the
transactions contemplated thereby, InteliData stockholders
should be aware that some directors and officers of InteliData
will receive benefits if the merger is completed, which results
in those persons having interests in the merger that are
different from, or in addition to, the interests of InteliData
stockholders. Please see “The Merger Agreement —
Interests of Certain Persons in the Merger” beginning on
page 51.
C:
Annual Meeting of InteliData Stockholders (see
page 31)
InteliData will hold an annual meeting of its stockholders on
[],
2005, at
[]
local time, at 11600 Sunrise Valley Drive, Reston, Virginia20191. At the annual meeting, you will be asked to vote on
proposals to (i) adopt the merger agreement and to approve
the transactions contemplated thereby, (ii) elect three
directors to InteliData’s board of directors, and
(iii) ratify the selection of the independent registered
public accounting firm for the fiscal year ending
December 31, 2005.
You may vote at the annual meeting if you owned shares of
InteliData common stock at the close of business on the record
date, June 27, 2005. On that date, there were
[] shares
of InteliData common stock outstanding and entitled to vote at
the annual meeting. You may cast one vote for each share of
InteliData common stock you owned on the record date.
C:
Stockholder Vote Required for the Merger Proposal (see
page 32)
The proposal to adopt the merger agreement and to approve the
transactions contemplated thereby requires the affirmative vote
of the holders of a majority of the shares of InteliData common
stock outstanding on the record date. Accordingly, a failure to
vote or an abstention will have the same effect as a vote
against the proposal to adopt the merger agreement and to
approve the transactions contemplated thereby.
C:
Agreements to Facilitate Merger (see page 67)
In connection with the execution of the merger agreement,
Corillian and Merger Sub entered into agreements with the
directors and officers of InteliData, whereby they granted
Corillian a proxy to vote their shares of InteliData common
stock in favor of the proposal to adopt the merger agreement and
to approve the transactions contemplated thereby. These
stockholders collectively own approximately 0.7% of the voting
power of InteliData common stock. However, if the merger
agreement terminates in accordance with its terms, these
agreements to facilitate merger will also terminate. The form of
Agreement to Facilitate Merger is attached as
Appendix B to the proxy statement/ prospectus.
C:
Appraisal Rights (see page 54)
Under Delaware law, holders of InteliData common stock may have
the right to receive an appraisal of the value of their shares
of InteliData common stock in connection with the merger. To
exercise appraisal rights, an InteliData stockholder must
deliver to InteliData a written demand for appraisal prior to
the vote at the annual meeting. In addition, an InteliData
stockholder desiring appraisal must not vote for the proposal to
adopt the merger agreement and to approve the transactions
contemplated thereby, must not submit a letter of transmittal,
and must strictly comply with all of the procedures required by
Delaware law. These procedures are described more fully
beginning on page 54.
A copy of Section 262 of the Delaware General Corporation
Law is also included as Appendix D to this document.
C:
Interests of InteliData’s Executive Officers and
Directors in the Merger (see page 51)
In addition to their interests as stockholders, some of the
directors and officers of InteliData have interests in the
merger that are different from, or in addition to, your
interests. Certain of InteliData’s officers and directors
may receive change of control and severance payments in
connection with the merger. Additionally, InteliData officers
and directors will receive indemnification and liability
insurance benefits from Corillian. Certain InteliData officers
may also be employed by Corillian after the merger. In addition,
InteliData directors and officers are stockholders and/or
optionholders. In connection with the merger, these directors
and officers will receive a portion of the merger consideration
for their shares of InteliData common stock and consideration
for their cancellation of InteliData stock options.
C:
Conditions to the Merger Agreement (see page 64)
The respective obligations of Corillian and InteliData to
complete the merger and the other transactions contemplated by
the merger agreement are subject to the satisfaction or waiver
of various conditions that include, in addition to other
customary closing conditions, the following:
•
the SEC shall have declared the registration statement of which
this document is a part effective under the Securities Act, no
stop order or similar restraining order suspending the
effectiveness of the registration agreement shall be in effect
and no proceedings for such purpose shall be pending or
threatened by the SEC or any state securities administrator;
•
the merger agreement must be adopted and the transactions
contemplated thereby must be approved by the holders of a
majority of the outstanding shares of InteliData common stock;
•
no provision of any applicable laws and no judgment, injunction,
order or decree shall restrict, prevent or prohibit the
consummation of the merger or the transactions contemplated by
the merger agreement;
•
the Corillian common stock to be issued pursuant to the merger
shall have been approved for listing on the Nasdaq National
Market;
•
holders of no more than 5% of the outstanding shares of
InteliData common stock shall have delivered notices of intent
to seek appraisal under Section 262 of the Delaware General
Corporation Law;
•
the receipt of a tax opinion by Corillian and InteliData to the
effect that the merger will constitute a reorganization within
the meaning of Section 368(a) of the Code;
•
the representations and warranties of the other party set forth
in the merger agreement must be materially true, complete and
correct, as qualified by confidential disclosure schedules
delivered by InteliData to Corillian in connection with signing
the merger agreement; and
•
the other party to the merger agreement must have performed in
all material respects all of its agreements and covenants
required by the merger agreement.
Corillian and InteliData cannot be certain when, or if, the
conditions to the merger will be satisfied or waived or whether
or not the merger will be completed.
C:
Termination of the Merger Agreement (see page 66)
Corillian and InteliData can mutually agree to terminate the
merger agreement without completing the merger. In addition,
Corillian and InteliData can each terminate the merger agreement
under certain circumstances as set forth in the merger agreement
and summarized herein.
If the merger agreement is terminated, InteliData would be
required, under certain circumstances involving the acquisition
or potential acquisition of InteliData by another company, to
pay Corillian a termination fee equal to $1.4 million.
C:
Restrictions on Solicitation (see page 62)
The merger agreement prohibits InteliData from soliciting and,
except in connection with certain unsolicited third-party
potentially superior proposals, prohibits InteliData from
participating in discussions with third parties, or taking other
actions, related to alternative transactions to the merger.
C:
Accounting Treatment (see page 54)
Corillian will account for the merger under the purchase method
of accounting for business combinations.
C:
Regulatory Approvals Required for the Merger (see
page 54)
The merger does not require the approval of any state or federal
regulatory entity. In order to consummate the merger, the
companies must file a Certificate of Merger with the Delaware
Secretary of State.
C:
Material United States Federal Income Tax Consequences (see
page 49)
The parties intend that the merger will qualify as a
“reorganization” for United States federal income tax
purposes pursuant to Section 368(a) of the Internal Revenue
Code. Completion of the merger is conditioned upon the receipt
of tax opinions, from counsel to InteliData and counsel to
Corillian, to the effect that the merger will constitute a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. Those opinions will be given in reliance
on customary representations and assumptions as to factual
matters. In the event that the assumptions are incorrect and the
ultimate facts do not support reorganization treatment, the tax
opinions cannot be relied upon.
Assuming that the merger qualifies as a
“reorganization,” an InteliData stockholder generally
will recognize gain in an amount equal to the lesser of
(a) the amount of cash received in the exchange or
(b) the amount, if any, by which the sum of the fair market
value, as of the effective date of the merger, of the Corillian
common stock and the amount of cash received in the exchange
exceeds the tax basis of the shares of InteliData common stock
surrendered in the exchange. No loss may be recognized on the
exchange. Gain or loss should be computed separately for each
block of shares of InteliData common stock owned by a
stockholder.
You should read the summary under the caption “Material
United States Federal Income Tax Consequences” of the
merger agreement for a more complete discussion of the federal
income tax consequences of the merger. You should also consult
your own tax advisor with respect to other tax consequences of
the merger or any special circumstances that may affect the tax
treatment to you of the cash or shares of Corillian common stock
that you receive pursuant to the merger.
C:
Additional Matters Being Submitted to a Vote of InteliData
Stockholders (see page 81)
Because this stockholder meeting is also InteliData’s
regularly scheduled annual meeting of stockholders, the
stockholders are being asked to consider proposals for the
election of directors and ratification of InteliData’s
independent registered public accounting firm in addition to the
merger proposal. If the merger is approved by the stockholders
and consummated as contemplated by the merger agreement, passage
of these proposals will not have any effect following the
closing of the merger because the directors of Merger Sub will
be the directors of the surviving entity following the merger
with InteliData, and the surviving entity’s accounting will
be consolidated with Corillian’s. Corillian has engaged
KPMG LLP to act as its independent registered public accounting
firm. If, however, the InteliData
stockholders do not approve the merger proposal, their approval
of the other proposals will allow InteliData to continue its
normal operations without the added expense of an additional
stockholder meeting.
The InteliData board of directors recommends that the
stockholders of InteliData vote “FOR” the election of
directors and “FOR” the ratification of the
independent registered public accounting firm.
C:
Stockholder Vote Required for Additional Matters (see
page 32)
The proposal to elect directors requires a plurality of the
votes cast at the annual meeting. Ratification of the
independent registered public accounting firm does not require
stockholder approval, although the InteliData board of directors
has determined that the proposal should be submitted to the
stockholders. The proposal to ratify the independent registered
public accounting firm requires the affirmative vote of the
holders of a majority of the shares of InteliData common stock
outstanding on the record date; however, notwithstanding the
vote of the stockholders, InteliData’s audit committee may
direct the appointment of a new independent registered public
accounting firm at its discretion.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF
CORILLIAN
The table below presents selected historical financial data for
the three month periods ended March 31, 2005 and 2004,
which have been derived from its unaudited consolidated
financial statements, and selected Corillian historical
financial data for the five years ended December 31, 2004,
which have been derived from its audited consolidated financial
statements for those years. Historical results are not
necessarily indicative of the results to be expected in the
future. You should read the following table together with the
historical financial information and related notes that
Corillian has presented in its Quarterly Report on
Form 10-Q for the three month period ended March 31,2005, filed with the SEC on May 10, 2005, and Annual Report
on Form 10-K, for the year ended December 31, 2004,
filed with the SEC on March 16, 2005, Corillian’s
quarterly reports and other information on file with the SEC and
Management’s Discussion and Analysis of Financial Condition
and Results of Operations included in those reports. Corillian
has incorporated this material into this document by reference.
See “Where You Can Find More Information” beginning on
page 99.
Corillian recorded an impairment charge of $0.5 million in
2004; restructuring and litigation settlement charges of
$0.7 million and $2.6 million, respectively, in 2002;
and restructuring and impairment charges of $18.1 million
in 2001.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF
INTELIDATA
The table below presents selected historical financial data for
the three month periods ended March 31, 2005 and 2004,
which have been derived from its unaudited consolidated
financial statements, and selected InteliData historical
financial data for the five years ended December 31, 2004,
which have been derived from its audited consolidated financial
statements for those years. Historical results are not
necessarily indicative of the results to be expected in the
future. You should read the following table together with the
historical financial statements and related notes that
InteliData has presented in its Quarterly Report on
Form 10-Q for the three month period ended March 31,2005, filed with the SEC on May 10, 2005, and Annual Report
on Form 10-K, for the year ended December 31, 2004,
filed with the SEC on March 31, 2005, and accompanying this
proxy statement/ prospectus, InteliData’s quarterly reports
and other information on file with the SEC, and
Management’s Discussion and Analysis of Financial Condition
and Results of Operations included in those reports.
InteliData acquired Home Account Holdings, Inc. in January
2001.
(2)
InteliData recorded a goodwill impairment charge of
$25.8 million in 2004. See Note 12 to
InteliData’s consolidated financial statements for
additional detail.
(3)
InteliData sold its interest in Home Financial Network, Inc., a
company in which InteliData held approximately a
25% ownership interest, in 2000.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
OF
CORILLIAN AND INTELIDATA
The unaudited pro forma condensed combined balance sheet
combines the historical consolidated balance sheets of Corillian
and InteliData, giving effect to the merger as if it had been
consummated on March 31, 2005. The unaudited pro forma
condensed combined statement of operations combines the
historical consolidated statements of operations of Corillian
and InteliData, giving effect to the merger as if it had
occurred on January 1, 2004. The historical consolidated
financial information has been adjusted to give effect to pro
forma events that are (1) directly attributable to the
merger, (2) factually supportable, and (3) with
respect to the statement of operations, expected to have a
continuing impact on the combined results.
These unaudited pro forma condensed combined financial
statements should be read in conjunction with the historical
consolidated financial statements and accompanying notes of
Corillian and InteliData, which have been incorporated by
reference into this proxy statement/ prospectus. The unaudited
pro forma condensed combined financial statements are not
necessarily indicative of the operating results or financial
position that would have occurred if the merger had been
completed at the dates indicated.
The unaudited pro forma condensed combined financial statements
were prepared using the purchase method of accounting with
Corillian treated as the acquiring entity. Accordingly,
consideration paid by Corillian to complete the merger with
InteliData will be allocated to InteliData’s assets and
liabilities based upon their estimated fair values as of the
date of completion of the merger. The allocation is dependent
upon certain valuations and other studies that have not
progressed to a stage where there is sufficient information to
make a definitive allocation. Additionally, a final
determination of the fair value of InteliData’s assets and
liabilities will be based on the actual net tangible and
intangible assets of InteliData that exist as of the date of
completion of the merger. As such, a final determination cannot
be made prior to completion of the transaction. Accordingly, the
pro forma purchase price adjustments are preliminary, subject to
future adjustments and have been made solely for the purpose of
providing the unaudited pro forma condensed combined financial
information presented below.
Corillian expects to incur costs over the next year associated
with integrating the two businesses. Management’s
development of these integration plans is underway. The impact
of these plans, assuming they were in place at the date of
completion of the merger, could increase the amount of
liabilities recognized in purchase accounting in accordance with
EITF No. 95-3, Recognition of Liabilities in Connection
with a Purchase Business Combination and thus would increase
the amount of goodwill recognized. The unaudited pro forma
condensed combined financial statements do not reflect any
benefits that may result from synergies that may be derived from
any integration activities.
These unaudited pro forma condensed combined financial
statements reflect a preliminary allocation of the purchase
price as if the merger had been completed on March 31,2005, with respect to the unaudited pro forma condensed combined
balance sheet, and on January 1, 2004 for the year ended
December 31, 2004 and the three months ended March 31,2005, with respect to the unaudited pro forma condensed combined
statement of operations. The preliminary allocations are subject
to change based on finalization of the fair values of the
tangible and intangible assets acquired and liabilities assumed
as described above. The estimated purchase price of
$21.5 million has been calculated as follows (in
thousands):
The cash portion of the preliminary purchase price represents
$4,330,383, which is the estimated cash consideration, as
described in the “The Merger Agreement — Merger
Consideration” section. The fair value of shares issued
reflects the 4,918,032 shares of Corillian common stock to
be issued to InteliData shareholders valued at $3.38 per
share, the average closing price of Corillian’s common
stock for the five-day period beginning two days prior, and
concluding two days subsequent, to March 31, 2005 (the date
of the announcement of the Agreement and Plan of Merger). Merger
related transaction costs include our estimate for legal and
accounting fees and other external costs directly related to the
merger.
Under business combination accounting, the total preliminary
purchase price is allocated to InteliData’s net tangible
and identifiable intangible assets based on their estimated fair
values. The excess of the purchase price over the net tangible
and identifiable intangible assets is recorded as goodwill. The
estimated fair value of net liabilities assumed was established
based upon the unaudited March 31, 2005 consolidated
balance sheet of InteliData, as well as certain assumptions made
by Corillian management regarding the differences between the
historical value and the fair value of the assets acquired.
Additionally, Corillian has reflected approximately $1.8 million
of estimated restructuring costs comprised of employee
severance. Our estimates and assumptions are subject to change
upon finalization of the valuation. Based on our preliminary
evaluation, the total preliminary purchase price was allocated
as follows (in thousands):
Shares used in computing basic net income (loss) per share
38,717
51,084
43,635
(f)
Shares used in computing diluted net income (loss) per share
40,195
51,084
43,635
(f)
The following notes to the unaudited pro forma condensed
combined statement of operations are an integral part of this
statement:
(a)
Adjustment to reduce InteliData software maintenance revenues
based on a preliminary fair value adjustment related to the
customer maintenance obligation assumed. The preliminary fair
value represents an amount equivalent to the estimated cost to
fulfill the maintenance obligation assumed, plus an appropriate
profit margin. InteliData’s deferred revenue relates
primarily to software support contracts.
(b)
Adjustment to account for the elimination of InteliData’s
amortization of $720,000 and $180,000 for the year ended
December 31, 2004 and three months ended March 31,2005, respectively, related to its historical intangible assets
and its $25.8 million impairment charge for the year ended
December 31, 2004 to write off goodwill from previous
acquisitions.
(c)
Adjustment to record amortization expense related to the
identifiable intangible assets acquired. Such assets consist
primarily of developed technology and customer relationships
which are amortizable over their useful lives, currently
estimated to be between four and seven years. The fair value and
useful life estimate of these assets is preliminary and subject
to change.
(d)
Adjustment to record a reduction of interest income due to the
use of an estimated $6.6 million of cash related to
Corillian’s purchase of InteliData, including
$4.3 million cash consideration and $2.3 million of
transaction and restructuring costs.
(e)
Adjustment to record the income tax expense (benefit) from the
pro forma adjustments, less the intangible asset amortization
from (c) above, using a 2% effective tax rate based on the
annual effective tax rate for the respective periods.
(f)
Reflects the issuance of 4,918,032 shares of Corillian
Corporation common stock to InteliData stockholders to complete
the merger. 1,478,000 shares were excluded in computing pro
forma diluted earnings per share for the three months ended
March 31, 2005 as their inclusion would have been
anti-dilutive.
Adjustment to record the purchase of InteliData, which includes
estimates of $4.3 million in cash and $16.6 million in
Corillian common stock.
(b)
Adjustment to account for the elimination of InteliData’s
historical intangible assets.
(c)
Adjustment to record goodwill and the estimated fair value of
identifiable intangible assets acquired. Identifiable intangible
assets consist primarily of developed technology and customer
relationships which will be amortizable over their useful lives,
currently estimated to be between four and seven years. The fair
value and useful life estimates of these assets are preliminary.
(d)
Adjustment to record a liability for InteliData’s
transaction costs, consisting primarily of investment banking
fees. These costs are not included in the purchase price, but
are an increase to the net liabilities assumed.
(e)
Adjustment to record a preliminary fair value adjustment related
to the maintenance obligation assumed. The preliminary fair
value represents an amount equivalent to the estimated cost to
fulfill the maintenance obligation assumed plus an appropriate
profit margin. InteliData’s deferred revenue consists
primarily of software support contracts.
(f)
Adjustment to record the elimination of InteliData’s equity.
(g)
Adjustment to record estimated direct costs incurred to complete
the merger of $535,000, estimated costs of registering the
shares to be issued to InteliData shareholders of $250,000 and
an estimated restructuring liability of approximately
$1.8 million. Merger related transaction costs include
estimated costs for legal and accounting fees and other external
costs directly related to the merger. The restructuring
liability relates to employee severance costs based on our
current integrated plans.
Income Taxes
Both Corillian and InteliData have substantial gross deferred
tax assets primarily associated with net operating loss
carryforwards, which both companies have historically offset by
a full valuation allowance. The pro forma condensed combined
financial statements were prepared with an assumption that the
combined entity would maintain a full valuation allowance.
Accordingly, no adjustments are reflected for pro forma net
deferred tax assets or liabilities in the pro forma condensed
combined balance sheet.
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE
INFORMATION
The following table sets forth (i) historical basic and
diluted earnings per share, historical cash dividends per share
and historical book value per share of Corillian,
(ii) historical basic and diluted net income per share,
historical cash dividends per share and historical book value
per share of InteliData, (iii) unaudited pro forma combined
basic and diluted earnings per share, unaudited pro forma
combined cash dividends per share and unaudited pro forma
combined book value per share of Corillian after giving effect
to the merger and (iv) unaudited pro forma combined
equivalent basic and diluted earnings per share, unaudited pro
forma combined equivalent cash dividends per share and unaudited
pro forma combined equivalent book value per share of InteliData
based on a merger exchange rate of 0.0956 shares of
Corillian common stock for each share of InteliData common stock
(based upon the 51,128,492 shares of InteliData common
stock outstanding as of the date of this proxy
statement/prospectus, and without accounting for the possible
exercise of options or warrants to purchase common stock prior
to the closing of the merger). The information in the table
should be read in conjunction with the audited consolidated
financial statements of Corillian and InteliData, and the notes
thereto, which are incorporated by reference herein and the
unaudited pro forma condensed combined financial information and
notes thereto included elsewhere herein. The unaudited pro forma
condensed combined financial information is not necessarily
indicative of the earnings, dividends or book value per share
that would have been achieved had the merger been consummated as
of the beginning of the period presented and should not be
construed as representative of such amounts for any future dates
or periods.
Basic Earnings Per Share From Continuing Operations
Corillian historical
$
0.28
$
0.02
InteliData historical
$
(0.65
)
$
(0.04
)
Corillian pro forma combined(1)(2)
$
0.04
$
(0.03
)
InteliData pro forma equivalent(3)
$
0.00
$
0.00
Diluted Earnings Per Share From Continuing Operations
Corillian historical
$
0.26
$
0.02
InteliData historical
$
(0.65
)
$
(0.04
)
Corillian pro forma combined(1)(2)
$
0.04
$
(0.03
)
InteliData pro forma equivalent(3)
$
0.00
$
0.00
Dividends Per Share
Corillian historical
$
0.00
$
0.00
InteliData historical
$
0.00
$
0.00
Corillian pro forma
$
0.00
$
0.00
InteliData pro forma equivalent
$
0.00
$
0.00
Book Value Per Share at Period End
Corillian historical(4)
$
0.87
InteliData historical(4)
$
0.07
Corillian pro forma combined(5)(2)
$
1.15
InteliData pro forma equivalent(3)
$
0.11
(1)
Pro forma combined basic and diluted earnings per share is
computed using the weighted-average number of shares of
Corillian common stock outstanding, after issuance of Corillian
common stock in this merger, and it also gives effect to any
dilutive options.
(2)
See Unaudited Pro Forma Combined Financial Information included
elsewhere in this proxy statement/prospectus.
The InteliData equivalent pro forma combined per share amounts
are computed by multiplying the respective Corillian pro forma
combined amounts by the quotient determined by dividing the
number of shares of Corillian common stock to be issued in the
merger by the number of shares of InteliData common stock to be
converted into shares of Corillian common stock.
(4)
Historical book value per share is computed by dividing
shareholders’ equity by the number of shares of common
stock outstanding at the end of the period.
(5)
The pro forma combined book value per share is computed by
dividing pro forma shareholders’ equity, including the
effect of pro forma adjustments, by the pro forma number of
Corillian common stock which would have been outstanding had the
merger been consummated as of March 31, 2005.
InteliData’s common stock has traded on the Nasdaq SmallCap
Market since September 7, 2004, and on the Nasdaq National
Market System prior to September 7, 2004, both under the
symbol “INTD.” As of June 15, 2005, InteliData
had 650 stockholders of record. Corillian’s common
stock trades on the Nasdaq National Market System under the
symbol “CORI.” As of June 15, 2005, Corillian had
122 shareholders of record. The table below sets forth, for
the calendar quarters indicated, the high and low sales prices
of both Corillian and InteliData common stock as reported on the
Nasdaq National Market System and Nasdaq SmallCap Market, as
applicable:
Corillian
InteliData
High
Low
High
Low
2005:
First Quarter
$
4.95
$
2.82
$
0.77
$
0.27
Second Quarter through June [ ], 2005
$
[ ]
$
[ ]
$
[ ]
$
[ ]
2004:
First Quarter
$
8.15
$
4.30
$
2.11
$
1.09
Second Quarter
$
5.69
$
3.72
$
1.46
$
0.60
Third Quarter
$
6.25
$
4.04
$
0.70
$
0.29
Fourth Quarter
$
6.05
$
4.38
$
0.69
$
0.30
2003:
First Quarter
$
1.00
$
0.61
$
1.84
$
0.84
Second Quarter
$
2.10
$
0.64
$
3.24
$
1.19
Third Quarter
$
4.20
$
1.70
$
3.60
$
2.15
Fourth Quarter
$
7.45
$
3.52
$
2.62
$
1.40
The following table sets forth the closing sales prices of the
common stock of Corillian and the common stock of InteliData on
March 31, 2005, the last trading day before the public
announcement of the execution and delivery of the merger
agreement, and
[ ],
2005, the most recent date for which prices were practicably
available prior to the date of this proxy statement/ prospectus.
The table also sets forth the value of the fraction of a share
of Corillian common stock that an InteliData stockholder would
have received for one share of InteliData common stock, assuming
that the transactions had taken place on those dates.
CORILLIAN’S STOCK PRICE FLUCTUATES. EACH SHARE OF
INTELIDATA COMMON STOCK THAT IS EXCHANGED FOR CORILLIAN COMMON
STOCK WILL RECEIVE APPROXIMATELY 0.0956 SHARES OF CORILLIAN
COMMON STOCK, SUBJECT TO ADJUSTMENT. IF CORILLIAN’S STOCK
PRICE INCREASES OR DECREASES, THE VALUE OF THE MERGER
CONSIDERATION RECEIVED BY EACH INTELIDATA STOCKHOLDER WILL BE
HIGHER OR LOWER, RESPECTIVELY.
By voting in favor of the adoption and approval of the merger
agreement, you will be choosing to invest in shares of Corillian
common stock. An investment in shares of Corillian common stock
involves risk. In deciding whether to vote in favor of the
merger agreement, we urge you to consider all of the information
we have included in this document and its annexes and all of the
information included in the documents incorporated by reference.
See “Where You Can Find More Information” beginning on
page 99 of this proxy statement/ prospectus.
In addition, we urge you to pay particular attention to the
following risks related to the merger and risks related to
Corillian’s business and the business of the combined
company following the merger.
C:
General Risks Relating to the Proposed Merger
While Corillian’s share price varies according to
market factors, the stock exchange ratio is fixed and no
adjustment to the stock exchange ratio will be made as a result
of fluctuations in the market price of Corillian’s common
stock.
Corillian’s share price has been volatile in the past and
may continue to be volatile in the future. During the 12-month
period ended June [ ], 2005,
the closing price of Corillian common stock ranged from
$[ ]
to
$[ ].
As of
[ ],
2005, the date of this proxy statement/ prospectus, the closing
price of Corillian’s common stock was
$[ ].
Upon completion of the merger, each share of InteliData common
stock will be converted into the right to receive
0.0956 shares of Corillian common stock, subject to
adjustment in the event of the exercise of options or warrants
to purchase InteliData common stock, in addition to cash
consideration. The stock exchange ratio will not change even if
the market price of the Corillian common stock fluctuates. In
addition, neither party may withdraw from the merger nor may
InteliData resolicit the vote of its stockholders solely because
of changes in the market price of Corillian common stock. The
specific dollar value of Corillian common stock that InteliData
stockholders will receive upon completion of the merger will
depend on the market value of Corillian common stock at that
time. InteliData stockholders will not know the exact value of
Corillian common stock to be issued pursuant to the merger at
the time of the InteliData annual meeting of stockholders.
Corillian may be unable to successfully integrate
InteliData’s operations and fail to realize the anticipated
benefits of the merger, which could have a material adverse
effect on Corillian’s business, financial condition and
operating results.
The merger involves the integration of two companies that
previously operated independently. Although the businesses of
the two companies are complementary, the integration of the
departments, systems, business units, operating procedures and
information technologies of Corillian and InteliData will
present a significant challenge to management. We cannot assure
you that Corillian will be able to integrate and manage these
operations effectively or maintain or improve the historical
financial performances of Corillian and InteliData. The failure
to successfully integrate these systems and procedures could
have a material adverse effect on the results of operations and
financial condition of the combined company.
The difficulties of combining the companies’ operations
include:
•
the necessity of coordinating geographically separated
organizations;
•
integrating personnel with diverse business backgrounds;
creating uniform standards, controls, procedures, policies and
information systems;
•
integrating sales and business development operations; and
•
preserving important distribution relationships.
The process of integrating operations could cause an
interruption of, or loss of momentum in, the activities of one
or more of the combined company’s businesses and the loss
of key personnel. The integration of the two companies will
require the experience and expertise of certain InteliData
employees. We cannot assure you, however, that Corillian will be
successful in retaining these employees for the time period
necessary to successfully integrate InteliData’s operations
with those of Corillian. Corillian may need to reassign key
employees to manage InteliData’s operations, which could
have a negative impact on Corillian’s operations. The
diversion of management’s attention and any delays or
difficulties encountered in connection with the merger and the
integration of the two companies’ operations could have a
material adverse effect on the business and results of
operations of the combined company.
Corillian may be unable to realize the expected cost
savings and other synergies from the merger.
Even if Corillian is able to integrate the operations of
InteliData successfully, we do not assure you that this
integration will result in the realization of the full benefits
of the cost savings, synergies or revenue enhancements that
Corillian expects to result from this integration or that these
benefits will be achieved within the timeframe that Corillian
expects. The cost savings and other synergies from the merger
may be offset by costs incurred in integrating InteliData’s
operations, as well as by increases in other expenses, by
operating losses or by problems with Corillian’s or
InteliData’s businesses unrelated to the merger.
The market price of the shares of Corillian common stock
may be affected by factors different from those affecting the
shares of InteliData common stock.
Upon completion of the merger, holders of InteliData common
stock will become holders of Corillian common stock. Some of
Corillian’s current businesses and markets differ from
those of InteliData and, accordingly, the results of operations
of Corillian after the merger may be affected by factors
different from those currently affecting the results of
operations of InteliData. For a discussion of the business of
Corillian and InteliData and of factors to consider in
connection with their businesses, see the documents incorporated
by reference into this document and referred to under
“Where You Can Find More Information” beginning on
page 99.
The parties intend that the merger will constitute a
tax-free reorganization, but a successful assertion by the
Internal Revenue Service that the merger does not qualify as a
tax-free reorganization would result in the merger being fully
taxable to InteliData stockholders.
The parties intend that the merger will qualify as a
“reorganization” pursuant to Section 368(a) of
the Code. If the Internal Revenue Service were to successfully
assert that the merger does not qualify as a reorganization
within the meaning of Section 368(a) of the Code, then
InteliData stockholders may recognize more taxable gain for
U.S. federal income tax purposes than if the merger
qualifies as a “reorganization.”
The market price of Corillian’s common stock may
decline as a result of the merger.
The market price of Corillian’s common stock may decline as
a result of the merger for a number of reasons, including:
•
The integration of InteliData by Corillian may be unsuccessful;
•
Corillian may not achieve the perceived benefits of the merger
as rapidly as, or to the extent, anticipated by financial or
industry analysts;
The effect of the merger on Corillian’s financial results
may not be consistent with the expectations of financial or
industry analysts; or
•
InteliData could continue to suffer financial losses, which
could negatively impact the combined results of operations
following the merger.
These factors are, to some extent, beyond Corillian’s
control. In addition, for InteliData stockholders who hold their
shares in certificated form, there will be a time period between
the effective time of the merger and the time when InteliData
stockholders actually receive stock certificates evidencing
Corillian common stock. Until stock certificates are received,
InteliData stockholders will not be able to sell their shares of
Corillian common stock in the open market and, thus, will not be
able to avoid losses resulting from any decline in the market
price of Corillian common stock during this period.
InteliData’s officers and directors have conflicts of
interest that may influence them to support or approve the
merger.
Certain directors and officers of InteliData may receive change
of control payments that become effective upon consummation of
the merger or upon the happening of some other event in
connection with the merger, such as termination of employment,
that provide them with interests in the merger that are
different from, or in addition to, those of InteliData’s
stockholders. In addition, all directors and officers of
InteliData will receive indemnification and liability insurance
benefits from Corillian as a result of the merger. The directors
and officers of InteliData will also receive the per share
merger consideration for their shares of InteliData common stock
and some may receive compensation for the cancellation of their
InteliData stock options upon consummation of the merger.
These directors and officers could be more likely to support and
recommend the adoption of the merger agreement and the approval
of the transactions contemplated thereby than if they did not
hold these interests.
InteliData stockholders should consider whether these interests
might have influenced these directors and officers to support or
recommend the adoption of the merger agreement and the approval
of the transactions contemplated thereby.
Uncertainty regarding the merger may cause customers and
suppliers to delay or defer decisions concerning Corillian and
InteliData and adversely affect each company’s ability to
attract and retain key employees.
The merger will happen only if stated conditions are met,
including adoption of the merger agreement and approval of the
transactions contemplated thereby by InteliData’s
stockholders, and the absence of any material adverse effect in
the business of InteliData or Corillian. Many of the conditions
are outside the control of InteliData and Corillian, and both
parties also have rights to terminate the merger agreement.
Accordingly, there may be uncertainty regarding the completion
of the merger. This uncertainty may cause customers and
suppliers to delay or defer decisions concerning InteliData or
Corillian, which could negatively affect their respective
businesses. Customers and suppliers may also seek to change
existing agreements with InteliData or Corillian as a result of
the merger. Customers and suppliers who dealt with either
Corillian or InteliData in the past may not choose to continue
to do business with the combined company. Any delay or deferral
of those decisions or changes in existing agreements could have
a material adverse effect on the respective businesses of
InteliData and Corillian, regardless of whether the merger is
ultimately completed. Moreover, diversion of management focus
and resources from the day-to-day operation of the business to
matters relating to the merger could have a material adverse
effect on each company’s business, regardless of whether
the merger is completed.
Failure to retain key employees could diminish the
anticipated benefits of the merger.
The success of the merger will depend in part on the retention
of personnel critical to the business and operations of the
combined company due to, for example, their technical skills or
management
expertise. Employees may experience uncertainty about their
future role with InteliData and Corillian until strategies with
regard to these employees are announced or executed. If
InteliData and Corillian are unable to retain personnel that are
critical to the successful integration and future operations of
the companies, InteliData and Corillian could face disruptions
in their operations, loss of existing customers, loss of key
information, expertise or know-how, and unanticipated additional
recruitment and training costs. In addition, the loss of key
personnel could diminish the anticipated benefits of the merger.
The merger may go forward in certain circumstances even if
Corillian or InteliData suffers a material adverse
change.
In general, either party can refuse to complete the merger if a
material adverse effect occurs with regard to the other party
before the closing. However, neither party may refuse to
complete the merger on that basis as a result of:
•
Any decrease in the stock price of Corillian common stock in the
case of InteliData or InteliData common stock in the case of
Corillian; or the delisting of InteliData common stock from the
Nasdaq SmallCap Market; or
•
Any change, event, violation or inaccuracy resulting from
compliance with the terms and conditions of the merger
agreement, actions taken by InteliData at the request of
Corillian or a general decline in the financial markets in the
United States.
If adverse changes occur but Corillian and InteliData must still
complete the merger, Corillian’s stock price may suffer.
This in turn may reduce the value of the merger to InteliData
stockholders. In addition, even if a material adverse effect
occurs with regard to a party, the other party may still choose
to complete the merger.
The termination fee and restrictions on solicitation
contained in the merger agreement may discourage other companies
from trying to acquire InteliData.
With limited exceptions, the merger agreement prohibits
InteliData from entering into or soliciting any acquisition
proposal or offer for a merger or other business combination
with a party other than Corillian. InteliData has agreed to pay
Corillian a termination fee of $1.4 million in specified
circumstances, including those in which InteliData’s board
of directors withdraws its support of the merger with Corillian
to support a business combination with a third party. These
provisions could discourage other companies from trying to
acquire InteliData even though those other companies might be
willing to offer greater value to InteliData stockholders than
Corillian has offered pursuant to the merger agreement.
The rights of holders of InteliData common stock will
change as a result of the merger.
After the merger, your rights as a stockholder of Corillian will
be governed by Corillian’s amended and restated articles of
incorporation and bylaws, which are different from
InteliData’s amended and restated certificate of
incorporation and bylaws. As a result of these differences,
InteliData stockholders may have less control over corporate
actions proposed to be taken by Corillian than they would have
had over corporate actions proposed to be taken by InteliData.
For more information, see “Comparative Rights of Corillian
Shareholders and InteliData Stockholders,” beginning on
page 69.
Former InteliData stockholders will have limited ability
to influence Corillian’s actions and decisions following
the merger.
Following the merger, former InteliData stockholders will hold
approximately 11% of the outstanding shares of Corillian common
stock. As a result, former InteliData stockholders will have
only limited ability to influence Corillian’s business.
Former InteliData stockholders will not have separate approval
rights with respect to any actions or decisions of Corillian or
have separate representation on Corillian ’s board of
directors.
Risks Related to Corillian’s Business and the Combined
Company
The pro forma financial data included in this proxy
statement/ prospectus is preliminary and the combined
company’s actual financial position and results of
operations may differ significantly and adversely from the pro
forma amounts included in this proxy statement/
prospectus.
Because of the proximity of this proxy statement/ prospectus to
the date of the announcement of the proposed merger, the process
of valuing InteliData’s tangible and intangible assets and
liabilities, as well as evaluating InteliData’s accounting
policies for consistency with Corillian’s accounting
policies, is still in the very preliminary stages. Material
revisions to current estimates could be necessary as the
valuation process and accounting policy review are finalized.
The unaudited pro forma combined financial information contained
in this proxy statement/ prospectus is not necessarily
indicative of the results that actually would have been achieved
had the proposed merger been completed at the beginning of the
period indicated or that may be achieved in the future. We
provide no assurances as to how the operations and assets of
both companies would have been run if they had been combined
during the period indicated, or how they will be run in the
future, which, together with other factors, could have a
significant adverse effect on the results of operations and
financial position of the combined company.
Although Corillian recently has generated net income,
Corillian has a history of losses and may incur losses in future
periods if it is not able to, among other things, increase its
sales to new and existing customers.
Until the second quarter of 2003, Corillian incurred substantial
net losses in every quarter since it began operations. Corillian
generated net income of approximately $10.5 million during
the year ended December 31, 2004, and approximately
$5.1 million during the year ended December 31, 2003;
however, as of December 31, 2004, Corillian had an
accumulated deficit of approximately $97.4 million. If
Corillian does not sign contracts with new customers or provide
additional software and services to existing customers, it will
incur significant operating losses in future quarters. Corillian
may decide that it is necessary to further reduce its personnel
or other expenses to maintain its operations, and such
reductions may reduce Corillian’s ability to sell its
products and services. In addition, InteliData has sustained net
losses in the last four fiscal years. These losses may reduce
Corillian’s net income in the future.
Corillian’s quarterly results fluctuate significantly
and may fall short of anticipated levels, which may cause the
price of its common stock to decline.
Corillian’s and InteliData’s quarterly operating
results have varied in the past, and they expect the operating
results of the combined company will continue to vary from
quarter to quarter in the future. In future quarters,
Corillian’s operating results may be below the expectations
of public market analysts and investors, which could cause the
price of its common stock to decline. Corillian may also
announce that expected financial or operating results for a
particular period will be less than it anticipated, which could
cause the price of Corillian’s common stock to decline. In
addition, Corillian has difficulty predicting the volume and
timing of orders and recognizes a substantial portion of its
revenues on a percentage-of-completion basis. Any delays in
closing orders or implementation of products or services can
cause Corillian’s operating results to fall substantially
short of anticipated levels for any quarter. The acquisition of
InteliData could increase the difficulties in predicting
volumes, timing and delays. As a result of these and other
factors, Corillian believes period-to-period comparisons of its
historical results of operations are not necessarily meaningful
and are not a good predictor of its future performance.
If Corillian, or its implementation partners, do not
effectively implement Corillian’s solutions, Corillian may
not achieve anticipated revenues or gross margins.
Corillian’s solutions are complex and must integrate with
complex data processing systems. Implementing Corillian’s
solutions is a lengthy process, generally taking between 60 and
270 days to complete. In addition, Corillian generally
recognizes revenues on a percentage-of-completion basis, so its
revenues are often dependent on its ability to complete
implementations within the time periods that Corillian
establishes for its projects. Corillian relies on a combination
of internal and outsourced teams for its implementations. If
these teams encounter significant delays in implementing
Corillian’s solutions for a customer or fail to implement
its solutions effectively or at all, Corillian may not be able
to recognize any revenues from the contract or be required to
recognize negative revenues from the contract if its revised
project estimates indicate that Corillian recognized excess
revenues in prior periods. In addition, Corillian may incur
monetary damages or penalties if it is not successful in
completing projects on schedule.
From time to time, Corillian agrees to penalty provisions in its
contracts that require Corillian to make payments to its
customers if Corillian fails to meet specified milestones or
that permit its customers to terminate their contracts with
Corillian if Corillian fails to meet specified milestones. If
Corillian fails to perform in accordance with established
project schedules, Corillian may be forced to make substantial
payments as penalties or refunds and may lose its contractual
relationship with the applicable customers.
The lengthy sales cycles of Corillian’s products may
cause revenues and operating results to be unpredictable and to
vary significantly from period to period.
The sale and implementation of Corillian’s products and
services are often subject to delays because of its
customers’ internal budgets and procedures for approving
large capital expenditures and deploying new technologies within
their networks. As a result, the time between the date of
initial contact with a potential customer and the execution of a
contract with the customer typically ranges from three to nine
months. In addition, Corillian’s prospective
customers’ decision-making processes require Corillian to
provide a significant amount of information to them regarding
the use and benefits of its products. Corillian may expend
substantial funds and management resources during a sales cycle
and fail to make the sale.
Corillian may not achieve anticipated revenues if
Corillian does not successfully introduce new products or
develop upgrades or enhancements to its existing
products.
To date, Corillian has derived substantially all of its revenues
from licenses and professional and support services related to
the Corillian Voyager product and its related applications.
Corillian expects to add new products by acquisition, including
the acquisition of InteliData, partnering or internal
development and to develop enhancements to its existing
products. New or enhanced products may not be released on
schedule and may not achieve market acceptance. New products or
upgrades to existing products may contain defects when released,
which could damage Corillian’s relationship with its
customers or partners and further limit market acceptance of its
products and services. If Corillian is unable to ship or
implement new or enhanced products and services when planned, or
fails to achieve timely market acceptance of its new or enhanced
products and services, Corillian may lose sales and fail to
achieve anticipated revenues.
A small number of customers account for a substantial
portion of Corillian’s revenues in each period;
Corillian’s results of operations and financial condition
could suffer if it loses customers or fails to add additional
customers to its customer base.
Corillian derives a significant portion of its revenues from a
limited number of customers in each period. Accordingly, if
Corillian fails to close a sale with a major potential customer,
if a contract is delayed or deferred, or if an existing contract
expires or is cancelled and Corillian fails to replace the
contract with new business, its revenues would be adversely
affected. During the years ended December 31, 2004, and
December 31, 2003, two customers individually accounted for
more than 10% of consolidated revenues, and, in total, these two
customers accounted for approximately 29% and 28% of
consolidated revenues, respectively. Some customers of
Corillian’s are also customers of InteliData’s, and
thus the combined company will not see the revenue benefit that
the two companies individually experienced. Corillian expects
that a limited number of customers will continue to account for
a substantial portion of its revenues in each quarter in the
foreseeable future. If a customer terminates a Voyager contract
with Corillian early, Corillian would lose ongoing revenue
streams from annual
maintenance fees, hosting fees, professional service fees and
potential additional license and service fees for additional
increments of end users and for other Voyager applications.
Corillian’s partners may be unable to fulfill their
service obligations and cause Corillian to incur penalties or
other expenses with its customers.
Corillian resells products and services from other companies,
such as CheckFree, CashEdge, CenterPost and InfoImage. If these
vendors are unable to fulfill their contractual obligations as a
result of insolvency, a disaster or similar event or are unable
to provide the services in a commercially reasonable manner,
Corillian may be required to incur additional expenses to
provide the services to its customers or to pay penalties to its
customers for the suspension or termination of the services.
Corillian may need to raise additional financing to fund
its operations and may not be able to raise funds on beneficial
terms or at all.
Because it has a history of losses and has limited cash
resources and because InteliData has been incurring significant
operating losses, Corillian may need to raise financing in the
future to fund its operations, especially if the merger is
consummated. If Corillian is required to raise financing, it may
be required to sell equity or debt securities at severely
discounted prices and with terms that are superior to the rights
of its common shareholders, or Corillian may not be able to
raise financing at all. If Corillian sells equity or debt
securities, the price of its common stock could decrease
significantly and the interests of its common shareholders could
be diluted substantially.
Corillian’s facility and operations may be disabled
by a disaster or similar event, which could damage its
reputation and require Corillian to incur financial loss.
All of Corillian’s communications and network equipment
related to its operations are currently located in Hillsboro,
Oregon. Corillian does not currently have an alternate facility
that can serve as a center of business operations. Corillian
cannot assure that its data center and facility will operate
after a disaster. In addition, Corillian may experience problems
during the period following a disaster in reestablishing its
systems and infrastructure. Although Corillian has a disaster
recovery plan in place, Corillian does not currently have the
technology or facilities to instantly recover full Internet
services if its facility is not functioning. A disaster, such as
a fire, an earthquake, a terrorist attack or a flood, at its
facility could result in failures or interruptions in providing
Corillian’s products and services to its customers. In
addition, Corillian’s systems are vulnerable to operational
failures, losses in power, telecommunications failure and
similar events. Corillian has contracted to provide a certain
level of service to its customers and, consequently, a failure
or interruption of Corillian’s systems in the future could
cause it to refund fees to some of its customers to compensate
for decreased levels of service.
Competition in the market for Internet-based financial
services is intense and could reduce Corillian’s sales and
prevent Corillian from achieving profitability.
The market for Internet-based financial services is intensely
competitive and rapidly changing. Corillian expects competition
to persist and intensify, which could result in price
reductions, reduced gross margins and loss of market share for
its products and services. Corillian competes with a number of
companies in various segments of the Internet-based financial
services industry, and its competitors vary in size and in the
scope and breadth of the products and services they offer.
Corillian’s primary competitors for software platforms
designed to enable financial institutions to offer
Internet-based financial services, both domestically and
internationally, include S1, Digital Insight, Financial Fusion,
Online Resources and Communications, and Metavante. Corillian
also competes with companies that offer software platforms
designed for internal development of Internet-based financial
services software, such as IBM’s WebSphere. Within this
segment of Corillian’s industry, many companies are
consolidating, creating larger competitors with greater
resources and a broader range of products.
In addition, Corillian’s customers may develop competing
products. For example, a bank or brokerage may choose to develop
its own software platform for Internet-based financial services.
Several of the vendors offering data processing services to
financial institutions, including EDS, Fiserv, Jack Henry and
Metavante, also offer Internet banking solutions that compete
with Corillian’s solutions.
Many of Corillian’s competitors and potential competitors
have a number of significant advantages over Corillian,
including:
•
a longer operating history;
•
more extensive name recognition and marketing power;
•
preferred vendor status with Corillian’s existing and
potential customers; and
•
significantly greater financial, technical, marketing and other
resources, giving them the ability to respond more quickly to
new or changing opportunities, technologies and customer
requirements.
Consolidation in the financial services industry could
reduce the number of Corillian’s customers and potential
customers.
As a result of the mergers and acquisitions occurring in the
banking industry today, some of Corillian’s existing
customers could terminate their contracts with Corillian and
potential customers could break off negotiations with Corillian.
An existing or potential customer may be acquired by or merged
with another financial institution that uses competing
Internet-based financial products and services or does not
desire to continue the relationship with Corillian for some
other reason, which could result in the new entity terminating
the relationship with Corillian.
In addition, an existing or potential customer may be acquired
by or merged with one of Corillian’s existing customers
that licenses Corillian’s products under a contract with
more favorable terms and that can be applied to the acquired
customer’s business operations. This may result in a
reduction in Corillian’s anticipated revenues from the
acquired customer. Recently, two of Corillian’s largest
customers, J.P. Morgan Chase and Bank One, merged, and one
of Corillian’s customers, Charter One Bank, was acquired by
Citizens Bank.
If Corillian loses key personnel, Corillian could
experience reduced sales, delayed product development and
diversion of management resources.
Corillian’s success depends largely on the continued
contributions of its key management, technical, sales and
marketing, and professional services personnel, many of whom
would be difficult to replace. If one or more of its key
employees were to resign, the loss of personnel could result in
loss of sales, delays in new product development and diversion
of management resources. Corillian does not have employment
agreements with its senior managers or other key personnel.
If Corillian does not develop international operations as
expected or fails to address international market risks,
Corillian may not achieve anticipated sales growth.
To increase its revenues, Corillian pursued direct international
sales opportunities and opened an international office. However,
international demand for its products and services did not grow
significantly during 2001 or 2002, so Corillian significantly
reduced its direct investments internationally and is seeking
instead to expand international sales through resellers and
selective direct sales efforts. International expansion of its
business may be more difficult or take longer than Corillian
anticipates, and it may not be able to successfully market,
sell, deliver and support its products internationally.
Corillian will need to form additional relationships with
partners worldwide. These activities require significant
investments of time and capital from Corillian. If Corillian is
unable to develop international sales on a timely basis or at
all, it may not achieve anticipated sales growth, gross margins
or operating results. If Corillian is successful in
developing international sales, it will be subject to a number
of risks associated with international operations, including:
•
longer accounts receivable collection cycles;
•
expenses associated with localizing products for foreign markets;
•
difficulties in managing operations and partners across
disparate geographic areas;
•
difficulties in hiring qualified local personnel, finding
qualified partners and complying with disparate labor laws;
•
foreign currency exchange rate fluctuations;
•
difficulties associated with enforcing agreements and collecting
receivables through foreign legal systems; and
•
unexpected changes in regulatory requirements that impose
multiple conflicting tax laws and regulations.
If Corillian fails to address these risks, its results of
operations and financial condition may be adversely affected.
Acquisitions may be costly and difficult to integrate,
divert management resources or dilute shareholder value.
Corillian has considered and made strategic acquisitions in the
past and in the future may acquire or make investments in
complementary companies, products or technologies. Corillian may
not be able to successfully integrate these companies, products
or technologies. In connection with these acquisitions or
investments, Corillian could:
•
issue stock that would dilute its current shareholders’
percentage ownership;
•
incur debt and assume liabilities; and
•
incur amortization expenses related to intangible assets or
incur large impairment charges.
Future acquisitions also could pose numerous additional risks to
Corillian’s operations, including:
•
problems combining the purchased operations, technologies or
products;
•
problems integrating the business models of acquisition targets
with Corillian’s;
•
unanticipated costs;
•
diversion of management’s attention from Corillian’s
core business;
•
adverse effects on existing business relationships with
suppliers and customers;
•
entering markets in which Corillian has no or limited prior
experience; and
•
potential loss of key employees, particularly those of the
purchased organization.
If Corillian becomes subject to intellectual property
infringement claims, these claims could be costly and
time-consuming to defend, divert management attention or cause
product delays.
Corillian has in the past been, and may in the future be, sued
for allegedly infringing or misappropriating a third
party’s intellectual property rights. Any intellectual
property infringement claims against Corillian, with or without
merit, could be costly and time-consuming to defend, divert
Corillian’s management’s attention, or cause product
delays. Corillian expects that software product developers and
providers of Internet-based financial services will increasingly
be subject to infringement claims as the number of products and
competitors in its industry grows and the functionality of
products overlaps. If Corillian’s products were found to
infringe a third party’s proprietary rights, Corillian
could be required to
enter into royalty or licensing agreements in order to be able
to sell its products. Royalty and licensing agreements, if
required, may not be available on terms acceptable to Corillian
or at all.
There has been substantial litigation in the software and
Internet industries regarding intellectual property rights. It
is possible that, in the future, third parties may claim that
Corillian’s current or potential future products infringe
their intellectual property.
Network or Internet security problems could damage
Corillian’s reputation and business.
Corillian has in the past and might in the future experience
security incidents involving actual or attempted access to its
customers’ systems by unknown third parties. As a result of
these types of incidents, Corillian may incur contractual or
other legal liabilities. Security risks may also deter financial
service providers from purchasing Corillian’s products and
deter consumers of financial services from using
Corillian’s products or services. Corillian relies on
standard Internet security systems, all of which are licensed
from third parties, to provide the security and authentication
necessary to effect secure transmission of data over the
Internet. Corillian’s networks may be vulnerable to
unauthorized access, computer viruses and other disruptive
problems. In addition, advances in computer capabilities, new
discoveries in the field of cryptography or other events or
developments may render Corillian’s Internet security
measures inadequate.
Someone who is able to circumvent security measures could
misappropriate proprietary information or cause interruptions in
Corillian’s Internet operations. Corillian may need to
expend significant capital or other resources protecting against
the threat of security breaches or alleviating problems caused
by breaches. Eliminating computer viruses and alleviating other
security problems may result in interruptions, delays or
cessation of service to users accessing Internet sites that
deliver Corillian’s services, any of which could harm
Corillian’s business.
New technologies could render Corillian’s products
obsolete.
If Corillian is unable to develop products that respond to
changing technology, Corillian’s business could be harmed.
The market for Internet-based financial services is
characterized by rapid technological change, evolving industry
standards, changes in consumer demands and frequent new product
and service introductions.
Advances in Internet technology or in applications software
directed at financial services could lead to new competitive
products that have better performance or lower prices than
Corillian’s products and could render its products obsolete
and unmarketable. Corillian’s Voyager solutions were
designed to run on servers using the Windows NT, Windows
2000 and Windows 2003 operating systems. If a new software
language or operating system becomes standard or is widely
adopted in Corillian’s industry, Corillian may need to
rewrite portions of its products in another computer language or
for another operating system to remain competitive.
Defects in Corillian’s solutions and system errors in
its customers’ data processing systems after installing
Corillian’s solutions could result in loss of revenues,
delay in market acceptance and injury to Corillian’s
reputation.
Complex software products like Corillian’s may contain
undetected errors or defects that may be detected at any point
in the life of the product. Corillian has in the past discovered
software errors in its products. After implementation, errors
may be found from time to time in Corillian’s new products
or services, its enhanced products or services, or products or
services Corillian resells for strategic partners, such as
Yodlee’s data aggregation service. These errors could cause
Corillian to lose revenues or cause a delay in market acceptance
of its solutions or could result in liability for damages,
injury to Corillian’s reputation or increased warranty
costs.
Corillian’s products and services must interact with
other vendors’ products, which may not function
properly.
Corillian’s products are often used in transaction
processing systems that include other vendors’ products,
and, as a result, Corillian’s products must integrate
successfully with these existing systems. System errors, whether
caused by Corillian’s products or those of another vendor,
could adversely affect the market acceptance of its products,
and any necessary modifications could cause Corillian to incur
significant expenses.
If Corillian becomes subject to product liability
litigation, it could be costly and time consuming to
defend.
Since Corillian’s products are used to deliver services
that are integral to its customers’ businesses, errors,
defects or other performance problems could result in financial
or other damages to Corillian’s customers. Product
liability litigation arising from these errors, defects or
problems, even if it were unsuccessful, would be time consuming
and costly to defend. Existing or future laws or unfavorable
judicial decisions could negate any limitation of liability
provisions that are included in Corillian’s license
agreements.
If Corillian is unable to protect its intellectual
property, Corillian may lose a valuable competitive advantage or
be forced to incur costly litigation to protect its
rights.
Corillian’s future success and ability to compete depends
in part upon its proprietary technology, but its protective
measures may prove inadequate. Corillian relies on a combination
of copyright, trademark, patent and trade secret laws and
contractual provisions to establish and protect its proprietary
rights. None of Corillian’s technology is patented.
Corillian has obtained federal trademark registration for some
of its marks and its logo. Corillian has applied for, but has
not yet obtained, patents on technology it has developed. If
Corillian does not receive approval for these patents, it may be
unable to use this technology without restriction or to prevent
others from using this technology.
Despite Corillian’s efforts to protect its intellectual
property, a third party could copy or otherwise obtain
Corillian’s software or other proprietary information
without authorization, or could develop software competitive to
Corillian’s. Corillian’s competitors may independently
develop similar technology, duplicate its products or design
around Corillian’s intellectual property rights. In
addition, the laws of some foreign countries do not protect
Corillian’s proprietary rights to as great an extent as do
the laws of the United States, and Corillian expects the use of
its products will become more difficult to monitor if Corillian
increases its international presence.
Corillian may have to litigate to enforce its intellectual
property rights, to protect its trade secrets or know-how or to
determine their scope, validity or enforceability. Enforcing or
defending Corillian’s intellectual property rights is
expensive, could cause the diversion of Corillian’s
resources and may not prove successful. If Corillian is unable
to protect its intellectual property, it may lose a valuable
competitive advantage.
Increasing government regulation of the Internet and the
financial services industry could limit the market for
Corillian’s products and services, impose on Corillian
liability for transmission of protected data and increase its
expenses.
Numerous federal agencies have recently adopted rules and
regulations protecting consumer privacy and establishing
guidelines for financial institutions to follow in selecting
technology vendors for solutions such as Corillian’s
solutions. Corillian believes its business does not currently
subject it to any of these rules or regulations that would
adversely affect Corillian’s business. However, these rules
and regulations are new and may be interpreted to apply to
Corillian’s business in a manner that could make its
business more onerous or costly.
As the Internet continues to evolve, Corillian expects federal,
state and foreign governments to adopt more laws and regulations
covering issues such as user privacy, taxation of goods and
services provided over the Internet, pricing, content and
quality of products and services. If enacted, these laws and
regulations could limit the market for Internet-based financial
services.
If enacted or deemed applicable to Corillian, some laws, rules
or regulations applicable to financial service activities could
render Corillian’s business or operations more costly and
less viable. The financial services industry is subject to
extensive and complex federal and state regulation, and
financial institutions operate under high levels of governmental
supervision. Corillian’s customers must ensure its services
and related products work within the extensive and evolving
regulatory requirements applicable to them. Corillian may become
subject to direct regulation as the market for its business
evolves. Federal, state or foreign authorities could adopt laws,
rules or regulations affecting Corillian’s business
operations, such as requiring Corillian to comply with data,
record keeping and other processing requirements. Any of these
laws, rules or regulations, or new laws, rules and regulations
affecting Corillian’s customers’ businesses, could
lead to increased operating costs and could also reduce the
convenience and functionality of Corillian’s services,
possibly resulting in reduced market acceptance.
A number of proposals at the federal, state and local level and
by the governments of significant foreign countries would, if
enacted, expand the scope of regulation of Internet-based
financial services and could impose taxes on the sale of goods
and services and other Internet activities. Any development that
substantially impairs the growth of the Internet or its
acceptance as a medium for transaction processing could have a
material adverse effect on Corillian’s business, financial
condition and operating results.
C:
INTELIDATA ANNUAL MEETING
General
This proxy statement/ prospectus and related form of proxy are
first being mailed by InteliData to holders of InteliData common
stock on or about
[ ],
2005, in connection with the solicitation of proxies by the
InteliData board of directors for use at the annual meeting to
be held on
[ ],
beginning at
[ ]
at InteliData’s corporate headquarters at 11600 Sunrise
Valley Drive, Reston, Virginia20191, and at any adjournments or
postponements of the meeting.
C:
Matters to Be Considered
The purpose of the annual meeting is to consider and vote on the
following proposals:
•
To adopt the merger agreement, dated as of March 31, 2005,
among InteliData Technologies Corporation, Corillian Corporation
and Wizard Acquisition Corporation, a wholly owned subsidiary of
Corillian (“Merger Sub”), and to approve the
transactions contemplated thereby;
•
To elect two Class III members and one Class II member
to InteliData’s board of directors; and
•
To ratify the selection of Deloitte & Touche LLP as
InteliData’s independent registered public accounting firm
for the year ending December 31, 2005.
Such other business as may properly come before the annual
meeting or any adjournment or postponement of the meeting may
also be considered and transacted.
Proxies
Even if you are currently planning to attend InteliData’s
annual meeting, we urge you to submit a properly executed proxy,
by filling out, signing and sending back the accompanying proxy
card. You may revoke your proxy at any time before it is
exercised by:
If your shares are held in “street name,” you should
follow the instructions of your broker regarding revocation of
proxies and not the foregoing instructions.
C:
Solicitation of Proxies
InteliData will bear the entire cost of soliciting proxies, but
InteliData and Corillian will share equally the cost of printing
and filing of this document. InteliData has retained
Morrow & Co., Inc. to aid in the solicitation of
proxies and to verify records relating to the solicitation.
Morrow & Co., Inc. will receive a fee for its services
of
$[ ]
and expense reimbursement.
In addition to solicitation by mail, the directors, officers and
employees of InteliData may, without additional compensation,
solicit proxies from InteliData stockholders by telephone,
facsimile or other electronic means or in person. InteliData
will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send the proxy materials
to the beneficial owners of InteliData common stock held of
record by these persons. InteliData will reimburse these
custodians, nominees and fiduciaries for their reasonable
expenses in connection with the solicitation of proxies.
C:
Record Date and Quorum
InteliData’s board of directors has fixed the close of
business on June 27, 2005, as the record date for
determining the InteliData stockholders entitled to receive
notice of and vote at the annual meeting. At that time, there
were
[ ] shares
of InteliData common stock outstanding.
The presence, in person or by properly executed proxy, of the
holders of a majority of the voting power of the shares of
InteliData common stock outstanding on the record date is
necessary to constitute a quorum at the annual meeting.
Abstentions will be counted solely for the purpose of
determining whether a quorum is present. There must be a quorum
in order for the vote on the proposal to occur.
C:
Voting Rights and Vote Required
Shares representing a majority of the shares of InteliData
common stock outstanding on the record date must vote
“FOR” the merger proposal in order for it to be
adopted by InteliData. You are entitled to one vote for each
share of InteliData common stock you held on the record date.
The proposal to elect directors requires a plurality of the
votes cast at the annual meeting. Ratification of the
independent registered public accounting firm does not require
stockholder approval, although the InteliData board of directors
has determined that the proposal should be submitted to the
stockholders. The proposal to ratify the independent registered
public accounting firm requires the affirmative vote of the
holders of a majority of the shares of InteliData common stock
outstanding on the record date; however, notwithstanding the
vote of the stockholders, InteliData’s audit committee may
direct the appointment of a new independent registered public
accounting firm at its discretion.
Because the proposal to adopt the merger agreement and to
approve the transactions contemplated thereby requires the
affirmative vote of a majority of the shares of InteliData
common stock outstanding on the record date, the failure to vote
in person or by proxy and abstentions will have the same effect
as
voting against the proposal. Therefore, InteliData’s board
of directors urges you to submit your proxy by mail. IF YOU
SIGN, DATE AND MAIL YOUR PROXY CARD WITHOUT INDICATING HOW YOU
WANT TO VOTE, YOUR PROXY WILL BE COUNTED AS A VOTE
“FOR” THE PROPOSAL TO ADOPT THE MERGER AGREEMENT
AND TO APPROVE THE TRANSACTIONS CONTEMPLATED THEREBY,
“FOR” THE ELECTION OF DIRECTORS AND “FOR”
THE RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
C:
Share Ownership of Management and Certain Beneficial
Stockholders
InteliData directors and officers, who collectively own
approximately 0.7% of InteliData’s common stock, have
granted Corillian a proxy to vote their shares “FOR”
the proposal to adopt the merger agreement and to approve the
transactions contemplated thereby. However, if the merger
agreement terminates in accordance with its terms, these voting
agreements will also terminate. See “Agreements to
Facilitate Merger” beginning on page 67.
C:
Recommendation of InteliData’s Board of Directors
InteliData’s board of directors has unanimously approved
and declared advisable the merger agreement and the transactions
contemplated thereby. The board believes that the merger
agreement and the transactions contemplated thereby are in the
best interests of InteliData and its stockholders and
unanimously recommends that you vote “FOR” the
proposal to adopt the merger agreement and to approve the
transactions contemplated thereby.
See “The Merger Agreement — InteliData’s
Reasons for the Merger; Recommendation of InteliData’s
Board of Directors” beginning on page 36 for a more
detailed discussion of InteliData’s board of
directors’ recommendation with respect to the merger
proposal.
InteliData’s board of directors also unanimously recommends
that the stockholders vote “FOR” the election of
directors and “FOR” the ratification of the
independent registered public accounting firm.
C:
DELISTING AND DEREGISTRATION OF INTELIDATA COMMON STOCK
If the merger is completed, InteliData common stock will be
delisted from the Nasdaq SmallCap Market and will be
deregistered under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).
C:
QUOTATION ON THE NASDAQ NATIONAL MARKET SYSTEM
The merger agreement provides that Corillian will use its
reasonable efforts to cause the shares of Corillian common stock
to be issued in the merger to be approved for trading on the
Nasdaq National Market System, and such approval of trading is a
condition to the closing of the merger.
C:
THE MERGER AND SPECIAL FACTORS RELATED TO THE MERGER
This section contains material information pertaining to the
proposed merger. The following summary is not complete and is
subject to, and qualified in its entirety by reference to, the
complete text of the merger agreement, which is incorporated by
reference and attached as Appendix A to this
document. WE URGE YOU TO READ CAREFULLY THE FULL TEXT OF THE
MERGER AGREEMENT. The agreement to facilitate merger is
described in the section “Agreements to Facilitate
Merger” beginning on page 67.
Structure
Subject to the terms and conditions of the merger agreement, and
in accordance with Delaware law, at the completion of the
merger, InteliData will merge with and into Merger Sub, a wholly
owned
subsidiary of Corillian. Merger Sub will be the surviving
corporation in the merger and will continue its corporate
existence under the laws of Delaware under the name
“Corillian Payment Solutions, Inc.” When the merger is
completed, the separate corporate existence of InteliData will
terminate.
C:
Background of the Merger
Since January 2001, when InteliData acquired Home Account,
InteliData’s board of directors and management have been
evaluating methods by which InteliData could expand its
operations or be provided with the financial resources to
continue development of InteliData’s promising technology.
As part of that process, InteliData’s board of directors
engaged Wachovia on four separate occasions during 2001 through
2004 to evaluate a full range of strategic alternatives,
including acquisitions, mergers, partnerships, sale of a
division, or sale of the entire company.
On February 24, 2004, at the request of InteliData’s
board of directors, Wachovia met with the board to discuss
launching a process to solicit possible interest in the
acquisition of InteliData. At this meeting, the InteliData board
unanimously authorized Wachovia to commence the process of
soliciting potential interest in acquiring the company. During
the months of February, March and April 2004, Wachovia worked
with InteliData’s management to prepare a confidential
information memorandum describing InteliData and supplementary
materials describing the credit card presentment and community
online banking businesses of InteliData.
On March 8, 2004, Wachovia began contacting potential
acquirers.
On May 5, 2004, InteliData issued its earnings release for
the first quarter of 2004. In this release, InteliData announced
that Wachovia had been engaged to assist its board in evaluating
its strategic alternatives.
On August 2, 2004, Wachovia met with InteliData’s
board to provide an update of the process. Wachovia reported
that during May 2004 through August 2004, Wachovia had held
discussions with 63 potential buyers. Of the 63 parties
contacted, Wachovia sent to 21 a confidential information
memorandum regarding InteliData and sent to 8 confidential
supplementary materials regarding the credit card presentment
and online banking business of InteliData. In its conversations
with the potential buyers, Wachovia learned that such potential
buyers had concerns about InteliData’s market valuation.
Several parties also stated that their interest in acquiring
InteliData was diminished by their lack of interest in the
credit card presentment and community online banking pieces of
the business. At that time, only one party submitted an
indication of interest for InteliData, which that party
subsequently decided not to pursue.
Based on this information and other factors, InteliData’s
board of directors determined to focus for the time being on
opportunities to divest the credit card presentment and
community online banking pieces of the business. The Board
believed that such a divestiture would provide InteliData with
improved financial resources that would both enable it to
continue to develop its technology and would enhance marketing
efforts to potential financial institution customers. In light
of the new focus, on October 1, 2004, InteliData’s
board of directors amended the engagement letter with Wachovia
to specifically include a sale of the credit card presentment
and community online banking piece of the business.
During August 2004 through February 2005, InteliData and
Wachovia selectively marketed the credit card presentment and
community online banking piece of the business to strategic
partners. InteliData received written proposals to acquire this
piece of the business from two potential acquirers, referred to
herein as Company Y and Company Z. Company Y submitted an
initial offer of $2.5 million, and Company Z submitted an
initial offer in the range of $4.5 million to
$6.5 million. After due diligence, the parties revised
their offers to $1.75 million and $1.6 million,
respectively. Company Y then declined to move forward with the
potential acquisition, citing lack of strategic fit.
During this time period, Wachovia and InteliData’s
management continued selective conversations with certain
parties regarding a sale of the entire company. On
February 17, 2005, InteliData entered into an exclusivity
agreement with Company Z for the credit card presentment and
community online banking
piece of the business. This agreement permitted InteliData to
continue to explore opportunities for selling the other portions
of InteliData’s business.
On March 1, 2005, representatives of Corillian met with
InteliData’s management to discuss a potential merger with
InteliData following divestiture of the credit card presentment
and community online banking businesses.
Thereafter, Wachovia and InteliData’s management held
discussions with Corillian regarding a potential combination
with InteliData (not including the credit card presentment and
community online banking piece of the business). Wachovia
presented Corillian with a financial model combining the two
companies on such a basis.
In a meeting with InteliData’s board of directors on
March 8, 2005, Wachovia presented detailed financials and
customer information, projections and other information about
Corillian and discussed Corillian’s verbal indication of
interest to acquire all of InteliData for stock and cash of
$19.5 million or to acquire InteliData without the credit
card presentment and community online banking piece of the
business for $15.1 million. After discussions of
Corillian’s proposals and the status of negotiations with
Company Z, InteliData’s board of directors instructed
Wachovia to inform Company Z that the fiduciary duties of
InteliData’s board would not allow it to approve the
divestiture of this piece of the business on the proposed terms
until it had fully explored the unsolicited proposal to acquire
the entire company. InteliData’s board also expressed
concerns with some of the material terms of
Company Z’s proposed purchase agreement, such as the
proposed escrow, indemnification provisions and representations
and warranties.
From March 8 through March 11, 2005, Wachovia and
Hunton & Williams, InteliData’s outside legal
counsel, negotiated amendments to the exclusivity agreement with
Company Z in order to allow InteliData to pursue a merger
of the entire business with Corillian. InteliData agreed to pay
diligence-related expenses to Company Z if, by
March 25, 2005, InteliData had not re-initiated discussions
with Company Z.
Thereafter, InteliData management, Corillian management and
their respective representatives continued to conduct the due
diligence process and to discuss the financial terms of a
transaction.
On March 17, 2005, Corillian sent a draft exclusivity
agreement to InteliData. Corillian also proposed more detailed
terms of a potential transaction, with an aggregate purchase
price for the entire business in the amount of $20 million.
Of that amount, between two-thirds and three-quarters would be
payable in Corillian stock while the remainder would be payable
in cash. Proposed deal protection provisions included a
$1 million cash breakup fee, an option to acquire 19.9% of
InteliData’s stock and an option to acquire the credit card
presentment and community online banking piece of the business
for $1.5 million.
From March 17 through March 22, 2005, Wachovia and
Hunton & Williams negotiated certain terms of the
proposed transaction with Corillian and its counsel, Perkins
Coie LLP. Matters discussed included the stock component of the
consideration and the proposed breakup provisions. The parties
discussed fixing the exchange ratio at approximately 0.0954
Corillian common shares per InteliData common share based on the
average closing sales price of Corillian’s common stock as
quoted in the Nasdaq National Market for the 20-day trading
period ending on March 18, 2005 ($3.05 per share).
With respect to deal protection provisions, the parties agreed
to a $1.4 million breakup fee and eliminated the other
proposed provisions.
On March 22, 2005, InteliData and Corillian signed an
exclusivity agreement.
Thereafter, InteliData’s management and Hunton &
Williams negotiated the terms of a definitive purchase agreement
with Corillian and Perkins Coie. Due diligence also was
performed by all parties. During this period, Corillian informed
InteliData that, based upon certain findings during due
diligence, it was proposing to reduce the cash portion of the
purchase price by $500,000, and by a potential additional
$475,000, relating to contingent liabilities of InteliData.
InteliData’s board of directors met on March 29, 2005,
and March 30, 2005, to discuss the proposed terms of the
transaction and to receive information from Wachovia and
Hunton & Williams. The parties thereafter agreed to
reduce the cash portion of the
purchase price by $500,000, plus up to an additional $275,000,
relating to contingent liabilities of InteliData, with such
amount being reduced by settling the liabilities for a lesser
amount prior to closing the merger. In June 2005, pursuant to
the merger agreement, InteliData and Corillian determined the
amount to be deducted from the cash portion of the merger
consideration relating to the contingent liabilities to be
$234,200. This results in an estimated aggregate cash
consideration of $4.3 million.
On March 31, 2005, after completion of due diligence, a
review of all the terms of the transaction, a report from
Hunton & Williams on the legal aspects of the
transaction and a report from Wachovia as to the fairness of the
merger consideration to InteliData’s stockholders from a
financial point of view, InteliData’s board unanimously
approved the merger agreement. That same day, InteliData
executed the merger agreement and issued a press release
announcing the execution.
C:
InteliData’s Reasons for the Merger; Recommendation of
InteliData’s Board of Directors
At a meeting held on March 31, 2005, the InteliData board
of directors unanimously:
•
determined that the merger is advisable, fair to and in the best
interests of InteliData and its stockholders;
•
approved the merger agreement;
•
directed that the merger agreement and the transactions
contemplated thereby be submitted for consideration by
InteliData stockholders at an InteliData annual meeting; and
•
resolved to recommend that the InteliData stockholders adopt the
merger agreement and the transactions contemplated thereby.
In reaching its decision, the InteliData board of directors
identified a number of reasons for, and potential benefits to
InteliData stockholders of, the merger, including, among others:
•
InteliData has experienced flat or declining revenues since
2002, has had an operating loss every year for the last five
years, has experienced substantial declines in customer orders
over the past year and is uncertain about its ability to
continue as an independent company;
•
InteliData’s customers have expressed concerns regarding
InteliData’s viability as a sustainable business, and the
combination with Corillian could mitigate these concerns;
•
The performance of InteliData common stock has consistently
declined over the past years and InteliData is having difficulty
maintaining quotation of its common stock on Nasdaq;
•
Corillian’s proposal has presented InteliData with a viable
strategic alternative while affording its stockholders the
opportunity to sell their common stock for Corillian stock and
cash at a price (based on the March 30, 2005 closing per
share price of Corillian stock) that represents a premium of
approximately 32.3% over the closing price immediately prior to
the public announcement of the proposed merger;
•
InteliData’s board concluded that the proposed merger
better accomplished its goals as more fully described under
“Background of the Merger” on page 34.
•
The combined experience, financial resources, number of
employees, and breadth of product offering may allow the
combined company to respond more quickly and effectively to
technological change, competition and market demands; and
•
The combined company may benefit from cost savings synergies
that may be achieved from savings of costs associated with being
a separate public company and other operating efficiencies.
In reaching its decision to approve the merger agreement and
recommend the adoption of the merger to the InteliData
stockholders, the InteliData board of directors consulted with
InteliData’s management and legal counsel and with Wachovia
regarding the strategic, operational, financial and other
aspects of the merger and discussed with Wachovia its financial
analysis prepared in connection with its fairness opinion.
In the course of reaching its decision to approve the merger
agreement, the factors the board considered included, but were
not limited to, the following:
•
the reasons for the merger described above;
•
the fairness opinion of Wachovia regarding the merger
consideration to be received in the transaction and the
financial analysis presented to the InteliData board of
directors in connection with rendering such fairness opinion;
•
reports from InteliData’s management and legal counsel as
to the results of their respective due diligence investigations
of Corillian;
•
historical information concerning InteliData’s and
Corillian’s respective businesses, prospects, financial
performance and condition, operations, management and
competitive position, including the results of operations for
each company;
•
the terms of the merger agreement, including the structure and
overall valuation of the transaction and the belief that the
terms of the merger agreement, including the parties’
representations, warranties and covenants, and the conditions to
their respective obligations, are reasonable;
•
the liquidity that the cash component of the transaction
consideration would provide to InteliData’s stockholders;
•
InteliData’s management’s view of the prospects for
InteliData as an independent company;
•
the structuring of the proposed combination such that InteliData
stockholders would not be immediately taxed on the stock portion
of the merger consideration;
•
the provisions of the merger agreement that permit InteliData,
prior to stockholder approval of the merger agreement, to
negotiate with third parties under certain circumstances and
terminate the merger agreement in the event of a superior
competing transaction;
•
InteliData’s deteriorating cash position and continued
operating losses;
•
the steady decline of InteliData’s stock price since the
third quarter of 2003, when it closed at a high of
$3.60 per share, including the significant decline in
InteliData’s stock price since the second quarter of 2004,
falling from a high of $1.46 to a low in the first quarter of
2005 of $0.27;
•
the time and expense required in order to meet the various
public company reporting obligations, which have increased
significantly as a result of the internal control reporting
requirements of Section 404 of the Sarbanes-Oxley Act of
2002;
•
the proposed merger consideration of an estimated $0.41 per
share (based on the March 30, 2005 closing price of
Corillian stock), which constitutes a premium of approximately
32.3%, 35.2% and 21.6% over the average one-day,
five-trading-day and 20-trading-day closing prices of InteliData
stock immediately prior to the public announcement of the
proposed merger;
•
that, after engaging in a competitive auction process to solicit
proposals from the most likely acquirers of InteliData (pursuant
to the publicly announced engagement by InteliData of Wachovia),
which were familiar with InteliData and its business and which
InteliData’s board of directors determined were in the best
position to offer competitively attractive acquisition
proposals, the merger with Corillian was the most attractive
transaction for InteliData stockholders and the only final offer
for the acquisition of more than a portion of InteliData’s
business;
•
the portion of stock consideration in the proposed merger, which
will provide InteliData’s stockholders with ownership of
approximately 10.9% of Corillian stock post-merger;
•
impact of the merger on InteliData’s customers, strategic
partners and employees; and
•
the compatibility of the businesses of InteliData and Corillian.
In its deliberations concerning the proposed merger, the
InteliData board of directors also considered the potential
adverse impact of other factors, including:
•
the ongoing risks the combined company would face in the
industry, taking into account the challenging financial services
environment and its effect on InteliData’s business on a
stand-alone basis;
•
the risk that the potential benefits anticipated as a result of
the merger do not materialize or are substantially delayed;
•
the fact that to the extent that the stockholders of InteliData
receive cash consideration in accordance with the merger
agreement, they will not participate in any future growth
potential of the combined company;
•
the risk that, despite the efforts of the combined company, key
management, marketing, technical, administrative and other
personnel might not remain employed by the combined company;
•
the possible effects of the provisions in the merger agreement
regarding termination fees;
•
the fact that the stock portion of the merger consideration is
fixed, subject only to limited adjustments, and may decline in
value prior to the consummation of the merger;
•
the restrictions that the merger agreement imposes on
InteliData’s ability to operate its business until the
transaction closes or the merger agreement is terminated;
•
the interests that certain of InteliData’s directors and
officers may have with respect to the merger in addition to
their interests as stockholders generally, as described in
“Interests of Certain Persons in the Merger” beginning
on page 51;
•
the risk that the merger might not be consummated and the effect
of the public announcement of the merger on InteliData’s
sales, operating results and stock price and ability to attract
and retain key management, sales and marketing and technical
personnel; and
•
the other applicable risks described in this proxy
statement/prospectus under “Risk Factors” beginning on
page 20.
After due consideration, the InteliData board of directors
concluded that the potential benefits of the merger with
Corillian to InteliData stockholders outweighed the risks
associated with the merger. The above discussion of the material
factors considered by the InteliData board of directors is not
intended to be exhaustive, but does set forth principal factors
considered by the InteliData board. The InteliData board of
directors reached the unanimous decision to approve the merger
agreement in light of the various factors described above and
the other factors that each member of the board felt were
appropriate. In view of the variety of factors considered by the
InteliData board, the board did not find it constructive to and
did not attempt to quantify, rank or otherwise assign relative
weights to the factors considered in reaching its decision.
Rather, InteliData’s board of directors considered the
totality of the information presented to it and the
investigation conducted by it. In considering the factors
discussed above, individual directors may have given different
weights to different factors.
InteliData’s board of directors retained Wachovia
Securities to act as its exclusive financial advisor in
connection with its review of strategic alternatives, including
a potential sale of InteliData. InteliData’s board of
directors selected Wachovia based on its qualifications,
expertise and reputation. Representatives of Wachovia
participated in a meeting of the board of directors of
InteliData held on March 31, 2005, at which the board
discussed and approved the merger and recommended the merger to
the stockholders for their approval. At the meeting, Wachovia
rendered its oral opinion, which was subsequently confirmed in
writing, to the board of directors of InteliData that, as of
March 31, 2005, the date of the written fairness opinion,
and subject to and based on the assumptions made, procedures
followed, matters considered and limitations of the review
undertaken in such opinion, the merger consideration to be
received by holders of
shares of InteliData common stock pursuant to the merger
agreement was fair, from a financial point of view, to such
holders.
THE FULL TEXT OF THE WRITTEN OPINION OF WACHOVIA, DATED
MARCH 31, 2005, WHICH SETS FORTH THE ASSUMPTIONS MADE,
PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE
OPINION AND ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE
OPINION, IS ATTACHED AS APPENDIX C TO, AND IS
INCORPORATED BY REFERENCE IN, THIS PROXY STATEMENT/PROSPECTUS.
THE OPINION OF WACHOVIA IS DIRECTED FOR THE INFORMATION AND USE
OF THE BOARD OF DIRECTORS OF INTELIDATA IN CONNECTION WITH ITS
CONSIDERATION OF THE MERGER AND RELATES ONLY TO THE FAIRNESS,
FROM A FINANCIAL POINT OF VIEW, TO THE STOCKHOLDERS OF THE
MERGER CONSIDERATION, AND DOES NOT AND SHALL NOT CONSTITUTE A
RECOMMENDATION AS TO HOW ANY HOLDER OF SHARES OF INTELIDATA
COMMON STOCK SHOULD VOTE IN CONNECTION WITH THE MERGER AGREEMENT
OR ANY OTHER MATTER RELATED THERETO. YOU SHOULD CAREFULLY READ
THE OPINION IN ITS ENTIRETY.
In arriving at its opinion, Wachovia, among other things:
•
reviewed the merger agreement;
•
reviewed certain business, financial and other information
regarding each of Corillian and InteliData that was publicly
available;
•
reviewed certain current business, financial and other
information about Corillian that was furnished to Wachovia by
Corillian’s management, and which Wachovia discussed with
Corillian’s management;
•
reviewed certain current business, financial and other
information regarding InteliData that was furnished to Wachovia
by InteliData’s management, and which Wachovia discussed
with InteliData’s management;
•
participated in the discussions and negotiations among
representatives of Corillian and InteliData;
•
reviewed the current and historical market prices of
Corillian’s common stock and InteliData’s common stock;
•
compared the publicly available business, financial and other
information regarding each of Corillian and InteliData with
similar information regarding certain publicly traded companies
that Wachovia deemed relevant;
•
compared the proposed financial terms of the merger with the
financial terms of certain other business combinations and
transactions that Wachovia deemed relevant;
•
developed discounted cash flow models for Corillian based on
Corillian’s management’s estimates;
•
reviewed the potential pro forma impact of the merger on
Corillian’s financial statements;
•
analyzed the premiums paid in certain other business
combinations and transactions that Wachovia deemed relevant;
•
considered such other information as well as financial, economic
and market criteria that Wachovia deemed to be relevant; and
•
performed such other analyses and performed such other services
as Wachovia deemed appropriate.
In connection with its review, Wachovia has relied upon the
accuracy and completeness of the foregoing financial and other
information that it obtained and reviewed for the purpose of its
opinion, and Wachovia has not assumed any responsibility for any
independent verification of such information. In that regard,
Wachovia has relied upon the respective assurances of
InteliData’s and Corillian’s management that they are
not aware of any facts or circumstances that would make such
information about InteliData
or Corillian inaccurate or misleading. Wachovia has assumed that
the respective forecasts, estimates, judgments and all
assumptions expressed by InteliData’s and Corillian’s
respective managements have been reasonably formulated and that
they are the best currently available good faith forecasts,
estimates, judgments and assumptions of the management of each
company. In arriving at its opinion, Wachovia did not
incorporate any conclusions as a result of its limited physical
inspection of certain facilities of InteliData, and has not made
or been provided with any evaluations or appraisals of the
assets or liabilities of either InteliData or Corillian.
In rendering its opinion, Wachovia has assumed that the merger
contemplated by the merger agreement will be consummated on the
terms described in the merger agreement, without waiver of any
material terms or conditions, and that in the course of
obtaining any necessary legal, regulatory or third-party
consents and/or approvals, no restrictions will be imposed or
delay will be suffered that will adversely affect InteliData,
the merger or the other actions contemplated by the merger
agreement in any way meaningful to Wachovia’s analysis.
Wachovia’s opinion is necessarily based on economic,
market, financial and other conditions and the information made
available to Wachovia as of the date of its opinion. Although
subsequent developments may affect its opinion, Wachovia does
not have any obligation to update, revise or reaffirm its
opinion. Wachovia’s opinion does not address the relative
merits of the merger or other actions contemplated by the merger
agreement compared with other business strategies that may have
been considered by InteliData’s management or
InteliData’s board of directors. Nor does Wachovia’s
opinion address the merits of the underlying decision by
InteliData to enter into the merger agreement.
The summary set forth below does not purport to be a complete
description of the analyses performed by Wachovia, but
describes, in summary form, the material elements of the
presentation that Wachovia made to the board of directors of
InteliData on March 31, 2005, in connection with
Wachovia’s fairness opinion. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible
to a partial analysis or summary description. In arriving at its
opinion, Wachovia considered the results of all of its analyses
as a whole and did not attribute any particular weight to any
analysis or factor considered by it. The analyses described
below must be considered as a whole, and considering portions of
these analyses, without considering all of them, would create an
incomplete view of the process underlying Wachovia’s
analyses and opinion.
InteliData
In performing certain of its analyses described below, Wachovia
utilized two sets of estimated income statement statistics for
InteliData that were prepared by InteliData’s management to
reflect differing assumptions and adjustments. The first set of
income statement statistics, referred to below as the
“Management Case,” reflected approximately
$3.7 million in sales to new customers in 2005 and assumed
a 5% revenue growth rate over 2005 and constant margins from
2005 to develop estimates for 2006. A second set of estimates,
referred to below as the “Downside Case,” was
developed assuming, based on management’s assessment of
risk due to InteliData’s difficulty in obtaining new
customers given its uncertain financial situation, that the
$3.7 million in new customer sales for 2005 reflected in
the Management Case would not materialize. The Downside Case
further assumed $600,000 in additional expense savings for 2005
over the 2005 estimate reflected in the Management Case based on
reduced headcount savings if InteliData was unable to secure the
additional $3.7 million in new customer sales in 2005. The
2006 estimates in the Downside Case reflected the same 5%
revenue growth rate over 2005 and constant margins from 2005
used in the Management Case.
For purposes of its analysis, Wachovia calculated a per share
merger consideration of $0.41 based on the following
assumptions: an exchange ratio of 0.0954 Corillian share per
InteliData share, based on $15 million of consideration in
the form of Corillian stock divided by $3.05, the average price
of Corillian’s common stock for the 20-day trading period
ending on March 18, 2005; $4.5 million cash
consideration; estimated contingent liabilities of $300,000; all
“in the money” options being exercised; $0.02 per
share
consideration paid to holders of “out of the money”
options with strike prices less than $2.00; and no consideration
paid to holders of “out of the money” options with
strike prices greater than $2.00.
Comparable Companies Analysis. Wachovia reviewed and
compared certain financial information, multiples and ratios for
InteliData to corresponding financial information, multiples and
ratios for the following publicly traded corporations operating
in the electronic bill payment and processing industry:
•
CheckFree Corporation
•
Digital Insight Corporation
•
S1 Corporation
•
Open Solutions Inc.
•
Bottomline Technologies, Inc.
•
Online Resources Corporation
•
Fundtech Ltd.
•
Corillian Corporation
The multiples and ratios of each of the selected publicly traded
companies were calculated using their respective closing share
prices on March 30, 2005. The multiples and ratios of
InteliData were calculated using the per share value of the
merger consideration as of March 30, 2005, of approximately
$0.41 per share. The multiples and ratios of each of the
selected publicly traded companies were based upon the most
recent publicly available information, projected financial
information from First Call consensus estimates and, for
InteliData and Corillian, projections provided by the respective
managements of each. With respect to each of the selected public
companies and InteliData, Wachovia calculated:
•
enterprise value, which is the market value of common equity
(or, in the case of InteliData, the aggregate value of the
merger consideration as of March 30, 2005) plus the book
value of debt minus cash, as a multiple of estimated revenues
for calendar years 2005 and 2006; and
•
enterprise value as a multiple of estimated earnings before
interest, taxes and depreciation and amortization
(“EBITDA”) for calendar years 2005 and 2006.
Based on the median multiples derived from the analysis of the
selected public companies, Wachovia then calculated an implied
enterprise value and per share reference value for the
InteliData common stock based on both the Management Case and
the Downside Case. This compares to the per share value of the
merger consideration as of March 30, 2005, of approximately
$0.41 per share.
The results of these analyses are summarized as follows:
With regard to the comparable companies analysis summarized
above, Wachovia selected comparable public companies on the
basis of various factors, including the size of the public
company and the similarity of the lines of business. No public
company used as a comparison, however, is identical to
InteliData. Accordingly, these analyses are not purely
mathematical, but also involve complex considerations and
judgments concerning the differences in financial and operating
characteristics of the comparable companies and other factors.
These factors could affect the public trading value of the
companies to which InteliData is being compared.
Selected Transactions Analysis. For reference purposes,
using publicly available information and analyses prepared by
Wachovia, Wachovia examined selected transactions involving
publicly traded and privately held companies in the electronic
bill payment and processing industry that have been announced
from February 28, 2003, to January 18, 2005. The
selected transactions were:
Acquiror
Target
Total System Services, Inc.
Siebel Systems, Inc.
Online Resources Corp.
Fidelity National Financial, Inc.
GTCR Golder Rauner, LLC
Metavante Corporation
Metavante Corporation
Metavante Corporation
Siebel Systems, Inc.
Lightbridge, Inc.
Certegy Inc.
Fidelity National Financial, Inc.
Fidelity National Financial, Inc.
CheckFree Corporation
CheckFree Corporation
Digital Insight Corporation
eFunds Corporation
Fiserv, Inc.
National Processing, Inc.
John H. Harland Company
First Data Corporation
GTECH Holdings Corporation
Vital Processing Services LLC
eDocs, Inc.
Incurrent Solutions, Inc.
Kordoba GmbH & Co. KG
Retriever Payment Systems, Inc.
NYCE Corporation
Advanced Financial Solutions
Kirchman Corporation
Eontec Ltd.
Authorize.net Corp.
Game Financial Corporation
Aurum Technology Inc.
Sanchez Computer Associates, Inc.
American Payment Systems, Inc.
HelioGraph, Inc.
Magnet Communications, Inc.
Oasis Technology, Inc.
EDS Credit Union business
Bridgeview Payment Solutions Inc.
Premier Systems Inc.
Concord EFS, Inc.
PolCard S.A.
Wachovia calculated for each of the selected transactions the
transaction value (defined as the agreed upon equity (in stock
or cash) consideration at announcement of the transaction plus
the book value of debt minus cash) as a multiple of revenues of
the last 12 months prior to the consummation of the
transaction (“LTM”) and as a multiple of LTM EBITDA.
Wachovia then used the median and mean multiples derived from
this analysis to calculate an implied per share reference value
for InteliData based on both the Management Case and Downside
Case provided by InteliData management.
The following table presents the results of this analysis:
Median Implied
Mean
InteliData
Implied InteliData
Per Share Value
Per Share Value
Range for
Median for
Mean for
Selected
Selected
Selected
Management
Downside
Management
Downside
Multiple of:
Transactions
Transactions
Transactions
Case
Case
Case
Case
Transaction value to LTM Revenues
0.9x - 4.3x
1.9
x
2.2
x
$
0.43
$
0.43
$
0.53
$
0.53
Transaction value to LTM EBITDA*
3.5x - 16.9x
9.8
x
9.2
x
0.29
NM
0.27
NM
*
Because InteliData had negative EBITDA for 2004, Wachovia used
InteliData’s estimated 2005 EBITDA for purposes of
determining this multiple for InteliData.
Because the market conditions, rationale and circumstances
surrounding each of the selected transactions were unique to
each transaction and because of the inherent differences between
InteliData’s businesses, operations and prospects and those
of each of the companies that comprise the selected
transactions, Wachovia believed that it was inappropriate to,
and therefore did not, rely solely on the quantitative results
of this analysis. Accordingly, Wachovia also made qualitative
judgments concerning differences between the characteristics of
each of the selected transactions and the proposed merger that
could affect InteliData’s acquisition values and those of
such acquired companies.
Premiums Paid Analysis. Based on publicly available
information, Wachovia compared the premiums represented by the
consideration to be paid to InteliData stockholders pursuant to
the merger agreement over the closing price per share of
InteliData common stock as of one day (March 30, 2005)
prior to March 31, 2005, the date the merger was publicly
announced, to the median premiums paid in 41 stock-for-stock
transactions completed or pending since January 1, 2002,
involving publicly traded U.S. target companies, with
enterprise values up to $50 million, as of one day prior to
the announcement date of such transaction.
The following table presents the results of this analysis:
Selected 41
U.S. Transactions
Premiums Represented by Announced Purchase Price
Over Target Share Price
Median
InteliData
One day prior to announcement
26.6%
32.3%
No company utilized in the premiums paid analysis is identical
to InteliData, nor is any transaction identical to the merger.
Therefore, a purely quantitative premiums paid analysis would
not be dispositive in the context of the merger and an
appropriate use of such analysis involves qualitative judgments
concerning the differences between the characteristics of these
transactions and the merger that would affect the value of the
selected companies and InteliData.
Contribution Analysis. Wachovia reviewed
InteliData’s and Corillian’s financial contribution to
the combined company on an actual basis for 2004 and on an
estimated basis for 2005 and a projected basis for 2006 under
both InteliData’s Management Case and Downside Case, based
on information provided by the managements of InteliData and
Corillian with respect to the relative contributions of each to
the combined company’s revenues, earnings before interest
and taxes (“EBIT”) and EBITDA. Wachovia compared these
pro forma relative contributions to an estimated 10.9% pro forma
post-merger ownership stake of InteliData stockholders in the
combined company (based on the value of the equity consideration
to be received by InteliData stockholders in the merger using
the closing price of Corillian’s common stock on
March 30, 2005) and an estimated 13.6% pro forma ownership
stake of InteliData stockholders in the combined company (based
on the value of the total consideration to be received by
InteliData stockholders in the merger).
The following tables present the results of this analysis:
Estimated
Estimated
InteliData %
InteliData %
Pro Forma
Pro Forma
InteliData
Ownership
Ownership
Corillian %
Management Case
Based on
Based on
Pro Forma
% Pro Forma
Stock
Total
Operating Statistic
Contribution
Contribution
Consideration
Consideration
Revenue
2004A
78.7
%
21.3
%
10.9
%
13.6
%
2005E
79.4
%
20.6
%
10.9
%
13.6
%
2006P
80.3
%
19.7
%
10.9
%
13.6
%
EBIT
2004A
297.4
%
(197.4
)%
10.9
%
13.6
%
2005E
88.7
%
11.3
%
10.9
%
13.6
%
2006P
90.7
%
9.3
%
10.9
%
13.6
%
EBITDA
2004A
173.4
%
(73.4
)%
10.9
%
13.6
%
2005E
84.4
%
15.6
%
10.9
%
13.6
%
2006P
86.5
%
13.5
%
10.9
%
13.6
%
Estimated
Estimated
InteliData %
InteliData %
Pro Forma
Pro Forma
InteliData
Ownership
Ownership
Corillian %
Downside Case
Based on
Based on
Pro Forma
% Pro Forma
Stock
Total
Operating Statistic
Contribution
Contribution
Consideration
Consideration
Revenue
2004A
78.7%
21.3
%
10.9%
13.6%
2005E
84.3%
15.7
%
10.9%
13.6%
2006P
85.0%
15.0
%
10.9%
13.6%
EBIT
2004A
297.4%
(197.4
)%
10.9%
13.6%
2005E
132.2%
(32.2
)%
10.9%
13.6%
2006P
124.3%
(24.3
)%
10.9%
13.6%
EBITDA
2004A
173.4%
(73.4
)%
10.9%
13.6%
2005E
113.0%
(13.0
)%
10.9%
13.6%
2006P
110.7%
(10.7
)%
10.9%
13.6%
Corillian
In performing certain of its analyses described below, Wachovia
utilized a set of projections from Corillian’s management.
Comparable Companies Analysis. With respect to its
valuation of Corillian’s common stock, Wachovia reviewed
and compared certain financial information, multiples and ratios
for the following publicly traded corporations operating in the
electronic bill payment and processing industry:
The multiples and ratios of each of the selected publicly traded
companies and Corillian were calculated using their respective
closing share prices on March 30, 2005. The multiples and
ratios of each of the selected publicly traded companies were
based upon the most recent publicly available information,
projected financial information from First Call consensus
estimates and, for Corillian, projections provided by its
management. With respect to each of the selected public
companies and Corillian, Wachovia calculated:
•
enterprise value, which is the market value of common equity
plus the book value of debt minus cash, as a multiple of
estimated revenues for calendar years 2005 and 2006; and
•
enterprise value as a multiple of EBITDA for calendar years 2005
and 2006.
Based on the median multiples derived from the selected public
companies analysis, Wachovia then calculated an implied
enterprise value and per share reference value for Corillian
common stock. This compares to a closing public trading price of
$3.47 per share for Corillian common stock as of
March 30, 2005.
The results of these analyses are summarized as follows:
With regard to the comparable companies analysis summarized
above, Wachovia selected comparable public companies on the
basis of various factors, including the size of the public
company and the similarity of the lines of business. No public
company used as a comparison, however, is identical to
Corillian. Accordingly, these analyses are not purely
mathematical, but also involve complex considerations and
judgments concerning the differences in financial and operating
characteristics of the comparable companies and other factors.
These factors could affect the public trading value of the
comparable companies to which Corillian is being compared.
Selected Transactions Analysis. For reference purposes in
its analysis of Corillian, using publicly available information
and analyses prepared by Wachovia, Wachovia examined selected
transactions involving publicly traded and privately held
companies in the electronic bill payment and processing industry
that have been announced from February 28, 2003, to
January 18, 2005. The selected transactions were:
Acquiror
Target
Total System Services, Inc.
Siebel Systems, Inc.
Online Resources Corp.
Fidelity National Financial, Inc.
GTCR Golder Rauner, LLC
Metavante Corporation
Metavante Corporation
Metavante Corporation
Vital Processing Services LLC
eDocs, Inc.
Incurrent Solutions, Inc.
Kordoba GmbH & Co. KG
Retriever Payment Systems, Inc.
NYCE Corporation
Advanced Financial Solutions
Kirchman Corporation
Siebel Systems, Inc.
Lightbridge, Inc.
Certegy Inc.
Fidelity National Financial, Inc.
Fidelity National Financial, Inc.
CheckFree Corporation
CheckFree Corporation
Digital Insight Corporation
eFunds Corporation
Fiserv, Inc.
National Processing, Inc.
John H. Harland Company
First Data Corporation
GTECH Holdings Corporation
Eontec Ltd.
Authorize.net Corp.
Game Financial Corporation
Aurum Technology Inc.
Sanchez Computer Associates, Inc.
American Payment Systems, Inc.
HelioGraph, Inc.
Magnet Communications, Inc.
Oasis Technology, Inc.
EDS Credit Union business
Bridgeview Payment Solutions Inc.
Premier Systems Inc.
Concord EFS, Inc.
PolCard S.A.
Wachovia calculated for each of the selected transactions the
transaction value (defined as the agreed upon equity (in stock
or cash) consideration at announcement of the transaction plus
the book value of debt minus cash) as a multiple of LTM revenues
and as a multiple of LTM EBITDA. Wachovia then used the median
and mean multiples derived from this analysis to calculate an
implied per share reference value for Corillian.
The following table presents the results of this analysis:
Because the market conditions, rationale and circumstances
surrounding each of the selected transactions were unique to
each transaction and because of the inherent differences between
Corillian’s businesses, operations and prospects and those
of each of the companies that comprise the selected
transactions, Wachovia believed that it was inappropriate to,
and therefore did not, rely solely on the quantitative results
of this analysis. Accordingly, Wachovia also made qualitative
judgments concerning differences between the characteristics of
each of the selected transactions and Corillian that could
affect Corillian’s values and those of such acquired
companies.
Discounted Cash Flow Analysis. Wachovia performed both
perpetuity method and exit multiple method discounted cash flow
analyses to estimate a range of present values per share of
Corillian common stock assuming Corillian continued to operate
as a stand-alone entity without consummating the merger.
Wachovia determined the range of present values per share of
Corillian using the perpetuity method by calculating the sum of
(i) the present value of projected free cash flows of
Corillian over the five-year period from 2005 through 2009, and
(ii) the present value of the estimated perpetuity value of
Corillian. In calculating a perpetuity value for Corillian,
Wachovia was provided by Corillian management a range of growth
rates for Corillian of between 4% and 6% during the perpetuity
period. Wachovia determined the range of present values per
share of Corillian using the exit multiple method by calculating
the sum of (i) the present value of projected free cash
flows of Corillian over the five-year period from 2005 through
2009, and (ii) the present value of an exit multiple of
estimated 2009 EBITDA. In calculating an exit multiple value for
Corillian, Wachovia assumed a range of exit multiples between
4.2x and 6.2x. The free cash flows and respective terminal
values were discounted to present value using discount rates
ranging
from 14% to 18%. Wachovia viewed this range of discount rates as
appropriate for companies with the risk characteristics of
Corillian.
Based upon the perpetuity method analysis, Wachovia determined a
reference range for an implied value per share of Corillian
common stock of $2.43 to $3.29. Based upon the exit multiple
method analysis, Wachovia determined a reference range for an
implied value per share of Corillian common stock of $2.45 to
$3.09. This compares with the 20-day trailing average price of
Corillian common stock of $3.05 as of March 18, 2005.
The discounted cash flow analyses of Corillian do not
necessarily indicate actual values or actual future results and
do not purport to reflect the prices at which any securities of
Corillian may trade at the present or at any time in the future.
The range of discount rates applied to Corillian referred to
above was based upon several factors, including Wachovia’s
knowledge of Corillian and the industry in which it operates,
and business risks of Corillian and the overall interest rate
environment as of March 31, 2005. Discounted cash flow
analysis is a widely used valuation methodology, but the results
of this methodology are highly dependent on the numerous
assumptions that must be made, including earnings growth rates,
perpetuity values and discount rates.
Pro Forma Financial Impact. Wachovia analyzed the pro
forma financial impact of the mergers on the combined
company’s earnings per share. This analysis was based on
the projected financial performance of each of InteliData and
Corillian for 2005 and 2006 provided by the respective
managements of InteliData and Corillian to Wachovia. This
analysis assumed, among other things, pre-tax cost synergies
preliminarily estimated jointly by the managements of InteliData
and Corillian in the amounts of $4.5 million for each of
2005 and 2006. Based on the foregoing, Wachovia determined that
the merger would be accretive to Corillian’s pro forma
projected earnings per share for 2005 and 2006.
Miscellaneous
In performing its analyses, Wachovia made numerous assumptions
with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond
InteliData’s and Corillian’s control. No company,
transaction or business used in the analyses described above is
identical to InteliData or Corillian or the proposed merger. Any
estimates contained in Wachovia’s analyses are not
necessarily indicative of future results or actual values, which
may be significantly more or less favorable than those suggested
by such analyses. The analyses performed were prepared solely as
a part of Wachovia’s analysis of the fairness, from a
financial point of view, to the holders of shares of InteliData
common stock, as of the date of the opinion, and subject to and
based on the assumptions made, procedures followed, matters
considered and limitations of the review undertaken in
connection with such opinion, of the merger consideration to be
received by such holders pursuant to the terms of the merger
agreement, and were conducted in connection with the delivery by
Wachovia of its oral opinion, which was subsequently confirmed
in writing, dated March 31, 2005, to the board of directors
of InteliData. Wachovia’s analyses performed in connection
with delivery of its opinion do not purport to be appraisals or
to reflect the prices at which InteliData or Corillian common
stock might actually trade. The consideration to be paid to
holders of shares of InteliData common stock in the merger
agreement was determined through negotiations between
InteliData, Corillian, members of each of InteliData’s and
Corillian’s senior management teams and boards of directors
and their respective advisors, and was unanimously approved by
the InteliData board of directors. Wachovia did not recommend
any specific consideration to the board of directors of
InteliData or that any given consideration constituted the only
appropriate consideration for the merger.
Wachovia’s opinion was one of many factors taken into
consideration by the InteliData board of directors in making its
determination to approve the merger. Wachovia’s analyses
summarized above should not be viewed as determinative of the
opinion of the InteliData board of directors with respect to the
value of InteliData common stock or of whether the board would
have been willing to agree to a different form of consideration.
Wachovia Securities, a trade name of Wachovia Capital Markets,
LLC, is a nationally recognized investment banking and advisory
firm and a subsidiary and affiliate of Wachovia Corporation.
Wachovia, as part of its investment banking and financial
advisory business, is continuously engaged in the valuation of
businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other
purposes. In the ordinary course of its business, Wachovia may
trade in debt and equity securities (or related derivative
securities) of InteliData and Corillian for its own account and
for the accounts of its customers and, accordingly, may at any
time hold a long or short position in such securities.
Additionally, in the ordinary course of business, Wachovia
currently provides, and may provide in the future, equity or
other research coverage of the securities of Corillian.
Pursuant to a letter agreement, dated December 31, 2003,
Wachovia has been engaged to render certain financial advisory
services to the board of directors of InteliData in connection
with its review of strategic alternatives, including a potential
sale of InteliData. Pursuant to the terms of the letter
agreement, upon the rendering of a fairness opinion in
connection with the merger, Wachovia earned a fee of $250,000.
Also pursuant to the letter agreement, upon consummation of the
transaction, Wachovia will be paid by InteliData a fee of
$875,000. InteliData has also agreed to reimburse Wachovia for
certain reasonable expenses incurred in performing its services
and to indemnify Wachovia and certain related parties against
certain liabilities and expenses, including certain liabilities
under federal securities laws, related to or arising out of
Wachovia’s engagement and any related transactions. Since
2003, Wachovia has received fees of $700,000 from InteliData for
other investment banking and advisory services.
C:
Corillian’s Reasons for the Merger
The Corillian board of directors has unanimously approved the
merger agreement and has determined that the merger agreement
and the merger is in the best interests of Corillian and its
shareholders. In reaching this decision, the Corillian board
considered the terms and conditions of the merger agreement and
the ancillary agreements, as well as a number of other factors,
including those listed below:
•
Given the complementary nature of InteliData’s and
Corillian’s products, the merger enhances the opportunity
to realize Corillian’s strategic objective of achieving
greater scale and presence in the online financial services
market;
•
The merger provides Corillian with significant new customer
relationships with large U.S. financial institutions and
creates an opportunity for both companies to sell additional
products and services to each other’s customers;
•
The merger provides Corillian with greater capabilities to
market and sell online bill payment solutions to financial
institutions and to differentiate itself more significantly in
the online financial services market;
•
Because InteliData relies more heavily on subscription-based
contracts, the merger provides Corillian with more recurring
revenue;
•
The merger supplements Corillian’s online credit card
management capabilities with a hosted solution that can serve
smaller credit card issuers;
•
The combination creates opportunities for cost reduction through
the integration of Corillian’s and InteliData’s
businesses and the elimination of redundant overhead expenses
and public company costs; and
•
The merger is expected to be accretive to earnings.
The foregoing list comprises the material factors considered by
the Corillian board of directors in its consideration of the
merger. In view of the variety of factors and information
considered, the Corillian board did not find it practicable to,
and did not, make specific assessments of, quantify or otherwise
assign relative weights to the specific factors considered in
reaching its decision. Rather, the decision was made
after consideration of all of the factors as a whole. In
addition, individual members of the Corillian board of directors
may have given different weight to different factors.
C:
Completion of the Merger
The merger will be completed when all of the conditions to
completion of the merger are satisfied or waived, including the
adoption of the merger agreement and the transactions
contemplated thereby by the stockholders of InteliData. The
merger will become effective when a duly executed and delivered
certificate of merger is filed with the Secretary of State of
the State of Delaware.
Corillian and InteliData intend to complete the merger as soon
as practicable after the stockholders of InteliData adopt the
merger at the annual meeting and all other closing conditions
are satisfied. Corillian and InteliData anticipate that the
merger will be completed in the third quarter of 2005.
C:
Material United States Federal Income Tax Consequences of the
Merger
The following discussion is a summary of the material United
States federal income tax consequences of the merger generally
applicable to InteliData stockholders who hold their shares of
InteliData common stock as capital assets at the effective time
of the merger and who exchange their shares for shares of
Corillian common stock and cash, including cash in lieu of
fractional shares, in the merger. This discussion does not
address all United States federal income tax consequences of the
merger that may be relevant to particular stockholders,
including stockholders that are subject to special tax rules.
Some examples of stockholders that are subject to special tax
rules are:
•
dealers in securities or foreign currencies, financial
institutions, insurance companies, mutual funds, tax-exempt
organizations and stockholders subject to the alternative
minimum tax;
•
stockholders who hold shares of InteliData common stock as part
of a hedge, straddle, constructive sale or conversion
transaction, or other risk reduction arrangement;
•
stockholders who have a “functional currency” other
than the U.S. dollar;
•
foreign persons;
•
stockholders who own their shares indirectly through
partnerships, trusts or other entities that may be subject to
special treatment; and
•
stockholders who acquired their shares of InteliData common
stock through stock option or stock purchase programs or
otherwise as compensation.
In addition, this discussion does not address any consequences
arising under the laws of any state, local or foreign
jurisdiction.
The following discussion is based on the Internal Revenue Code,
applicable Treasury Regulations, administrative interpretations
and judicial decisions in effect as of the date of this joint
proxy statement/ prospectus, all of which are subject to change,
possibly with retroactive effect. Accordingly, the tax
consequences of the merger to InteliData stockholders could
differ from those described below.
The obligation of each of InteliData and Corillian to effect the
merger is conditioned upon the receipt of a written opinion,
respectively, from each of Hunton & Williams LLP,
counsel to InteliData, and Perkins Coie LLP, counsel to
Corillian, dated as of the closing date of the merger, to the
effect that, on the basis of the statements, limitations,
qualifications and assumptions set forth therein, for United
States federal income tax purposes, the merger will constitute a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. InteliData does not intend to waive the
closing condition regarding the receipt of an opinion from its
counsel (or, instead, an opinion from Corillian’s counsel)
regarding tax matters without resoliciting the approval of its
shareholders after providing appropriate disclosure. These
opinions will not be binding on the Internal Revenue Service and
will not preclude the Internal Revenue Service from taking a
contrary position. Neither InteliData nor Corillian has
requested,
nor will either request, a ruling from the Internal Revenue
Service as to the United States federal income tax consequences
of the merger.
Assuming that the merger is carried out in accordance with the
terms of the merger agreement and that certain representations
in tax certificates to be delivered by officers of InteliData,
Corillian and Wizard Acquisition Corporation are true and
correct, it is the opinion of each of Hunton & Williams
LLP and Perkins Coie LLP that the merger will constitute a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. Accordingly, subject to the limitations
and qualifications set forth above, the material federal income
tax consequences to an InteliData stockholder of the exchange of
InteliData common stock for Corillian common stock pursuant to
the merger is summarized as follows:
•
an InteliData stockholder generally will recognize gain in an
amount equal to the lesser of (a) the amount of cash
received in the exchange, excluding cash received in lieu of a
fractional share, or (b) the amount, if any, by which the
sum of the fair market value, as of the effective date of the
merger, of the Corillian common stock (including any fractional
share interest) and the amount of cash, excluding cash received
in lieu of a fractional share, received if the exchange exceeds
the tax basis of the shares of InteliData common stock
surrendered in the exchange;
•
except with respect to fractional shares, as discussed below, no
loss may be recognized;
•
for purposes of calculating the amount of gain to be recognized
on the exchange, an InteliData stockholder must calculate gain
separately for each identifiable block of shares of InteliData
common stock that the stockholder surrenders in the merger, and
because losses are not permitted to be recognized, an InteliData
stockholder cannot offset a loss realized on one block of shares
against a gain realized on another block of shares;
•
an InteliData stockholder who receives cash in lieu of a
fractional share of Corillian common stock in the merger will be
treated as having received the fractional share interest in the
merger and then as having such fractional share interest
redeemed for cash, and the InteliData stockholder will recognize
gain or loss equal to the difference between the cash received
for the fractional share interest and that portion of the
stockholder’s tax basis in its InteliData common stock that
is allocated to the fractional share interest;
•
any gain or loss recognized generally will be capital gain or
loss and will be long-term if the shares of InteliData common
stock exchanged have been held for more than one year as of the
date of the merger;
•
the tax basis of Corillian common stock received by an
InteliData stockholder in the merger, including any fractional
share interest for which cash is received, will generally be
equal to the tax basis of the InteliData common stock exchanged
therefor decreased by the amount of cash, excluding cash
received in lieu of a fractional share, received by the
stockholder and increased by the amount of gain recognized,
excluding gain recognized with respect to any fractional share
interest, to the stockholder on the exchange;
•
the holding period of the Corillian common stock received by an
InteliData stockholder in the merger, including any fractional
share deemed received, will include the holding period of the
InteliData common stock surrendered therefor; and
•
Corillian, Wizard Acquisition Corporation and InteliData will
not recognize any gain or loss upon consummation of the merger.
However, the utilization of any tax losses or credits of
InteliData existing at the time of the merger will be limited
after the merger.
INTELIDATA STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS AND OF CHANGES IN APPLICABLE TAX LAWS.
Management and Operations of Corillian and InteliData
Following the Merger
General. After the merger is completed, it is anticipated
that Merger Sub, renamed “Corillian Payment Solutions,
Inc.,” will remain as Corillian’s wholly owned
subsidiary.
Management After the Merger. The executive officers of
Corillian following the merger will be the same as the executive
officers prior to the merger. The officers of the surviving
corporation after the merger will be the same as the officers of
InteliData prior to the merger.
Board of Directors After the Merger. The board of
directors of Corillian and Merger Sub following the merger will
be the same as the Corillian board of directors and the Merger
Sub board of directors, respectively, prior to the merger.
C:
Interests of Certain Persons in the Merger
In considering the recommendation of the InteliData board of
directors in favor of the merger agreement and the transactions
contemplated thereby, you should be aware that some directors
and officers of InteliData have interests in the merger that may
be different from, or in addition to, your interests as an
InteliData stockholder. The InteliData board of directors was
aware of these potential interests and considered them. To the
extent they are material, these potential interests are
described in the following paragraphs:
Alfred S. Dominick, Jr. has an Employment Agreement and a
Change in Control Severance Agreement with InteliData, both of
which contain provisions that are effective upon a termination
in connection with a change of control. The Change in Control
Severance Agreement provides that Mr. Dominick’s
benefits under it are to be paid only to the extent that similar
benefits are not paid under another agreement or plan.
If Mr. Dominick is terminated in certain circumstances
following the merger with Corillian, which is expected,
Mr. Dominick will be entitled to certain severance
benefits, consisting of:
•
payment of two times Mr. Dominick’s base salary, or
$750,000;
•
payment of a bonus, equal to the highest bonus paid to
Mr. Dominick in the last three years, or $50,000, prorated
from the beginning of the year through his month of termination;
•
payment or reimbursement for 18 months after termination of
COBRA or other premiums to continue the health and medical
insurance benefits that Mr. Dominick and his dependents
received prior to his termination; and
•
acceleration of vesting of options, which Mr. Dominick may
exercise or receive consideration for canceling, prior to
closing, as described below under “Stock and Options of
Directors and Executive Officers.”
Mr. Dominick’s Employment Agreement also provides
that, to the extent any of the payments made to him thereunder
would subject him to parachute payment excise taxes,
Mr. Dominick’s severance payments would be grossed up
to mitigate the taxes. His Change in Control Severance Agreement
provides that, to the extent any of the payments made to him
thereunder would subject him to parachute payment excise taxes,
Mr. Dominick’s severance payments would be reduced to
a level so as to not trigger such taxes the taxes. It is
currently not expected that Mr. Dominick’s severance
benefits would trigger parachute payment excise taxes.
As a condition to receiving the payments and benefits listed
above, Mr. Dominick must execute a valid release and waiver
of any claims against InteliData, its related entities, and
their shareholders, officers, directors, employees, benefits
plans, representatives, agents, successors and assigns.
In consideration for such termination benefits,
Mr. Dominick has agreed, during the period of employment
and for a period of 12 months after termination of
employment, not to compete, directly or indirectly, with
InteliData or any related entity, solicit employees of
InteliData or any related entity, solicit any customer of
InteliData or any related entity, or make disparaging comments
about InteliData or any related entity. Mr. Dominick has
also agreed not to disclose any secret or confidential
information related to InteliData or any related entity.
Mr. Dominick’s Employment Agreement and Change in
Control Severance Agreement are described in greater detail in
the section titled “Employment and Change of Control
Agreements” beginning on page 91.
Karen Kracher, President
Karen Kracher has an Employment Agreement with InteliData, which
contains provisions that are effective upon a termination in
connection with a change of control of InteliData.
In the event that Ms. Kracher is terminated in certain
circumstances following the merger with Corillian,
Ms. Kracher will be entitled to certain severance benefits,
consisting of:
•
payment equal to her base salary, or $200,000;
•
continued coverage by InteliData or its successor under its
health, medical, life insurance and disability plans for
6 months after termination; and
•
acceleration of vesting of options, which Ms. Kracher may
exercise or receive consideration for canceling, prior to
closing, as described below under “Stock and Options of
Directors and Executive Officers.”
Ms. Kracher’s Employment Agreement is described in
greater detail in the section titled “Employment and Change
of Control Agreements” beginning on page 91.
Monique L. Marcus, Vice President of Finance and Treasurer
Monique L. Marcus is a participant in InteliData’s Key
Employee Change of Control Program for 2005. The change of
control program provides that if Ms. Marcus’s
employment is terminated without cause by InteliData either
within 12 months following the merger, provided that the
merger occurs in 2005, she will be entitled to a severance
payment equal to her base salary, or $140,000. Ms. Marcus
would also be entitled to continued vesting of options; however,
all such options will be exercised or terminated in exchange for
consideration prior to closing, as described below under
“Stock and Options of Directors and Executive
Officers”.
Ms. Marcus’s participation in the Key Employee Change
of Control Program is described in greater detail in the section
titled “Employment and Change of Control Agreements”
beginning on page 91.
Michael E. Jennings, Director
Michael E. Jennings entered into a Separation Agreement and
General Release with InteliData, dated August 16, 2004.
This agreement entitles Mr. Jennings to a payment of
$200,000 if the merger occurs prior to August 16, 2005.
Mr. Jennings’s Separation Agreement and General
Release is described in greater detail in the section titled
“Employment and Change of Control Agreements”
beginning on page 91.
Key Employees
Certain other key employees of InteliData, who are not officers
of InteliData, also have agreements or arrangements that entitle
them to severance payments of up to twice their base salary, if
their employment with InteliData is terminated in connection
with the merger, as well as continued medical and other
insurance benefits. These key employees would also be entitled
to continued vesting or acceleration of
vesting of stock options upon termination in connection with a
change of control; however, all such options will be exercised
or terminated prior to the merger.
D & O Insurance
The merger agreement provides that Merger Sub will provide,
after the effective time of the merger and until the sixth
anniversary date of the effective time of the merger,
indemnification to InteliData’s directors and officers at
least as favorable as provided by InteliData’s certificate
of incorporation and bylaws with respect to matters occurring
prior to the effective time of the merger. Corillian shall also
cause to be purchased a directors’ and officers’
liability insurance policy, which they will maintain for six
years after the effective time of the merger, of at least the
same coverage and amounts and containing terms and conditions
which are in the aggregate no less advantageous than
InteliData’s existing directors’ and officers’
liability insurance policy, subject to certain limitations.
Stock and Options of Directors and Executive
Officers
In addition to the interests of InteliData’s directors and
officers in the merger that may be different from your
interests, each of InteliData’s directors and officers owns
InteliData common stock and/or options to
purchase InteliData common stock, as more fully described
in the following paragraphs:
Michael E. Jennings, director, owns 94,750 shares of issued
and outstanding InteliData common stock.
Alfred S. Dominick, Jr., Chairman and Chief Executive
Officer, owns 104,600 shares of issued and outstanding
InteliData common stock, InteliData stock options, which are
exercisable for 700,000 shares of common stock at an
exercise price of $1.219 per share.
Patrick F. Graham, director, owns 10,000 shares of issued
and outstanding InteliData common stock and InteliData stock
options, which are exercisable for 40,500 shares of common
stock at exercise prices ranging from $0.99 to $18.86 per
share.
L. William Seidman, director, owns 13,000 shares of
issued and outstanding InteliData common stock and InteliData
stock options, which are exercisable for 48,000 shares of
common stock at exercise prices ranging from $0.99 to
$9.19 per share.
Norman J. Tice, director, owns 30,000 shares of issued and
outstanding InteliData common stock and InteliData stock
options, which are exercisable for 36,000 shares of common
stock at exercise prices ranging from $0.99 to $9.19 per
share.
Neal F. Finnegan, director, owns 10,000 shares of issued
and outstanding InteliData common stock and InteliData stock
options, which are exercisable for 24,000 shares of common
stock at exercise prices ranging from $0.99 to $4.13 per
share.
Karen Kracher, President, owns 25,000 shares of issued and
outstanding InteliData common stock, 25,000 of which are subject
to vesting, InteliData stock options, which are exercisable for
100,000 shares of common stock at exercise prices ranging
from $0.31 to $1.80 per share.
Monique L. Marcus, Vice President of Finance and Treasurer, owns
5,000 shares of issued and outstanding InteliData common
stock and InteliData stock options, which are exercisable for
100,000 shares of common stock at an exercise price of
$0.34 per share.
InteliData has offered the holders of certain stock options,
including officers and directors of InteliData, the opportunity
to receive a cash payment of (i) $0.01 per share for
each option with an exercise price of greater than $2.00 and/or
(ii) $0.02 per share for each option with an exercise
price of $2.00 or less for the cancellation of their respective
stock options prior to consummation of the merger.
Corillian intends to treat the merger as a purchase by Corillian
of InteliData under generally accepted accounting principles.
Under the purchase method of accounting, the assets and
liabilities of InteliData will be recorded, as of the completion
of the merger, at the respective fair market values, in the
financial statements of Corillian. Financial statements and
reported results of operations of Corillian issued after the
completion of the merger will reflect these values, but will not
be restated retroactively to reflect the historical financial
position or results of operations of InteliData.
C:
Regulatory Approvals Required for the Merger
The merger does not require the approval of any state or federal
regulatory entity. In order to consummate the merger, the
companies must file a Certificate of Merger with the Delaware
Secretary of State.
C:
Stock Exchange Listing
The merger agreement provides that Corillian will use all
reasonable efforts to cause the shares of Corillian common stock
to be issued in the merger to be approved for trading on the
Nasdaq National Market System, and such approval of trading is a
condition to the closing of the merger.
C:
Appraisal Rights
Under Section 262 of the Delaware General Corporation Law
(the “DGCL”), any holder of InteliData common stock
who does not wish to accept the merger consideration may dissent
from the merger and elect to exercise appraisal rights. A
stockholder who exercises appraisal rights may ask the Delaware
Court of Chancery to determine the fair value of his or her
shares, exclusive of any element of value arising from the
accomplishment or expectation of the merger, and receive payment
of the fair value in cash, together with a fair rate of
interest, if any, provided that the stockholder complies with
the provisions of Section 262 of the DGCL.
The following discussion is a summary of the law pertaining to
appraisal rights under the DGCL. The full text of
Section 262 of the DGCL is attached to this proxy
statement/ prospectus as Appendix D. All references
in Section 262 of the DGCL to a “stockholder” and
in this summary to a “stockholder” are to the record
holder of the shares of InteliData common stock who asserts
appraisal rights.
Under Section 262 of the DGCL, when a merger is submitted
for approval at a meeting of stockholders, as in the case of the
merger agreement, the corporation, not less than 20 days
prior to the meeting, must notify each of its stockholders
entitled to appraisal rights that appraisal rights are available
and include in the notice a copy of Section 262 of the
DGCL. This proxy statement/ prospectus constitutes such notice,
and the applicable statutory provisions are attached to this
proxy statement/ prospectus as Appendix D. This
summary of appraisal rights is not a complete summary of the law
pertaining to appraisal rights under the DGCL and is qualified
in its entirety by the text of Section 262 of the DGCL
attached as Appendix D. Any holder of InteliData
common stock who wishes to exercise appraisal rights or who
wishes to preserve the right to do so should review the
following discussion and Appendix D carefully.
Failure to comply with the procedures of Section 262 of the
DGCL in a timely and proper manner will result in the loss of
appraisal rights. If you lose your appraisal rights, you will be
entitled to receive the merger consideration described in the
merger agreement.
Stockholders wishing to exercise the right to dissent from the
merger and seek an appraisal of their shares must do ALL of the
following:
•
The stockholder must not vote in favor of the proposal to adopt
the merger agreement and to approve the transactions
contemplated thereby. Because a proxy that does not contain
voting instructions will, unless revoked, be voted in favor of
the proposal, a stockholder who votes by proxy and who wishes to
exercise appraisal rights must vote against the proposal or
abstain.
The stockholder must deliver to InteliData a written demand for
appraisal before the vote on the merger agreement at the annual
meeting.
•
The stockholder must not submit a letter of transmittal. The
stockholder must continuously hold the shares from the date of
making the demand through the effective time of the merger. A
stockholder will lose appraisal rights if the stockholder
transfers the shares before the effective time of the merger.
•
The stockholder must file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of the
shares within 120 days after the effective time of the
merger. The surviving company is under no obligation, and has no
intention, to file any petition.
Neither voting, in person or by proxy, against, abstaining from
voting on or failing to vote on the proposal to adopt the merger
agreement will constitute a written demand for appraisal within
the meaning of Section 262 of the DGCL. The written demand
for appraisal must be in addition to and separate from any proxy
or vote.
Only a holder of record of shares of InteliData common stock
issued and outstanding immediately prior to the effective time
of the merger may assert appraisal rights for the shares of
stock registered in that holder’s name. A demand for
appraisal must be executed by or on behalf of the stockholder of
record, fully and correctly, as the stockholder’s name
appears on the stock certificates. The demand must reasonably
inform InteliData of the identity of the stockholder and that
the stockholder intends to demand appraisal of his or her common
stock. STOCKHOLDERS WHO HOLD THEIR SHARES IN BROKERAGE ACCOUNTS
OR OTHER NOMINEE FORMS, AND WHO WISH TO EXERCISE APPRAISAL
RIGHTS, SHOULD CONSULT WITH THEIR BROKERS TO DETERMINE THE
APPROPRIATE PROCEDURES FOR THE NOMINEE HOLDER TO MAKE A DEMAND
FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL
INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON,
SUCH AS A BROKER OR NOMINEE, MUST ACT PROMPTLY TO CAUSE THE
RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE
STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.
A stockholder who elects to exercise appraisal rights under
Section 262 of the DGCL should mail or deliver a written
demand to:
If the merger is completed, InteliData will give written notice
of the effective time of the merger within 10 days after
such effective time to each former InteliData stockholder who
did not vote in favor of the merger agreement and who made a
written demand for appraisal in accordance with Section 262
of the DGCL. Within 120 days after the effective time of
the merger, but not later, either the surviving company or any
dissenting stockholder who has complied with the requirements of
Section 262 of the DGCL may file a petition in the Delaware
Court of Chancery demanding a determination of the value of the
shares of InteliData common stock held by all dissenting
stockholders. The surviving company is under no obligation, and
has no intention, to file any petition. Stockholders who desire
to have their shares appraised should initiate any petitions
necessary for the perfection of their appraisal rights within
the time periods and in the manner prescribed in
Section 262 of the DGCL.
Within 120 days after the effective time of the merger, any
stockholder who has complied with the provisions of
Section 262 of the DGCL to that point in time may receive
from the surviving company, upon written request, a statement
setting forth the aggregate number of shares not voted in favor
of the merger agreement and with respect to which InteliData has
received demands for appraisal, and the aggregate number of
holders of those shares. The surviving company must mail this
statement to the stockholder within 10 days of receipt of
the request.
If any party files a petition for appraisal in a timely manner,
the Delaware Court of Chancery will determine which stockholders
are entitled to appraisal rights and may require the
stockholders demanding appraisal who hold certificated shares to
submit their stock certificates to the court for notation of the
pendency of the appraisal proceedings, and any stockholder who
fails to comply with such direction may be dismissed from such
proceedings. If the stockholder fails to comply with the
court’s direction, the court may dismiss the proceeding
against the stockholder. The Delaware Court of Chancery will
thereafter determine the fair value of the shares of InteliData
common stock held by dissenting stockholders, exclusive of any
element of value arising from the accomplishment or expectation
of the merger, but together with a fair rate of interest, if
any, to be paid on the amount determined to be fair value.
In determining the fair value, the Delaware Court of Chancery
will take into account all relevant factors. The Delaware
Supreme Court has stated that “proof of value by any
techniques or methods that are generally considered acceptable
in the financial community and otherwise admissible in
court” should be considered in the appraisal proceedings.
In addition, Delaware courts have decided that the statutory
appraisal remedy, in cases of unfair dealing, may or may not be
a dissenter’s exclusive remedy. The Delaware Court of
Chancery may determine the fair value to be more than, less than
or equal to the consideration that the dissenting stockholder
would otherwise receive under the merger agreement. If no party
files a petition for appraisal in a timely manner, then
stockholders will lose the right to an appraisal, and will
instead receive the merger consideration described in the merger
agreement.
The Delaware Court of Chancery will determine the costs of the
appraisal proceeding and will allocate those costs to the
parties as the Delaware Court of Chancery determines to be
equitable under the circumstances. Upon application of a
stockholder, the Delaware Court of Chancery may order all or a
portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including reasonable
attorneys’ fees and the fees and expenses of experts, to be
charged pro rata against the value of all shares entitled to
appraisal.
Stockholders should be aware that the fair value of their shares
as determined under Section 262 of the DGCL could be
greater than, the same as, or less than the merger
consideration. A fairness opinion of an investment banking firm
does not in any manner address fair value under Section 262
of the DGCL.
Any stockholder who has duly demanded an appraisal in compliance
with Section 262 of the DGCL may not, after the effective
time of the merger, vote the shares subject to the demand for
any purpose or receive any dividends or other distributions on
those shares, except dividends or other distributions payable to
holders of record of shares as of a record date prior to the
effective time of the merger.
Any stockholder may withdraw a demand for appraisal and accept
the merger consideration by delivering to the surviving company
a written withdrawal of the demand for appraisal, except that
any attempt to withdraw made more than 60 days after the
effective time of the merger will require written approval of
the surviving company, and no appraisal proceeding in the
Delaware Court of Chancery will be dismissed as to any
stockholder without the approval of the Delaware Court of
Chancery, and may be conditioned on such terms as the Delaware
Court of Chancery deems just. If the stockholder fails to
perfect, successfully withdraws or loses the appraisal right,
the stockholder’s shares will be converted into the right
to receive the merger consideration.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF
THE DGCL FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS
OF APPRAISAL RIGHTS, IN WHICH EVENT YOU WILL BE ENTITLED TO
RECEIVE THE CONSIDERATION WITH RESPECT TO YOUR DISSENTING SHARES
IN ACCORDANCE WITH THE MERGER AGREEMENT. IN VIEW OF THE
COMPLEXITY OF THE PROVISIONS OF SECTION 262 OF THE DGCL, IF
YOU ARE AN INTELIDATA STOCKHOLDER AND ARE CONSIDERING EXERCISING
YOUR APPRAISAL RIGHTS UNDER THE DGCL, YOU SHOULD CONSULT YOUR
OWN LEGAL ADVISOR.
The following summary describes the material provisions of the
merger agreement. The provisions of the merger agreement are
complicated and not easily summarized. This summary may not
contain all of the information about the merger agreement that
is important to you.
The merger agreement is attached to this proxy statement/
prospectus as Appendix A and is incorporated by
reference into this proxy statement/ prospectus, and we
encourage you to read it carefully in its entirety for a more
complete understanding of the merger agreement. The merger
agreement has been included to provide you with information
regarding its terms. It is not intended to provide any other
factual information about Corillian or InteliData. Such
information can be found elsewhere in this proxy statement/
prospectus, in the information incorporated by reference into
this proxy statement/ prospectus and in the other public filings
Corillian and InteliData make with the SEC. See “Where You
Can Find More Information” beginning on page 99 of
this proxy statement/ prospectus.
The representations and warranties of Corillian and InteliData
contained in the merger agreement are qualified by information
in confidential disclosure schedules delivered by InteliData to
Corillian in connection with signing the merger agreement, which
modify and create exceptions to the representations and
warranties in the merger agreement. The representations and
warranties of Corillian and InteliData contained in the merger
agreement speak only as of March 31, 2005, the date on
which the merger agreement was executed. Therefore, information
concerning the subject matter of the representations and
warranties may have changed since the date of the merger
agreement. These representations and warranties are solely
intended to allocate risk between the parties. Accordingly, the
representations and warranties contained in the merger agreement
should not be taken as assertions of facts by either Corillian
or InteliData and should not be relied upon by you. Such
information can be found elsewhere in this proxy statement/
prospectus and in the public filings each of Corillian and
InteliData makes with the SEC, which are available without
charge at www.sec.gov.
C:
Merger Consideration
Form of Consideration. Upon completion of the merger,
each outstanding share of InteliData common stock, excluding any
treasury shares and any shares held by Corillian, its
subsidiaries, Merger Sub or any dissenting stockholder, will be
converted into the right to receive approximately
0.0956 shares of Corillian common stock and $0.0841 in
cash, subject to adjustment. Corillian will issue an aggregate
of 4,918,032 shares of its common stock and pay an
estimated aggregate of $4,330,383 in cash in exchange for all of
the outstanding shares of InteliData common stock. The aggregate
number of shares to be issued by Corillian was determined by
dividing $15.0 million by the average stock price of
Corillian common stock over a period of time prior to the
signing of the merger agreement, or $3.05. Because the number of
shares of Corillian common stock to be issued pursuant to the
merger is fixed and will not be adjusted based on changes in the
value of Corillian common stock, the value of Corillian common
stock that InteliData stockholders will receive in the merger
will vary as the market price for Corillian common stock
changes. The closing price of Corillian common stock on the date
of this proxy statement/ prospectus, was
$[ ],
reflecting aggregate stock merger consideration of
$[ ] million.
The actual per share merger consideration to be received by the
holders of InteliData common stock upon the closing may differ
slightly from the amounts stated above, depending on the number
of shares of InteliData common stock outstanding immediately
prior to the closing and the number of InteliData stock options
that are exercised or terminated prior to closing, as described
under “Treatment of Stock Options” below. Any money
received by InteliData as payment for the exercise of
outstanding stock options will increase the aggregate cash
available for distribution to InteliData stockholders, but the
additional shares issued will decrease the per share
consideration. Any money paid by InteliData to holders of
outstanding options to terminate their options will decrease the
aggregate cash available for distribution to InteliData
stockholders, but the option termination will have an
anti-dilutive effect on the per share consideration.
The per share merger consideration stated above assumes the
exercise of all options to purchase InteliData common stock that
were outstanding and “in-the-money” as of the date of
this proxy
statement/ prospectus, and the termination of all options to
purchase InteliData common stock that were outstanding and
“out-of-the-money” as of the date of this proxy
statement/ prospectus. No additional options will be
in-the-money unless Corillian’s common stock increases to
over $5.40 per share as of the closing of the merger. If
that happens and additional options get exercised, you will be
entitled to fewer shares of Corillian common stock in exchange
for your shares; however, the aggregate value of those Corillian
shares will have increased along with the increase in
Corillian’s stock price. Conversely, if the market price of
Corillian’s common stock decreases prior to the closing of
the merger and more options become out-of-the-money, you will be
entitled to a greater number of shares of Corillian common stock
in exchange for your shares and, generally, an increase in
aggregate per share merger consideration; however, the aggregate
value of those Corillian shares will have decreased along with
the decrease in Corillian’s stock price. Corillian and
InteliData do not anticipate that disposition of options will
materially affect the combined stock and cash merger
consideration that each InteliData stockholder receives.
Corillian and InteliData do not anticipate that any other event
or transaction will occur prior to closing that would materially
affect the number of outstanding shares of InteliData common
stock.
You will not know the exact per share merger consideration
before submitting your vote on the proposal to adopt the merger
contemplated thereby.
Treatment of InteliData Stock Options. Immediately prior
to the effectiveness of the merger, all outstanding options
under InteliData’s stock option plans and agreements will
be exercised or terminated. Holders of InteliData stock options
who exercise their options prior to the effective time of the
merger will receive a portion of the merger consideration based
upon the number of shares of InteliData common stock received
upon exercise of such stock options, just like other InteliData
stockholders. Holders of InteliData stock options with an
exercise price greater than the value of the per share cash and
stock merger consideration are expected to surrender their
options to InteliData prior to consummation of the merger and
InteliData will pay them (i) $0.02 per share for each
share of common stock underlying options with an exercise price
of $2.00 or less and/or (ii) $0.01 per share for each
share of common stock underlying options with an exercise price
of greater than $2.00, in cash, less applicable tax withholdings.
Corillian Stock. Each share of Corillian common stock
issued and outstanding at the time of the merger will remain
issued and outstanding and those shares will be unaffected by
the merger.
C:
Procedures for Exchange
Surrender of Certificates. As promptly as practicable
following the effective time of the merger, the exchange agent
will mail to each record holder of InteliData common stock
(a) a letter of transmittal and (b) instructions for
surrendering certificates formerly representing InteliData
common stock in exchange for cash and a certificate or
certificates representing Corillian common stock, into which the
InteliData common stock will be converted pursuant to the
merger. After receipt of those forms, holders of InteliData
common stock will be able to surrender their certificates to the
exchange agent, and each holder will receive in exchange
therefor the cash to which the holder is entitled, certificates
evidencing the number of whole shares of Corillian common stock
to which the holder is entitled, and any cash which may be
payable in lieu of a fractional share of Corillian common stock.
InteliData stockholders should not send their certificates
until they receive the transmittal form.
After the merger, each certificate that previously represented
shares of InteliData common stock will represent only the right
to receive the cash and shares of Corillian common stock into
which those shares of InteliData common stock have been
converted.
Corillian will not pay dividends to holders of InteliData stock
certificates in respect of the shares of Corillian common stock
into which the Corillian shares represented by those
certificates have been converted until the InteliData stock
certificates are surrendered to the exchange agent.
After the effective time of the merger, InteliData will not
register any further transfers of InteliData shares. Any
certificates evidencing InteliData shares that are presented for
registration after the effective time will be exchanged for the
cash and certificates evidencing the number of whole shares of
Corillian
common stock to which they are entitled, and any cash which may
be payable in lieu of a fractional share of Corillian common
stock.
C:
Adjustments to Merger Consideration
If, prior to the effective time of the merger, Corillian pays a
dividend in, subdivides, combines into a smaller number of
shares or issues by reclassification of its shares any shares of
Corillian common stock, then the exchange rate will be
multiplied by a fraction, the numerator of which shall be the
number of shares of Corillian common stock outstanding
immediately after, and the denominator of which shall be the
number of shares of Corillian common stock outstanding
immediately before, the occurrence of such event, and thereafter
the resulting product will be the exchange rate.
C:
Fractional Shares
No certificates representing fractional shares of Corillian
common stock will be issued in connection with the merger, and
such fractional share interests shall not entitle the owner
thereof to vote or to any rights of a stockholder of InteliData
after the merger. Instead, each holder of shares of InteliData
common stock exchanged pursuant to the merger who would
otherwise have been entitled to receive a fraction of a share of
Corillian common stock, after taking into account all shares of
InteliData common stock delivered by such holder, will receive a
cash payment, without interest, rounded up to the nearest whole
cent, determined by multiplying the fractional share interest to
which such holder would otherwise be entitled by the average
closing price for a share of Corillian common stock as reported
on the Nasdaq National Market System for the 20 consecutive
trading days ending on and including the third trading day
preceding the closing date.
C:
Representations and Warranties
InteliData made a number of representations and warranties in
the merger agreement that are qualified by reference to
confidential disclosure schedules delivered by InteliData to
Corillian in connection with the signing of the merger
agreement, relating to, among other things:
•
its corporate organization and similar corporate matters;
its organizational documents and the organizational documents of
its subsidiaries;
•
its capitalization;
•
its filings and reports with the SEC;
•
its compliance with the Sarbanes-Oxley Act of 2002;
•
the absence of undisclosed liabilities required to be disclosed
on a balance sheet prepared in accordance with
U.S. generally accepted accounting principles that would
have a material adverse effect on InteliData;
•
the absence of notification by either InteliData’s
independent registered public accounting firm or by the staff of
the SEC that such accounting firm or staff is of the view that
any financial statement of InteliData should be restated, other
than as disclosed in InteliData’s SEC filings;
•
disclosure controls and procedures maintained by InteliData;
•
the accuracy of information supplied by InteliData in connection
with this proxy statement/ prospectus and the registration
statement of which it is a part;
•
authorization, execution, delivery and performance by and
enforceability of the merger agreement against InteliData;
•
the absence of certain changes or events in its business since
January 1, 2005;
the absence of conflicts with or violations of its amended and
restated certificate of incorporation and bylaws, applicable
laws or material agreements by InteliData as a result of the
merger;
•
governmental consents, approvals, orders and authorizations
required in connection with the merger;
•
InteliData’s possession of permits and regulatory approvals
necessary to conducts its business;
•
compliance with applicable laws and orders;
•
the absence of undisclosed litigation involving InteliData;
•
its employee benefit plans and other labor matters;
•
the absence of payments to InteliData’s officers, directors
or employees reasonably expected to be characterized as
“excess parachute payments”;
•
labor and employment matters of InteliData;
•
its title to real and personal properties;
•
intellectual property matters of InteliData;
•
the filing of tax returns and payment of taxes by InteliData;
agreements that restrict or impair its business activities;
•
the customers of InteliData;
•
environmental matters of InteliData;
•
the absence of transactions between InteliData and related
parties since January 1, 2002;
•
change of control payments to InteliData’s directors,
employees and independent contractors triggered by the merger,
either alone or in combination with another event, such as a
termination of employment;
•
the receipt of a fairness opinion by InteliData;
•
the payment of fees to finders and financial advisors in
connection with the merger agreement and other expenses incurred
in connection with the merger;
•
the accuracy and completeness of InteliData’s
representations and warranties;
•
actions that would prevent the merger from qualifying as a
reorganization under Section 368(a) of the Code; and
•
the applicability of the Stockholder Rights Plan, dated
January 21, 1998, between InteliData and American Stock
Transfer & Trust Company.
Corillian and Merger Sub made a number of representations and
warranties in the merger agreement relating to, among other
things:
•
their corporate organization and similar corporate matters;
•
their capitalization;
•
Corillian’s filings and reports with the SEC;
•
Corillian’s compliance with the Sarbanes-Oxley Act of 2002;
•
the absence of undisclosed liabilities required to be disclosed
on a balance sheet prepared in accordance with generally
accepted accounting principles that would have a material
adverse effect on Corillian;
the absence of notification by either Corillian’s
independent registered public accounting firm or by the staff of
the SEC that such accounting firm or staff is of the view that
any financial statement of Corillian should be restated;
•
compliance with applicable laws and orders;
•
the accuracy of information supplied by Corillian in connection
with this proxy statement/ prospectus and the registration
statement of which it is a part;
•
authorization, execution, delivery and performance by and
enforceability of the merger agreement against Corillian and the
Merger Sub;
•
the absence of certain changes or events in Corillian’s
business since January 1, 2005;
•
the absence of conflicts with or violations of Corillian’s
amended and restated articles of incorporation and bylaws,
Merger Sub’s certificate of incorporation and bylaws, or
applicable laws or material agreements by Corillian or Merger
Sub as a result of the merger;
•
governmental consents, approvals, orders and authorizations
required in connection with the merger;
•
ownership and interim operations of Merger Sub;
•
the absence of undisclosed litigation involving Corillian;
•
the absence of brokers’ or finders’ fees in connection
with the merger;
•
actions that would prevent the merger from qualifying as a
reorganization under Section 368(a) of the Code; and
•
Corillian’s financial resources to pay all required cash
amounts to InteliData stockholders pursuant to the merger
agreement.
C:
Conduct of InteliData’s Business Pending the Merger
Except as contemplated by the merger agreement or with
Corillian’s written consent, InteliData agreed that, until
the termination of the merger agreement or effective time of the
merger, InteliData will carry on its business in the ordinary
and usual manner and maintain its existing relationships with
suppliers, customers, employees and business associates.
Additionally, subject to specified exceptions, the merger
agreement expressly restricts the ability of InteliData, without
Corillian’s prior written consent, to:
sell any shares of capital stock or issue securities convertible
into capital stock;
•
sell or dispose of any of InteliData’s assets, other than
sales of inventory in the ordinary course of business;
•
declare or pay any dividends;
•
split, recombine or reclassify its capital stock;
•
acquire (by merger or the acquisition of securities or assets)
another business entity or material part of another business
entity;
•
incur, assume or guarantee any indebtedness other than trade
payables in the ordinary course of business;
•
make capital expenditures above specified levels;
•
increase compensation payable to directors, officers, employees
or consultants;
•
change its method of accounting, except as required by
U.S. generally accepted accounting principles as concurred
with by its independent registered public accounting firm;
discharge any indebtedness above specified levels other than the
discharge of existing indebtedness in the ordinary course of
business consistent with past practices;
•
materially transfer or license any rights to InteliData’s
intellectual property;
enter into any licensing or distribution agreement other than in
the ordinary course of business;
•
permit the removal of material equipment or personal property
from any InteliData facility;
•
institute or settle any litigation or other proceedings;
•
file any amended tax return, settle any tax claims, or make any
material tax election;
•
take any action, or fail to take any action, with respect to
InteliData’s representations, warranties and covenants that
would prevent satisfaction of the closing conditions to the
merger; or
•
authorize or enter into any agreement to do any of the actions
referred to above.
C:
Acquisition Proposals by Third Parties
The merger agreement contains provisions prohibiting InteliData
from seeking a competing transaction, subject to certain
exceptions described below. Under these “no
solicitation” provisions, InteliData has agreed that it
will not, directly or indirectly, and will not authorize or
permit any of its officers, directors, employees, or advisors,
to take any of the following actions:
•
solicit, initiate, encourage or facilitate an “acquisition
proposal”;
•
enter into any agreement or letter of intent regarding an
acquisition proposal; or
•
negotiate or otherwise engage in discussions with any person
(other than Corillian or its directors, officers, employees,
agents and representatives) with respect to any acquisition
proposal.
However, prior to the adoption of the merger agreement and
approval of the transactions contemplated thereby at the annual
meeting, InteliData may, after providing written notice to
Corillian, furnish information to and enter into discussions or
negotiations with any person that makes an unsolicited bona fide
acquisition proposal that the InteliData board of directors in
good faith, after consultation with its outside counsel and
financial advisor, concludes is likely to result in a
“superior proposal” if, and only to the extent that,
the InteliData board of directors determines in good faith,
after consultation with outside counsel, that failing to take
such action would be reasonably likely to constitute failure of
the board of directors to comply with its fiduciary duties to
InteliData’s stockholders under applicable law.
InteliData has agreed to provide Corillian with notice of any
acquisition proposal it receives.
An “acquisition proposal” is any of the following:
•
any inquiry, offer or proposal from any person relating to any
direct or indirect acquisition or purchase of assets that
constitutes (i) 10% or more of the assets of InteliData and
its subsidiaries taken as a whole, (ii) the credit card
business of InteliData, or (iii) a transaction otherwise
material to InteliData, or involving 15% or more of the
outstanding shares of InteliData’s capital stock equity
securities of InteliData or any of its subsidiaries;
•
any tender offer or exchange offer that if consummated would
result in any person beneficially owning 15% or more of the
outstanding shares of InteliData’s capital stock; or
•
any merger, consolidation, business combination,
recapitalization or similar transaction involving InteliData or
any of its subsidiaries, other than the transactions
contemplated by the merger agreement.
A “superior proposal” is an unsolicited, bona fide,
written acquisition proposal made by a third party to acquire
all of the outstanding shares or voting power of InteliData on
terms that the InteliData board of
directors determines in its good faith judgment, after
consultation with its outside counsel and financial advisor, to
be more favorable to InteliData’s stockholders than the
merger with Corillian, for which financing, to the extent
required, is then committed, and which is reasonably likely to
be completed in a time period not materially longer than the
merger with Corillian.
Corillian may terminate the merger agreement if a superior
proposal exists with respect to InteliData and the board of
directors of InteliData has withdrawn or modified, in a manner
adverse to Corillian, its approval and recommendation to adopt
the merger agreement and to approve the transactions
contemplated thereby, or if the board of directors of InteliData
approves or recommends such superior competing transaction.
Likewise, InteliData may terminate the merger agreement if
InteliData receives a superior proposal, provided that it gives
Corillian notice of the superior proposal and opportunity to
negotiate a counterproposal. If either Corillian or InteliData
terminates the merger agreement in connection with these
provisions, InteliData has agreed to promptly pay Corillian a
fee of $1.4 million.
C:
Other Agreements
The merger agreement contains other mutual agreements, in
addition to the covenants relating to the conduct of business
described above, including the following mutual agreements of
InteliData and Corillian:
•
to promptly prepare and file all necessary documentation to
effect all applications, notices, petitions and filings,
including this proxy statement/ prospectus and the registration
statement of which this proxy statement/ prospectus is a part,
and to obtain and comply with all permits, consents, approvals
and authorizations of all third parties and governmental
entities necessary or advisable to consummate the transactions
contemplated by the merger agreement;
•
to provide each other, upon request, with all information
concerning themselves for purposes of this document and other
filings and statements made in connection with the merger;
•
to agree to be bound by the confidentiality letters entered into
between the two parties prior to execution of the merger
agreement, including following the termination of the merger
agreement;
•
to provide each other with reasonable access to properties,
books, contracts, commitments and records;
•
to use all commercially reasonable efforts to obtain all
approvals, including any consents, waivers and approvals from
any governmental entity or under any agreements, contracts,
licenses or leases with third parties, required to be obtained
in connection with the consummation of the transactions
contemplated by the merger agreement;
•
to take all commercially reasonable actions to consummate the
merger and make effective the transactions contemplated by the
merger agreement;
•
to promptly notify the other of any communications received in
connection with the merger agreement regarding consents
required, notice received by any governmental authority,
commenced or threatened litigation against the party or its
subsidiaries, the inaccuracy of any representation or warranty
contained in the merger agreement, or the failure to comply with
or satisfy any covenant, condition or agreement to be complied
with or satisfied under the merger agreement;
•
not to issue or cause the publication of any press release or
other public announcement with respect to the merger, the merger
agreement or the other transactions contemplated thereby without
the prior approval of the other party, except such disclosures
as may be required by law or by Nasdaq regulations or listing
requirements; and
•
to use commercially reasonable efforts to cause the merger to
qualify as a reorganization under Section 368(a) of the
Code.
to use commercially reasonable efforts to have the registration
statement declared effective by the SEC as promptly as
practicable and to maintain the effectiveness of the
registration statement through the effective time;
•
to use its reasonable efforts to cause the shares of Corillian
common stock issued in the merger to be approved for listing on
the Nasdaq National Market System;
•
to cause the surviving company of the merger to assume a
“tail” policy under InteliData’s directors’
and officers’ insurance policy that has an effective term
of six years from the effective time of the merger; and
•
to address certain employee benefit matters (see “Employee
Benefit Plans” on page 65).
InteliData has also agreed:
•
to take all action necessary to convene and hold the annual
meeting of its shareholders as promptly as practicable to
consider and vote on the merger agreement and the transactions
contemplated thereby and to use its commercially reasonable
efforts to solicit from stockholders of InteliData proxies in
favor of the proposal to adopt the merger agreement and to
approve the transactions contemplated thereby;
•
to take all reasonable action to ensure that no anti-takeover
statute or regulation becomes applicable to the merger or the
transactions contemplated thereby;
•
to deliver to Corillian a letter identifying all persons who are
affiliates of InteliData and to use its reasonable efforts to
obtain from each such person a written affiliate letter
agreement;
•
to provide notice to, or obtain consents from, InteliData’s
option holders in order to cause the exercise or termination of
all outstanding stock options and stock option plans as of the
effective time;
•
to take all actions necessary to cause any warrants to
purchase InteliData’s common stock to become warrants
to purchase Corillian’s common stock as of the effective
time;
•
to take all action to ensure that InteliData’s Stockholder
Rights Plan is inapplicable to the merger and will terminate
immediately prior to the effective time; and
•
to cause the resignations of InteliData’s directors and, if
applicable, officers as of the effective time.
C:
Conditions to Completion of the Merger
The respective obligations of Corillian and InteliData to
complete the merger and the other transactions contemplated by
the merger agreement are subject to the satisfaction or waiver
of various conditions that include, in addition to other
customary closing conditions, the following:
•
no provision of any applicable laws and no judgment, injunction,
order or decree shall restrict, prevent or prohibit the
consummation of the merger or the transactions contemplated by
the merger agreement;
•
the SEC shall have declared the registration statement of which
this document is a part effective under the Securities Act and
no stop order or similar restraining order suspending the
effectiveness of the registration agreement shall be in effect
and no proceedings for such purpose shall be pending or
threatened by the SEC or any state securities administrator;
•
the merger agreement must be adopted and the transactions
contemplated thereby must be approved by the holders of a
majority of the outstanding shares of InteliData common
stock; and
•
the shares of Corillian common stock to be issued at the
effective time of the merger shall have been authorized for
listing on the Nasdaq National Market System.
Each party’s obligation to effect the merger is further
subject to the satisfaction or waiver of the following
additional conditions:
•
the representations and warranties of the other party set forth
in the merger agreement must be true and correct in all material
respects; and
•
the other party to the merger agreement must have performed in
all material respects all of its agreements and covenants
required by the merger agreement.
The obligations of Corillian and Merger Sub to complete the
merger are also subject to the following conditions:
•
InteliData’s delivery to Corillian of a certificate
regarding InteliData’s representations, warranties and
covenants;
•
InteliData obtaining all approvals required for the
authorization, execution and delivery of the merger agreement
and the consummation of the transactions contemplated thereby;
•
the absence of any pending action, proceeding or investigation
before any court or administrative agency or by a government
agency or any other person challenging or seeking to restrain or
prohibit the consummation of the merger or seeking material
damages in connection with the merger;
•
delivery to Corillian by Perkins Coie LLP of an opinion to the
effect that the merger will be treated for federal income tax
purposes as a reorganization within the meaning of
Section 368(a) of the Code;
•
InteliData’s delivery of a written letter agreement from
each of its affiliates;
•
the resignation of the directors and, if applicable, the
officers of InteliData;
•
there must not have occurred, since the date of the merger
agreement, any undisclosed material adverse effect on InteliData
and its subsidiaries that is continuing, and InteliData’s
delivery to Corillian of a certificate to that effect;
•
InteliData shall have terminated all option plans and
agreements, and all related outstanding options, and the
InteliData Employee Stock Purchase Plan;
•
the expiration of the rights under the Stockholder Rights Plan
and their inapplicability to the merger and the transactions
contemplated thereby;
•
if holders of InteliData common stock have delivered a notice of
intent to exercise their appraisal rights under Delaware law,
these holders must not hold more than 5% of the outstanding
shares of InteliData common stock;
•
the timely filing of InteliData’s report on internal
controls and the attestation of its independent registered
public accounting firm; and
•
InteliData’s delivery to Corillian of certain tax
certificates.
The obligation of InteliData to complete the merger is also
subject to the following conditions:
•
Corillian’s delivery to InteliData of a certificate
regarding Corillian’s representations, warranties and
covenants;
•
Corillian and Merger Sub obtaining all approvals for the
authorization, execution and delivery of the merger agreement
and the consummation of the transactions contemplated thereby;
•
there must not have occurred, since the date of the merger
agreement, any undisclosed material adverse effect on Corillian
and its subsidiaries that is continuing, and Corillian’s
delivery to InteliData of a certificate to that effect; and
•
delivery to InteliData by Hunton & Williams LLP of an
opinion to the effect that the merger will be treated for
federal income tax purposes as a reorganization within the
meaning of
Section 368(a) of the Code; provided, however, that if this
opinion is not delivered, this condition will be deemed to be
satisfied if InteliData receives an opinion to this effect from
Perkins Coie LLP.
C:
Employee Benefit Plans
Corillian has agreed to maintain InteliData’s employee
benefits plans or to cause Merger Sub, as the surviving
corporation of the merger, to provide the same benefits plans to
the employees of the surviving corporation as Corillian provides
its employees. Corillian may request that InteliData terminate
any of its employee benefit plans, including its 401(k) plans.
In addition, InteliData has agreed to take any remedial or
corrective action with respect to its employee benefit plans
that may be requested by Corillian.
C:
InteliData’s Option Plans; Employee Stock Purchase
Plan
Corillian will not assume any InteliData option plan or
agreement, or any options outstanding thereunder, or
InteliData’s Employee Stock Purchase Plan (the
“InteliData ESPP”). InteliData will take all necessary
action to terminate the option plans and agreements, and any
related outstanding options, and the InteliData ESPP on or prior
to the effective time of the merger. In connection with the
merger agreement, InteliData will suspend the effectiveness of
the purchase period that would have commenced under the
InteliData ESPP on June 30, 2005. As a result, at the
effective time of the merger, there will be no outstanding
purchase rights under the InteliData ESPP.
C:
Termination of the Merger Agreement
The merger agreement may be terminated at any time before the
effective time of the merger by:
•
the mutual written consent of InteliData and Corillian;
•
either InteliData or Corillian, if the merger has not been
consummated by September 30, 2005;
•
either InteliData or Corillian, if a permanent injunction
preventing the consummation of the merger shall have become
final and unappealable;
•
either InteliData or Corillian, if the required approval of the
InteliData stockholders is not obtained at the annual meeting;
•
Corillian, if there exists a superior proposal and
InteliData’s board of directors withdraws or modifies, in a
manner adverse to Corillian, its recommendation “FOR”
the proposal to adopt the merger agreement and to approve the
transactions contemplated thereby, or if InteliData’s board
of directors has approved or recommended such superior proposal;
•
InteliData, if InteliData receives a superior proposal; and
•
either InteliData or Corillian, upon a breach of a
representation, warranty or covenant of the other party
contained in the merger agreement that is not curable within
30 days after notice of breach.
C:
Termination Fee
InteliData shall pay to Corillian a termination fee of
$1.4 million if the merger agreement is terminated by:
•
either InteliData or Corillian, if (a) the required
approval of InteliData stockholders is not obtained at the
annual meeting, (b) at or prior to the annual meeting,
there is publicly disclosed an acquisition proposal, and
(c) InteliData enters into an agreement for an acquisition
proposal within 12 months following the termination of the
merger agreement with Corillian;
•
Corillian, if there exists a superior proposal and
InteliData’s board of directors withdraws or modifies, in a
manner adverse to Corillian, its recommendation “FOR”
the proposal to adopt the
merger agreement and to approve the related transactions, or if
InteliData’s board of directors has approved or recommended
such superior proposal; or
•
InteliData, if InteliData receives a superior proposal.
C:
Amendment, Extension and Waiver
InteliData and Corillian may amend the merger agreement at any
time prior to the effective time of the merger. Any amendment to
the merger agreement must be in writing and signed on behalf of
both InteliData and Corillian.
At any time before the effective time of the merger, InteliData
and Corillian may:
•
extend the time for performance of any of the other party’s
obligations;
•
waive any inaccuracies contained in the representations and
warranties in the merger agreement or any document delivered
pursuant to the merger agreement; and
•
waive compliance with any of the agreements or conditions
contained in the merger agreement.
Any agreement to an extension or waiver must be in writing
signed on behalf of the party agreeing to the extension or
waiver.
Expenses
The merger agreement provides that each party will pay its own
costs and expenses in connection with the merger and the
transactions contemplated by the merger agreement; provided,
however, that InteliData and Corillian will share equally the
cost of printing and filing this document.
C:
AGREEMENTS TO FACILITATE MERGER
InteliData directors and officers who collectively own
approximately 0.7% of InteliData’s common stock have
entered into agreements to facilitate the merger with Corillian
and Merger Sub. These agreements to facilitate merger grant
Corillian irrevocable proxies to vote any shares of InteliData
common stock over which such stockholder has sole voting power
in favor of the adoption of the merger agreement and approval of
the transactions contemplated thereby and against any action,
agreement or transaction, other than the merger agreement or the
transactions contemplated thereby, or proposal, including any
acquisition proposal, that would result in a breach of any
covenant, representation or warranty or any other obligation or
agreement of InteliData under the merger agreement or that could
result in any of the conditions to InteliData’s obligations
under the merger agreement not being fulfilled.
The agreements to facilitate merger prohibit the sale,
assignment, transfer or other disposition by these InteliData
directors and officers of their shares of InteliData common
stock, except as specifically permitted by the agreement to
facilitate merger and provided that any permitted transferee
also agrees to be bound by the agreement to facilitate merger.
The agreements to facilitate merger will terminate at the
earlier of the effective time of the merger or termination of
the merger agreement in accordance with its terms.
C:
INTELIDATA AFFILIATE LETTERS
The shares of Corillian common stock that InteliData
stockholders will own following the merger have been registered
under the Securities Act. They may be freely traded without
restriction by you if you are not an “affiliate” of
InteliData under the Securities Act. An affiliate of InteliData,
as defined by the rules under the Securities Act, is a person
that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with,
InteliData. InteliData has agreed to use its reasonable efforts
to obtain from each of these affiliates an “affiliate
letter” pursuant to which each such affiliate agrees not to
sell, transfer or otherwise dispose of Corillian common stock
received by them in the
merger in violation of the Securities Act or the rules and
regulations of the SEC promulgated thereunder. These InteliData
affiliates have been advised that they may not sell, transfer or
otherwise dispose of shares of Corillian common stock received
by them in connection with the merger unless such sale, transfer
or other disposition has been registered under the Securities
Act, is made in accordance with Rule 145 promulgated by the
SEC under the Securities Act, or is otherwise exempt from
registration under the Securities Act in the opinion of legal
counsel reasonably acceptable to Corillian. Affiliates generally
include directors, executive officers and beneficial owners of
10% or more of any class of capital stock.
In accordance with the affiliate letters, Corillian will be
entitled to place appropriate restrictive legends on these
InteliData stockholders’ certificates evidencing any
Corillian common stock to be received by them in connection with
the merger. Execution of an affiliate letter does not constitute
an admission by the InteliData stockholder to being an affiliate
of InteliData.
C:
INFORMATION ABOUT CORILLIAN
Corillian is a leading provider of solutions that enable banks,
credit unions and other financial service providers to rapidly
deploy Internet-based financial services. Corillian’s
solutions allow consumers to conduct financial transactions,
view personal and market financial information, pay bills and
access other financial services on the Internet. Corillian
Voyager is a software platform combined with a set of
applications for Internet banking, electronic bill presentment
and payment, identity management, targeted marketing, data
aggregation, alerts and online customer relationship management.
Corillian’s solutions integrate into existing database
applications and systems and enable its customers to monitor
transactions across all systems in real time. Corillian’s
solutions are also designed to support multiple lines of
business, including small business banking, corporate banking
and credit card management, and to scale to support millions of
users. Current Corillian customers include J.P. Morgan
Chase, the Huntington National Bank, Wachovia Bank and SunTrust
Bank.
Corillian was founded in 1997 and is incorporated under the laws
of the State of Oregon. Corillian’s common stock trades on
the Nasdaq Stock Market under the symbol “CORI.”
Corillian’s principal executive offices are located at
3400 N.W. John Olsen Place, Hillsboro, Oregon97124, and
its telephone number is (503) 629-3300.
Additional information concerning Corillian is included in
Corillian’s reports filed under the Exchange Act that are
incorporated by reference into this proxy statement/prospectus.
See “Where You Can Find More Information” beginning on
page 99.
More information regarding the corporate structure and
governance of Corillian is contained in the section titled
“Comparative Rights of Corillian Shareholders and
InteliData Stockholders” beginning on page 69.
C:
INFORMATION ABOUT INTELIDATA
InteliData Technologies Corporation and subsidiaries provides
electronic bill payment and presentment and online banking
solutions to the financial services industry. InteliData’s
products provide financial institutions with the real-time
financial processing infrastructure needed to provide their
customers with payment and presentment services and online
banking via the Internet and other online delivery channels.
InteliData markets its products and services to banks, credit
unions, brokerage firms, financial institution processors and
credit card issuers.
InteliData’s product suite consists of three complementary
product offerings:
Payment and Presentment
•
Payment Solutions: providing payment warehousing, payment
matching, biller directory management, and least cost routing
functionality for electronic bill payment and presentment
transactions;
Card Services: providing Internet-based account activation, bill
presentment, balance consolidation, and e-Statement
capabilities; and
Online Banking
•
Online Banking: providing Internet-based access to real-time
account information, as well as interfaces to personal financial
management software such as Intuit’s Quicken® and
Microsoft Money®.
InteliData has invested in developing products and capabilities
designed to establish a leadership position in the online bill
payment market. InteliData believes this market opportunity is
significant based on the billions of recurring bills that
consumers and businesses pay each year, primarily via paper
checks. Financial institutions should be able to realize
significant cost and efficiency benefits from initiating these
payments online and processing them electronically. Migrating to
online electronic payments will require significant investment
in online bill payment infrastructure, which is where
InteliData’s products are focused.
In January 2001, InteliData acquired Home Account Holdings,
Inc. and its operating subsidiary, Home Account Network, Inc.,
by means of the merger of one of InteliData’s wholly owned
subsidiaries with and into Home Account Holdings, with Home
Account Holdings surviving the merger. Home
Account Holdings is a wholly owned subsidiary of
InteliData. This acquisition was accounted for as a purchase.
Through this transaction, InteliData acquired the products and
customer base of Home Account Holdings, Inc., including
(i) the Card Services sector, (ii) the Online Banking
platform,
Canopytm
Banking, for commercial banks, and (iii) an Open Financial
Exchange (“OFX”) solution that provides Payment
Solutions capabilities.
InteliData was incorporated under the laws of the State of
Delaware on August 23, 1996. InteliData’s principal
executive offices are located at 11600 Sunrise Valley
Drive, Suite 100, Reston, Virginia20191, and its telephone
number is (703) 259-3000. Additional information concerning
InteliData is included in InteliData’s reports filed under
the Exchange Act that are incorporated by reference into this
proxy statement/prospectus. See “Where You Can Find More
Information” beginning on page 99.
C:
COMPARATIVE RIGHTS OF CORILLIAN SHAREHOLDERS AND
INTELIDATA STOCKHOLDERS
InteliData is a Delaware corporation subject to the provisions
of the Delaware General Corporation Law (the “DGCL”).
Corillian is an Oregon corporation subject to the provisions of
the Oregon Business Corporation Act (the “OBCA”). Upon
completion of the merger, InteliData shareholders, whose rights
are currently governed by InteliData’s Amended and Restated
Certificate of Incorporation and Bylaws and the DGCL, will
become shareholders of Corillian, whose rights will be governed
by Corillian’s Restated Articles of Incorporation and
Restated Bylaws and the OBCA. We believe the description below
covers the material differences between the rights of Corillian
shareholders and InteliData stockholders, but it may not contain
all information important to you. The description is qualified
in its entirety by reference to the respective charter
documents, bylaws and rights agreements of Corillian and
InteliData, all of which are incorporated by reference into this
proxy statement/ prospectus. See “Where You Can Find More
Information” beginning on page 99. The rights of
InteliData stockholders are governed by the DGCL and
InteliData’s Amended and Restated Certificate of
Incorporation and Bylaws.
Delaware law and InteliData’s Amended and Restated
Certificate of Incorporation and Bylaws govern the rights of
InteliData stockholders. Upon completion of the merger, the
rights of InteliData stockholders who become Corillian
shareholders will be governed by Oregon law and Corillian’s
Restated Articles of Incorporation and Restated Bylaws.
Oregon law and Corillian’s Restated Articles of
Incorporation and Restated Bylaws currently govern the rights of
Corillian shareholders. Upon completion of the merger, the
rights of Corillian shareholders will continue to be governed by
Oregon law and Corillian’s Restated Articles of
Incorporation and Restated Bylaws.
Authorized Capital Stock:
The authorized capital stock of InteliData currently consists of
(i) 100,000,000 shares of Common Stock, par value
$0.001 per share, and (ii) 5,000,000 shares of
Preferred Stock, par value $0.001 per share, 100,000 of
which are designated Series A Cumulative Preferred Stock.
The InteliData board is authorized, without stockholder
approval, to issue shares of the remaining preferred stock in
one or more series and to determine the designations, rights and
preferences of such preferred stock.
The authorized capital stock of Corillian currently consists of
(i) 150,000,000 shares of Common Stock, without par
value, and (ii) 40,000,000 shares of Preferred Stock,
without par value. The Corillian board is authorized, without
shareholder approval, to issue shares of preferred stock in one
or more series and to determine the powers, designations,
preferences and relative, participating, optional and other
special rights.
Number of Directors:
The InteliData board of directors currently consists of six
directors. The number of directors is established from time to
time by resolution adopted by a majority of the InteliData board
of directors (presuming a quorum is present), although there
must be a minimum of five and not more than fifteen directors.
The Corillian board of directors consists of seven directors.
The number of directors is established from time to time by
resolution adopted by a majority of the Corillian board of
directors, although there must be a minimum of three and not
more than nine directors.
Election of Directors:
Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a
quorum is present.
Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a
quorum is present.
Term and Classes of Directors:
There are three classes of InteliData directors. Each class
serves for a three-year term, with one class’s term
expiring each year.
Whenever there are more than six directors on the board, the
board is then divided into three classes of Corillian directors.
Each class serves for a three-year term, with
A director may be removed only for cause by the holders
representing at least two-thirds of the votes then entitled to
be cast at an election of directors.
Corillian’s Articles provide that a director may be removed
only for cause by the holders representing a majority of the
votes then entitled to be cast at an election of directors. If
elected by a voting group of shareholders, only those
shareholders may participate in the removal vote. In addition an
Oregon court may remove a director from office in a proceeding
commenced by the corporation or its shareholders holding at
least 10% of the shares of any class if the court determines
that: (i) the director engaged in fraudulent or dishonest
conduct or gross abuse of authority with respect to the
corporation; and (ii) removal is in the best interest of
the corporation.
Vacancies on the Board:
Vacancies in InteliData’s board of directors as a result of
death, resignation, retirement, disqualification, removal, or an
increase in the authorized number of directors or any other
cause may be filled by a majority of the remaining directors
then in office, although less than a quorum, and the directors
so elected will hold office until the next succeeding annual
meeting of stockholders and until their successors are duly
elected and qualified, or until their earlier death, resignation
or removal.
Vacancies in Corillian’s board of directors (including a
vacancy created by newly created directorships resulting from
any increase in the authorized number thereof) may be filled by
a majority of the remaining directors then in office, although
less than a quorum, or by a sole remaining director.
Board Quorum and Vote Requirements:
At all meetings of InteliData’s board of directors, the
presence of a majority of the total authorized number of
directors constitutes a quorum for the transaction of business.
Except as otherwise required by law, the vote of a majority of
the directors present at any meeting at which a
At all meetings of Corillian’s board of directors, the
presence of a majority of the total authorized number of
directors constitutes a quorum for the transaction of business.
Except as otherwise required by law, the vote of a majority of
the directors present at any meeting at which a
quorum is present constitutes the act of the board of directors.
quorum is present constitutes the act of the board of directors.
Any action required or permitted to be taken at any meeting of
InteliData’s board of directors may be taken without a
meeting if all members of the board of directors consent thereto
in writing, and that writing or those writings are filed with
the minutes of proceedings of the board of directors.
Any action required or permitted to be taken at any meeting of
Corillian’s board of directors may be taken without a
meeting if all members of the board of directors consent thereto
in writing, and that writing or those writings are filed with
the minutes of proceedings of the board of directors.
Stockholder/ Shareholder Meetings:
The annual meeting of InteliData stockholders is held at the
place, either within or without the State of Delaware, and on
the date and at the time, as may be fixed from time to time by
resolution of the board of directors and set forth in the notice
or waiver of notice of the meeting.
The annual meeting of Corillian shareholders is held at the
principal place of business, or the place, either within or
without the State of Oregon, and on the date and at the time, as
may be fixed from time to time by resolution of the board of
directors and set forth in the notice or waiver of notice of the
meeting.
Special meetings of InteliData’s stockholders may be called
at any time by the Chairman of the board of directors, and shall
be called by the secretary at the written request, or by
resolution adopted by the affirmative vote, of a majority of the
board. Special meetings of the stockholders are held at the
places, within or without the State of Delaware, as are
specified in the respective notices or waivers of notice
thereof. Only business brought before the special meeting
pursuant to InteliData’s notice of the special meeting will
be conducted at the special meeting.
Special meetings of Corillian’s shareholders may be called
at any time by (i) the President or Chair of the board of
directors, (ii) the board of directors or (iii) by
request, dated, signed and delivered to the Secretary, of the
holders of not less than one-tenth of all the outstanding shares
of the corporation entitled to vote at the meeting. Special
meetings of the shareholders are held at the principal place of
business, or the places, within or without the State of Oregon,
as are specified in the respective notices or waivers of notice
thereof. Only business brought before the special meeting
pursuant to Corillian’s notice of the special meeting will
be conducted at the special meeting.
Quorum Requirements:
The presence in person or by proxy of the holders of record of a
majority of shares entitled to vote at a meeting of InteliData
stockholders constitutes a quorum
The presence in person or by proxy of the holders of record of a
majority of shares entitled to vote at a meeting of Corillian
shareholders constitutes a quorum
For business to be properly brought before an annual meeting by
a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of InteliData. To be timely,
a stockholder’s notice must be delivered to or mailed and
received at the principal executive offices of InteliData not
less than 60 calendar days in advance of the date notice of
annual meeting released to stockholders in connection with the
previous year’s annual meeting of stockholders. A
stockholder’s notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual
meeting: (i) as to each person whom the stockholder
proposes to nominate for election or reelection as a director,
all information relating to the person that is required to be
disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended, and
the rules promulgated pursuant to that act; (ii) as to any
other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
the business at the annual meeting; (iii) the name and
address, as they appear on the corporation’s books, of the
stockholder proposing the business; (iv) the class, series
and number of shares of the corporation which are beneficially
owned by the stockholder; (v) any material interest of the
stockholder in the
For business to be properly brought before an annual meeting by
a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of Corillian. To be timely,
a shareholder’s notice must be delivered to or mailed and
received at the principal executive office of the corporation
not less than 60 days nor more than 90 days prior to
the meeting; provided, that in the event that less than
70 days’ notice is given, timely shareholder notice
requires receipt thereof not later than close of business on the
seventh day after the date of mailing of the notice of meeting.
A shareholder’s notice to the Secretary shall set forth
(i) as to each person whom the shareholder proposes to
nominate for election or reelection as a director, all
information relating to the person that is required to be
disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended, and
the rules promulgated pursuant to that act; (ii) as to any
other business that the shareholder proposes to bring before the
meeting, a brief description of the matters desired to be
brought before the meeting and the reasons for conducting the
business at the meeting; (iii) the name and record address
of the shareholder; (iv) the class and number of shares of
the corporation that the shareholder owns or is entitled to
vote; (v) any material interest of the shareholder in the
matters; and (vi) a representation that the
business; and (vi) any other information that is required
to be provided by the stockholder pursuant to
Regulation Q14A under the Securities Exchange Act of 1934,
as amended, in the stockholder’s capacity as a proponent of
a stockholder proposal.
shareholder intends to appear in person or by proxy to present
the business specified in the notice.
Action of Stockholders and Shareholders by Written
Consent:
Any action required or permitted to be taken by
InteliData’s stockholders must be effected at a duly called
annual or special meeting and the ability of InteliData’s
stockholders to consent in writing to the taking of any action
is specifically denied.
Oregon law permits shareholders to take actions by unanimous
written consent in lieu of a meeting and Corillian’s
Restated Bylaws allow it.
Stockholder and Shareholder Inspection Rights:
Under the DGCL, any stockholder has the right to inspect the
company’s stock ledger, stockholder list, and other books
and records for a purpose reasonably related to the
person’s interest as a stockholder.
Under the OBCA, any shareholder giving five days’ written
notice to Corillian has the right to inspect Corillian’s
organizational documents, certain board resolutions, shareholder
meeting minutes and recordings of all actions taken by the
shareholders without a meeting, all written communications to
the shareholders generally within the past three years, a list
of the names and addresses of Corillian’s current directors
and officers and Corillian’s most recent annual report
delivered to the Oregon Secretary of State. In addition, any
shareholder giving five days’ written notice to Corillian
may also inspect and copy board and committee meeting minutes,
accounting records, and a list of shareholders, provided the
shareholder’s demand is made in good faith and for a proper
purpose, specifically describes the records to be inspected, and
the records are directly connected with the shareholder’s
purpose.
requires the affirmative vote of the holders of at least a
majority of the shares of capital stock entitled to vote. In
addition, an affirmative vote of two-thirds of InteliData
stockholders who would be entitled to vote is required to amend
articles of InteliData’s Certificate of Incorporation that
pertain to the classification of directors. Any amendment that
adversely affects the rights of the Series A Cumulative
Preferred Stock must also be approved by the holders of a
majority of the shares of such series.
approved by the shareholders if a quorum exists and the votes
cast favoring the amendment exceed the votes cast opposing the
amendment, unless the amendment would create dissenters’
rights, in which case a majority of the votes entitled to be
cast is required for approval. The Article pertaining to the
classified Board of Directors contained in the Restated Articles
of Incorporation may only be amended by affirmative vote of
two-thirds or more of shares held by members of each voting
group entitled to vote. All shareholders vote together as a
single class, unless an amendment would affect specified rights
of preferred shareholders, in which case the consent of a
majority of each applicable class of preferred shareholders is
required.
InteliData’s Bylaws may be amended, altered or repealed
(i) by resolution adopted by a majority of the board of
directors of InteliData at any regular or special meeting of the
board, or (ii) by the affirmative vote of the holders of at
least a majority of the shares of capital stock entitled to
vote. Any provision of the Bylaws adopted or required to be
adopted pursuant to the DGCL by the stockholders may only be
made, altered or repealed by the stockholders.
Corillian’s Restated Bylaws may be altered, amended or
repealed, in whole or in part, by the board of directors.
Shareholders may adopt or amend one or more Bylaws that fix a
greater quorum or voting requirement for shareholders, or voting
group of shareholders, than required by the OBCA.
Exculpation of Directors:
InteliData’s Amended and Restated Certificate of
Incorporation provides that a director will not be personally
liable to InteliData or its stockholders for monetary damages
for breach of fiduciary duty as a director; provided this right
will not eliminate or limit the liability of a director
(i) for any breach of his duty of loyalty
Oregon law provides that a corporation’s articles of
incorporation may contain a provision limiting the personal
liability of directors to the corporation or its shareholders
for monetary damages for conduct as a director, provided that no
provision may eliminate or limit the liability of any director
for (i) any breach of the director’s
to InteliData or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of
Delaware (relating to unlawful payment of dividends or unlawful
stock purchase or redemption) or (iv) for any transaction
from which the director derives an improper personal benefit. If
the General Corporation Law of the State of Delaware is amended
after the date InteliData’s Certificate of Incorporation
became effective to authorize corporate action further
eliminating or limiting the personal liability of InteliData
directors, then the liability of an InteliData director will be
eliminated or limited to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as so amended.
duty of loyalty to the corporation or its shareholders,
(ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) any
unlawful distribution as defined under ORS 60.367, or
(iv) any transaction from which the director derived an
improper personal benefit. Corillian’s Restated Articles of
Incorporation eliminate liability of directors for monetary
damages as a director for all actions other than those
specifically excluded in the Oregon statute as described above.
Indemnification of Directors, Officers and Employees:
InteliData will indemnify its directors, officers, employees and
other agents to the fullest extent not prohibited by the
Delaware General Corporation Law; provided, however, that
InteliData is not be required to indemnify any director or
executive officer in connection with any proceeding (or part
thereof) initiated by him or her or any proceeding by him or her
against the corporation or its directors, officers, employees or
other agents unless (i) such indemnification is expressly
required to be made by law, (ii) the proceeding was
authorized by the board of directors of the corporation, or
(iii) the indemnification is provided by the corporation,
in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General
Corillian will indemnify its directors, officers, employees and
other agents to the fullest extent permitted by law. The Oregon
Business Corporation Act provides that a director or officer who
has been or is threatened to be made a defendant in a legal
proceeding because that person is or was a director or officer
of a corporation (i) shall be indemnified by the
corporation for reasonable expenses of the litigation when the
director or officer is wholly successful on the merits or
otherwise, (ii) may be indemnified by the corporation for
expenses, judgments, fines, penalties and amounts paid in
settlement of the litigation (other than a derivative suit),
even if the director or officer is not successful on the merits
or otherwise, if he or she acted in
InteliData will advance, before the final disposition of any
proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with
the proceeding upon receipt of an undertaking by or on behalf of
that person to repay said amounts if it should be determined
ultimately that he or she is not entitled to be indemnified.
Notwithstanding the foregoing, generally no advance will be made
by InteliData if a determination is reasonably and promptly made
(i) by the board of directors by a majority vote of a
quorum consisting of directors who were not parties to the
proceeding, or (ii) if a quorum of non-interested directors
is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion, that the facts known to the
decision-making party at the time the determination is made
demonstrate clearly and convincingly that the person acted in
bad faith or in a manner that he or she did not believe to be in
or not opposed to the best interests of the corporation.
good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation (and,
in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful) and (iii) may be
indemnified by the corporation for expenses of a derivative suit
(a proceeding by or in the right of the corporation), even if
the director or officer is not successful on the merits, if he
or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
corporation, provided that the director or officer is not
adjudged liable to the corporation.
If a director furnishes the Corporation with a written
affirmation of such person’s good faith belief of
entitlement to indemnification, Corillian will advance, before
the final disposition of any proceeding, promptly following
request therefor, all expenses incurred by any director (or
executive officer, at its election) in connection with the
proceeding upon receipt of an undertaking by or on behalf of
that person to repay said amounts if it should be determined
ultimately that he or she is not entitled to be indemnified.
Corillian also has entered into Indemnity Agreements with many
of its directors and officers that require Corillian to
indemnify the officer or director to the fullest extent
permitted by law.
Anti-Takeover Provisions:
Business Combination Act
Section 203 of the DGCL prohibits a Delaware corporation
from engaging in a “business
The Oregon Business Combination Act to which Corillian is
subject is, in all
combination” with a person owning 15% or more of the
corporation’s voting stock (an ‘interested
stockholder”) for three years following the time that
person became an interested stockholder, unless:
material respects, identical to Delaware law.
• the board, before the time the person became
an interested stockholder, approved either the business
combination or the transaction that resulted in the
person’s becoming an interested stockholder;
• the person became an interested stockholder
and 85% owner of the voting stock in the transaction, excluding
shares owned by directors and officers and shares owned by some
employee stock plans; or
• the combination transaction is approved by the
board and authorized by the affirmative vote of at least
two-thirds of the outstanding voting stock not owned by the
interested stockholder.
A Delaware corporation can elect in its Certificate of
Incorporation or Bylaws not to be governed by Section 203.
InteliData has not made that election.
Control Share Act
No applicable law governing InteliData.
The Oregon Control Share Act (“OCSA”) regulates the
manner in which a person may acquire control of any Oregon-based
corporation with 100 or more shareholders without the consent
and cooperation of the board of directors. The OCSA generally
provides that shares of stock acquired in a ‘control share
acquisition‘ have no voting rights unless the restoration
of the voting rights associated with such shares is approved by
the shareholders. The restoration
must be approved by the holders of a majority of the voting
shares, including the control shares, and by a majority of the
voting shares, excluding the control shares, entitled to vote. A
Control Share Acquisition is defined as the acquisition of
shares in a transaction or series of transactions that causes
the acquiring person to own more than 20%, 33% or 50% of the
total voting power of all voting shares. Shares are not deemed
to be acquired in a control share acquisition if, among other
things, they are acquired from the issuing corporation, or are
issued pursuant to a plan of merger or exchange effected in
compliance with the OBCA and the issuing corporation is a party
to the merger or exchange agreement.
Provisions Relating to Some Business Combinations:
The DGCL generally requires that a merger and consolidation, or
sale, lease, or exchange of all or substantially all of a
corporation’s property and assets be approved by the
directors and by a majority of the outstanding stock. A
corporation’s Certificate of Incorporation may require a
greater vote. InteliData’s Amended and Restated Certificate
of Incorporation does not provide for a greater vote.
Under the DGCL, a surviving corporation need not obtain
stockholder approval for a merger if:
• each share of the surviving corporation’s stock
outstanding prior to the merger remains outstanding in identical
form after the merger;
• the merger agreement does not amend the Certificate
of Incorporation of the surviving
The OBCA generally requires that a merger or exchange be
approved by the directors and by a majority of the outstanding
stock. A corporation’s articles of incorporation may
require a greater vote. Corillian’s articles of
incorporation do not provide for a greater vote. Under the OBCA,
a surviving corporation need not obtain stockholder approval for
a merger if:
• the articles of incorporation of the surviving
corporation will not differ from its articles before the
merger;
• each share of the surviving corporation’s stock
outstanding prior to the merger remains outstanding in identical
form after the merger;
• the number of voting shares outstanding immediately
after the merger, plus the number of voting shares issued as a
result
corporation; and
• either no shares of common stock of the surviving
corporation are to be issued or delivered in the merger or, if
common stock will be issued or delivered, it will not increase
the number of shares of common stock outstanding prior to the
merger by more than 20%.
of the merger, either by conversion of securities issued
pursuant to the merger or the exercise of rights and warrants
issued pursuant to the merger, will not exceed by more than 20%
the total number of voting shares of the surviving corporation
outstanding immediately before the merger; and
• the number of participating shares outstanding
immediately after the merger, plus the numbers of participating
shares issuable as a result of the merger, either by the
conversion of securities issued pursuant to the merger or the
exercise of rights and warrants issued pursuant to the merger,
will not exceed by more than 20% the total number of
participating shares outstanding immediately before the merger.
Appraisal or Dissenters’ Rights:
Under Delaware law, the right of dissenting stockholders to
obtain the fair value for their shares is available in
connection with some mergers or consolidations. Unless otherwise
provided in the Certificate of Incorporation, appraisal rights
are not available to stockholders when the corporation will be
the surviving corporation in a merger and no vote of its
stockholders is required to approve the merger. In addition, no
appraisal rights are available to holders of shares of any class
of stock which is either:
• listed on a national securities exchange or
designated as a national market system security on an
interdealer quotation system by the NASD, or
• held of record by more than 2,000 stockholders,
unless those
Under Oregon law, the right of dissenting shareholders to obtain
the fair value for their shares is available in connection with
some mergers or consolidations. Unless otherwise provided in the
articles of incorporation, appraisal rights are not available to
shareholders when no vote of its shareholders is required to
approve the merger. In addition, no appraisal rights are
available to holders of shares of any class of stock which is
listed on a national securities exchange or included in the
national market system by the NASD unless Corillian’s
Articles of Incorporation specify otherwise (they do not so
specify).
stockholders are required by the terms of the merger to accept
anything other than (1) shares of stock of the surviving
corporation, (2) shares of stock of another corporation
which, on the effective date of the merger or consolidation, are
of the kind described above, (3) cash instead of fractional
shares of stock, or (4) any combination of the consideration set
forth in (1) through (3).
Rights Plan:
InteliData’s stockholders have rights to
purchase InteliData’s Series B No Par Preferred
Shares in specified takeover situations.
Corillian does not have a rights plan.
C:
ADDITIONAL MATTERS BEING SUBMITTED TO A VOTE OF INTELIDATA
STOCKHOLDERS
C:
Election of Directors (Proposal 2)
InteliData’s amended and restated certificate of
incorporation provides that the board of directors be divided
into three classes as nearly equal in number as possible. The
current term of Class I directors expires in 2006, the term
of Class II directors expires in 2007, and the term of
Class III directors expires in 2005. The current size of
the board of directors is fixed at six.
At the annual meeting, the InteliData stockholders are being
asked to elect one Class II director for a two-year term
expiring in 2007 and two Class III directors for a new
three-year term expiring in 2008, or until their successors are
elected and qualified. Assuming the merger proposal is approved
by InteliData’s stockholders and the merger with Corillian
is completed, the directors elected at the annual meeting will
serve only until the closing of the merger. If the merger is not
approved by the stockholders or is not consummated, the
directors elected at the annual meeting will serve their full
terms or until their successors are elected and qualified.
Nominees. The nominating and governance committee of the
board of directors selected, and the board of directors
approved, the following nominees for election to the board of
directors at the annual meeting, each to serve until the annual
meeting of stockholders held in the year listed beside his name
or until his successor is duly qualified and elected (the
“Nominees”):
Information about the Nominees can be found in the section
titled “Management” beginning on page 87.
Although the board of directors anticipates that the Nominees
will be available to serve as directors of InteliData, if any of
them do not accept the nomination, or otherwise are unwilling or
unable to serve, the proxies will be voted for the election of a
substitute nominee or nominees designated by the board of
directors. There are no arrangements or understandings between
any director or executive officer and any other person pursuant
to which he is or was to be selected as a director or officer of
InteliData. There is no family relationship between any director
or executive officer of InteliData.
Vote Required. If a quorum is present, the three
candidates receiving the highest number of affirmative votes
represented and voting on this proposal at the annual meeting
will be elected to the board of directors. Abstentions and
broker non-votes will be counted for the purposes of determining
the presence or absence of a quorum, but will have no effect on
the election of directors once a quorum is established.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF
THE THREE NOMINEES
Board of Directors, Committees and Corporate Governance
Matters. InteliData’s board of directors held four
regular meetings and four telephonic meetings during fiscal year
2004. Each incumbent director attended at least 75% of the
meetings held during fiscal year 2004 by the board of directors
and each committee of the board of directors of which he was a
member.
The standing committees of InteliData’s board of directors
include a compensation committee, an audit committee, and a
nominating and governance committee. Each of these committees
has adopted a written charter that is posted on
InteliData’s website (www.intelidata.com) in the section on
“Governance.”
The compensation committee, consisting of Messrs. Finnegan,
Graham and Tice, reviews and recommends to the board of
directors appropriate action with respect to the compensation of
and benefits granted to officers and other key employees of
InteliData and administers InteliData’s 1996 Incentive
Plan. The compensation committee held five meetings during
fiscal year 2004. All of the committee members satisfy the
independence requirements of The Nasdaq Stock Market.
The audit committee, consisting of Messrs. Finnegan, Graham
and Tice, selects InteliData’s independent registered
public accounting firm, reviews related-party transactions for
conflicts of interest, reviews with InteliData’s
independent registered public accounting firm matters relating
to the scope and plan of the audit, the effectiveness of
internal controls and the preparation of InteliData’s
financial statements, and reports and makes recommendations to
the board of directors with respect thereto. The audit committee
held four regular meetings and four telephonic meetings during
fiscal year 2004. All of the committee members satisfy the
current independence requirements of The Nasdaq Stock Market.
Each member of the committee meets the financial literacy
requirements for audit committee members under the Nasdaq Stock
Market listing standards. The board of directors has determined
that Mr. Finnegan is an “audit committee financial
expert,” as defined by the regulations promulgated by the
SEC.
The nominating and governance committee, consisting of
Messrs. Finnegan, Graham and Tice, was formed in February
2004. This committee identifies and nominates qualified
individuals for election to the board of directors, recommends
the individual directors to serve on committees and recommends
to the board of directors the Corporate Governance Guidelines
for InteliData. All of the committee members satisfy the
independence requirements of The Nasdaq Stock Market. In
accordance with its charter, the committee identifies candidates
for election to the board of directors on its own as well as by
considering recommendations from stockholders, other members of
the board, officers and employees of InteliData, and other
sources that the committee deems appropriate. Stockholder
recommendations for candidates for election to the board of
directors shall be made in accordance with InteliData’s
bylaws. See “Other Matters” on page 95 for a
description of procedures to be followed by stockholders in
submitting recommendations for nominees as directors. The
committee may retain a third-party search firm to assist in the
identification of possible candidates for election to the board
of directors. The committee will evaluate all candidates for
election to the board of directors, regardless of the source
from which the candidate was first identified, based upon the
totality of the merits of each candidate and not based upon
minimum qualifications or attributes. In considering the
individual nominees, the committee will take into account the
qualifications of other board members to ensure that a broad
variety of skill sets and experience beneficial to InteliData
and its business are represented on the board of directors. The
committee also will ensure that the board is composed of a
sufficient number of independent directors to
satisfy the Nasdaq listing requirements. In addition, the
committee will seek to ensure that, for purposes of audit
committee service, at least three of the board’s
independent members satisfy the Nasdaq financial and accounting
experience requirements and the heightened independence
standards of the SEC and that at least one of such three members
qualifies as an “audit committee financial expert.”
Corporate Governance Guidelines and Codes of Ethics.
InteliData’s Corporate Governance Guidelines are available
on InteliData’s website. InteliData has adopted a Code of
Ethics for its Chief Executive Officer and senior financial
officers, which may be found on its website. InteliData has also
adopted a Code of Business Conduct and Ethics for directors,
officers and employees, which is available on its website.
InteliData intends to satisfy the disclosure requirement under
Item 5.05 of Form 8-K by posting such information on
its website.
Determination of Independence. The board of directors has
determined that each member of the board of directors, other
than Messrs. Dominick and Jennings, is an independent
director for purposes of the listing standards for The Nasdaq
Stock Market. Accordingly, the board of directors is composed of
a majority of independent directors as required by Nasdaq.
Director Attendance at Annual Meetings. The Corporate
Governance Guidelines adopted by the board of directors in 2004
strongly encourage directors to attend the annual
stockholders’ meeting. All of the directors attended the
2004 meeting.
Executive Sessions. InteliData’s Corporate
Governance Guidelines provide that the independent directors
meet as a group in executive session at every regularly
scheduled board meeting. These sessions are chaired by the Lead
Outside Director, currently Mr. Tice.
Communications to the Board of Directors. Stockholders
may send communications to the board of directors by sending
written correspondence to: Chairman of the Nominating and
Governance Committee, c/o Corporate Secretary, InteliData
Technologies Corporation, 11600 Sunrise Valley Dr.,
Suite 100, Reston, Virginia20191. The chairman of the
nominating and governance committee and his or her duly
authorized agents shall be responsible for collecting and
organizing shareholder communications. Absent a conflict of
interest, the chairman of the nominating and governance
committee is responsible for evaluating the materiality of each
stockholder communication and determining whether further
distribution is appropriate, and, if so, whether to (i) the
full board, (ii) one or more board members and/or
(iii) other individuals or entities.
Audit Committee Report
The following report of the audit committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any of InteliData’s other
filings under the Securities Act or the Exchange Act, except to
the extent this report is specifically incorporated by reference
therein.
Management is responsible for InteliData’s financial
statements and internal controls. The independent registered
public accounting firm is responsible for performing an audit of
InteliData’s consolidated financial statements in
accordance with auditing standards generally accepted in the
United States and of management’s assessment regarding
the effectiveness of internal control over financial reporting
and for the purpose of issuing opinions thereon. The audit
committee’s responsibility is to monitor and oversee these
processes. The audit committee operates under a written charter
adopted by the board of directors.
The audit committee has met and held discussions with management
and the independent registered public accounting firm.
Management represented to the audit committee that
InteliData’s consolidated financial statements as filed in
its Annual Report on Form 10-K for the year ended
December 31, 2004, were prepared in accordance with
accounting principles generally accepted in the United States,
and the audit committee has reviewed and discussed the audited
consolidated financial statements with management and the
independent registered public accounting firm. The audit
committee discussed with the independent registered public
accounting firm matters required to be discussed by Statement on
Auditing Standards No. 61, Communications with Audit
Committees (and its interpretations) and Rule 2-07 of
Regulation S-X.
InteliData’s independent registered public accounting firm
also provided to the audit committee the written disclosures
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the audit
committee has also determined that all of its members are
independent within the meaning of NASD Rule 4200 (a)(14).
Based upon the audit committee’s discussions with
management and the independent registered public accounting firm
and the audit committee’s review of the representation of
management and the report of the independent registered public
accounting firm to the audit committee, the audit committee
approved the inclusion of the audited consolidated financial
statements in InteliData’s Annual Report on Form 10-K
for the year ended December 31, 2004, as filed with the SEC.
Audit Committee
Neal F. Finnegan
Patrick F. Graham
Norman J. Tice
Compensation Committee Report on Executive
Compensation
The following report of the compensation committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any of InteliData’s other
filings under the Securities Act or the Exchange Act, except to
the extent this report is specifically incorporated by reference
therein.
InteliData’s compensation committee is composed of
independent directors whose role is to oversee the development
and administration of the compensation and benefit programs for
InteliData’s executive officers. The compensation committee
also administers InteliData’s 1996 Incentive Plan that
permits stock option grants and stock awards to employees.
Compensation for all the named executive officers consists of a
base salary and a variable portion than can include performance
bonuses, stock options and stock awards. In the case of
Mr. Dominick, InteliData’s Chief Executive Officer,
Ms. Kracher and Messrs. Jennings and Wergley, the
named executive officers, the salary levels are set pursuant to
employment agreements entered into between InteliData and the
executive officers and are reviewed on an annual basis by the
compensation committee. The employment agreements of
Mr. Dominick and Ms. Kracher are described in the
“Executive Compensation” section beginning on
page 89.
Bonus awards are made based on various subjective considerations
including personal goals and objectives and the overall
performance of InteliData. The assessment of each
executive’s performance will vary depending on the
executive’s responsibilities and, as a result, bonuses,
stock options and stock awards will likely fluctuate from year
to year and from person to person. As reported in the Summary
Compensation Table, there were no cash bonuses paid to the named
executive officers for 2004.
Performance Graph. The following graph compares the
cumulative total returns from December 31, 1999, through
December 31, 2004, for InteliData, the Nasdaq Market Index
and the Media General Group Index for Computer Software and
Services companies. The graph assumes that the value of the
investment in each scenario was $100 as of December 31,1998, the date of InteliData’s initial public offering.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG INTELIDATA TECHNOLOGIES CORP.,
NASDAQ MARKET INDEX AND COREDATA GROUP INDEX
1999
2000
2001
2002
2003
2004
INTELIDATA TECHNOLOGIES CORP
100.00
62.41
68.09
21.65
37.53
16.12
COREDATA GROUP INDEX
100.00
60.08
53.23
36.25
46.88
51.49
NASDAQ MARKET INDEX
100.00
62.85
50.10
34.95
52.55
56.97
Section 16(a) Beneficial Ownership Reporting
Compliance. Section 16(a) of the Exchange Act requires
InteliData’s directors and executive officers and
beneficial owners of more than 10% of InteliData’s common
stock to file with the SEC initial reports of ownership and
reports of changes in ownership of equity securities of
InteliData. Officers, directors and beneficial owners of more
than 10% of InteliData’s common stock are required by SEC
regulation to furnish InteliData with copies of all
Section 16(a) forms they file. To InteliData’s
knowledge based solely upon a review of copies of such reports
furnished to InteliData and representations that no other
reports were required, during the fiscal year ending
December 31, 2004, InteliData’s officers, directors
and beneficial owners of more than 10% of InteliData’s
common stock complied with all applicable Section 16(a)
filing requirements, except for the Form 4 filed on
December 30, 2004, reporting the surrender of shares of
InteliData common stock by Mr. Dominick to InteliData on
December 15, 2004.
C:
Ratification of Selection of Independent Registered Public
Accounting Firm (Proposal 3)
Action is to be taken at the annual meeting with respect to the
ratification of an independent registered public accounting
firm, that was selected by the audit committee of the board of
directors, to audit the financial statements of InteliData for
the fiscal year ending December 31, 2005. Although the
ratification of an independent registered public accounting firm
is not required to be submitted to a vote of the stockholders,
InteliData believes that such ratification is a matter on which
the stockholders should
express their opinion. Notwithstanding stockholder approval of
the ratification of an independent registered public accounting
firm, the audit committee, in its discretion, may direct the
appointment of a new independent registered public accounting
firm at any time during the year, if the audit committee
believes that such a change would be in the best interest of
InteliData and its stockholders. If the stockholders fail to
ratify the selection, the audit committee will reconsider
whether or not to retain Deloitte & Touche LLP as the
independent registered public accounting firm for the fiscal
year ending December 31, 2005.
Deloitte & Touche LLP has advised InteliData that no
member of its firm has any direct or indirect material financial
interest in InteliData. Representatives of Deloitte &
Touche LLP are expected to be present at the annual meeting,
will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions from
the stockholders.
Independent Auditor Fees and Services. The aggregate fees
for professional services rendered to InteliData by
Deloitte & Touche LLP, for the fiscal years ended
December 31, 2004 and 2003, are as follows:
2004
2003
Audit fees(A)
$
928,700
$
182,500
Audit-related fees(B)
97,117
30,000
Tax fees(C)
2,500
—
All other fees
—
—
Total fees
$
1,028,317
$
212,500
(A)
Audit fees include $343,700 and $182,500 of fees for services
rendered for the audit of InteliData’s annual financial
statements and the review of the interim financial statements
included in our quarterly reports for 2004 and 2003,
respectively. Audit fees also include $585,000 of fees for
services rendered for the audit of management’s assessment
of internal control over financing reporting as of
December 31, 2004 in accordance with Section 404 of
the Sarbanes-Oxley Act of 2002; no similar fees were incurred in
2003.
(B)
Audit-related fees include fees associated with assurance and
related services that are reasonably related to the performance
of the audit or review of InteliData’s financial
statements. This category include fees related to consultations
regarding U.S. generally accepted accounting principles and
general implementation of new SEC and Sarbanes-Oxley Act of 2002
requirements. The audit-related fees for 2004 were for advisory
services for matters related to accounting consultation, due
diligence, and assistance in compliance with regulatory
requirements. Audit-related fees for 2003 were for advisory
services for matters related to accounting consultation, review
of financial statements outside of SEC filings, and assistance
in compliance with regulatory requirements.
(C)
Tax fees were for assistance with a prior year sales and tax
audit appeal.
The audit committee has considered whether the provision of the
other services is compatible with maintaining the principal
independent registered public accounting firm’s
independence and has concluded that it is so compatible.
Audit Committee Pre-Approval Policies and Procedures. The
audit committee reviews and considers all professional services
provided by Deloitte & Touche LLP when assessing
auditor independence. The audit committee approved all audit and
non-audit services provided by InteliData’s independent
registered public accounting firm during 2003 and 2004 on a
case-by-case basis in advance of each engagement. The audit
committee does not have a written policy or procedure for the
pre-approval by category of particular audit or non-audit
services.
Alfred S. Dominick, Jr., age 59, has served as
the Chief Executive Officer and a director of InteliData since
August 1998. He has served as Chairman of the Board since August
2002. Prior to joining InteliData, Mr. Dominick served as
President of the Retail Products Delivery Group at M&I Data
Services. Prior to joining M&I Data Services in July 1995,
he was Executive Vice President of Retail Banking and a member
of the Executive Committee for Boatmen’s Bancshares
Corporation for three years. From 1990 to 1992,
Mr. Dominick was an Executive Vice President with Bank One
Texas. Prior to joining Bank One Texas, Mr. Dominick was a
Senior Vice President with Shawmut National Bank (now Fleet
National Bank). Mr. Dominick currently serves as a director
of FB BanCorp.
Karen Kracher, age 49, has served as President of
InteliData since August 2004 and has served as the Chief Sales
and Marketing Officer since joining InteliData in January 2004.
In her role as President, she oversees product development
efforts, engineering, operations, ASP initiatives and customer
care for the InteliData bill pay product offerings. She also is
in charge of overall business planning and business development
activities for electronic bill payment, Internet Banking, and
operations. Prior to joining InteliData, Ms. Kracher’s
breadth of experience in the financial services industry
included positions as Corporate Officer for Deluxe Corporation
from 1978 to 1996, General Manager for Travelers Express (now
MoneyGram) from 1996 to 1998, Senior Vice President of TCF
Financial from 1998 to 1999, and President of Aveus, Inc. from
1999 to 2001. Ms. Kracher is also President of a non-profit
organization, Young Audiences.
Monique Marcus, age 48, has served as Vice
President, Finance and Treasurer since joining InteliData in
October 2004 and was appointed Principal Accounting Officer in
November 2004. Prior to joining InteliData, Ms. Marcus held
management positions in finance and accounting with several
telecommunications companies, including Vice President and
Controller for CityNet Telecommunications, Inc. from June 2000
through October 2004; Vice President and Controller for eLink
Communications, Inc. from October 1999 through August 2000; and
Senior Director and Controller for WinStar Communications, Inc.
from May 1996 through June 1999. Previously she was Controller
for Snyder Communications, Inc., a direct marketing and direct
sales company, and she also has held various financial positions
within Caterair International Corporation, a spin-off from
Marriott Corporation, and Marriott Corporation. Ms. Marcus
is a C.P.A. and has four years’ experience in public
accounting after receiving her B.S. in accounting from
Georgetown University.
Neal F. Finnegan, age 67, has served as a director
of InteliData from 2001 to January 2005. He is a director of
Citizens Capital, Inc. and the principal in Clover Capital, LLC
and Data Products, USA, Inc. He is on the board of directors of
SMH Fine Foods, Inc. and is a managing partner of Clover Capital
and Consulting LLP. He served as Chairman of Citizens Bank of
Massachusetts from January 2000 to January 2005 and also was
director of Citizens Financial Group, Inc. From February 2000
through May 2001, he served as President of Lumber Insurance
Companies, a specialty insurer to the lumber industry. From 1993
to January 2000, Mr. Finnegan was Chairman and Chief
Executive Officer of US Trust. Previously, he served in the
financial services sector as an executive with Bankers Trust
Company of New York, Bowery Savings Bank, Worcester Bancorp. and
Shawmut Corporation.
Patrick F. Graham, age 65, has served as a director
of InteliData since 1996 and was a director of US Order, Inc.
from 1993 until US Order and Colonial Data Technologies Corp.
merged to form InteliData in November 1996. Since October
2001, he has been the Vice President of Business Development and
Strategic Projects for The Gillette Company, a consumer products
marketer of personal care and personal use products. From July
1999 until October 2001, he was the Director of the Global
Strategy Practice of A.T. Kearney, Inc., a management consulting
firm. From 1997 until June 1999, he served as Chief Executive
Officer of WorldCorp, Inc. On February 12, 1999, WorldCorp,
Inc. filed a voluntary petition and a proposed plan of
reorganization under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the
district of Delaware. He was previously a director of
Bain & Company, Inc., a management consulting firm
Mr. Graham co-founded in 1973. In addition to his primary
responsibilities with Bain clients, he served as Bain’s
Vice Chairman and Chief Financial Officer. Prior to founding
Bain, Mr. Graham was a group Vice President with the Boston
Consulting Group. Mr. Graham is also a director of
Stericycle, Inc., a provider of medical waste services and OSHA
compliance services.
Michael E. Jennings, age 59, has served as a
director of InteliData since his appointment in August 2004. He
served as President and Chief Operating Officer of InteliData
from May 2003 through August 2004. Prior to this, he served as
the Executive Vice President of Product Management and Payment
Solutions since joining InteliData in June 2000. Prior to
joining InteliData, Mr. Jennings served at Bank of America
as a Senior Vice President of Self Service Delivery. During the
eight years prior to joining InteliData, he worked on
alternative delivery strategies and managing several different
areas of electronic banking including: Debit Cards, ATMs, ATM/
POS Operations, PC and Internet Banking and EFT switches.
Mr. Jennings is a former director of CIRRUS, Money Transfer
Systems, and Credit Systems Inc. and was chairman of the
American Banking Association’s Retail Payment Systems
Committee.
L. William Seidman, age 83, has served as a
director of InteliData since 1997. He is the publisher of
Bank Director magazine and chief commentator on CNBC-TV.
He served on the board of US Order, Inc., InteliData’s
predecessor, from 1995 to 1996. Mr. Seidman served from
1985 to 1991 as the Chairman of the Federal Deposit Insurance
Corporation (FDIC) and from 1989 to 1991 also served as the
Chairman of the Resolution Trust Corporation. Before joining the
FDIC, Mr. Seidman served as Dean of the College of Business
at Arizona State University. From 1977 to 1982 he was
Vice-Chairman and Chief Financial Officer of Phelps Dodge
Corporation. Mr. Seidman has also served as managing
partner of Seidman & Seidman, Certified Public
Accountants (now BDO Seidman), and as Assistant to the President
for Economic Affairs during the Ford Administration.
Mr. Seidman presently serves as a director of Fiserv, Inc.,
a data processing company, Clark, Inc., a services company
providing insurance-financed benefits programs, LML Payment
Systems, Inc., a financial payment process company, GMAC
Commercial Mortgage, and GMAC Bank, a retail banking business.
Norman J. Tice, age 69, has served as a director of
InteliData since 1999 and is the Chairman of the Executive
Committee of the Board and the designated lead outside director.
Mr. Tice is the former Chairman of the Board of MasterCard
International, Blue Cross and Blue Shield of Missouri and Right
Choice Managed Care, Inc. He currently serves as a director of
Consolidated Financial Services, a brokerage firm, and General
Credit Forms and is an advisory director of 1st National
Bank in St. Louis and of Lawrence and Associates, an IT
consulting firm. Mr. Tice has over 40 years’
experience in banking as an executive with Boatmen’s Bank
of St. Louis, City Bank of St. Louis Charter Bank,
N.A. of
St. Louis and Boatmen’s Bancshares, Inc. From 1985
until his retirement in 1996, Mr. Tice’s positions
included service as Chairman and Chief Executive Officer of
Boatmen’s Credit Card Bank, Chairman and Chief Executive
Officer of Boatmen’s Community Development Corporation and
Executive Vice President of Boatmen’s Bank of
St. Louis.
C:
Executive Compensation
Summary Compensation Table. The following table sets
forth information concerning the annual, long-term and all other
compensation for services rendered in all capacities to
InteliData, it subsidiaries and predecessors for the years ended
December 31, 2004, 2003 and 2002 of
(a) InteliData’s Chief Executive Officer, and
(b) each of the other three highly compensated executive
officers (other than the chief executive officer) of InteliData
whose aggregate cash compensation exceeded $100,000 for the
fiscal year ended December 31, 2004 (collectively, the
“Named Executive Officers”):
Bonus awards are reported for the year earned, but may have been
paid in the subsequent year.
(2)
For 2004, includes: (i) travel and temporary housing
expenses for Mr. Jennings ($21,361.63); (ii) the
dollar value of insurance premiums paid by InteliData for the
benefit of Mr. Dominick ($6,505.94); (iii) the amount
of InteliData matching contributions made on behalf of the named
individual under InteliData’s 401(k) Plan as follows:
Mr. Dominick ($2,500.00), Ms. Kracher ($2,240.35),
Mr. Jennings ($1,961.46), and Mr. Wergley ($2,807.78);
(iv) $5,229.49 for the forgiveness of a loan from
InteliData to Mr. Dominick; (v) the fair market value
($6,935.00) of the 2000 Toyota Camry given to Mr. Jennings
pursuant to his Separation Agreement and General Release with
InteliData; (vi) the amount of consulting fees
($15,000.00), plus expenses ($1,299.00), paid to
Mr. Jennings in 2004; and (vii) an amount of severance
($50,000.00) paid to Mr. Wergley pursuant to his Separation
Agreement and General Release with InteliData.
For 2003, includes: (i) travel and temporary housing
expenses for Mr. Dominick ($17,490) and Mr. Jennings
($59,090); (ii) the dollar value of insurance premiums paid
by InteliData for the benefit of Mr. Dominick ($11,866);
and (iii) the amount of Company matching contributions made
on behalf of the named individual under InteliData’s
401(k) Plan as follows: Mr. Dominick ($2,500),
Mr. Jennings ($3,000), and Mr. Wergley ($2,585).
For 2002, includes: (i) travel and temporary housing
expenses for Mr. Dominick ($53,396) and Mr. Jennings
($62,365); (ii) the dollar value of insurance premiums paid
by InteliData for the
benefit of Mr. Dominick ($7,521); and (iii) the amount
of Company matching contributions made on behalf of the named
individuals under InteliData’s 401(k) Plan as follows:
Mr. Dominick ($2,500), Mr. Jennings ($2,750), and
Mr. Wergley ($2,366).
(3)
Ms. Kracher became an officer of InteliData in
January 2004 and became an officer of InteliData in
August 2004.
(4)
Mr. Jennings resigned from his position as
President & Chief Operating Officer on August 15,2004.
(5)
For 2004, consists of the fair market value of a restricted
stock award on the date of the award of 25,000 shares on
May 21, 2004. The award vests, subject to
Ms. Kracher’s continued employment, on
November 21, 2005.
(6)
For 2004, consists of the fair market value of a restricted
stock award on the date of the award of 10,000 shares on
May 21, 2004. The award terminated due to
Mr. Jennings’ resignation. For 2003, consists of the
fair market value of a restricted stock award on the date of the
award of 30,000 shares on April 15, 2003. The award
vested on October 15, 2004. For 2002, consists of the fair
market value of a restricted stock award on the date of the
award of 25,000 shares on February 21, 2002. The award
vested on August 21, 2003.
(7)
Mr. Wergley resigned from his position as Vice President,
General Counsel & Secretary on November 5, 2004.
(8)
Includes unused vacation pay ($11,588.47) accrued to
Mr. Wergley through November 5, 2004.
(9)
For 2004, consists of the fair market value of a restricted
stock award on the date of the award of 10,000 shares on
May 21, 2004. The award terminated due to
Mr. Wergley’s resignation. For 2003, consists of the
fair market value of a restricted stock award on the date of the
award of 20,000 shares on April 15, 2003. The award
vested on October 15, 2004. For 2002, consists of the fair
market value of a restricted stock award on the date of the
award of 15,000 shares on February 21, 2002. The award
vested on August 21, 2003.
Option Grants in Fiscal Year 2004. The following table
presents information regarding options granted to
InteliData’s Named Executive Officers during the year ended
December 31, 2004, to purchase shares of InteliData’s
common stock. In accordance with SEC rules, the table shows the
hypothetical “gains” or “option spreads”
that would exist for the respective options based on assumed
rates of annual compound stock price appreciation of 5% and 10%
from the date the options were granted over the full option term.
Individual Grants
Potential Realizable
Percentage
Value at
of Total
Assumed Annual Rates
Options
of Stock Price
Number of
Granted to
Appreciation for
Securities
Employees
Exercise
the Option Term(3)
Underlying
in Fiscal
Price Per
Expiration
Grants(1)
Year(1)
Share(2)
Date
5%
10%
Alfred S. Dominick
80,000
(4)
14.7
%
$
0.31
10/15/12
$
11,841
$
28,361
Karen Kracher
50,000
(4)
9.2
%
1.80
01/28/12
42,971
102,923
50,000
(4)
9.2
%
0.31
10/15/12
7,401
17,726
Michael E. Jennings
—
—
%
—
—
—
—
Albert N. Wergley
—
—
%
—
—
—
—
(1)
The total number of options granted to employees during the year
ended December 31, 2004 was 545,000.
(2)
The exercise price per share of options granted represented the
fair market value of the underlying shares of common stock on
the date the options were granted.
(3)
As required under SEC rules, amounts represent hypothetical
gains that could be achieved for the respective options if
exercised at the end of the option term. These gains are based
on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options
were granted to their expiration date. These assumptions are not
intended to forecast future appreciation of InteliData’s
stock price. The potential realizable value computation does not
take into account federal or state income tax consequences of
option exercises or sales of appreciated stock. If
InteliData’s stock price does not actually increase to a
level above the applicable exercise price at the time of
exercise, the realized value to the Named Executive Officers
from these options will be zero.
(4)
These options become exercisable as follows: one-third on the
first anniversary date of the grant and then ratably over
24 months.
Aggregated Option Exercises in Last Fiscal Year and Year-End
Option Values. The following table sets forth information
regarding the exercise of stock options and unexercised stock
options as of December 31, 2004 granted to the Named
Executive Officers. The value of unexercised in-the-money
options at December 31, 2004, is calculated based on the
closing price of InteliData’s common stock on
December 31, 2004, which was $0.67 per share, less the
aggregate exercise price of the options.
Value based on last reported sale price of InteliData’s
common stock on the exercise date, minus the exercise price.
(2)
Value based on last reported sale price of InteliData’s
common stock on December 31, 2004 (the last trading day of
the year) on the Nasdaq SmallCap Market, minus the exercise
price. The last reported sale price at December 31, 2004
was $0.67 per share.
C:
Employment and Change of Control Agreements
Employment Agreements
Alfred S. Dominick, Jr. InteliData has an employment
agreement with Alfred S. Dominick, Jr., providing that
Mr. Dominick will serve as Chief Executive Officer of
InteliData until April 5, 2006, unless further extended or
sooner terminated as set forth in the agreement. Furthermore,
InteliData will nominate and take such action as may be
appropriate or necessary to seek stockholder election of
Mr. Dominick to InteliData’s board of directors.
Mr. Dominick has agreed to resign from the board of
directors in connection with, and effective upon, termination of
his employment with InteliData.
Mr. Dominick is entitled to (i) a base salary of
$375,000 per year and (ii) an annual bonus of up to
75% of his base salary. In addition, Mr. Dominick is
entitled to participate in all medical, dental, life,
disability, 401(k), employee stock purchase and such other
fringe benefit plans or arrangements generally made available by
InteliData to all salaried employees. As an inducement to his
becoming an employee of InteliData, Mr. Dominick was
granted options to purchase 1,200,000 shares of common
stock pursuant to InteliData’s 1998 Chief Executive
Officer’s Plan. The options became exercisable as to 66,667
option shares on August 17, 1999, 66,667 option shares on
August 17, 2000, and 66,666 option shares on
August 17, 2001. An additional 500,000 option shares became
exercisable based on the achievement of designated trading
prices of the common stock. The options as to an additional
500,000 option shares shall become exercisable on April 15,2008; provided that the options shall become exercisable earlier
upon the common stock trading above $25.00 per share for 60
consecutive days during the term of the options.
Mr. Dominick has agreed to hold 100,000 shares of
common stock for the remaining term of his employment agreement.
Upon entering into the employment agreement, Mr. Dominick
purchased 200,000 shares of common stock for an aggregate
purchase price of $200.00.
InteliData may terminate the agreement for “cause” (as
defined in the employment agreement) or if Mr. Dominick
incurs a disability that continues for a period of 180
consecutive days. Mr. Dominick may terminate the agreement
upon prior written notice to InteliData or for “good
reason” (as defined in the employment agreement). If
InteliData terminates Mr. Dominick for other than
“cause,” or if Mr. Dominick terminates the
agreement for “good reason,” then Mr. Dominick is
entitled to: (i) an amount equal to 12 months of his
base salary then in effect; (ii) any amounts vested or
payable under any deferred salary, bonus compensation or other
plan; (iii) an amount equal to the highest incentive bonus
paid to him during the three years immediately preceding his
termination, prorated through his month of termination; and
(iv) a continuation, at InteliData’s expense, of life,
disability, accident and health insurance benefits for
12 months following termination. Notwithstanding the above,
if, within one year of a “change of control” of
InteliData (as defined in the employment agreement),
Mr. Dominick’s employment is terminated by InteliData
for other than “cause” or by Mr. Dominick for
“good reason,” then Mr. Dominick is entitled to:
(i) an amount equal to the greater of the undiscounted
amount of twelve months base salary or the undiscounted
remainder of his base salary for the unexpired term of the
employment agreement; (ii) any amounts vested or payable
under any deferred salary, bonus compensation or other plan;
(iii) an amount equal to the highest incentive bonus paid
to him during the three years immediately preceding his
termination, prorated through his month of termination; and
(iv) a continuation, at InteliData’s expense, of life,
disability, accident and health insurance benefits for the
greater of 12 months from termination or a period equal to
the unexpired term of the employment agreement. Also, in the
event of such a termination, Mr. Dominick would be entitled
to immediate exercisability of his outstanding stock options,
which would remain exercisable until their expiration, pursuant
to the 1998 Chief Executive Officer’s Plan. Under
Mr. Dominick’s employment agreement and the 1998 Chief
Executive Officer’s Plan, Mr. Dominick is entitled to
a gross-up payment to mitigate any parachute payment excise
taxes on the above payments and benefits.
Mr. Dominick’s employment agreement terminates
automatically upon his death, in which case InteliData would
have no further obligation to Mr. Dominick or his estate
other than the disposition of life insurance, accrued and unpaid
base salary, accrued vacation and bonuses and other incentive
compensation earned but not paid for periods prior to the date
of death.
The employment agreement also provides that during the term of
the agreement and for one year following his termination (other
than in the event of termination by InteliData other than for
“cause” or by Mr. Dominick for “good
reason”), Mr. Dominick will not compete, directly or
indirectly, with InteliData. Furthermore, pursuant to a
non-solicitation provision in the employment agreement,
Mr. Dominick may not solicit certain current or former
employees of InteliData during the term of the agreement or for
a period of two years thereafter.
Other Named Executive Officers. InteliData has an
employment agreement with Karen Kracher, which provides for her
employment through August 16, 2005, unless further extended
or sooner terminated as set forth in the agreement.
Ms. Kracher is entitled to a base salary per year of not
less than $200,000 and annual bonuses. In addition,
Ms. Kracher is entitled to participate in all bonus and
incentive compensation plans or arrangements made available by
InteliData to its officers and is entitled to receive such
benefits as provided to all salaried employees as well as those
established by the compensation committee for InteliData’s
executives. Her employment agreement terminates automatically
upon her death, in which case InteliData would have no further
obligation to Ms. Kracher or her estate other than the
disposition of life insurance and related benefits and accrued
and unpaid base salary, bonus, unreimbursed expenses and
incentive compensation for periods prior to the date of death,
known as the standard termination payments. InteliData may
terminate the agreement for “cause” (as defined in the
employment agreement) or if Ms. Kracher incurs a disability
that continues for a period of 180 consecutive days or
180 days in any 365 day period. Ms. Kracher may
terminate the agreement for “good reason” (as defined
in the employment agreement). She may also terminate the
agreement, in which case InteliData would have no further
obligation to Ms. Kracher except for the standard
termination payments. If InteliData terminates Ms. Kracher
for other than “cause” or upon death or total
disability, or if she terminates the agreement
because InteliData fails to comply with the agreement or
following a “change of control” of InteliData whereby
Ms. Kracher’s duties are substantially diminished or
she is relocated, then Ms. Kracher is entitled to:
(i) the standard termination payments (which include earned
and unpaid salary, additional salary in lieu of accrued and
unused vacation, any unreimbursed business and entertainment
expenses in accordance with InteliData’s policies and any
unreimbursed employee benefit expenses that are reimbursable in
accordance with InteliData’s employee benefit plans);
(ii) any bonus earned but not yet paid under any bonus
program then in effect; (iii) 100% of her annual base
salary; and (iv) any and all options granted shall continue
vesting for 12 months and be exercisable for the longer of
12 months after termination date or period for exercise as
provided in her option agreement. For termination subsequent to
a “change of control,” all granted but unvested
options shall become immediately vested and nonforfeitable and
remain exercisable for their respective remaining terms.
InteliData will also continue to cover Ms. Kracher under
its medical, dental, life insurance and total disability benefit
plans for a period of six months at no cost to Ms. Kracher.
Change in Control Severance Agreements
InteliData has entered into a Change in Control Severance
Agreement with Mr. Dominick that provides for certain
termination benefits in the event his employment is terminated
by InteliData without “cause” (as defined in the
Change in Control Severance Agreement) or by Mr. Dominick
for “good reason” (as defined in the Change in Control
Severance Agreement), and such termination occurs either
(a) within 90 days before or 24 months after a
“change in control” of InteliData (as defined in the
Change in Control Severance Agreement) or (b) after
InteliData makes a public announcement or files a report or
proxy statement with the SEC disclosing a transaction which, if
completed, would constitute a change in control of InteliData
and before the Board of Directors determines that such
transaction will not be completed or the transaction is
completed.
The termination benefits consist of:
(a) a lump-sum cash payment equal to (i) any unpaid
base pay and accrued leave or vacation pay through the
termination date, (ii) any unpaid annual bonus earned prior
to the termination date, (iii) two times
Mr. Dominick’s annual salary plus (iv) any
unreimbursed expenses;
(b) acceleration of the vesting and exercisability of
outstanding stock options and awards previously granted to
Mr. Dominick and the extension of the period for exercising
such options until their expiration date;
(c) payment or reimbursement for 18 months after
termination for (i) any COBRA premiums for
Mr. Dominick, his spouse and his dependents to the extent
they participated in InteliData’s health and medical plan
prior to termination and elect COBRA coverage or (ii) any
premiums for continuation of other health and medical insurance
for Mr. Dominick, his spouse and his dependents if
Mr. Dominick, his spouse and his dependents did not
participate in InteliData’s health and medical plan prior
to termination, but InteliData was paying or reimbursing
Mr. Dominick for premiums on such other health and medical
insurance at the time of termination; and
(d) payment of or reimbursement for premiums for
continuation of life insurance coverage for 18 months after
termination if InteliData paid or reimbursed Mr. Dominick
for such life insurance coverage immediately prior to his
termination of employment.
As a condition to receiving such payments and benefits,
Mr. Dominick must execute a valid release and waiver of any
claims against InteliData, its related entities, and their
shareholders, officers, directors, employees, benefits plans,
representatives, agents, successors and assigns.
In consideration for such termination benefits,
Mr. Dominick agrees during the period of employment and for
a period of 12 months after termination of employment not
to compete, directly or indirectly, with InteliData or any
related entity, solicit employees of InteliData or any related
entity, solicit any customer of InteliData or any related
entity, or make disparaging comments about InteliData or any
related entity.
Mr. Dominick also agrees not to disclose any secret or
confidential information related to InteliData or any related
entity.
If the termination payments or benefits would be subject to
change in control or parachute payment excise taxes under
federal, state or local law, then the termination payments and
benefits must be reduced to the largest amount that will result
in no portion of the payments or benefits being subject to such
taxes.
The Change in Control Severance Agreement provides that amounts
paid and benefits provided shall be construed and interpreted so
that amounts are paid and benefits are provided only if and to
the extent that similar amounts and benefits are not paid or
provided under any other similar agreements, policies, plans,
programs or arrangements of InteliData or any related entity,
including any employment agreement between InteliData and
Mr. Dominick. Accordingly, if similar amounts and benefits
are otherwise to be provided to Mr. Dominick, then amounts
payable or benefits to be provided under his Change in Control
Severance Agreement shall be reduced by the amount of similar
payments and benefits to be provided under such other agreement,
policy, plan, program or arrangement.
The initial term of the Change in Control Severance Agreement is
through February 3, 2005, but the term automatically
extends for an additional 12-month period at the end of the
initial term and each annual anniversary thereafter, unless
InteliData gives Mr. Dominick written notice at least
90 days prior to the end of the initial term or the
applicable extended term date that the term will not be so
extended.
C:
Director Compensation
Directors of InteliData who are not also executive officers of
InteliData or of an affiliate of InteliData receive a quarterly
payment of $3,000 and $500 for each board of directors meeting
attended, excluding telephonic meetings. They are also
reimbursed for usual and ordinary expenses of meeting
attendance. Under InteliData’s Non-Employee Directors’
Stock Option Plan, each non-employee director is offered options
to purchase 6,000 shares of common stock following
InteliData’s annual meeting of stockholders. The exercise
price for any option grants under this plan is the average
closing price of the common stock during the 30 trading days
immediately preceding the date of grant. Options granted under
this plan vest in 12 equal monthly installments during the
non-employee director’s continued service on the board of
directors. The option price may be paid in cash, by surrendering
shares of common stock or by a combination of cash and common
stock. All options expire 10 years after their grant. Up to
200,000 shares of common stock may be issued under this
plan, subject to certain adjustments.
Mr. Jennings, in addition to the foregoing, received
$3,333.33 per month in consulting fees pursuant to the
Consultant Agreement, dated August 16, 2004, between
InteliData and Mr. Jennings. As a consultant,
Mr. Jennings provided InteliData approximately
35 hours of services per month. The Consultant Agreement
was terminated on February 28, 2005. InteliData also
entered into a separation agreement and general release with
Mr. Jennings, dated August 16, 2004. The separation
agreement and general release provides for payment of the
following severance benefits and consideration to
Mr. Jennings: current full salary and accrued and unused
vacation pay through August 15, 2004; continued vesting of
all Mr. Jennings’s stock options and awards until
October 31, 2004; an automobile that was purchased by
InteliData and was titled in Mr. Jennings’s name and,
upon a “change of control” of InteliData that occurs
before August 16, 2005, a severance payment of $200,000.00
in cash to be paid within 30 days of the date of such
“change of control.”
C:
Compensation Committee Interlocks and Insider
Participation
No member of the compensation committee was, during the last
fiscal year, an officer or employee of InteliData nor was
formerly an officer of InteliData. There are no compensation
committee interlocks between InteliData and other entities
involving InteliData’s executive officers and members of
the board of directors who serve as executive officer or board
member of such other entities.
The following table sets forth information as of June 14,2005, before giving effect to the consummation of the merger,
regarding beneficial ownership of InteliData’s common stock
by (i) each person who is known to InteliData to own
beneficially more than five percent of InteliData’s common
stock, (ii) each director of InteliData, (iii) each of
the Named Executive Officers, and (iv) all current
directors and the executive officers of InteliData as a group.
Beneficial ownership is determined in accordance with the rules
of the SEC and is generally based on voting or investment power
with respect to the securities. This table is based on
information supplied by officers, directors, Schedules 13D
and 13G, and Forms 3 and 4 filed with the SEC. In computing
the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock
subject to options held by that person are deemed to be
outstanding if the options are exercisable within 60 days
of the date of this table. The shares subject to options are not
deemed to be outstanding for the purpose of computing the
percentage ownership of any other person. All percentages in
this table are based on a total of 51,128,492 shares of
common stock outstanding on June 14, 2005. Except as
indicated in the footnotes below, InteliData believes, based on
information furnished to it and subject to community property
laws where applicable, that the persons and entities named in
the table below have sole voting and investment power with
respect to all shares of common stock shown as beneficially
owned by them. Unless otherwise indicated, the principal address
of each of the stockholders below is c/o InteliData
Technologies Corporation, 11600 Sunrise Valley Drive,
Reston, Virginia20191.
Directors and Executive Officers as a Group (9 persons)
1,231,426
(8)
2.4
%
*
Less than one percent.
(1)
As reported in the Schedule 13G/A filed with the SEC on
April 8, 2003, and includes 1,805,000 shares with sole
voting and dispositive power and 1,280,000 shares with
shared voting and dispositive power.
(2)
Includes 700,000 shares of common stock issuable upon the
exercise of options.
(3)
Includes 20,832 shares of common stock issuable upon the
exercise of options.
(4)
Includes 36,000 shares of common stock issuable upon the
exercise of options.
(5)
Includes 48,000 shares of common stock issuable upon the
exercise of options.
(6)
Includes 40,500 shares of common stock issuable upon the
exercise of options.
(7)
Includes 24,000 shares of common stock issuable upon the
exercise of options.
(8)
Includes 869,332 shares of common stock issuable upon the
exercise of options.
Employee Loan. On December 21, 1999, InteliData
provided a loan of $82,838 to Alfred S. Dominick, Jr.,
President and Chief Executive Officer of InteliData, pursuant to
a Secured Promissory Note, due on the earlier of
December 22, 2004, or 90 days after the termination of
Mr. Dominick’s employment with InteliData. As security
for the loan, Mr. Dominick has pledged 200,000 shares
of InteliData’s common stock owned by him.
As of December 15, 2004, the outstanding balance on this
loan was $105,229.49. On December 15, 2004, in anticipation
of the upcoming maturity of the Amended and Restated Secured
Promissory Note, the compensation committee determined that
InteliData would exercise its rights under the pledge to acquire
the 200,000 shares of common stock in satisfaction of
$100,000 of the loan (200,000 × $0.50 (the
closing share price on the Nasdaq SmallCap Market on
December 15, 2004)). The compensation committee determined
to forgive the remaining $5,229.49 of the loan, and the audit
committee ratified the determination of the compensation
committee on December 29, 2004.
Director and Officer Indemnification. InteliData’s
certificate of incorporation and bylaws contain provisions
limiting the liability of its officers and directors.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, InteliData has been advised that in
the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act, and therefore may be
unenforceable.
InteliData has entered into non-competition, non-solicitation
and confidentiality agreements with all its executive officers.
C:
Expenses of Solicitation
The cost of solicitation of proxies for the annual meeting will
be paid by InteliData. In addition to solicitation of proxies by
mail, the officers, directors and regular employees of
InteliData may solicit proxies on behalf of the board of
directors in person or by telephone, facsimile, telex or
telegraph. InteliData has retained Morrow & Co., Inc. to aid
in the solicitation of proxies and to verify records relating to
the solicitation.
[ ]
will receive a fee for its services of
$[ ]
and expense reimbursement. No additional compensation will be
received by any officer, director or employee of InteliData in
connection with any such proxy solicitation. Brokerage houses,
nominees, fiduciaries and other custodians will be requested by
InteliData to forward proxy soliciting material to beneficial
owners of shares held of record by them and, upon request,
InteliData may reimburse them for reasonable out-of-pocket
expenses incurred in doing so.
C:
Householding Information
Unless it has received contrary instructions, InteliData may
send a single copy of its annual report, proxy statement and
notice of annual meeting to any household at which two or more
stockholders reside if InteliData believes the stockholders are
members of the same family. Each stockholder in the household
will continue to receive a separate proxy card. This process,
known as “householding,” reduces the volume of
duplicate information received at your household and helps to
reduce InteliData’s expenses. However, if you prefer to
receive multiple sets of InteliData’s annual disclosure
documents at the same address this year or in future years,
follow the instructions described below. Similarly, if you share
an address with another stockholder and together both of you
would like to receive only a single set of InteliData’s
annual disclosure documents, follow these instructions:
If your shares are registered in your own name, please contact
InteliData at its executive offices at 11600 Sunrise Valley
Drive, Suite 100, Reston, Virginia20191, Attention:
Corporate Secretary, to inform it of your request. If a bank,
broker or other nominee holds your shares, please contact your
bank, broker or other nominee directly.
The validity of the shares of Corillian common stock offered by
this proxy statement/ prospectus will be passed upon for
Corillian by Perkins Coie LLP, counsel for Corillian.
Perkins Coie LLP, counsel for Corillian, and Hunton &
Williams LLP, counsel for InteliData, will pass upon certain
U.S. federal income tax consequences of the merger for
Corillian and InteliData, respectively.
EXPERTS
The consolidated financial statements of Corillian Corporation
as of December 31, 2004 and 2003, and for each of the years
in the three-year period ended December 31, 2004, and
management’s assessment of the effectiveness of internal
control over financial reporting as of December 31, 2004,
have been incorporated by reference herein and in the
registration statement in reliance upon the reports of KPMG LLP,
independent registered public accounting firm, incorporated by
reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements and management’s
report on the effectiveness of internal control over financial
reporting of InteliData Technologies Corporation and
subsidiaries incorporated in this proxy statement/ prospectus by
reference from InteliData’s Annual Report on
Form 10-K, as amended, for the year ended December 31,2004 have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in
their reports, which are incorporated herein by reference (which
reports (1) express an unqualified opinion on the
consolidated financial statements and include an explanatory
paragraph raising substantial doubt about InteliData’s
ability to continue as a going concern and include an
explanatory paragraph regarding the restatement of the 2003 and
2002 consolidated financial statements; (2) express an
unqualified opinion on management’s assessment that
InteliData did not maintain effective internal control over
financial reporting; and (3) express an adverse opinion on
the effectiveness of internal control over financial reporting
due to the existence of material weaknesses), and have been so
incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
C:
OTHER MATTERS
As of the date of this document, the InteliData board of
directors does not know of any other business to be presented
for consideration at the annual meeting. If other matters
properly come before the annual meeting, the persons named in
the accompanying form of proxy intend to vote on such matters
based on their best judgment.
In addition to solicitation of proxies by mail, directors,
officers and regular employees of InteliData (none of whom will
be specifically compensated for such services) may solicit
proxies by telephone or otherwise.
C:
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders
may present proper proposals for inclusion in InteliData’s
proxy statement and for consideration at the 2006 annual meeting
of stockholders by submitting their proposals to InteliData in a
timely manner. In order to be considered for the 2006 annual
meeting of stockholders, stockholder proposals must be received
in InteliData’s headquarters, attention of the Secretary,
11600 Sunrise Valley Drive, Suite 100, Reston,
Virginia20191, no later than
December [ ], 2005, and must
have complied with the requirements of Rule 14a-8 of the
Exchange Act.
The SEC allows Corillian and InteliData to “incorporate by
reference” information into this proxy statement/
prospectus. This means that Corillian and InteliData can
disclose important information to you by referring you to
another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this document,
except for any information superseded by information in this
document. This proxy statement/ prospectus incorporates by
reference the documents set forth below that Corillian and
InteliData have previously filed with the SEC, excluding any
portions of such documents that have been “furnished”
but not “filed” for purposes of the Exchange Act.
These documents contain important information about Corillian
and InteliData and their financial performance.
Description of Corillian Capital Stock included in its
Registration Statement on Form S-1/A (File
No. 333-95513) incorporated by reference in its
Registration Statement on Form 8-A filed with the SEC on
February 2, 2000, under Section 12(g) of the Exchange
Act, including any amendment or report filed for the purpose of
updating such description and as amended by the description of
Corillian’s common stock to the extent discussed herein
In addition, all documents filed (but not furnished) by
Corillian and InteliData pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this proxy
statement/ prospectus and before the date of the InteliData
annual meeting are deemed to be incorporated by reference into,
and to be a part of, this proxy statement/ prospectus from the
date of filing of those documents.
This proxy statement/ prospectus incorporates important business
and financial information about Corillian and InteliData from
other documents that are not included in or delivered with this
proxy statement/ prospectus. See “Incorporation of Certain
Documents by Reference” on page 88. Documents
incorporated by reference are available from Corillian and
InteliData without charge, excluding all exhibits, unless
Corillian or InteliData has specifically incorporated by
reference an exhibit in this proxy statement/ prospectus. You
may obtain the documents incorporated by reference in this proxy
statement/ prospectus by requesting them in writing or by
telephone from Corillian or InteliData at the following
addresses and telephone numbers:
If you would like to request any documents from Corillian,
please do so by
[ ],
2005, in order to receive them before the InteliData annual
meeting.
Corillian and InteliData file annual, quarterly and current
reports, proxy statements and other information with the SEC.
Copies of the reports, proxy statements and other information
(as well as documents incorporated by reference herein) may be
inspected and copied at the following public reference
facilities maintained by the SEC:
Public Reference Room
450 Fifth Street, NW
Washington, D.C. 20549
Copies of these materials can also be obtained by mail at
prescribed rates from the Public Reference Section of the SEC,
450 Fifth Street, NW, Washington, D.C. 20549 or by
calling the SEC at 1-800-SEC-0330. The SEC maintains a website
that contains reports, proxy statements and other information
regarding Corillian and InteliData. The address of the SEC
website is www.sec.gov. These materials may also be inspected at
the offices of the National Association of Securities Dealers,
1735 K Street, NW, Washington, D.C.20006.
Corillian filed a registration statement on Form S-4 to
register with the SEC the issuance of Corillian common stock in
the merger. This proxy statement/ prospectus is a part of that
registration statement and constitutes a prospectus of
Corillian. As permitted by SEC rules, this proxy statement/
prospectus does not contain all the information that you can
find in the registration statement or the exhibits to that
registration statement.
WE HAVE AUTHORIZED NO ONE TO GIVE YOU ANY INFORMATION OR TO
MAKE ANY REPRESENTATION ABOUT THE PROPOSED TRANSACTIONS
INVOLVING OUR COMPANIES THAT DIFFERS FROM OR ADDS TO THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT/ PROSPECTUS, OR IN
THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. THEREFORE, IF
ANYONE SHOULD GIVE YOU ANY DIFFERENT OR ADDITIONAL INFORMATION,
YOU SHOULD NOT RELY ON IT.
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT/ PROSPECTUS
SPEAKS ONLY AS OF THE DATE INDICATED ON THE COVER OF THIS PROXY
STATEMENT/ PROSPECTUS UNLESS THE INFORMATION SPECIFICALLY
INDICATES THAT ANOTHER DATE APPLIES.
The merger agreement has been included to provide you with
information regarding its terms. It is not intended to provide
any other factual information about Corillian or InteliData.
Such information can be found elsewhere in this proxy statement/
prospectus and in the public filings each of Corillian and
InteliData makes with the Securities and Exchange Commission,
which are available without charge at www.sec.gov.
The merger agreement contains representations and warranties
Corillian and InteliData made to each other. The assertions
embodied in those representations and warranties are qualified
by information in confidential disclosure schedules delivered by
InteliData to Corillian in connection with signing the merger
agreement. While neither Corillian nor InteliData believe that
the disclosure schedules contain information that the securities
laws require to be publicly disclosed, the disclosure schedules
do contain information that modifies, qualifies and creates
exceptions to the representations and warranties set forth in
the attached merger agreement. Accordingly, you should not rely
on the representations and warranties as characterizations of
the actual state of facts, since they are modified by the
underlying disclosure schedules. These disclosure schedules
contain information that has been included in InteliData’s
prior public disclosures, as well as potential additional
non-public information. Moreover, information concerning the
subject matter of the representations and warranties may have
changed since the date of the merger agreement, which subsequent
information may or may not be fully reflected in
InteliData’s public disclosures.
THIS AGREEMENT AND PLAN OF MERGER (this
“Agreement”) is dated as of March 31,2005, by and among Corillian Corporation, an Oregon corporation
(the “Parent”), Wizard Acquisition Corporation,
a Delaware corporation and wholly-owned subsidiary of the Parent
(“Merger Sub”), and InteliData Technologies
Corporation, a Delaware corporation (the
“Company”).
WHEREAS, the respective Boards of Directors of the Parent,
Merger Sub and the Company have each determined that an
acquisition of the Company by the Parent is advisable and in the
best interests of their respective stockholders;
WHEREAS, in furtherance of the acquisition of the Company by the
Parent, the Boards of Directors of the Parent, Merger Sub and
the Company have approved the merger of the Company with and
into Merger Sub (the “Merger”) upon the terms
and subject to the conditions set forth herein, whereby each
share of common stock, par value $0.001 per share, of the
Company (the “Company Common Stock”) issued and
outstanding immediately prior to the effective time of the
Merger (other than Cancelled Shares, as defined below), shall be
converted into the right to receive shares of common stock, no
par value, of the Parent (the “Parent Common
Stock”), and certain cash consideration as described in
Article 2 below;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning
of Section 368 of the Internal Revenue Code of 1986, as
amended (the “Code”);
WHEREAS, officers and directors of the Company have, to induce
the Parent to execute this Agreement, executed and delivered to
the Parent the Agreements to Facilitate Merger described in
Section 5.14;
WHEREAS, the parties hereto desire to make certain
representations, warranties, and agreements in connection with
the Merger and also to prescribe various conditions to the
Merger; and
WHEREAS, capitalized terms shall have the meaning set forth in
this Agreement, including the meanings set forth in
Article 8.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual representations, warranties, covenants and agreements
contained herein and intending to be legally bound hereby, the
Parent, Merger Sub and the Company hereby agree as follows:
Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.3 hereof),
the Company shall be merged with and into Merger Sub in
accordance with the provisions of Delaware Law, whereupon the
separate corporate existence of the Company shall cease, and
Merger Sub shall continue as the surviving corporation (the
“Surviving Corporation”).
C:
1.2. Closing of the
Merger.
The closing of the Merger (the “Closing”) shall
take place at 10:00 a.m., local time, on a date to be
specified by the parties (the “Closing Date”),
which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in
Article 6 (other than those conditions that by their terms
are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions), at the offices of
Perkins Coie LLP, 1120 NW Couch Street, Portland, Oregon, or at
such other place as the parties hereto may agree.
At the time of the Closing, the Company and Merger Sub shall
file, or cause to be filed, with the Secretary of State of the
State of Delaware a Certificate of Merger for the Merger, which
Certificate shall be in the form required by and executed in
accordance with the applicable provisions of Delaware Law and in
form and substance acceptable to the Parent (the
“Certificate of Merger”). The Merger shall
become effective at the time such filing is made or, if agreed
to by the Parent and the Company, at such later time or date set
forth in the Certificate of Merger (the “Effective
Time”).
C:
1.4. Effects of the
Merger.
The Merger shall have the effects set forth under Delaware Law.
From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers, and
franchises, and be subject to all the restrictions,
disabilities, and duties, of the Company and Merger Sub, all as
more fully described under Delaware Law.
C:
1.5. Certificate of
Incorporation and Bylaws of the Surviving Corporation.
The Certificate of Incorporation of Merger Sub shall, by virtue
of the Merger, become and thereafter be the Certificate of
Incorporation of the Surviving Corporation until amended in
accordance with such Certificate of Incorporation and Delaware
Law. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation,
until amended in accordance with such Bylaws, the Certificate of
Incorporation and Delaware Law.
C:
1.6. Directors and Officers
of the Surviving Corporation.
The directors of Merger Sub and the officers of the Company
immediately prior to the Effective Time shall be the directors
and officers of the Surviving Corporation until their respective
successors shall be duly elected and qualified or appointed.
C:
Article 2.
CONVERSION OF SECURITIES
C:
2.1. Conversion of Capital
Stock.
At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any share of capital stock
of the Company or Merger Sub:
(a) Common Stock of Merger Sub. Each share of
common stock of Merger Sub, par value $0.001 per share
(“Merger Sub Common Stock”), issued and
outstanding immediately prior to the Effective Time shall
continue to remain issued and outstanding.
(b) Cancellation of Parent Owned Stock and Treasury
Shares. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time that is then
held by the Parent, the Company or their direct or indirect
wholly-owned subsidiaries (collectively, the “Cancelled
Shares”) shall be canceled without payment of any
consideration therefor and without any conversion thereof.
(c) Conversion of Shares. Each share of
Company Common Stock issued and outstanding immediately prior to
the Effective Time, other than the Cancelled Shares and any
Dissenting Shares (as defined and to the extent provided in
Section 2.2(a) hereof), shall be converted into the
right to receive (i) the fraction of a share (subject to
adjustment as provided below) of Parent Common Stock equal to
the Exchange Ratio, and (ii) the Per Share Cash
Consideration, without interest (the “Cash
Consideration”), together with any cash in lieu of
fractional shares of Parent Common Stock to be paid pursuant to
Section 2.3(g) hereof (such shares and cash, as
adjusted pursuant to the following paragraph, the
“Merger Consideration”). Each share of Company
Common Stock shall thereafter cease to be outstanding and cease
to exist, and each holder of Company Common Stock outstanding
immediately prior to the Effective Time will cease to have any
rights with respect to the
Company Common Stock and each certificate formerly representing
shares of Company Common Stock (other than the Cancelled Shares)
shall thereafter represent only the right to receive the Merger
Consideration.
(d) Adjustments to Exchange Ratio. An
appropriate adjustment shall be made to the Exchange Ratio in
the event that, prior to the Effective Time, the outstanding
shares of Parent Common Stock, without new consideration, are
changed into or exchanged for a different kind of shares or
securities through a reorganization, reclassification, stock
dividend, stock combination, or other like change in the
Parent’s capitalization.
C:
2.2. Appraisal Rights.
(a) Notwithstanding any provision of this Agreement to the
contrary other than Section 2.2(b), any shares of
Company Common Stock held by a holder who is entitled to and has
demanded and perfected appraisal rights for such shares in
accordance with Section 262 of the Delaware General
Corporation Law (the “DGCL”) and who, as of the
Effective Time, has not effectively withdrawn or lost such
appraisal rights (“Dissenting Shares”), shall
not be converted into or represent a right to receive Merger
Consideration pursuant to Section 2.1(c), but
instead shall be converted into the right to receive only such
consideration as may be determined to be due with respect to
such Dissenting Shares under the DGCL. From and after the
Effective Time, a holder of Dissenting Shares shall not be
entitled to exercise any of the voting rights or other rights of
a stockholder of the Surviving Corporation.
(b) Notwithstanding the provisions of
Section 2.2(a), if any holder of shares of Company
Common Stock who demands appraisal of such shares under the DGCL
shall effectively withdraw or lose (through failure to perfect
or otherwise) the right to appraisal, then, as of the later of
the Effective Time and the occurrence of such event, such
holder’s shares shall no longer be Dissenting Shares and
shall automatically be converted into and represent only the
right to receive Merger Consideration as provided in
Section 2.1(c) without interest thereon, upon
surrender of the certificate representing such shares pursuant
to Section 2.3.
(c) The Company shall give Parent (i) prompt notice of
any written demands for appraisal of any shares of Company
Common Stock, withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the
Company which relate to any such demand for appraisal and
(ii) the opportunity to participate in all negotiations and
proceedings which take place prior to the Effective Time with
respect to demands for appraisal under the DGCL. The Company
shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for
appraisal of Company Common Stock or offer to settle or settle
any such demands.
C:
2.3. Exchange of
Certificates.
(a) Prior to the Effective Time, the Parent shall appoint
the Parent’s stock transfer agent or such other person as
the Parent may select to act as exchange agent for the exchange
of Parent Common Stock upon surrender of Certificates (the
“Exchange Agent”). Promptly following the
Effective Time, Parent shall deposit, or cause to be deposited,
with the Exchange Agent, for the benefit of the holders of
Company Common Stock, for exchange in accordance with this
Article 2 through the Exchange Agent,
(i) certificates representing the number of shares of
Parent Common Stock issuable pursuant to
Section 2.1(c)(i), and (ii) the amount of cash
payable pursuant to Section 2.1(c)(ii) as of the
Effective Time and, thereafter, cash from time to time as
required to make payments in lieu of fractional shares pursuant
to Section 2.3(g) (such cash and certificates for
Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred
to as the “Exchange Fund”). The Exchange Agent
shall, pursuant to irrevocable instructions, deliver
(x) the Parent Common Stock and cash contemplated to be
issued pursuant to Section 2.1(c)hereto, and
(y) such cash as may be required to make payments in lieu
of any fractional shares out of the Exchange Fund. Except as
contemplated by Section 2.3(h), the Exchange Fund
shall not be used for any other purpose.
(b) As promptly as reasonably practicable after the
Effective Time, but in no event later than ten business days
thereafter, the Parent will cause the Exchange Agent to mail to
each holder of record of a
certificate or certificates (to the extent such certificates
have not already been submitted to the Exchange Agent) which
immediately prior to the Effective Time represented outstanding
shares (other than Cancelled Shares) of Company Common Stock
(each, a “Certificate” and collectively, the
“Certificates”) (i) a letter of
transmittal (which shall be in customary form and shall specify
that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and
have such other provisions as the Parent and the Exchange Agent
shall reasonably specify), (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the
Merger Consideration, and (iii) such notification as may be
required under the DGCL to be given to the holders of Dissenting
Shares.
(c) Upon surrender to the Exchange Agent of a Certificate
for cancellation, together with such letter of transmittal, duly
executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably required
by the Exchange Agent pursuant to such instructions, the holder
of such Certificate shall be entitled to receive in exchange
therefor, (i) the Cash Consideration, (ii) one or more
of the Parent certificates representing the number of whole
shares of Parent Common Stock into which the shares represented
by the Certificate(s) shall have been converted pursuant to
Section 2.1(c), and (iii) if applicable, a bank
check for fractional shares pursuant to
Section 2.3(g), to be distributed as soon as
practicable after the Effective Time, and the Certificate so
surrendered shall immediately be cancelled. In the event of a
transfer of ownership of shares of Company Common Stock which is
not registered in the transfer records of the Company, Parent
Common Stock (and any Cash Consideration and any cash paid for
fractional shares pursuant to Section 2.3(g)) may be
issued or paid to a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock
transfer taxes have been paid.
(d) Whenever a dividend or other distribution is declared
by the Parent in respect of the Parent Common Stock, the record
date for which is after the Effective Time, that declaration
shall include dividends or other distribution in respect of all
shares issuable pursuant to this Agreement. No dividends or
other distributions pertaining to Parent Common Stock with a
record date on the same date as or after the Effective Time
shall be paid to any holder of shares of Company Common Stock
who have not surrendered their Certificates for exchange, until
the holder of such Certificates shall have exchanged such
Certificates in accordance with Section 2.3(c)
hereof. Subject to the effect, if any, of applicable Law, the
Exchange Agent shall receive, hold, and remit any such dividends
or other distributions to each such record holder entitled
thereto, without interest, at the time that such Certificates
are surrendered to the Exchange Agent for exchange. Holders of
Company Common Stock will not be entitled, however, to dividends
or other distributions that are payable to persons who were
holders of record of Parent Common Stock as of a record date
that is prior to the date of the Effective Time.
(e) All shares of Parent Common Stock issued upon the
surrender for exchange of the Certificates in accordance with
the terms hereof (including any cash paid for fractional shares
pursuant to Section 2.3(g)hereof) and the Cash
Consideration shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company
Common Stock represented by the Certificates.
(f) After the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares
are presented to the Surviving Corporation, they shall be
cancelled and exchanged as provided in this
Article 2.
(g) No fractional shares of Parent Common Stock and no
certificates or scrip therefor, or other evidence of ownership
thereof, shall be issued upon the surrender for exchange of
Certificates, no dividend or other distribution of the Parent
shall relate to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any
rights of a stockholder of the Parent. All fractional shares of
Parent Common Stock to which a holder of Company Common Stock
immediately prior to the Effective Time would otherwise be
entitled, at the Effective Time, shall be aggregated if and to
the extent
multiple Certificates of such holder are submitted together to
the Exchange Agent. If a fractional share results from such
aggregation, then (in lieu of such fractional share) the
Exchange Agent shall pay to each holder of shares of Company
Common Stock who otherwise would be entitled to receive such
fractional share of Parent Common Stock an amount of cash
(without interest) determined by multiplying (i) the
fractional share of Parent Common Stock to which such holder
would otherwise be entitled, by (ii) the Parent Average
Stock Price. The Parent will make available to the Exchange
Agent any cash necessary for this purpose.
(h) Any portion of the Exchange Fund that remains
undistributed to the holders of shares of Company Common Stock
six (6) months after the Effective Time shall be delivered
to Parent, upon demand by Parent. Any holder of Certificates who
have not theretofore complied with Section 2.2(a)
shall thereafter look only to Parent for the portion of the
Merger Consideration represented by the Certificates to which
such holder is entitled pursuant to Section 2.1(c)
hereof. Any portion of the Exchange Fund remaining unclaimed by
holders of shares of Company Common Stock as of the date that is
immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Entity shall,
to the extent permitted by applicable Law, become the property
of Parent, free and clear of any claims or interest or any
person previously entitled thereto.
(i) To the fullest extent permitted by Law, neither Parent
nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for any Parent Common Stock (or
dividends or distributions with respect thereto) or cash
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(j) Each of the Surviving Corporation, Parent and the
Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to
any holder of shares of Company Common Stock such amounts as it
is required to deduct and withhold with respect to the making of
such payments under the Code, or any provision of state, local
or foreign tax Law. To the extent that amounts are so withheld
by the Surviving Corporation, Parent or Exchange Agent, as the
case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of
shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation,
Parent or Exchange Agent, as the case may be.
(k) If any Certificate shall have been lost, stolen or
destroyed, upon the delivery to the Exchange Agent of an
affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Parent or Surviving Corporation
may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent
shall issue or pay in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration and the cash
value of any fraction of a share of Parent Common Stock as
provided in Section 2.3(g) hereof.
C:
2.4. Stock Options
As soon as practicable following the Closing, but effective as
of the Effective Time, each Company Option that is outstanding
immediately prior to the Effective Time (including, specifically
and without limitation, every option outstanding under any
Company Stock Plan) and that has not been exercised prior to the
Effective Time, shall be terminated. No options or Company Stock
Plan will continue after the Effective Time or be assumed or
continued by Parent or the Surviving Corporation. Prior to the
Closing Date, the Company shall take all action necessary to
effect the termination of all Company Options, as contemplated
by this Section 2.4.
C:
2.5. Warrants
Each warrant to purchase shares of Company Common Stock (a
“Company Warrant”) that is outstanding
immediately prior to the Effective Time shall, at the Effective
Time, cease to represent a right to purchase shares of Company
Common Stock and shall be converted, at the Effective Time, into
a warrant to purchase shares of Parent Common Stock (a
“Parent Warrant”) on substantially the same
terms and conditions as were applicable under such Company
Warrant. The number of shares of Parent
Common Stock subject to each such Parent Warrant shall be the
number of shares of Company Common Stock subject to each such
Company Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded, if necessary, to the
nearest whole share of Parent Common Stock, and such Parent
Warrant shall have an exercise price per share (rounded to the
nearest cent) equal to the per share exercise price specified in
such Company Warrant divided by the Exchange Ratio.
As a material inducement to the Parent and Merger Sub to enter
into this Agreement, with the understanding that the Parent and
Merger Sub shall be relying thereon in consummating the
transactions contemplated hereunder, the Company hereby
represents and warrants to the Parent and Merger Sub, except as
set forth in the Company Disclosure Schedule delivered by the
Company to the Parent and Merger Sub on the date hereof (the
“Company Disclosure Schedule”), which Company
Disclosure Schedule identifies the section and subsection
numbers of this Article 3 to which the disclosures
pertain and which disclosures relate only to the representations
and warranties set forth in the section or subsection of this
Agreement to which such section of the Company Disclosure
Schedule expressly relates and not to any other representation
and warranty contained in this Agreement (except to the extent
that one section of the Company Disclosure Schedule specifically
refers to another section thereof), as follows:
C:
3.1. Organization and
Qualification.
(a) The Company and each Company Subsidiary is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and
has all power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
The Company and each Company Subsidiary is duly qualified and in
good standing to do business in each jurisdiction in which the
property owned, leased, or operated by it or the nature of the
business conducted by it (i) makes such qualification
necessary and (ii) where the failure to qualify could
reasonably be expected to have a Company Material Adverse Effect.
(b) Section 3.1(b) of the Company Disclosure
Schedule lists each Company Subsidiary and its jurisdiction of
incorporation. Except for the capital stock of the CompanySubsidiaries owned by the Company, neither the Company nor any
Company Subsidiary owns, directly or indirectly, any capital
stock or other interest in any person. The Company wholly owns
each Company Subsidiary.
The Company has furnished or made available to the Parent a
complete and correct copy of the Certificate of Incorporation
and the Bylaws of the Company and the Certificate of
Incorporation, Bylaws or equivalent organizational documents of
each Company Subsidiary, each as in full force and effect as of
the date hereof. Neither the Company nor any Company Subsidiary
is in violation of any of the provisions of its Certificate of
Incorporation, Bylaws or equivalent organizational documents.
C:
3.3. Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and
5,000 shares of Preferred Stock of the Company, par value
$0.001 per share (the “Company Preferred
Stock”). As of the date hereof, there are
(i) 51,133,492 shares of Company Common Stock issued
and outstanding; (ii) no shares of Preferred Stock issued
and outstanding; (iii) 1,034,784 shares of Company
Common Stock and no shares of Company Preferred Stock held in
the treasury of the Company; (iv) no shares of Company
Common Stock or Company Preferred Stock owned by the CompanySubsidiaries; and (v) 3,964,015 shares of Company
Common Stock reserved for future issuance pursuant to Company
Stock Plans (including 3,034,397 shares subject to
outstanding Company Options, which includes 45,000 restricted
stock awards that will vest immediately prior to the Effective
Time). Except (1) as set forth in this
Section 3.3(a), (2) as set forth in
Section 3.3(a) of the Company’s Disclosure
Schedule, including the Employee Stock Purchase Plan set forth
therein (“ESPP”) and (3) as
provided in the Rights Plans (as defined in
Section 3.28 hereof), there are no outstanding
(x) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities or
ownership interests in the Company, (y) options, warrants,
rights or other agreements or commitments to acquire from the
Company, or obligations of the Company to issue, any capital
stock, voting securities or other ownership interests in (or
securities convertible into or exchangeable for capital stock or
voting securities or other ownership interests in) the Company,
(z) obligations of the Company to grant, extend or enter
into any subscription, warrant, right, convertible or
exchangeable security or other similar agreement or commitment
relating to any capital stock, voting securities or other
ownership interests in the Company (the items in
clauses (x), (y) and (z), together with the capital
stock of the Company, being referred to collectively as
“Company Securities”) or (iv) obligations
by the Company or any of the CompanySubsidiaries to make any
payments based on the price or value of shares of the
Company’s capital stock. All outstanding shares of Company
Common Stock have been duly authorized and validly issued, are
fully paid and nonassessable and were issued in compliance with
all applicable federal and state securities laws (or applicable
exemptions thereunder).
(b) Section 3.3(b) of the Company Disclosure
Schedule accurately sets forth (A) a list of all Company
Stock Plans and information regarding the exercise price, the
date of grant or issuance and the number of underlying
securities issuable in respect of each Company Option, and
(B) a list of all Warrants outstanding and information
regarding the holder, the exercise price, the expiration date
and the number and type of securities into which the warrants
are exercisable. All securities of the Company subject to
issuance upon exercise of Company Options, upon issuance on the
terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in
Section 3.3(b) of the Company Disclosure Schedule,
no consent of holders of any Company Options is required to
carry out the Merger and the other transactions contemplated by
this Agreement, including, without limitation, the matters
contemplated by Section 2.4 and
Article 1. All actions, if any, required on the part
of the Company under the Company Options to allow for the
treatment of Company Options as is provided in
Section 2.4 and Article 1, have been, or
prior to the Closing shall be, validly taken by the Company. The
Company has delivered or made available to the Parent complete
and correct copies of the Company Stock Plans and all forms of
Company Options and agreements under any such plans.
(c) Except as contemplated by this Agreement, the Company
is not under any obligation to repurchase, redeem or otherwise
acquire any securities of the Company or of any Company
Subsidiary or to provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any
Company Subsidiary or any other Person. As of the date of this
Agreement and except as contemplated by this Agreement, there
are no voting trusts or other agreements or understandings to
which the Company is a party, or, to the Knowledge of the
Company, to which persons other than the Company are parties,
that relate to the voting or control of any outstanding shares
of the Company’s capital stock.
(d) Each outstanding share of capital stock of each Company
Subsidiary is duly authorized, validly issued, fully paid and
nonassessable, and each such share is owned by the Company or
another Company Subsidiary, free and clear of all Encumbrances.
There are no outstanding (i) securities of the Company or
any Company Subsidiary convertible into or exchangeable for
shares of capital stock or other voting securities or ownership
interests in any Company Subsidiary, (ii) options,
warrants, rights or other agreements or commitments to acquire
from the Company or any Company Subsidiary (or obligations of
the Company or any Company Subsidiary to issue) any capital
stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital
stock, voting securities or ownership interests in, any Company
Subsidiary, (iii) obligations of the Company or any Company
Subsidiary to grant, extend or enter into any subscription,
warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any capital stock,
voting securities or other ownership interests in any Company
Subsidiary (the items in clauses (i), (ii) and (iii),
together with the capital stock of such Company Subsidiaries,
being referred to collectively as “Subsidiary
Securities”) or (iv) obligations of the Company or
any Company Subsidiary to make any payment based on the value of
any shares of any Company Subsidiary. There are no outstanding
obligations of the Company or any of Company Subsidiary to
purchase, redeem or otherwise acquire any outstanding Subsidiary
Securities.
C:
3.4. Company SEC Reports;
Financial Statements.
(a) The Company has filed with the SEC, at or prior to the
time due (including by proper extension pursuant to
Rule 12b-25), and has heretofore made available to the
Parent true and complete copies of, all forms, reports,
schedules, registration statements, definitive proxy statements
and other documents (together with all information incorporated
therein by reference, the “Company SEC
Reports”) it filed or was required to file with the SEC
since January 1, 2002. As of their respective dates, the
Company SEC Reports complied in all material respects with all
applicable requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to the Company SEC Reports. As of
their respective dates and as of the date any information from
such Company SEC Reports has been incorporated by reference, the
Company SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Section 3.4(a) of the Company
Disclosure Schedule lists all comment letters or other
correspondence received by the Company from the Staff of the SEC
since January 1, 2002 with respect to any Company SEC
Report or otherwise and all responses to such comment letters or
correspondence by or on behalf of the Company, copies of all of
which have been provided to the Parent.
(b) To the extent required in connection with the Company
SEC Reports, the Company’s Chief Executive Officer and
Chief Financial Officer have signed, and the Company has
furnished to the SEC, all necessary certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.
Such certifications contain no qualifications or exceptions to
the matters certified therein and have not been modified or
withdrawn, and neither the Company nor any of its officers has
received notice from any Governmental Entity questioning or
challenging the accuracy, completeness, form or manner of filing
or submission of such certifications nor to the Company’s
Knowledge is any such notice or action threatened.
(c) Each of the financial statements of the Company
(including the related notes) included or incorporated by
reference in the Company SEC Reports (including any similar
documents filed after the date of this Agreement) comply as to
form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by
Form 10-Q or Regulation S-X of the SEC) applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the
consolidated financial position of the Company and its
consolidated Company Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for
the periods then ended (subject to normal year-end adjustments
in the case of any unaudited interim financial statements).
Neither the Company nor any Company Subsidiary has, nor does the
Company or any Company Subsidiary have any Knowledge of any
basis for, any material liabilities or obligations individually
or in the aggregate (whether absolute, accrued, contingent, or
otherwise) of any nature, other than liabilities or obligations
(i) accrued or reserved against in the most recent
consolidated balance sheet of the Company included in the
Company SEC Reports, (ii) specifically disclosed in this
Agreement, or (iii) incurred in the ordinary course of
business consistent with past practice since the date of the
balance sheet included in the most recent Company SEC Report
(none of which could, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect
or are in such amounts as to be materially greater than the
liabilities or obligations set forth in the balance sheet most
recently filed with the SEC prior to the date of this Agreement).
(d) Except as set forth in Section 3.4(d) of
the Company Disclosure Schedule, the Company has not been
notified by its independent auditors or by the staff of the SEC
that such auditors or staff of the SEC, as the case may be, are
of the view that any financial statements included in any
registration statement filed by the Company under the Securities
Act or any periodic or current report filed under the Exchange
Act should be restated, or that the Company should modify its
accounting in future periods in a manner that would be
materially adverse to the Company. As of the date hereof, the
Company has complied in all
material respects with the listing and other standards of Nasdaq
applicable to it (other than failing to meet the minimum per
share price qualification of the Nasdaq SmallCap Market).
(e) Prior to the execution of this Agreement, the Company
has delivered to the Parent its Annual Report on Form 10-K
for the fiscal year ended December 31, 2004 (the
“2004 Form 10-K”) in its final form, and
no changes or modifications to the 2004 Form 10-K will be
required or made prior to filing with the SEC. The 2004
Form 10K complies in all material respects with all
applicable requirements of the Exchange Act, and the rules and
regulations of the SEC thereunder applicable to the 2004
Form 10-K.
C:
3.5. Controls.
Except as set forth in Section 3.5 of the Company
Disclosure Schedule:
(a) Each of the Company and the CompanySubsidiaries has
internal control over financial reporting as defined in
Rule 13a-15(f) under the Exchange Act and such internal
control over financial reporting is effective. Since
January 1, 2002, there has been no material change in the
internal control over financial reporting of the Company and the
Company Subsidiaries that has materially affected, or is
reasonably likely to materially affect, the internal control
over financial reporting of the Company and the CompanySubsidiaries. Without limiting the generality of the foregoing,
each of the Company and the CompanySubsidiaries maintains
accurate books and records reflecting its assets and liabilities
and maintains proper and adequate internal accounting controls
which provide reasonable assurance that (i) transactions
are executed with management’s authorization;
(ii) transactions are recorded as necessary to permit
preparation of the consolidated financial statements of the
Company and to maintain accountability for the Company’s
consolidated assets; (iii) access to the Company’s
consolidated assets is permitted only in accordance with
management’s authorization; (iv) the reporting of the
Company’s consolidated assets is compared with existing
assets at regular intervals; and (v) accounts, notes and
other receivables and inventory are recorded accurately, and
proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis. The Company
has not been notified by its independent auditor that there is
any significant deficiency or material weakness in the
Company’s internal control over financial reporting. The
Company has delivered to Parent complete and accurate copies of
any management letter or similar correspondence from any
independent auditor since January 1, 2002, of the Company
or any of the CompanySubsidiaries.
(b) The Company maintains disclosure controls and
procedures required under the Exchange Act effective to ensure
that all material information concerning the Company and the
Company Subsidiaries is made known on a timely basis to the
individuals responsible for the preparation of the
Company’s filings with the SEC and other public disclosure
documents. Section 3.5(b) of the Company Disclosure
Schedule lists, and the Company has delivered to the Parent
copies of, all written descriptions of, and all policies,
manuals and other documents promulgating, such disclosure
controls and procedures and internal controls over financial
reporting.
C:
3.6. Information
Supplied.
The proxy statement/ prospectus included as part of the
Registration Statement (such proxy statement/ prospectus,
together with notice of meeting, form of proxy, and any letter
or other materials to the Company’s stockholders included
therein are referred to in this Agreement as the “Proxy
Statement/ Prospectus”) shall not, at the time the
Proxy Statement/ Prospectus is first mailed and at the time of
the Company Stockholders Meeting, contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are
made, not misleading, or omit to state any material fact
necessary to correct any statement made in any earlier
communication with respect to the solicitation of any proxy or
approval for the Merger in connection with which the Proxy
Statement/ Prospectus shall be mailed, which has become false or
misleading, except that no representation or warranty is made by
the Company with respect to any information regarding and
supplied in writing by the Parent, Merger Sub or any Affiliate
of the Parent or Merger Sub which is contained or incorporated
by reference in the Proxy Statement/
Prospectus. The Proxy Statement/ Prospectus shall comply as to
form in all material respects with the provisions of the
Exchange Act and the rules and regulations of the SEC
promulgated thereunder.
C:
3.7. Authorization and
Enforceability.
The Company has the corporate power and authority to execute and
deliver this Agreement and, subject to obtaining the Company
Stockholder Approval and the approvals set forth in
Section 3.7 of the Company Disclosure Schedule, the
corporate power and authority to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly and validly
authorized and unanimously approved by the Company’s Board
of Directors and no other corporate proceedings on the part of
the Company (other than Company Stockholder Approval) or any
Company Subsidiary are necessary to authorize this Agreement,
and, subject to obtaining the Company Stockholder Approval, no
other corporate action on the part of the Company or any Company
Subsidiary is necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to rules of Law
governing bankruptcy, specific performance, injunctive relief,
or other equitable remedies. Under applicable Law, the
Company’s Certificate of Incorporation and Nasdaq rules,
the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock is the only vote
required for the stockholders of the Company to approve the
Merger and, except as set forth in Section 3.7 of
the Company Disclosure Schedule no holders of any other Company
Securities are entitled to any vote or consent regarding the
Merger, this Agreement or any of the transactions contemplated
hereby.
C:
3.8. Absence of Certain
Changes or Events.
Except as contemplated hereby or as disclosed in the Company SEC
Reports or Section 3.8 of the Company Disclosure
Schedule, since January 1, 2005, the Company and the
Company Subsidiaries have conducted their business in the
ordinary course of business and consistent with past practice
and there has not been:
(a) any change, effect, event, occurrence, state of facts
or development that, individually or in the aggregate, has had
or could reasonably be expected to have a Company Material
Adverse Effect;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company or any Company Subsidiary
(other than any wholly owned subsidiary) of any outstanding
shares of capital stock or other equity or debt securities of,
or other ownership interests in, the Company;
(c) any split, combination or reclassification of any of
its capital stock;
(d) any amendment of any provision of the Certificate of
Incorporation, Bylaws or other governing documents of, or of any
material term of any outstanding security issued by, the Company
or any Company Subsidiary (other than any wholly owned
subsidiary);
(e) any incurrence, assumption or guarantee by the Company
or any Company Subsidiary of any indebtedness for borrowed
money, other than trade payables incurred in the ordinary course
of business and consistent with past practice;
(f) any change in any method of accounting or accounting
practice by the Company or any Company Subsidiary, except for
any such change required by reason of a change in GAAP and
concurred with by the Company’s independent public
accountants;
(g) any election or change in any election concerning
Taxes, any adoption or change in any Tax accounting method or
practice, or any change in any Tax accounting period;
(h) any issuance of any equity or debt securities of the
Company other than pursuant to the Company Stock Plans and the
Company Options in the ordinary course of business and
consistent with past practice;
(i) any acquisition or disposition of assets material to
the Company and the CompanySubsidiaries (except for sales of
inventory in the ordinary course of business consistent with
past practice), any acquisition or disposition of capital stock
of any third party (other than acquisitions or dispositions of
non-controlling equity interests of third parties in the
ordinary course of business), or any merger or consolidation
with any third party, by the Company or any Company Subsidiary;
(j) any creation or assumption by the Company or any
Company Subsidiary of any Encumbrance on any asset other than in
the ordinary course of business and consistent with past
practice;
(k) any capital expenditure or expenditures in excess of
$15,000 individually or $50,000 in the aggregate, other than
capital expenditures made in the ordinary course of business;
(l) any material damage, destruction or loss (whether or
not covered by insurance) from fire or other casualty to its
material tangible property;
(m) any increase in the base salary of any officer or
employee of the Company, other than increases in the base salary
of non-officer employees in the ordinary course of business and
consistent with past practice;
(n) any adoption, amendment, modification, or termination
of any bonus, profit-sharing, incentive, severance or other
similar plan or any outstanding option, award, or benefit
thereunder for the benefit of any of its directors, officers or
employees;
(o) entry by the Company into any joint venture,
partnership or similar agreement with any person other than a
Company Subsidiary; or
(p) any authorization of, or commitment or agreement to
take any of, the foregoing actions except as otherwise permitted
by this Agreement.
C:
3.9. Consents and
Approvals.
Except as set forth in Section 3.9 of the Company
Disclosure Schedule, the execution and delivery of this
Agreement by the Company and the consummation of the
transactions contemplated hereby does not: (a) violate any
provision of the Certificate of Incorporation, Bylaws, or other
governing document of the Company or any Company Subsidiary;
(b) violate any Law or Order by which the Company or any
Company Subsidiary or any of their respective properties or
assets may be bound; or (c) result in any violation or
breach of, or constitute (with or without due notice or lapse of
time or both) a default under, result in the loss of any
material benefit under, or give rise to any right of
termination, cancellation, increased payments, or acceleration
under, or result in the creation of any Encumbrance on any of
the properties or assets of the Company or any Company
Subsidiary under any of the terms, conditions, or provisions of
any note, bond, mortgage, indenture, or of any material license,
franchise, permit, authorization, agreement, or other instrument
or obligation to which the Company or any Company Subsidiary is
a party, or by which it or any of its material properties or
assets may be bound. Except as set forth in
Section 3.9 of the Company Disclosure Schedule, no
filing with or permit, consent, or approval of any Governmental
Entity or any other Person is required by the Company or any
Company Subsidiary in connection with the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby, except for (i) any applicable
requirements of the Securities Act, the Exchange Act and state
securities laws; (ii) the Company Stockholder Approval;
(iii) the filing and recordation of the Certificate of
Merger as required by Delaware Law; and (iv) applicable
notices to Nasdaq.
C:
3.10. Permits.
Each of the Company and the CompanySubsidiaries is in
possession of all Permits, except where the failure to have, or
the suspension or cancellation of, any of the Permits could not
reasonably be expected
to have a Company Material Adverse Effect. As of the date
hereof, no suspension or cancellation of any of the Permits is
pending or, to the Knowledge of the Company, threatened, except
where the failure to have, or the suspension or cancellation of,
any of such Permits could not reasonably be expected to have a
Company Material Adverse Effect. Section 3.10 of the
Company Disclosure Schedule lists all material Permits of the
Company and the CompanySubsidiaries, and the Company has made
available to the Parent all other Permits of the Company and the
Company Subsidiaries.
C:
3.11. Compliance with
Laws.
Except as set forth in Section 3.11 of the Company
Disclosure Schedule, all activities of the Company and each
Company Subsidiary have been, and are currently being, conducted
in all material respects in compliance with all applicable Laws
and Orders. To the Knowledge of the Company, (a) no
investigation or review by any Governmental Entity with respect
to the Company is pending or threatened or has been undertaken
within the past five (5) years and (b) no Governmental
Entity has indicated an intention to conduct the same.
C:
3.12. Litigation.
Except as set forth in Section 3.12 of the Company
Disclosure Schedule, there are no material suits, actions or
proceedings pending or, to the Knowledge of the Company,
threatened (in any manner) against or affecting the Company or
any of the CompanySubsidiaries. Neither the Company nor any of
the CompanySubsidiaries is subject to any outstanding Order
that contains ongoing material obligations, restricts the
activities of the Company or any Company Subsidiary going
forward or could reasonably be expected to prevent, hinder or
delay the timely completion of the transactions contemplated by
this Agreement.
C:
3.13. Employee Benefit
Matters.
(a) Section 3.13(a) of the Company Disclosure
Schedule contains a complete and accurate list of all Employee
Benefit Plans. Neither the Company nor any Company Subsidiary
has any agreement, arrangement, commitment or obligation,
whether formal or informal, whether written or unwritten and
whether legally binding or not, to create, enter into or
contribute to any additional Employee Benefit Plan, or to modify
or amend any existing Employee Benefit Plan. There has been no
amendment, interpretation or other announcement (written or
oral) by the Company, any Company Subsidiary or any other Person
relating to, or change in participation or coverage under, any
Employee Benefit Plan that, either alone or together with other
such items or events, could materially increase the expense of
maintaining such Employee Benefit Plan (or the Employee Benefit
Plans taken as a whole) above the level of expense incurred with
respect thereto for the fiscal year ended December 31,2004. The terms of each Employee Benefit Plan permit the Company
or relevant Company Subsidiary, as applicable, to amend and
terminate such Employee Benefit Plan at any time and for any
reason without penalty and without material liability or expense
other than for the ordinary accrual of benefits as of the date
of termination. None of the rights of the Company or any Company
Subsidiary under any Employee Benefit Plan will be impaired in
any way by this Agreement or the consummation of the
transactions contemplated by this Agreement.
(b) The Company has delivered to Parent true, correct and
complete copies (or, in the case of unwritten Employee Benefit
Plans, descriptions) of all Employee Benefit Plans (and all
amendments thereto since the inception of the particular
Employee Benefit Plan), along with, to the extent applicable to
the particular Employee Benefit Plan, copies of the following:
(i) the last three annual reports (Form 5500 series),
filed with respect to such Employee Benefit Plan, together with
all schedules and audit reports required with respect thereto;
(ii) the most recent summary plan description, and all
summaries of material modifications related thereto, distributed
with respect to such Employee Benefit Plan; (iii) all
contracts and agreements (and any amendments thereto since the
inception of such Employee Benefit Plan) relating to such
Employee Benefit Plan, including, without limitation, all trust
agreements, investment management agreements, annuity contracts,
insurance contracts, bonds, indemnification agreements and
service provider agreements; (iv) the most recent
determination letter issued by the IRS with respect to such
Employee Benefit Plan; (v) the most recent annual actuarial
valuation prepared
for such Employee Benefit Plan; (vi) all written
communications during the last three years relating to the
amendment, creation or termination of such Employee Benefit
Plan, or an increase or decrease in benefits, acceleration of
payments or vesting or other events that could result in
material liability to the Company or any Company Subsidiary;
(vii) all material correspondence to or from any
Governmental Entity relating to such Employee Benefit Plan;
(viii) samples of all administrative forms currently in use
with respect to such Employee Benefit Plan, including, without
limitation, all COBRA and HIPAA forms and notices; (ix) all
coverage, nondiscrimination, top heavy and Code Section 415
tests performed with respect to such Employee Benefit Plan for
the last three years; and (x) the most recent registration
statement, annual report (Form 11-K) and prospectus
prepared in connection with such Employee Benefit Plan.
(c) With respect to each Employee Benefit Plan, except as
set forth in Section 3.13(c) of the Company
Disclosure Schedule: (i) such Employee Benefit Plan was
properly and legally established; (ii) such Employee
Benefit Plan is, and at all times since inception has been,
maintained, administered, operated and funded in all material
respects in accordance with its terms and in compliance with all
applicable requirements of all applicable Laws, including,
without limitation, ERISA and the Code; (iii) the Company,
each Company Subsidiary, each of their respective directors,
officers, employees, representatives and agents, and, to the
Knowledge of the Company, all other Persons (including, without
limitation, all other fiduciaries) have, at all times and in all
material respects, properly performed all of their duties and
obligations (whether arising by operation of law or by contract)
under or with respect to such Employee Benefit Plan, including,
without limitation, all reporting, disclosure and notification
obligations; (iv) all returns, reports (including, without
limitation, all Form 5500 series annual reports, together
with all schedules and audit reports required with respect
thereto), notices, statements and other disclosures relating to
such Employee Benefit Plan required to be filed with any
Governmental Entity or distributed to any Employee Benefit Plan
participant have been properly prepared and duly filed or
distributed in a timely manner; (v) none of the Company,
any Company Subsidiary, any of their respective directors,
officers, employees, representatives or agents, or, to the
Knowledge of the Company, any other fiduciary of such Employee
Benefit Plan has engaged in any transaction or acted or failed
to act in a manner that violates the fiduciary requirements of
ERISA or any other applicable Law; (vi) no transaction or
event has occurred or is threatened or about to occur (including
any of the transactions contemplated in or by this Agreement)
that constitutes or could constitute a prohibited transaction
under Section 406 or 407 of ERISA or under
Section 4975 of the Code for which an exemption is not
available; and (vii) neither the Company nor any Company
Subsidiary has incurred, and there exists no condition or set of
circumstances in connection with which the Company, any Company
Subsidiary, the Surviving Corporation or Parent could incur,
directly or indirectly, any material liability or expense
(except for routine contributions and benefit payments) under
ERISA, the Code or any other applicable Law, or pursuant to any
indemnification or similar agreement, with respect to such
Employee Benefit Plan.
(d) Except as set forth in Section 3.13(d) of
the Company Disclosure Schedule, each Employee Benefit Plan that
is intended to be qualified under Sectio 401(a) of the Code is
so qualified and its related trust and/or group annuity contract
is exempt from taxation under Section 501(a) of the Code.
Each such Employee Benefit Plan (i) is the subject of an
unrevoked favorable determination letter from the IRS with
respect to such Employee Benefit Plan’s qualified status
under the Code, as amended by that legislation commonly referred
to as “GUST” and “EGTRRA,” and all
subsequent legislation, or (ii) has remaining a period of
time under the Code or applicable Treasury regulations or IRS
pronouncements in which to request, and make any amendments
necessary to obtain, such a letter from the IRS. Except as set
forth in Section 3.13(d) of the Company Disclosure
Schedule, nothing has occurred, or is reasonably expected by the
Company or any Company Subsidiary to occur, that could adversely
affect the qualification or exemption of any such Employee
Benefit Plan or its related trust or group annuity contract. No
such Employee Benefit Plan is a “top-heavy plan,” as
defined in Section 416 of the Code.
(e) Except as set forth in Section 3.13(e) of
the Company Disclosure Schedule, all contributions, premiums and
other payments due or required to be paid to (or with respect
to) each Employee Benefit Plan have been timely paid, or, if not
yet due, have been accrued as a liability on the balance sheet
most recently filed with the SEC prior to the date of this
Agreement. All income taxes and wage taxes that are
required by law to be withheld from benefits derived under the
Employee Benefit Plans have been properly withheld and remitted
to the proper depository.
(f) Except with respect to one another, neither the Company
nor any Company Subsidiary is, or has ever been, a member of
(i) a controlled group of corporations, within the meaning
of Section 414(b) of the Code, (ii) a group of trades
or businesses under common control, within the meaning of
Section 414(c) of the Code, (iii) an affiliated
service group, within the meaning of Section 414(m) of the
Code, or (iv) any other group of Persons treated as a
single employer under Section 414(o) of the Code.
(g) Neither the Company nor any Company Subsidiary
sponsors, maintains or contributes to, or has ever sponsored,
maintained or contributed to (or been obligated to sponsor,
maintain or contribute to), (i) a multiemployer plan, as
defined in Section 3(37) or 4001(a)(3) of ERISA,
(ii) a multiple employer plan within the meaning of
Section 4063 or 4064 of ERISA or Section 413 of the
Code, (iii) an employee benefit plan that is subject to
Section 302 of ERISA, Title IV of ERISA or
Section 412 of the Code, or (iv) a “multiple
employer welfare arrangement,” as defined in
Section 3(40) of ERISA.
(h) None of the Company, any Company Subsidiary or any
Employee Benefit Plan provides or has any obligation to provide
(or contribute toward the cost of) post-employment or
post-termination benefits of any kind, including, without
limitation, death and medical benefits, with respect to any
current or former officer, employee, agent, director or
independent contractor of the Company or any Company Subsidiary,
other than (i) continuation coverage mandated by
Sections 601 through 608 of ERISA and Section 4980B(f)
of the Code or other applicable Law that is paid for solely by
the relevant individual, (ii) retirement benefits under any
Employee Benefit Plan that is qualified under
Section 401(a) of the Code, and (iii) deferred
compensation that is accrued as a current liability on the
balance sheet most recently filed with the SEC prior to the date
of this Agreement.
(i) Except as set forth in Section 3.13(i) of
the Company Disclosure Schedule, there are no actions, suits or
claims (other than routine claims for benefits) pending or, to
the Knowledge of the Company, threatened with respect to (or
against the assets of) any Employee Benefit Plan, nor, to the
Knowledge of the Company, is there a basis for any such action,
suit or claim. Except as set forth in
Section 3.13(i) of the Company Disclosure Schedule,
no Employee Benefit Plan is currently under investigation, audit
or review, directly or indirectly, by any Governmental Entity,
and, to the Knowledge of the Company, no such action is
contemplated or under consideration by any Governmental Entity.
(j) Except as set forth in Section 3.13(j) of
the Company Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement (either alone or
upon the occurrence of any additional or subsequent event(s))
will (i) entitle any individual to severance pay,
unemployment compensation or any other payment from the Company,
any Company Subsidiary, the Surviving Corporation, Parent or any
Employee Benefit Plan, (ii) otherwise increase the amount
of compensation due to any individual or forgive indebtedness
owed by any individual, (iii) result in any benefit or
right becoming established or increased, or accelerate the time
of payment or vesting of any benefit, under any Employee Benefit
Plan, or (iv) require the Company, any Company Subsidiary,
the Surviving Corporation or Parent to transfer or set aside any
assets to fund or otherwise provide for any benefits for any
individual. Section 3.13(j) of the Company
Disclosure Schedule sets forth all payments, benefits,
acceleration provisions and other rights to which an employee,
director, consultant, or former employer, director or consultant
may become entitled upon his or her termination in connection
with or subsequent to the consummation of the transactions
contemplated by this Agreement.
(k) No “leased employee,” as defined in
Section 414(n) of the Code, performs, or has ever
performed, services for the Company or any Company Subsidiary.
C:
3.14. No Excess Parachute
Payments.
No amount required to be paid (whether in cash or property or
the vesting of property) in connection with any of the
transactions contemplated by this Agreement to any employee,
officer or director of the Company or any of its affiliates who
is a “disqualified individual” (as such term is
defined in proposed Treasury
Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other
compensation arrangement or Employee Benefit Plan currently in
effect or in effect as of the Closing Date is reasonably
expected to be characterized as an “excess parachute
payment” (as such term is defined in
Section 280G(b)(1) of the Code).
C:
3.15. Employees.
(a) Section 3.15(a) of the Company Disclosure
Schedule sets forth (i) all Company and Company Subsidiary
employees, as well as independent contractors and leased
employees, as of the date hereof, including their respective
name, job title or function, and location, as well as a true,
correct and complete listing of the current salary or wage,
incentive pay and bonuses, accrued vacation, and the current
status (as to leave or disability pay status, leave eligibility
status, full time or part time, exempt or nonexempt, temporary
or permanent status) of all Company and Company Subsidiary
employees; (ii) the names of all former officers of the
Company or of any Company Subsidiary whose employment with the
Company or such Company Subsidiary has terminated either
voluntarily or involuntarily during the preceding 12-month
period; and (iii) the names of the current officers (with
all positions and titles indicated) and directors of the Company
and of each Company Subsidiary. All current and former
employees, independent contractors and leased employees have
been properly classified as such by the Company or the CompanySubsidiaries.
(b) The Company and the CompanySubsidiaries have complied
in all material respects with all Laws relating to the
employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, workers’ compensation,
unemployment compensation, collective bargaining and the payment
of social security and other taxes.
(c) Except as set forth in Section 3.15(c) of
the Company Disclosure Schedule, neither the Company nor any of
the CompanySubsidiaries has labor relations problems or
employment-related complaints or charges pending or, to the
Knowledge of the Company, threatened or reasonably expected to
arise against the Company or the Subsidiaries with the Equal
Employment Opportunity Commission, Department of Labor, or any
other comparable state or local agency and the Company’s
and Subsidiaries’ labor relations are satisfactory.
(d) There are no strikes, concerted slowdowns, concerted
work stoppages, lockouts or, to the Knowledge of the Company,
any threats thereof, by or with respect to any employees of the
Company or the CompanySubsidiaries.
(e) There are no workers’ compensation claims pending
against the Company or the CompanySubsidiaries nor, to the
Knowledge of the Company, are there any facts that would give
rise to such a claim or claims not covered by workers’
compensation insurance.
(f) To the Knowledge of the Company, no employee,
independent contractor or leased employee of the Company or the
Company Subsidiaries is subject to any secrecy or noncompetition
agreement or any other agreement or restriction of any kind that
would impede the ability of such employee to carry out fully the
activities currently performed by such employee in furtherance
of the business of the Company or the CompanySubsidiaries.
C:
3.16. Property and
Leases.
(a) The Company and the CompanySubsidiaries have
sufficient title or leasehold interests to all their tangible
properties and assets to conduct their respective businesses as
currently conducted. Neither the Company nor any Company
Subsidiary owns any real property.
(b) Section 3.16(b) of the Company Disclosure
Schedule lists all leases for real or material personal property
to which the Company or any Company Subsidiary is a party and
includes the termination date for such leases and the amount of
annual payments under the leases. All leases of real property
leased for the use or benefit of the Company or any Company
Subsidiary to which the Company or any Company Subsidiary is a
party, and all amendments and modifications thereto are in full
force and effect, and there exists no material default under any
such lease by the Company or any Company Subsidiary, nor any
event which with notice or lapse of time or both would
constitute a default thereunder by the Company or
any Company Subsidiary, which would permit any such lease to be
terminated by the other party thereto. No consent, waiver,
approval or authorization is required under any lease for real
or material personal property to which the Company or any
Company subsidiary is a party as a result of the execution of
this Agreement or the consummation of the transactions
contemplated hereby.
C:
3.17. Intellectual Property
Rights.
(a) Section 3.17(a) of the Company Disclosure
Schedule lists all Company Intellectual Property that is
registered with U.S. Patent and Trademark Office or a
corresponding foreign governmental or public authority and that:
(i) is owned by, licensed to or otherwise controlled by the
Company and the CompanySubsidiaries; or (ii) is used in,
developed for use in, or necessary to the conduct of the
business of the Company and the CompanySubsidiaries as it is
currently conducted or as it is contemplated to be conducted.
Section 3.17(a) of the Company Disclosure Schedule
also lists all Company Intellectual Property that has been
licensed to or from third parties or the public (in the case of
open source software). The Company has delivered or made
available to the Parent complete and accurate copies of
correspondence, litigation documents, legal opinions,
agreements, file histories and office actions relating to the
patents and patent application listed on
Section 3.17(a) of the Company Disclosure Schedule.
Each item of Company Intellectual Property owned or used or
contemplated to be used by the Company or the CompanySubsidiaries immediately prior to the Effective Time hereunder
shall be owned or available for use by the Parent or its
subsidiaries on identical terms and conditions immediately after
the Effective Time.
(b) The Company and the CompanySubsidiaries own, free and
clear of any Encumbrance, other than pursuant to the license
agreements or other contracts to which the Company is a party,
and possess all right, title and interest, or hold a valid
license, in and to all Company Intellectual Property, and have
taken all reasonable action to protect the Company Intellectual
Property. To the Knowledge of the Company, all patents included
in the Company Intellectual Property are valid and enforceable.
To the Knowledge of the Company, the Company Intellectual
Property owned or licensed by the Company is sufficient for the
conduct of the business of the Company and the CompanySubsidiaries as it is currently conducted and as it is currently
contemplated to be conducted. There are no royalties, fees,
honoraria or other payments payable by the Company or any of the
Company Subsidiaries to any Person by reason of the ownership,
development, modification, use, license, sublicense, sale,
distribution or other disposition of the Company Intellectual
Property other than as set forth in Section 3.17(b)
of the Company Disclosure Schedule. The Company and the CompanySubsidiaries have taken all reasonable security measures to
protect the secrecy, confidentiality and value of the Company
Intellectual Property.
(c) Section 3.17(c) of the Company Disclosure
Schedule lists the Internet domain names included in the Company
Intellectual Property. The Company or one of the CompanySubsidiaries is the registrant and sole legal and beneficial
owner of the Internet domain names included in the Company
Intellectual Property, free and clear of any Encumbrance. The
Company or one of the CompanySubsidiaries is the registered
owner of the trademarks underlying each of the domain names
included in the Company Intellectual Property. The Company is
not aware of any pending or threatened actions, suits, claims,
litigation or proceedings relating to the domain names included
in the Company Intellectual Property. The Company has operated
the websites identified in Section 3.17(c) of the
Company Disclosure Schedule.
(d) Except as set forth in Section 3.17(d) of
the Company Disclosure Schedule, all personnel, including
employees, agents, consultants and contractors, who have
contributed to or participated in the conception or development,
or both, of the Company Intellectual Property on behalf of the
Company or any of the CompanySubsidiaries and all officers and
technical employees of the Company or the CompanySubsidiaries
either (i) have been a party to “work-for-hire”
arrangements or agreements with the Company or one or more of
the CompanySubsidiaries in accordance with applicable Law that
has accorded the Company or the CompanySubsidiaries effective
and exclusive ownership of all Intellectual Property thereby
arising, or (ii) have executed appropriate instruments of
assignment in favor of the Company or one or more the CompanySubsidiaries as assignee that have conveyed to the Company or
one or more of the CompanySubsidiaries effective and exclusive
ownership of all Intellectual Property arising thereby.
(e) To the Knowledge of the Company, the use of the Company
Intellectual Property in the conduct of the Company’s and
the CompanySubsidiaries’ businesses has not infringed,
misappropriated or conflicted with and does not and will not
infringe, misappropriate or conflict with any Intellectual
Property right of any other Person, nor has the Company or any
Company Subsidiary received any notice (written or oral) of any
infringement, misappropriation or violation by the Company or
any Company Subsidiary of any Intellectual Property right of any
third party. Except in connection with litigation initiated by
the Company to enforce its rights in the Company Intellectual
Property disclosed in Section 3.17(e) of the Company
Disclosure Schedule, no claim (written or oral) by any Person
contesting the validity of any Company Intellectual Property has
been made, is currently outstanding or, to the Knowledge of the
Company, is threatened. To the Knowledge of the Company, no
Person is infringing any Intellectual Property right of the
Company or any Company Subsidiary.
(f) For purposes of this Section 3.17, the term
“Knowledge” shall not include knowledge that
could have been possessed by the Company if it had performed a
right to use, clearance or freedom to operate search concerning
the Intellectual Property rights of the Company, any Company
Subsidiary or any other Person, unless the Company otherwise
possesses such Knowledge.
C:
3.18. Taxes.
(a) The Company and each Company Subsidiary (i) have
properly prepared and timely filed all income and similar Tax
Returns and all other material Tax Returns required to be filed
by or with respect to the Company and each Company Subsidiary
(taking into account any extension of time to file);
(ii) paid or accrued to the extent required by GAAP in the
financial statement included in the Company SEC Reports (other
than a reserve for deferred taxes established to reflect timing
differences between book and taxable income pursuant to
Statement of Financial Accounting Standards No. 109) all
Taxes (whether or not shown to be due on such Tax Returns); and
(iii) paid or accrued in the financial statement included
in the Company SEC Reports all Taxes for which a notice of
assessment or collection has been received by the Company or any
Company Subsidiary (other than those being contested or which
the Company intends to contest in good faith by appropriate
proceedings). All such Tax Returns are true, correct and
complete in all material respects and have been prepared in
accordance with applicable Law in all material respects. There
are no Encumbrances for Taxes (other than Taxes not yet due and
payable) on any of the assets of the Company or any of its
subsidiaries.
(b) The Company and each Company Subsidiary have withheld
or collected and paid over to appropriate Governmental Entities
(or are properly holding for such payment) all Taxes required by
Law to be withheld or collected by them in connection with
amounts paid or owing to any Person.
(c) Except as set forth in Section 3.18(c) of
the Company Disclosure Schedule, no dispute or claim concerning
any Tax liability of the Company or any Company Subsidiary has
been proposed or claimed in writing or, to the Knowledge of the
Company, threatened by any authority, including a claim that the
Company or any Company Subsidiary is subject to Tax in a
jurisdiction where it does not currently file a Tax Return. The
Company has made available to the Parent correct and complete
copies of all income Tax Returns and material non-income Tax
Returns for Taxable years for which the applicable statute of
limitations has not expired, and all examination reports, and
statements of deficiencies, if any, assessed against or agreed
to by the Company and any Company Subsidiary.
(d) Neither the Company nor any of the CompanySubsidiaries
has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment
or deficiency, which is currently effective. No power of
attorney that currently is in effect has been granted by the
Company or any of the CompanySubsidiaries with respect to any
Tax matter.
(e) Neither the Company nor any of the CompanySubsidiaries
has ever been a United States real property holding corporation
within the meaning of Section 897(c)(1)(A)(ii) of the Code.
Neither the Company nor any of the CompanySubsidiaries is a
party to any Tax allocation, indemnity, sharing or
similar agreement (excluding any lease or similar agreement to
the extent it provides for the payment of property taxes by the
lessee or similar user of property) that will survive the
Closing. Neither the Company nor any of the CompanySubsidiaries
(i) has been a member of any affiliated, consolidated,
combined, unitary or similar group (other than the group, the
common parent of which is the Company) that filed or was
required to file a consolidated, combined, unitary or similar
Tax Return, or (ii) has or will have any liability for the
Taxes (excluding any contractual obligation to pay property
taxes as a lessee or similar user of property) of any Person
(other than the Company and any of the CompanySubsidiaries that
is currently a member of the Company’s affiliated group
filing a consolidated federal income Tax Return) under Treas.
Reg. Section 1.1502-6 (or any similar provision of any
other Law), as a transferee or successor, by Contract,
assumption, transferee liability, operation of Law or otherwise.
(f) As of the date of the most recent financial statements
included in the Company SEC Documents, the unpaid Taxes of the
Company and the CompanySubsidiaries did not exceed the
liability for Taxes (other than any allowance for deferred Taxes
established to reflect timing differences between book and
taxable income pursuant to Statement of Financial Accounting
Standards No. 109) set forth on the face of such financial
statements, and neither the Company nor any of the CompanySubsidiaries has any liability for unpaid Taxes accruing after
the date of such financial statements, except for Taxes arising
in the ordinary course of business subsequent thereto.
(g) The Company and each of the CompanySubsidiaries has
disclosed on its Tax Returns any Tax reporting position taken in
any Tax Return which reasonably could result in the imposition
of penalties under Section 6662 of the Code or any
comparable provisions of state, local or foreign Law.
(h) Neither the Company nor any of the CompanySubsidiaries
has consummated, has participated in, or is currently
participating in any transaction which was or is a “Tax
shelter” transaction as defined in Sections 6662, 6011
or 6111 (before amendment by the American Jobs Creation Act of
2004) of the Code or the treasury regulations promulgated
thereunder or which was or is a “Listed Transaction”
or a “Reportable Transaction” as those terms are
defined in the Code and the treasury regulations thereunder.
(i) Neither the Company nor any of the CompanySubsidiaries
is required to include in income, or exclude any item of
deduction from, Taxable income for any Taxable period ending
after the Closing Date by reason of any (i) change in
accounting method for a Taxable period ending on or prior to the
Closing Date (nor does the Company or any of the CompanySubsidiaries have any Knowledge that the Internal Revenue
Service (or other Governmental Entity) has proposed or is
considering proposing, any such change), (ii) “closing
agreement” described in Section 7121 of the Code (or
any similar provision of any other Law), (iii) installment
sale or open transaction disposition made on or prior to the
Closing, or (iv) prepaid amount received on or prior to the
Closing .
(j) Neither the Company nor any of the CompanySubsidiaries
has made any payment or payments, is obligated to make any
payment or payments, or is a party to any Contract (or
participating employer in any Company Plans) that, individually
or collectively, could give rise to the payment of any amount
(whether in cash or property, including Company Common Stock) as
a result of the Merger that may not be deductible pursuant to
the terms of Section 162(m) or 280G of the Code.
(k) Except as set forth in Section 3.18(k) of
the Company Disclosure Schedule, neither the Company nor any of
the CompanySubsidiaries is involved in, subject to, or a party
to any joint venture, partnership, limited liability company
agreement or other arrangement that is treated as a
“partnership” for federal, state, local or foreign
income Tax purposes. Neither the Company nor any Company
Subsidiary owns an entity that is treated as “disregarded
as an entity separate from its owner” pursuant to
Section 301.7701-3 of the treasury regulations.
(l) Neither the Company nor any of the CompanySubsidiaries
has been either a “distributing corporation” or a
“controlled corporation” (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355
of the Code (i) in the two years prior to the date of this
Agreement or (ii) in a distribution that could otherwise
constitute part of a “plan”
or “series of related transactions” (within the
meaning of Section 355(e) of the Code) in conjunction with
the Merger.
(m) Except as set forth in Section 3.18(m) of
the Company Disclosure Schedule, there is currently no
limitation on the utilization of the net operating losses,
built-in losses, capital losses, Tax credits or other similar
items of the Company under (i) Section 382 of the
Code, (ii) Section 383 of the Code,
(iii) Section 384 of the Code, and
(iv) Section 1502 of the Code and treasury regulations
promulgated thereunder. Neither the Company nor any of the
Company Subsidiaries is or has been a party to any transaction
where a deferred intercompany gain was generated under
Section 1502 of the Code and the treasury regulations
promulgated thereunder.
(a) Except as otherwise disclosed in
Sections 3.13(a), 3.16 or 3.19(a) of the
Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is a party to or subject to:
(i) any Contract pursuant to which the Company or any
Company Subsidiary has granted to, or obtained from, a third
party a license to any Company Intellectual Property;
(ii) any Contract pursuant to which any agent, sales
representative, distributor or other third party markets,
licenses or sells any Company Product or any Contract that
provides for an exclusive relationship with respect to any
Company Product;
(iii) any union Contract, or any employment, consulting,
severance, termination, or indemnification Contract providing
for future payments, written or oral, with any current or former
officer or director or any other Contract with an officer or
director;
(iv) any joint venture Contract or similar arrangement or
any other agreement not in the ordinary course of business;
(v) any Contract with a stockholder or other Contract
relating to any equity ownership or profit interest with the
Company, the CompanySubsidiaries or otherwise;
(vi) any Contract involving or reasonably expected to
involve revenues or costs (including capital expenditures) to
the Company or otherwise involve payments or investment by the
Company in excess of $100,000 which has not been terminated or
performed in its entirety by the Company or any Company
Subsidiary and not renewed;
(vii) any Contract for the disposition or acquisition of
any property or assets in excess of $10,000 and not made in the
ordinary course of business;
(viii) any Contract of the Company or any Company
Subsidiary relating to the borrowing of money or an extension of
credit;
(ix) any Contract that provides for an express
non-competition covenant with any person or in any geographic
area and which limits the ability of the Company to compete in
its current business lines or otherwise restricts the Company or
the CompanySubsidiaries from engaging in any line of business
or to market or sell any products or services; or
(x) any other Contract that is material to the Company or
any Company Subsidiary.
(b) The agreements listed in Sections 3.13(a), 3.16 and
3.19(a) of the Company Disclosure Schedule are referred to
as the “Company Material Agreements.” All
Company Material Agreements are valid and binding agreements of
the Company or a Company Subsidiary and are in full force and
effect and shall remain in full force and effect immediately
following consummation of the transactions contemplated by this
Agreement, subject to rules of Law governing bankruptcy,
specific performance, injunctive relief or other equitable
remedies. Neither the Company nor any Company Subsidiary nor, to
the Knowledge of the Company, any other party thereto, is in
default in any material respect under the terms of any Company
Material Agreement.
Except as set forth in Section 3.20 of the Company
Disclosure Schedule, neither the Company nor any Company
Subsidiary has received any information from any customer that
accounted for more than 5% of the revenues of the Company and
its Subsidiaries during the last full fiscal year to the effect
that such customer intends to materially decrease the amount of
business it does with the businesses of the Company or any
Company Subsidiary either prior to or following the Merger.
Section 3.20 of the Company Disclosure Schedule
lists the top twenty (20) customers of Company Products as
measured by consolidated sales revenue earned by the Company for
the twelve month period ended December 31, 2004.
C:
3.21. Environmental
Matters.
Except as set forth in Section 3.21 of the Company
Disclosure Schedule, the Company and the CompanySubsidiaries:
(a) are in compliance in all material respects with all
applicable Environmental Laws (which compliance includes, but is
not limited to, the possession by the Company and the CompanySubsidiaries of all Permits required under applicable
Environmental Laws, and compliance with the terms and conditions
thereof); (b) have not received any communication (written
or, to the Knowledge of the Company, oral) from a Governmental
Entity or third party alleging that the Company is not in
compliance with, or has any liability under, any Environmental
Law; (c) have not owned or operated any property that is
contaminated with any Hazardous Material which may be expected
to require remediation under any Environmental Law; (d) are
not subject to liability for any Environmental Release, disposal
or contamination (whether on-site or, to the Knowledge of the
Company, off-site) of any Hazardous Material; (e) have not
received any claims (written or, to the Knowledge of the
Company, oral), and has no Knowledge of any potential claims,
that the Company or any Company Subsidiary may be liable under
any Environmental Law; and (f) are not subject to any other
circumstances in connection with any Environmental Law that
could reasonably be expected to have a Company Material Adverse
Effect. The Company’s accrual in the financial statements
included in the Company SEC Reports plus insurance proceeds
payable for such matter under insurance coverage currently in
effect are reasonably sufficient to pay all costs and expenses
arising out of or related to the matters disclosed in
Section 3.21 of the Company Disclosure Schedule.
C:
3.22. Interested Party
Transactions.
Since January 1, 2002, except as described in the Company
SEC Reports or as set forth in Section 3.22 of the
Company Disclosure Schedule: (a) no event has occurred that
would be required to be reported by the Company pursuant to
Item 404 of Regulation S-K promulgated by the SEC; and
(b) there are no existing contracts, agreements, business
dealings, arrangements or other understandings between the
Company or any Company Subsidiary and any Related Party. There
are no assets of any Related Party that are used in or necessary
to the conduct of the business of the Company or any Company
Subsidiary.
C:
3.23. Change in
Control.
Except as set forth in Section 3.23 of the Company
Disclosure Schedule, the execution and delivery of this
Agreement and the Agreements to Facilitate Merger and the
consummation of the transactions contemplated hereby and thereby
do not and shall not, either alone or in combination with some
other event (such as termination of employment) (a) result
in any payment (including severance, unemployment compensation,
Tax gross-up, bonus or otherwise) becoming due to any current or
former director, employee or independent contractor of the
Company or any of its subsidiaries, from the Company or any of
its subsidiaries under any Company Stock Plan, any Employee
Benefit Plan, agreement or otherwise, (b) materially
increase any benefits otherwise payable under any Company Stock
Plan, any Employee Benefit Plan, agreement or otherwise or
(c) result in the acceleration of the time of payment,
exercise or vesting of any such benefits.
The Company has received an opinion from Wachovia Securities,
financial advisor to the Company (such opinion to be promptly
confirmed in writing and dated as of the date hereof), to the
effect that, subject to the qualifications and limitations
stated therein, the merger consideration to be received by the
holders of shares of Company Common Stock pursuant to this
Agreement is fair to such holders from a financial point of
view. A copy of such written opinion shall be delivered to the
Parent promptly following receipt of such written opinion from
Wachovia Securities. As of the time of execution of this
Agreement, such opinion has not been withdrawn, revoked or
modified.
C:
3.25. No Finders.
Except for the fees payable to Wachovia Securities as set forth
in Section 3.25 of the Company Disclosure Schedule,
the Company has not incurred any brokers’, finders’ or
any similar fee in connection with the transactions contemplated
by this Agreement.
C:
3.26. Disclosure.
No representation or warranty by the Company in this Agreement
and no statement contained in the Company Disclosure Schedule,
contains any untrue statement of a material fact or omits any
material fact necessary to make the statements herein or therein
not misleading when taken together in light of the circumstances
in which they were made.
C:
3.27. Tax Treatment.
Neither the Company nor any of its Affiliates has taken or
agreed to take any action, or is aware of any fact or
circumstances, that would prevent the Merger from qualifying as
a reorganization within the meaning of Section 368 of the
Code.
C:
3.28. Rights Plan.
That certain Stockholder Rights Plan, dated January 21,1998, by and between the Company and American Stock
Transfer & Trust Company, as Rights Agent (the
“Rights Plan”) has been amended (a copy of
which amendment has been provided to Parent prior to the date
hereof), such that the execution of this Agreement and the
Agreement to Facilitate Merger and the consummation of the
transactions contemplated hereby and thereby, do not and will
not on the date hereof or as a result of the passage of time
(i) result in any Person being deemed to have become an
Acquiring Person (as defined in the Rights Plan),
(ii) result in the ability of any Person to exercise any
Rights (as defined in the Rights Plan) under the Rights Plan,
(iii) enable or require the Rights to separate from the
shares of Company Common Stock to which they are attached or to
be triggered or become exercisable, or (iv) enable the
Company to exchange any Rights for shares of Company Common
Stock pursuant to the Rights Plan. No Distribution Date or
Triggering Event (as such terms are defined in the Rights Plan)
or similar event has occurred or will occur by reason of
(a) the adoption, approval, execution or delivery of this
Agreement and the Agreements to Facilitate Merger, (b) the
public announcement of such adoption, approval, execution or
delivery, or (c) the consummation of the Merger or any of
the other transactions contemplated by this Agreement.
C:
Article 4.
C:
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND MERGER SUB
As a material inducement to the Company to enter into this
Agreement, with the understanding that the Company shall be
relying thereon in consummating the transactions contemplated
hereunder, the Parent and Merger Sub hereby represent and
warrant to the Company that:
C:
4.1. Organization and
Qualification.
Each of the Parent and Merger Sub is a corporation duly
organized and validly existing under the laws of the state of
its incorporation and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry
on its business as now being conducted. Each of the Parent and
Merger
Sub is duly qualified and in good standing to do business in
each jurisdiction in which the property owned, leased, or
operated by it or the nature of the business conducted by it
(a) makes such qualification necessary and (b) where
the failure to qualify could reasonably be expected to have a
Parent Material Adverse Effect.
C:
4.2. Capitalization.
As of February 28, 2005, the authorized capital stock of
the Parent consists of (a) 150,000,000 shares of
Parent Common Stock, of which there were 38,900,538 shares
issued and outstanding, and (b) 40,000,000 shares of
preferred stock, no par value, of which there were no shares
issued and outstanding. The authorized capital stock of Merger
Sub consists of 1,000 shares of Merger Sub Common Stock,
100 of which are issued and outstanding and owned by the Parent.
All issued and outstanding shares of Parent Common Stock and
Merger Sub Common Stock are, and the shares of Parent Common
Stock to be issued and delivered in the Merger pursuant to
Article 2 shall be, at the time of issuance and delivery,
duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. As of February 28, 2005, the
Parent has no more than 7,800,000 shares of the Parent
Common Stock reserved for future issuance pursuant to employee
or director benefit plans (including those subject to
outstanding options). Except as set forth above or in the Parent
SEC Reports, there are no preemptive or other outstanding
rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that
obligate the Parent to issue or sell any shares of capital stock
or other securities of the Parent or any securities or
obligations convertible or exchangeable into or exercisable for
or giving any Person a right to subscribe for or acquire, any
securities of the Parent, and no securities or obligations
evidencing such rights are authorized, issued or outstanding.
The Parent does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right
to vote (or convertible into or exercisable for securities
having the right to vote) with the stockholders of the Parent on
any matter.
C:
4.3. Parent SEC Reports;
Financial Statements.
(a) The Parent has filed with the SEC, at or prior to the
time due, and has heretofore made available to the Company true
and complete copies of, all forms, reports, schedules,
registration statements, definitive proxy statements and other
documents (together with all information incorporated therein by
reference, the “Parent SEC Reports”) it filed
or was required to file with the SEC since January 1, 2002.
As of their respective dates, the Parent SEC Reports complied in
all material respects with all applicable requirements of the
Exchange Act or the Securities Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to the
Parent SEC Reports. As of their respective dates and as of the
date any information from the Parent SEC Reports has been
incorporated by reference, the Parent SEC Reports did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Parent has provided to the Company copies of all comment letters
or other correspondence received by the Parent from the Staff of
the SEC since January 1, 2002 with respect to any Parent
SEC Report or otherwise and all responses to such comment
letters or correspondence by or on behalf of the Parent.
(b) To the extent required in connection with the Parent
SEC Reports, the Parent’s Chief Executive Officer and Chief
Financial Officer have signed, and the Parent has furnished to
the SEC, all necessary certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.
Such certifications contain no qualifications or exceptions to
the matters certified therein and have not been modified or
withdrawn, and neither the Parent nor any of its officers has
received notice from any Governmental Entity questioning or
challenging the accuracy, completeness, form or manner of filing
or submission of such certifications nor to the Parent’s
Knowledge is any such notice or action threatened.
(c) Each of the financial statements of the Parent
(including the related notes) included or incorporated by
reference in the Parent SEC Reports (including any similar
documents filed after the date of this Agreement) comply as to
form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance
with GAAP (except, in the case of unaudited statements, as
permitted by Form 10-Q or Regulation S-X of the SEC)
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Parent and
its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject to normal year-end adjustments in
the case of any unaudited interim financial statements).
(d) The Parent has not been notified by its independent
auditors or by the staff of the SEC that such auditors or staff
of the SEC, as the case may be, are of the view that any
financial statements included in any registration statement
filed by the Parent under the Securities Act or any periodic or
current report filed under the Exchange Act should be restated,
or that the Parent should modify its accounting in future
periods in a manner that could reasonably be expected to have a
Parent Material Adverse Effect.
C:
4.4. Compliance with
Laws.
All activities of the Parent and each subsidiary of the Parent
have been, and are currently being, conducted in all material
respects in compliance with all applicable Laws and Orders. To
the Knowledge of the Parent, (a) no investigation or review
by any Governmental Entity with respect to the Parent is pending
or threatened or has been undertaken within the past five
(5) years and (b) no Governmental Entity has indicated
an intention to conduct the same, in each case that could
reasonably be expected to have a Parent Material Adverse Effect.
C:
4.5. Registration
Statement.
The Registration Statement and any amendments or supplements
thereto will comply in all material respects with the Securities
Act, and none of the information relating to the Parent or its
Affiliates included or incorporated therein or in any amendments
or supplements thereto, or any schedules required to be filed
with the SEC in connection therewith, will, at the time the
Registration Statement becomes effective, at the time of the
Company Stockholders Meeting or at the Effective Time, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or
omit to state any material fact required necessary to correct
any statement made in any earlier communication with respect to
any proxy or approval for the Merger in connection with which
the Proxy Statement/ Prospectus shall be mailed, which has
become false or misleading; provided, however, that no
representation or warranty is made by the Parent with respect to
information supplied by the Company or any Affiliate of the
Company specifically for inclusion in the Registration Statement.
C:
4.6. Authorization and
Enforceability.
Each of the Parent and Merger Sub 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 by the Parent and Merger Sub and
the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Boards of
Directors of the Parent and Merger Sub and by the Parent as the
sole stockholder of Merger Sub, and no other corporate
proceedings on the part of the Parent and Merger Sub are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of the Parent and
Merger Sub and constitutes the valid and binding obligation of
the Parent and Merger Sub, enforceable against each of them in
accordance with its terms, subject to rules of Law governing
bankruptcy, specific performance, injunctive relief, or other
equitable remedies.
C:
4.7. Absence of Certain
Changes or Events.
Except as contemplated hereby or as disclosed in the Parent SEC
Reports, since January 1, 2005, the Parent and its
subsidiaries have conducted their business in the ordinary
course of business and consistent with past practice and there
has not been any change, effect, event, occurrence, state of
facts or
development that, individually or in the aggregate, has had or
could reasonably be expected to have a Parent Material Adverse
Effect.
C:
4.8. Consents and
Approvals.
The execution and delivery of this Agreement by the Parent and
Merger Sub and the consummation of the transactions contemplated
hereby will not: (a) violate any provision of the
Certificate of Incorporation, Bylaws or other governing document
of the Parent and Merger Sub; (b) violate any Law or Order
by which the Parent or Merger Sub or any of their respective
properties or assets may be bound; or (c) result in any
violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default under, result in the
loss of any material benefit under, or give rise to any right of
termination, cancellation, increased payments, or acceleration
under, or result in the creation of any Encumbrance on any of
the properties or assets of the Parent or Merger Sub under, any
of the terms, conditions, or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, authorization,
agreement, or other instrument or obligation to which the Parent
or Merger Sub is a party, or by which it or any of its
properties or assets may be bound, except where such violation
could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. No filing with or
permit, consent, or approval of any Governmental Entity is
required by the Parent or Merger Sub in connection with the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, except for (i) any
applicable requirements of the Securities Act or the Exchange
Act, (ii) the filing and recordation of the Certificate of
Merger as required by Delaware Law; and (iii) applicable
notices to Nasdaq.
C:
4.9. Ownership and Interim
Operations of Merger Sub.
Merger Sub is a direct, wholly owned subsidiary of the Parent.
Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has not engaged
in any business activities or conducted any operations other
than in connection with the performance of its obligations
hereunder.
C:
4.10. Litigation.
There are no suits, actions or proceedings pending or, to the
Knowledge of the Parent or Merger Sub, threatened against or
affecting the Parent or any of its subsidiaries that could
reasonably be expected to prevent, hinder or delay the timely
completion of the transaction contemplated by this Agreement or
that could be reasonably expected to have a Parent Material
Adverse Effect. Neither the Parent nor any of its subsidiaries
is subject to any outstanding Order that could reasonably be
expected to prevent, hinder or delay the timely completion of
the transaction contemplated by this Agreement.
C:
4.11. No Finders.
The Parent has not incurred any brokers’, finders’ or
any similar fee in connection with the transactions contemplated
by this Agreement.
C:
4.12. Tax Treatment.
Neither the Parent nor any of its Affiliates has taken or agreed
to take any action, or is aware of any fact or circumstances,
that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368 of the
Code.
C:
4.13. Capital
Resources.
The Parent has, and will have, sufficient cash or access to cash
to pay the aggregate Per Share Cash Consideration and cash in
lieu of fractional shares at such time and in such manner as
contemplated by this Agreement.
Except as contemplated by this Agreement or to the extent that
the Parent otherwise consents in writing, which consent shall
not be unreasonably withheld, during the period from the date of
this Agreement to the Effective Time, the Company and each
Company Subsidiary shall conduct their respective operations
according to their ordinary and usual course of business and
consistent with past practice, and the Company and each Company
Subsidiary shall use commercially reasonable efforts to preserve
intact in all material respects their respective business
organizations, to maintain in all material respects their
present and planned business, to keep available in all material
respects the services of their respective officers and employees
and to maintain in all material respects satisfactory
relationships with licensors, licensees, suppliers, contractors,
distributors, consultants, customers, and others having business
relationships with them. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in or
contemplated by this Agreement or as set forth in
Section 5.1 of the Company Disclosure Schedule,
prior to the Effective Time, neither the Company nor any Company
Subsidiary shall, without the prior written consent of the
Parent:
(a) amend or otherwise change their Certificate of
Incorporation or Bylaws or other organizational documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of, (i) any shares of capital stock of any
class of the Company or any Company Subsidiary, or any options,
warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest),
of the Company or any Company Subsidiary (except for the
issuance of shares of Company Common Stock pursuant to the
exercise of presently outstanding Company Options) or
(ii) any assets of the Company or any Company Subsidiary,
except for sales of inventory in the ordinary course of business
and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of
its capital stock;
(e) acquire or agree to acquire (including, without
limitation, by merger, consolidation or acquisition of stock or
assets) (i) any corporation, partnership, limited liability
company or other business organization or any division thereof
or, (ii) any material amount of assets forming part of any
such business organization or division;
(f) except for trade payables incurred in the ordinary
course of business and consistent with past practice, create,
incur or assume any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any
Person, or make any loans, advances or capital contributions to,
or investments in, any other Person, or create, incur or assume
any Encumbrance on any asset;
(g) authorize, make or agree to make any capital
expenditure or expenditures in excess of $15,000 individually or
$50,000 in the aggregate;
(h) except as otherwise provided in this Agreement,
(i) increase in any manner the compensation of any of its
directors, officers, employees, or consultants, or accelerate
the payment of any such compensation; (ii) pay or
accelerate or otherwise modify the payment, vesting,
exercisability, or other feature or requirement of any bonus,
pension, retirement allowance, severance, change of control,
stock option, or other employee benefit to any such director,
officer, employee or consultant other than pursuant to its
current terms without any action by the Company; or
(iii) except as
required by or applicable Law, commit itself to any additional
or increased pension, profit-sharing, bonus, incentive, deferred
compensation, group insurance, severance, change of control,
retirement or other benefit plan, agreement, or arrangement, or
any employment or consulting agreement, with or for the benefit
of any person, or amend any of such plans or any of such
agreements in existence on the date hereof (except any amendment
required by Law or that would not materially increase benefits
under the relevant plan);
(i) alter or revise its accounting principles, procedures,
methods or practices in any material respect (including, without
limitation, procedures with respect to the payment of accounts
payable and collection of accounts receivable) except as
required by applicable Law or regulation or by a change in GAAP
and concurred with by the Company’s and the Parent’s
independent public accountants;
(j) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) in an amount in excess of $50,000 in
the aggregate, other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent
with past practice, of liabilities reported in the
Company’s latest balance sheet filed with the SEC prior to
the date of this Agreement, or subsequently incurred in the
ordinary course of business and consistent in all material
respects with past practice;
(k) transfer or license to any person or entity or
otherwise extend, amend or modify in any material respect any
rights to Company Intellectual Property;
(l) modify, amend or terminate any Company Material
Agreement or waive, release or assign any material rights or
claims thereunder;
(m) enter into any development services, licensing,
distribution, sales, sales representation or similar agreement
or obligation with respect to any material Company Intellectual
Property or enter into any contract of a character required to
be disclosed by Section 3.18(a) other than such
agreements entered into in the ordinary course of business
consistent with past practices;
(n) remove or permit to be removed from any building,
facility, or real property any material equipment, fixture,
vehicle, or other personal property or parts thereof, except in
the ordinary course of business consistent with past practice;
(o) institute, settle, or compromise any claim, action,
suit, or proceeding pending or threatened by or against it, at
law or in equity or before any Governmental Entity or any
nongovernmental self-regulatory agency;
(p) file an amended Tax Return, enter into any closing
agreement, settle any Tax claim or assessment relating to the
Company or any Company Subsidiary, surrender any right to claim
a refund or credit of Taxes, consent to any extension or waiver
of the limitation period applicable to any Tax claim or
assessment relating to the Company or any Company Subsidiary, or
take any other similar action, including making any election
with respect to any Taxes, relating to the filing or any Tax
Return or the payment of any Tax, if such amendment, agreement,
settlement, surrender, consent, election or other action would
have the effect of materially increasing the Tax liability of
the Company or any Company Subsidiary or materially decreasing
any Tax attribute of the Company or any Company Subsidiary at or
after the Effective Time;
(q) take, or agree to commit to take, or fail to take any
action that would make any representation, warranty, covenant or
agreement of the Company contained herein inaccurate or breached
such that the conditions in Section 6.2(a) shall not
be satisfied at, or as of any time prior to, the Effective
Time; or
(r) enter into, or publicly announce an intention to enter
into, any agreement or consent to do any of the foregoing
actions set forth in this Section 5.1.
(a) From and after the date hereof until the Effective Time
or the termination of this Agreement pursuant to
Article 7, the Company shall not, and shall not
authorize or permit its Company Subsidiaries and their
respective officers, directors, employees, financial advisors,
counsel, representatives and agents (collectively,
“Representatives”) to, directly or indirectly,
(i) solicit, initiate, encourage or otherwise facilitate
any inquiry, offer, proposal or announcement that constitutes,
or could be reasonably expected to lead to, an Acquisition
Proposal; (ii) enter into any agreement or letter of intent
regarding, approve, endorse or recommend, an Acquisition
Proposal (except for any confidentiality agreement, to the
extent provided below); or (iii) participate or engage in
or encourage in any way negotiations or discussions concerning,
or provide any non-public information to, any Person relating
to, an Acquisition Proposal, or which may reasonably be expected
to lead to an Acquisition Proposal.
(b) Upon execution of this Agreement, the Company and its
Representatives shall, and shall cause all Company Subsidiaries
and their respective Representatives to, immediately terminate
all discussions with any Person (other than the Parent)
concerning any Acquisition Proposal, and shall request that such
Persons promptly return any confidential information furnished
by the Company in connection with any Acquisition Proposal.
Other than as contemplated in this Agreement, the Company shall
not waive any provision of its Rights Plan or of any
confidentiality, standstill or similar agreement entered into
with any Person regarding any Acquisition Proposal, and prior to
the Closing shall enforce all such agreements in accordance with
their terms.
(c) Notwithstanding the provisions of
Section 5.2(a) and subject to compliance with
Section 5.2(b), this Agreement shall not prohibit
the Company’s Board of Directors from, prior to obtaining
the Company Stockholder Approval, furnishing nonpublic
information to or entering into discussions or negotiations
with, any Person that makes an unsolicited, bona fide written
Acquisition Proposal that the Company’s Board of Directors
reasonably determines is likely to result in a Superior
Proposal, if, and only to the extent that:
(i) neither the Company nor its Representatives violated
any of the restrictions set forth in this
Section 5.2;
(ii) the Company’s Board of Directors, after
consultation with outside legal counsel and a financial advisor
of nationally recognized reputation, determines in good faith,
by resolution duly adopted, that such action is required in
order for the Company’s Board of Directors to comply with
its fiduciary duties under applicable Law;
(iii) prior to first furnishing nonpublic information to,
or first entering into discussions and negotiations with, such
Person after the date hereof, the Company (A) provides
written notice of at least three (3) business days to the
Parent to the effect that it intends to furnish information to,
or enter into discussions or negotiations with, such Person, and
naming and identifying the Person making the Acquisition
Proposal, and (B) receives from such Person an executed
confidentiality agreement with terms no less favorable to the
Company than the Confidentiality Agreement; and
(iv) the Company concurrently provides the Parent with all
non-public information to be provided to such Person that the
Parent has not previously received from the Company, the Company
keeps the Parent reasonably informed of the status and the
material terms and conditions and all other material
developments with respect to any such discussions or
negotiations, and the Company provides the Parent with copies of
all material documents regarding such discussions and
negotiations.
(d) The Company shall notify the Parent, telephonically and
in writing, as promptly as practicable (and in any event, within
24 hours) if it or any of its Representatives receives an
Acquisition Proposal or any inquiry reasonably likely to lead to
an Acquisition Proposal or if any discussions or negotiations
are sought to be initiated or continued with the Company or its
Representatives concerning an Acquisition Proposal, and such
notification shall contain, in writing, the name of the Person
involved and the material terms and conditions of such an
Acquisition Proposal.
(e) Subject to Section 5.2(f), unless and until
this Agreement has been terminated in accordance with
Article 7, the Company shall not withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to
the Parent or Merger Sub, the approval or recommendation of the
Merger as set forth in Section 5.3(a); or approve or
recommend, or propose publicly to approve or recommend, any
Acquisition Proposal.
(f) Notwithstanding the foregoing, in the event that, prior
to obtaining the Company Stockholder Approval, the
Company’s Board of Directors receives a Superior Proposal
that has not been withdrawn, the Company’s Board of
Directors may, if it determines in good faith, by resolution
duly adopted after consultation with outside legal counsel and a
financial advisor of nationally recognized reputation, that such
action is required in order for the Company’s Board of
Directors to comply with its fiduciary duties under applicable
Law, withdraw or modify the approval or recommendation of the
Merger, approve or recommend such Superior Proposal and
terminate this Agreement as permitted pursuant to the terms of
this Section 7.1(f) (and, concurrently with or
immediately after such termination, cause the Company to enter
into a definitive agreement with respect to such Superior
Proposal); provided that:
(i) the Company notifies the Parent in writing that it
intends to take such action, which notice must identify the
party making such proposal, set forth the material terms and
conditions of such proposal, and have attached to it the most
current version of any such written agreement;
(ii) Parent shall not have proposed, within three
(3) business days after receipt of such notice from the
Company, to amend this Agreement to provide for terms as
favorable as or superior to those of the Superior Proposal;
(iii) provided the Parent has submitted a proposal to amend
this Agreement as contemplated by
subparagraph (ii) above, (A) for a period of
three (3) business days after receipt of such proposal, the
Company shall have reasonably considered and discussed in good
faith all proposals submitted by the Parent and, without
limiting the foregoing, met with, and caused its financial
advisors and legal advisors to meet with, the Parent and its
advisors from time to time as reasonably requested by the Parent
to reasonably consider and discuss in good faith the
Parent’s proposals; and (B) the Company’s Board of
Directors in good faith determines, after consultation with its
financial and legal advisors, that after taking into account any
amendments to this Agreement proposed by the Parent as of the
end of such three (3) business day negotiation, the
Parent’s proposal is not at least as favorable to the
stockholders of the Company as the Superior Proposal; and
(iv) the Company did not violate the restrictions of this
Section 5.2.
Without limiting any other rights of the Parent and Merger Sub
under this Agreement in respect of any such action, any
withdrawal or modification by the Company of the approval or
recommendations of the Merger or any termination of this
Agreement shall not have any effect on the approvals of, and
other actions referred to herein for the purpose of causing
Section 203 of Delaware Law and any other takeover statute
to be inapplicable to, this Agreement and the transactions
contemplated hereby, which approvals and actions are irrevocable.
(g) Nothing contained in this Section 5.2 shall
prohibit the Company or its Board of Directors from taking and
disclosing to the Company’s stockholders a position with
respect to a tender offer by a third party pursuant to
Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act
or from taking any action or making any disclosure required by
applicable Law; provided that the content of the disclosure
complies with this Section 5.2.
(h) Any violation of the restrictions in this
Section 5.2 by a Representative shall be deemed a
breach of this Section 5.2 by the Company.
(a) The Company shall take all lawful action necessary to
(i) cause a special meeting of its stockholders (such
meeting or any adjournment thereof, the “Company
Stockholders Meeting”) to be duly called and held as
soon as practicable (and in any event within 45 days)
following the date on which the
Registration Statement becomes effective for the purpose of
voting on the approval and adoption of the agreement of merger
(within the meaning of Section 251 of Delaware Law)
contained in this Agreement and the Merger (the “Company
Stockholder Approval”), and (ii) solicit proxies
from its stockholders to obtain the Company Stockholder Approval
for such approval and adoption. Except as permitted by
Section 5.2(f), the Company’s Board of
Directors shall unanimously recommend approval and adoption of
the agreement of merger (within the meaning of Section 251
of Delaware Law) contained in this Agreement and the Merger by
the Company’s stockholders and state such recommendation in
the Proxy/ Prospectus. Unless this Agreement is previously
terminated in accordance with Article 7, the Company
shall submit this Agreement to its stockholders at the Company
Stockholders Meeting even if the Company’s Board of
Directors determines at any time after the date hereof that it
is no longer advisable or recommends that the Company
stockholders reject it (and not postpone or adjourn such meeting
or the vote by the Company’s stockholders upon this
Agreement and the Merger to another date without the
Parent’s approval). In accordance therewith, the Company
shall, with the cooperation of the Parent, prepare and file, as
soon as reasonably practicable, a Proxy Statement/ Prospectus.
The Company shall use all reasonable efforts to cause the
definitive Proxy Statement/ Prospectus to be mailed to the
stockholders of the Company, as soon as reasonably practicable
following its effectiveness, with the date of mailing as
mutually determined by the Company and the Parent.
(b) The Parent shall, with the cooperation of the Company,
prepare and file, as soon as reasonably practicable, a
registration statement under the Securities Act registering the
shares of Parent Common Stock to be issued in the Merger (the
“Registration Statement”), which Registration
Statement shall include the Proxy Statement/ Prospectus. The
Parent will use all reasonable efforts to have the Registration
Statement declared effective by the SEC as promptly thereafter
as practicable. The Parent shall also take any action required
to be taken under state blue sky or securities laws in
connection with the issuance of Parent Common Stock pursuant to
the Merger. The Company shall furnish to the Parent all
information concerning the Company and the CompanySubsidiaries
and the holders of its capital stock, and shall take such other
action and otherwise cooperate, as the Parent may reasonably
request in connection with any such action.
(c) The Parent shall notify the Company promptly of the
receipt of the comments of the SEC with respect to the
transactions contemplated hereby and of any request by the SEC
for amendments or supplements to the Registration Statement and
shall supply the Company with copies of all material
correspondence with the SEC with respect to the transactions
contemplated hereby.
(d) If at any time prior to the Effective Time, any event
should occur relating to the Company, any Company Subsidiary, or
the Company’s officers or directors that is required to be
described in an amendment or supplement to the definitive Proxy
Statement/ Prospectus or the Registration Statement, the Company
shall promptly inform the Parent. If at any time prior to the
Effective Time, any event shall occur relating to the Parent or
Merger Sub or their respective officers or directors that is
required to be described in an amendment or supplement to the
definitive Proxy Statement/ Prospectus or the Registration
Statement, the Parent shall promptly inform the Company.
Whenever any event occurs that should be described in an
amendment of, or supplement to, the definitive Proxy Statement/
Prospectus or the Registration Statement, the Company or the
Parent, as the case may be, shall, upon learning of such event,
promptly notify the other and consult and cooperate with the
other in connection with the preparation of a mutually
acceptable amendment or supplement. The parties shall promptly
file such amendment or supplement with the SEC and mail such
amendment or supplement as soon as practicable after it is
cleared by the SEC.
C:
5.4. State Takeover
Statutes.
The Company and its Board of Directors shall (a) take all
reasonable actions necessary to ensure that no “fair
price”, “control share acquisition”,
“moratorium” or other anti-takeover statute, or
similar statute or regulation, is or becomes applicable to this
Agreement, the Merger or any of the other transactions
contemplated hereby or thereby and (b) if any “fair
price”, “control share acquisition”,
“moratorium” or other anti-takeover statute, or
similar statute or regulation, becomes applicable to this
Agreement or the
Merger or any other transaction contemplated hereby or thereby,
take all action necessary to ensure that the Merger and the
other transactions contemplated hereby and thereby, may be
consummated as promptly as practicable on the terms contemplated
hereby and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated
hereby and thereby.
C:
5.5. Affiliates.
Within ten (10) days after the date of this Agreement, the
Company shall deliver to the Parent a letter identifying all
persons who are to the Company’s Knowledge
“affiliates” of the Company for purposes of
Rule 145 under the Securities Act. The Company shall use
reasonable efforts to cause each such person to deliver to the
Parent at least five (5) business days prior to the
Effective Time, a written agreement covering Rule 145
matters in customary form and reasonably acceptable to the
Parent and the Company from each such person.
C:
5.6. Nasdaq Listing
Application.
The Parent shall prepare and submit to Nasdaq a listing
application for Parent Common Stock to be issued in the Merger
pursuant to Article 2 of this Agreement and shall use its
reasonable efforts to obtain, prior to the Effective Time,
approval for the listing on the Nasdaq National Market of such
Parent Common Stock, subject to official Notice to Nasdaq of
issuance. The Company shall cooperate with the Parent in such
listing application.
C:
5.7. Confidentiality.
The Parent and the Company shall comply with, and shall cause
their respective representatives to comply with, in all
respects, all of their respective obligations under the
Confidentiality Agreement, and in no event shall the
negotiation, entering into or termination of this Agreement be
deemed to waive or otherwise adversely affect the rights and
obligations of the parties under the Confidentiality Agreement,
which rights and obligations shall continue in full force and
effect in accordance with their terms.
C:
5.8. Access to
Information.
(a) The Company shall afford to the Parent and Merger Sub,
and to their respective accountants, officers, directors,
employees, counsel, and other representatives reasonable access,
during normal business hours, upon reasonable prior notice, from
the date hereof through the Effective Time, to all of its
properties, books, data, contracts, commitments, and records.
During such period, the Company shall additionally furnish
promptly to the Parent and Merger Sub all information concerning
the Company’s and all Company Subsidiaries’
businesses, prospects, properties, liabilities, results of
operations, financial condition, product evaluations and
testing, officers, employees, consultants, customers, and others
having dealings with the Company and all Company Subsidiaries as
the Parent and Merger Sub may reasonably request and reasonable
opportunity to contact and obtain information from such
officers, employees, consultants, customers, and others having
dealings with the Company and all Company Subsidiaries as the
Parent and Merger Sub may reasonably request. No investigation
pursuant to this Section 5.8 shall affect any
representation or warranty of the Company contained herein or
any condition to the obligations of the Parent and Merger Sub
hereto.
(b) Parent and Merger Sub shall reasonably afford to the
Company, and to its accountants, officers, directors, employees,
counsel, and other representatives reasonable access, during
normal business hours, upon reasonable prior notice, from the
date hereof through the Effective Time, to its books, data,
contracts, commitments and records. During such period, the
Parent and Merger Sub shall additionally furnish promptly to the
Company all information concerning the Parent’s and all
Parent Subsidiaries’ businesses, prospects, properties,
liabilities, results of operations, financial condition, as the
Company may reasonably request and reasonable opportunity to
contact and obtain information from the officers of the Parent
as the Company may reasonably request. No investigation pursuant
to this Section 5.8 shall affect any representation
or warranty of the Parent or Merger Sub contained herein or any
condition to the obligations of the Company hereto.
5.9. Approvals and Consents;
Cooperation. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties
agrees to cooperate with each other and to use all commercially
reasonable efforts to promptly take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including, without
limitation, (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations,
submissions of information, applications and filings (including
filings with Governmental Entities) and the taking of all
reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any
Governmental Entity; (ii) the obtaining and maintenance of
all necessary consents, approvals, permits, authorizations and
other confirmations or waivers from third parties; and
(iii) the execution and delivery of any additional
instruments necessary to consummate the transactions
contemplated by this Agreement.
C:
5.10. Commercially Reasonable
Efforts; Further Actions.
Subject to the terms and conditions herein provided and without
being required to waive any conditions herein (whether absolute,
discretionary, or otherwise), each of the parties hereto agrees
to use commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things
necessary, proper, or advisable to consummate and make effective
the transactions contemplated by this Agreement, in the most
expeditious manner possible. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers
and directors of each party to this Agreement shall take all
such necessary action.
C:
5.11. Officers’ and
Directors’ Indemnification.
(a) The Parent and the Surviving Corporation agree that the
Surviving Corporation shall provide to the directors and
officers of the Company indemnification at least as favorable to
the Company’s officers and directors as provided by the
Company’s Certificate of Incorporation and Bylaws with
respect to matters occurring prior to the Effective Time,
including without limitation the authorization of this Agreement
and the transactions contemplated hereby until the six year
anniversary date of the Effective Time (or, in case of matters
occurring prior to the Effective Time giving rise to claims that
are made prior to but which have not been resolved by the sixth
(6th)
anniversary of the Effective Time, until such matters are
finally resolved).
(b) Prior to the Effective Time the Parent shall cause to
be purchased, or at its election allow the Company to purchase,
a “tail” or extended reporting period endorsement
directors’ and officers’ liability insurance policy
(covering a period of six (6) years after the Effective
Time and of at least the same coverage and amounts and
containing terms and conditions which are, in the aggregate, no
less advantageous to the insured than the Company’s
existing directors’ and officers’ liability insurance
policy), with respect to claims arising from facts or events
that occurred at or prior to the Effective Time for those
persons who are currently covered by such policy;
provided, however, that the aggregate premium for
insurance under this Section 5.11(b) shall not be in
excess of $500,000 net of any refund or credit for the
remaining term of the existing policy and if such premium for
such insurance exceeds that amount, then the Parent shall cause
to be purchased insurance policies that provide the maximum
coverage available at that amount.
C:
5.12. Notification of Certain
Matters.
The Company shall give prompt written notice to the Parent, and
the Parent shall give prompt written notice to the Company, of
(a) the occurrence, or nonoccurrence, of any event the
occurrence or nonoccurrence of which would be likely to cause
any representation or warranty of such party contained herein to
be untrue or inaccurate in any material respect at or prior to
the Effective Date and (b) any material failure of the
Company or the Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.12
shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
C:
5.13. Public
Announcements.
The Parent and Merger Sub, on the one hand, and the Company, on
the other hand, shall consult with each other before issuing,
and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect
to the transactions contemplated by this Agreement, including
the Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except as
may be required by applicable Law, court process or by
applicable Nasdaq rules. The parties agree that the initial
press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form previously
agreed to by the parties.
C:
5.14. Voting of
Shares.
To induce the Parent to execute this Agreement, all of the
officers and directors of the Company have executed and
delivered as of the date hereof Agreements to Facilitate Merger
in the form attached hereto as Exhibit 5.14 (the
“Agreements to Facilitate Merger”) pursuant to
which, as and to the extent set forth therein, each such person
has agreed to vote his, her or its shares of Company Common
Stock in favor of the Merger at the Company Stockholders Meeting.
C:
5.15. Expenses.
Except as set forth in Section 7.2 and as otherwise
provided in this Section 5.15, all fees and expenses
incurred in connection with the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the
party incurring such fees or expenses, whether or not the Merger
is consummated; provided, however, that the Company and the
Parent shall share equally the cost of printing and filing with
the SEC the Proxy Statement/ Prospectus and the Registration
Statement.
C:
5.16. Section 368
Qualification.
The Parent, Merger Sub and the Company will each use
commercially reasonable efforts to cause the Merger to qualify
as a reorganization within the meaning of Section 368 of
the Code, will report the Merger in such manner and will not
take any action reasonably likely to cause the Merger to not so
qualify.
C:
5.17. Employee Benefit
Plans.
Parent shall either maintain, or cause the Surviving Corporation
to maintain, the Employee Benefit Plans of the Company or to
provide the employees of the Surviving Corporation with all
Employee Benefit Plans as are provided by Parent and its
subsidiaries to their own employees who are similarly situated
(such similar situation to be determined after the Surviving
Corporation determines which position and title the employee is
to retain following the Merger). The foregoing shall not
constitute any commitment, contract, understanding, undertaking,
guarantee (express or implied) on the part of the Surviving
Corporation or Parent to continue the employment of any employee
of the Company for any period of time or on any terms except as
determined by the Surviving Corporation. The Company agrees
that, at the request of Parent, it and the CompanySubsidiaries
shall terminate their respective 401(k) plans and any other
Employee Benefit Plans, severance, separation, retention and
salary continuation plans, programs or arrangements, in each
case, prior to the Effective Time and, upon the reasonable
request of the Parent, timely take reasonable corrective or
remedial action for any noncompliance of the Employee Benefit
Pans with applicable Law.
C:
5.18. Company Options and
Company Stock Plans.
Prior to the Effective Time, the Company shall, if and to the
extent necessary or required by the terms of any Company Stock
Plan (including the ESPP) or any Company Option,
(i) provide notice to holders of Company Options under the
Company Stock Plans regarding the non-assumption and termination
of such Company Options and Company Stock Plans,
(ii) obtain any consents from holders of
Company Options, and (iii) amend the terms of any equity
incentive plans or arrangements, to give effect to the
provisions of Section 2.4 and this
Section 5.18.
C:
5.19. Company
Warrants.
The Company shall provide the notifications required by the
Company Warrant in the time frames set forth in the Company
Warrant and take all actions, if any, necessary to make the
Company Warrant a Parent Warrant in accordance with
Section 2.5, effective as of the Effective Time.
C:
5.20. Rights Plan.
Prior to the earlier of the termination of this Agreement
pursuant to Section 7.1 hereof or the Effective
Time, the Company and its Board of Directors shall not amend or
modify or take any other action with regard to the Rights Plan
in any manner or take any other action so as to (a) render
the Rights Plan inapplicable to any transaction(s) other than
the Merger and other transactions contemplated by this Agreement
and the Agreements to Facilitate Merger, (b) permit any
person or group who would otherwise be an Acquiring Person (as
defined in the Rights Plan) not to be an Acquiring Person,
(c) provide that a Distribution Date or Triggering Event
(as such terms are defined in the Rights Plan) or similar event
does not occur as promptly as practicable by reason of the
execution of any agreement or transaction other than this
Agreement and the Agreements to Facilitate Merger and the Merger
and the agreements and transactions contemplated hereby and
thereby, or (d) except as specifically contemplated by this
Agreement, otherwise affect the rights of holders of Rights (as
defined in the Rights Plan). The Company and its Board of
Directors shall take all action to ensure that the Rights Plan
is and, through the Effective Time, will be inapplicable to
Parent and Merger Sub, this Agreement, the Merger, the
Agreements to Facilitate Merger and the transactions
contemplated hereby and thereby. Pursuant to the amendment of
the Rights Plan contemplated in Section 3.28 hereof,
the rights under the Rights Plan shall expire immediately prior
to the Effective Time.
C:
5.21. Director and Officer
Resignations.
On the Closing Date, the Company shall cause to be delivered to
Parent duly executed resignations, effective as of the Effective
Time, of each member of the Board of Directors of the Company
and each Company Subsidiary and, to the extent requested by the
Parent, each officer of the Company and each Company Subsidiary,
and shall take such other action as is necessary to accomplish
the foregoing.
C:
Article 6.
CONDITIONS PRECEDENT
C:
6.1. Conditions to
Obligations of the Parent, Merger Sub, and the Company.
The respective obligations of each Party to consummate the
Merger shall be subject to the fulfillment at or prior to the
Closing of the following conditions:
(a) No Injunction. None of the Parent, Merger
Sub, or the Company shall be subject to any final Order of a
court of competent jurisdiction within the United States that
(i) prevents or materially delays the consummation of the
Merger, or (ii) would impose any material limitation on the
ability of the Parent effectively to exercise full rights of
ownership of the Company or the assets or business of the
Company.
(b) Stockholder Approval.The Company
Stockholder Approval shall have been obtained.
(c) Registration Statement. The Registration
Statement (as amended or supplemented) shall have become
effective under the 1933 Act and shall not be subject to
any “stop order,” and no action, suit, proceeding, or
investigation by the SEC to suspend the effectiveness or
qualification thereof shall have been initiated and be
continuing or have been threatened and be unresolved. The Parent
shall also have received all state securities Law or blue sky
authorizations necessary to carry out the transactions
contemplated hereby.
(d) Nasdaq Listing. The shares of Parent
Common Stock to be delivered pursuant to the Merger shall have
been duly listed on the Nasdaq National Market, subject to
official notice of issuance.
C:
6.2. Conditions to
Obligations of the Parent and Merger Sub.
The respective obligations of the Parent and Merger Sub to
consummate the Merger shall be subject to the fulfillment at or
prior to the Closing of the following additional conditions:
(a) Each representation and warranty of the Company
contained in this Agreement, to the extent qualified by
materiality (including a Company Material Adverse Effect
qualification), shall have been true and correct in all respects
and, to the extent not so qualified, shall have been true and
correct in all material respects, in each case on and as of the
date hereof and on the Closing Date as though made on and as of
such date (except for representations and warranties made as of
a specified date, which, to the extent qualified by materiality
(including a Company Material Adverse Effect qualification),
shall have been true and correct in all respects and, to the
extent not so qualified, shall have been true and correct in all
material respects, as the case may be, only as of the specified
date), and the Parent shall have received a certificate to such
effect signed by the Company’s Chief Executive Officer.
(b) The Company shall have performed and complied in all
material respects with all agreements, obligations, and
conditions required by this Agreement to be performed or
complied with by it on or prior to the Closing, and the Parent
shall have received a certificate to such effect signed by the
Company’s Chief Executive Officer.
(c) The Company shall have obtained all permits,
authorizations, consents, and approvals required on its part to
perform its obligations under, and consummate the transactions
contemplated by, this Agreement, in form and substance
reasonably satisfactory to the Parent, and the Parent and Merger
Sub shall have received evidence reasonably satisfactory to them
of the receipt of such permits, authorizations, consents, and
approvals.
(d) There shall not be pending any suit, action or
proceeding related directly or indirectly to the Merger,
including without limitation any suit, action or process that
seeks to restrain or prohibit the consummation of the Merger or
to unwind the Merger after it has been consummated or seeks
damages or other relief with respect to the Merger.
(e) Parent shall have received from Perkins Coie LLP,
counsel to Parent, a written opinion dated the Closing Date to
the effect that for U.S. federal income tax purposes the
Merger will constitute a “reorganization” within the
meaning of Section 368(a) of the Code. In rendering such
opinion, counsel to Parent shall be entitled to rely upon
customary assumptions and representations reasonably
satisfactory to such counsel, including representations set
forth in certificates of officers of Parent, Merger Sub and the
Company.
(f) The Parent shall have received a letter from each of
the Affiliates pursuant to Section 5.5 hereof.
(g) The directors and officers (as identified by Parent) of
the Company and of each Company Subsidiary shall have tendered
their resignations as of the Effective Time.
(h) Since the date of this Agreement, there shall not have
occurred or come into existence any change, event, occurrence,
state of facts or development that has had, or could reasonably
be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, and the Parent shall have received a
certificate to such effect from the Company’s Chief
Executive Officer.
(i) All actions necessary to cause all Company Options and
Company Stock Plans to terminate effective as of the Effective
Time shall have been taken.
(j) All actions necessary to cause all outstanding Rights
(as defined in the Rights Plan) under the Rights Plan to expire
immediately prior to the Effective Time and to render such Rights
inapplicable to Parent, Merger Sub, this Agreement, the Merger,
the Agreements to Facilitate Merger and the other transactions
contemplated by this Agreement and the Agreements to Facilitate
Merger shall have been taken.
(k) Holders of no more than five percent (5%) of the
outstanding Company Common Stock shall have delivered a notice
or notices of intent to demand payment in accordance with
Section 262 of the DGCL.
(l) Company shall have filed the 2004 Form 10-K within
the time period allowed by Rule 12b-25, and such 2004
Form 10-K is identical to the form of 2004 Form 10-K
provided to the Parent pursuant to Section 3.4(e),
except as otherwise consented to in writing by Parent.
(m) The Company shall have filed a report of the
Company’s management report on its internal controls and
the attestation given by the Company’s independent auditors
in connection with such report with the 2004 Form 10-K or
an amendment thereto within the time period allowed by the
SEC’s rules, and any deficiencies in internal controls
described in such report or attestation shall not be materially
different from the deficiencies described in
Section 3.5 of the Company Disclosure Schedule or
otherwise disclosed in writing to, and acknowledged in writing
as applicable to this condition by, the Parent prior to the
execution of this Agreement, except for such differences as
would not (i) have a Company Material Adverse Effect,
(ii) have a material adverse impact on Parent or
Parent’s ability to prepare its consolidated financial
statements or comply with applicable legal or Nasdaq
requirements or (iii) reasonably be expected to materially
adversely affect Parent’s quantitative valuation of the
Company.
(n) FIRPTA documentation, including (A) a notice to
the Internal Revenue Service, in accordance with the
requirements of Treas. Reg. Section 1.897-2(h)(2), in
substantially the form attached hereto as
Exhibit 6.2(n)(A), dated as of the Closing Date and
executed by the Company, together with written authorization for
Parent to deliver such notice form to the Internal Revenue
Service on behalf of the Company after the Closing, and
(B) a FIRPTA Notification Letter, in substantially the form
attached hereto as Exhibit 6.2(n)(B), dated as of
the Closing Date and executed by the Company.
The obligation of the Company to consummate the Merger shall be
subject to the fulfillment at or prior to the Closing of the
following additional conditions:
(a) Each representation and warranty of the Parent
contained in this Agreement, to the extent qualified by
materiality (including a Parent Material Adverse Effect
qualification), shall have been true and correct in all respects
and, to the extent not so qualified, shall have been true and
correct in all material respects, in each case on and as of the
date hereof and on the Closing Date as though made on and as of
such date (except for representations and warranties made as of
a specified date, which, to the extent qualified by materiality
(including a Parent Material Adverse Effect qualification),
shall have been true and correct in all respects and, to the
extent not so qualified, shall have been true and correct in all
material respects, as the case may be, only as of the specified
date), and the Company shall have received a certificate to such
effect from a senior executive officer of the Parent.
(b) The Parent and Merger Sub shall have performed and
complied in all material respects with all agreements,
obligations, and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing,
and the Company shall have received a certificate to such effect
from a senior executive officer of the Parent.
(c) The Parent and Merger Sub shall have obtained all
permits, authorizations, consents, and approvals required on
their part to perform their obligations under, and consummate
the transactions contemplated by, this Agreement, in form and
substance satisfactory to the Company, and the
Company shall have received evidence satisfactory to it of the
receipt of such permits, authorizations, consents, and approvals.
(d) Since the date of this Agreement, there shall not have
occurred or come into existence any change, event, occurrence,
state of facts or development that has had, or could reasonably
be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, and the Company shall have received a
certificate to such effect from a senior executive officer of
the Parent.
(e) The Company shall have received from Hunton &
Williams, LLP, counsel to the Company, a written opinion dated
the Closing Date to the effect that for U.S. federal income
tax purposes the Merger will constitute a
“reorganization” within the meaning of
Section 368(a) of the Code, provided that if
Hunton & Williams LLP does not render such opinion,
this condition shall nonetheless be satisfied if Perkins Coie
LLP delivers such opinion to the Company. In rendering such
opinion, counsel to the Company shall be entitled to rely upon
customary assumptions and representations reasonably
satisfactory to such counsel, including representations set
forth in certificates of officers of Parent, Merger Sub and the
Company.
C:
Article 7.
TERMINATION AND ABANDONMENT
C:
7.1. Termination.
This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval by the
stockholders of the Company, only:
(a) by mutual written consent duly authorized by the Board
of Directors of the Parent and the Company;
(b) by either the Parent or the Company if the Merger shall
not have been consummated on or before the date that is six
(6) months after the date hereof; provided, however, that
the terminating party shall not have breached in any material
respect its obligations under this Agreement in any manner that
shall have been the proximate cause of, or resulted in, the
failure to consummate the Merger by such date;
(c) by either the Parent or the Company if a Governmental
Entity has issued a final nonappealable Order, or taken any
other action, having the effect of permanently restraining,
enjoining, or otherwise prohibiting the Merger;
(d) by either the Parent or the Company if, at the Company
Stockholders Meeting, the Company Stockholder Approval is not
obtained, except that the right to terminate this Agreement
under this Section 7.1(d) shall not be available to
any party whose failure to perform any material obligation under
this Agreement has been the proximate cause of, or resulted in,
the failure to obtain the Company Stockholder Approval;
(e) by the Parent if either (i) the Company has
breached its obligations under Sections 5.2 or 5.3
in any material respect, (ii) the Company’s Board of
Directors has recommended, approved, accepted, or entered into
an agreement regarding, an Acquisition Proposal or has not
rejected an Acquisition Proposal within ten (10) business
days following the receipt by the Company of a written
Acquisition Proposal, (iii) the Company’s Board of
Directors has withdrawn or modified in a manner adverse to the
Parent its unanimous recommendation of the Merger or has failed
to recommend the Merger in the Proxy/ Prospectus, or (iv) a
tender offer or exchange offer for 15% or more of the
outstanding shares of Company Common Stock is commenced, and the
Company’s Board of Directors, within ten (10) business
days after such tender offer or exchange offer is so commenced,
either fails to recommend against acceptance of such tender
offer or exchange offer by its stockholders or takes no position
with respect to the acceptance of such tender offer or exchange
offer by its stockholders;
(f) by the Company if, prior to obtaining the Company
Stockholder Approval, (i) it has complied with its
obligations under Section 5.2(including subsections
(f)(i)-(iii) thereof); (ii) the Company’s Board of
Directors has authorized acceptance of a Superior Proposal
thereunder, and (iii) the Company has paid to the Parent
the fee required by Section 7.2 to be paid to the
Parent in the manner therein provided;
(g) by the Parent if (i) the Parent is not in material
breach of its obligations under this Agreement and
(ii) there has been a breach (A) by the Company of any
of its representations, warranties, or obligations under this
Agreement (other than breaches covered by subsection (e)(i)
above), or (B) by an officer or director of the Company
under such person’s Agreement to Facilitate Merger
described in Section 5.14, in each case such that
the conditions in Section 6.2 shall not be
satisfied, and the breach is not curable or, if curable, is not
cured by the Company by within thirty (30) calendar days
after receipt by the Company of written notice from the Parent
of such breach; or
(h) by the Company if (i) the Company is not in
material breach of its obligations under this Agreement and
(ii) there has been a breach by the Parent of any of its
representations, warranties, or obligations under this Agreement
such that the conditions in Section 6.3 shall not be
satisfied, and the breach is not curable or, if curable, is not
cured by the Parent within thirty (30) calendar days after
receipt by the Parent of written notice from the Company of such
breach.
C:
7.2. Effect of
Termination.
(a) In recognition of the time, efforts, and expenses
expended and incurred by the Parent with respect to the Company
and the opportunity that the acquisition of the Company presents
to the Parent, if:
(i) (A) this Agreement is terminated by the Parent or
the Company pursuant to Section 7.1(d), (B) at
or prior to the Company Stockholders Meeting there shall have
been publicly disclosed one or more Acquisition Proposals other
than the proposal contemplated by this Agreement, and
(C) within 12 months of the date of such termination,
the Company shall have entered into an agreement providing for
an Acquisition Proposal with a person (or their Affiliate) that
made an Acquisition Proposal described in
clause (B) of this subsection, then the Company shall
pay the Parent a fee in the amount of $1,400,000 (the
“Termination Fee”), payable upon the same date
the Company enters into an agreement providing for an
Acquisition Proposal;
(ii) this Agreement is terminated by the Parent pursuant to
Section 7.1(e), then the Company shall pay the
Parent the Termination Fee, payable within one business day
after termination by the Parent; and
(iii) this Agreement is terminated by the Company pursuant
to Section 7.1(f), then the Company shall pay the
Parent the Termination Fee, payable on or prior to the date of
termination.
(b) Any amounts payable pursuant to
Section 7.2(a) shall be paid by wire transfer of
immediately available funds to an account designated by the
receiving party for such purpose. The parties acknowledge that
the agreements contained in this Section 7.2 are an
integral part of the transactions contemplated by this Agreement
and are not a penalty, and that, without these agreements, the
parties would not enter into this Agreement. If the Parent or
the Company fails to pay promptly any amounts due pursuant to
this Section 7.2, such party shall also pay to the
other party such other party’s costs and expenses
(including legal fees and expenses) in connection with any
action to the extent such other party is the prevailing party in
such action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the
unpaid amounts under this section, accruing from its due date,
at an interest rate per annum equal to two percentage points in
excess of the prime commercial lending rate quoted by Wells
Fargo Bank N.A. Any change in the interest rate hereunder
resulting from a change in such prime rate shall be effective at
the beginning of the day of such change in such prime rate.
(c) Except as provided in the next sentence of this
paragraph, in the event of the termination of this Agreement
pursuant to any paragraph of Section 7.1, the
obligations of the parties to consummate the Merger shall
expire, and none of the parties shall have any further
obligations under this Agreement
except pursuant to Sections 5.7, 5.15, 7.2
and Article 9, which shall survive termination of
this Agreement. In the event this Agreement is terminated
pursuant to any paragraph of Section 7.1 due to a
breach by the Company, the Company shall not be relieved from
any liability for such breach or its obligations pursuant to
Section 7.2, and the Parent shall have no further
obligations under this Agreement except as provided in
Sections 5.7, 5.15, and Article 9.
Notwithstanding the preceding sentence, the parties agree that
the amounts payable upon the occurrence of the events specified
in Section 7.2(a) shall be the sole and exclusive
remedy of the parties upon termination of the Agreement arising
from the occurrence of such events; provided, however, that
nothing herein shall relieve the Company or the Parent from
liability for the willful breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
When used in this Agreement, and in addition to the other terms
defined herein, the following terms shall have the meanings
specified in this Article 8.
(a) “Acquisition Proposal” shall
mean any inquiry, offer or proposal, or any indication of
interest in making any offer or proposal, relating to (i) a
possible transaction or series of related transactions pursuant
to which any Person or “group” (as used in
Section 13(d) of the Exchange Act) acquires 15% or more of
the outstanding shares of the Company’s capital stock,
including without limitation by a tender offer or an exchange
offer which, if consummated, would result in any Person
acquiring 15% or more of the outstanding shares of the
Company’s capital stock, (ii) a possible merger or
other business combination involving the Company or Company
Subsidiaries, or (iii) any other transaction pursuant to
which any Person might acquire control ( by way of sale, lease,
license, liquidation, dissolution or otherwise) of assets
(including for this purpose the outstanding equity securities of
any Company Subsidiary) of the Company (x) having a fair
market value equal to 10% or more of the fair value of all of
the consolidated assets of the Company immediately prior to such
a transaction, (y) constituting the credit card business of
the Company, or (z) otherwise material to the Company;
provided, however, that the term “Acquisition
Proposal” shall not include the Merger and the other
transactions contemplated by this Agreement.
(b) “Affiliate” shall mean, in
relation to any party hereto, any entity directly or indirectly
controlling, controlled by or under common control with such
party.
(c) “COBRA” shall mean the health
care continuation provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations,
rulings and other pronouncements issued thereunder.
(d) “Company Intellectual Property”
shall mean all Intellectual Property used in, developed for use
in, or necessary to the conduct of the business of the Company
and the CompanySubsidiaries as it is currently conducted or as
it is contemplated to be conducted.
(e) “Company Material Adverse
Effect” shall mean any effect, change, event,
circumstance or condition that, individually or in the aggregate
with all similar effects, changes, events, circumstances or
conditions, is or would reasonably be expected to: (i) have
a material adverse effect on the business, operations, assets,
properties, results of operations or financial condition of the
Company and the CompanySubsidiaries taken as a whole;
(ii) prevent or materially delay the consummation of the
Merger or otherwise have a material adverse effect on the
ability of the Company to perform its obligations under this
Agreement; or (iii) have a material adverse effect on the
ability of the Surviving Corporation or the Parent to conduct
such business following the Effective Time or the ability of the
Parent to exercise full rights of ownership of the Company or
its assets or business. Notwithstanding anything to the contrary
contained in the foregoing, none of the following shall be
deemed, individually or in the aggregate, to constitute a
Company Material Adverse Effect: (A) a decrease in the
market price of the Company Common Stock or its removal of
listing from Nasdaq SmallCap Market, in each case, in and of
itself or (B) any change, event, violation or inaccuracy
directly attributable to any of the following: (1) any
actions taken by the Company at the written request or
direction, following the date of this Agreement, of the Parent,
or (2) a general decline in the financial markets in the
United States.
(f) “Company Option” shall mean any
option to purchase shares of Company Common Stock or other
equity securities of the Company, including, without limitation,
any option granted under the Company Stock Plans and any option
granted under the ESPP.
(g) “Company Products” shall mean
all software and other products produced, manufactured, marketed
or distributed at any time by the Company or any Company
Subsidiary.
(h) “Company Stock Plans” shall
mean any stock option plan, restricted stock plan, or other
similar program or agreement, including, without limitation, the
Company’s 1996 Incentive Plan, Merger Stock Incentive Plan,
Non-Employee Directors’ Stock Option Plan, 1998 Chief
Executive Officer’s Plan and ESPP, to which the Company or
any Company Subsidiary is a party or which is maintained by the
Company or any Company Subsidiary and pursuant to which the
Company has granted options to purchase shares of Company Common
Stock or awards of Company Common Stock.
(i) “Company Subsidiary” shall mean
each individual subsidiary of the Company.
(j) “Confidentiality Agreement”
shall mean the Mutual Confidentiality Agreement, dated
February 25, 2005, between the Company and the Parent.
(k) “Contract” shall mean any
contract, agreement, consensual obligation, promise or
undertaking, whether written or oral and whether express or
implied.
(l) “Delaware Law” shall mean the
General Corporation Law of the State of Delaware and the
Delaware Constitution.
(m) “Employee Benefit Plans” shall
mean any retirement, pension, profit sharing, deferred
compensation, stock bonus, savings, bonus, incentive, cafeteria,
medical, dental, vision, hospitalization, life insurance,
accidental death and dismemberment, medical expense
reimbursement, dependent care assistance, tuition reimbursement,
disability, sick pay, holiday, vacation, severance, change of
control, stock purchase, stock option, restricted stock, phantom
stock, stock appreciation rights, fringe benefit or other
employee benefit plan, fund, policy, program, contract,
arrangement or payroll practice of any kind (including any
“employee benefit plan,” as defined in
Section 3(3) of ERISA) or any employment, consulting or
personal services contract, whether written or oral, qualified
or nonqualified, funded or unfunded, or domestic or foreign,
(i) sponsored, maintained or contributed to by the Company
or any Company Subsidiary or to which the Company or any Company
Subsidiary is a party, (ii) covering or benefiting any
current or former officer, employee, agent, director or
independent contractor of the Company or any Company Subsidiary
(or any dependent or beneficiary of any such individual), or
(iii) with respect to which the Company or any Company
Subsidiary has (or could have) any obligation or liability.
(n) “Encumbrance” shall mean any
charge, claim, condition, equitable interest, lien, option,
pledge, security interest, mortgage, right of way, easement,
encroachment, servitude, right of first option, right of first
refusal or similar restriction, including any restriction on
use, voting (in the case of any security or equity interest),
transfer, receipt of income or exercise of any other attribute
of ownership.
(o) “Environmental Laws” shall mean
any Law relating to pollution or protection of human or worker
health or safety or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata),
including Laws relating to Environmental Releases or threatened
Environmental Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials, as in effect on the date hereof.
(p) “Environmental Release” shall
mean any release, spill, emission, leaking, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water or groundwater.
(q) “ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended, and the
regulations, rulings and other pronouncements issued thereunder.
(r) “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
(s) “Exchange Ratio” shall mean the
quotient obtained by dividing (x) 4,918,032.78689 by
(y) the total of the number of shares of Company Common
Stock outstanding immediately prior to the Closing plus the
number of shares of Company Common Stock that would have been
issuable upon exercise of any Company Option that may be, by
virtue of any amendment to the Company Option, exercisable for
Parent Common Stock after the Effective Time, rounded to the
nearest one-hundred thousandth (0.00001) (with amounts of
0.000005 and above rounded up).
(t) “GAAP” shall mean accounting
principles generally accepted in the United States, applied on a
consistent basis.
(u) “Governmental Entity” shall
mean any United States or non-United States federal, national,
state or local governmental or quasi-governmental,
administrative, regulatory or judicial court, department,
commission, agency, board, bureau, instrumentality or other
authority.
(v) “Hazardous Materials” shall
mean: (i) any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, and transformers or other
equipment that contain dielectric fluid containing
polychlorinated biphenyls above regulated levels and radon gas;
(ii) any chemicals, materials or substances which are now
defined as or included in the definition of “hazardous
substances,”“hazardous wastes,”“hazardous
materials,”“extremely hazardous wastes,”“restricted hazardous wastes,”“toxic
substances,”“toxic pollutants,” or words of
similar import, under any Environmental Law; and (iii) any
other chemical, material, substance or waste, exposure to which
as of the date hereof is prohibited, limited or regulated by any
Governmental Entity.
(w) “HIPAA” shall mean the means
the Health Insurance Portability and Accountability Act of 1997,
as amended, and the regulations, rulings and other
pronouncements issued thereunder.
(x) “Intellectual Property” shall
mean all rights in patents, patent applications, trademarks
(whether registered or not), trademark applications, service
mark registrations and service mark applications, trade names,
trade dress, logos, slogans, tag lines, uniform resource
locators, Internet domain names, Internet domain name
applications, corporate names, copyright applications,
registered copyrighted works and commercially significant
unregistered copyrightable works (including proprietary
software, books, written materials, prerecorded video or audio
tapes, and other copyrightable works), technology, software,
trade secrets, know-how, technical documentation,
specifications, data, designs and other intellectual property
and proprietary rights, other than off-the-shelf computer
programs.
(y) “IRS” shall mean the United
States Internal Revenue Service.
(z) “Knowledge” shall mean with
respect to the Company, the Parent or Merger Sub the knowledge
actually possessed, or which, upon the exercise of reasonable
due diligence, could be possessed, by any current director or
officer of the Company, the Parent or Merger Sub, as the case
may be.
(aa) “Law” shall mean any
constitution, law, ordinance, principle of common law, code,
regulation, statute or treaty of any Governmental Entity.
(bb) “Nasdaq” shall mean the Nasdaq
National Market or the Nasdaq SmallCap Market, as applicable.
(cc) “Order” shall mean any order,
injunction, judgment, decree, ruling, assessment or arbitration
award of any Governmental Entity or arbitrator.
(dd) “Parent Average Stock Price”
shall mean the average closing sale price of one share of Parent
Common Stock as reported on Nasdaq for the twenty
(20) consecutive trading days ending on and including the
third Nasdaq trading day preceding the Closing Date.
(ee) “Parent Material Adverse
Effect” shall mean any effect, change, event,
circumstance or condition that, individually or in the aggregate
with all similar effects, changes, events, circumstances or
conditions, is or would reasonably be expected to: (i) have
a material adverse effect on the business, operations, assets,
properties, results of operations, or financial condition of the
Parent and its subsidiaries, considered as a whole, or
(ii) prevent or materially delay the consummation of the
Merger or otherwise have a material adverse effect on the
ability of the Parent to perform its obligations under this
Agreement. Notwithstanding anything to the contrary contained in
the foregoing, none of the following shall be deemed,
individually or in the aggregate, to constitute a Parent
Material Adverse Effect: (A) a change in the market price
of the Parent Common Stock, in and of itself or (B) any
change, event, violation or inaccuracy directly attributable to
any of the following (1) any actions taken by the Parent at
the written request or direction, following the date of this
Agreement, of the Company, or (2) a general decline in the
financial markets in the United States.
(ff) “Per Share Cash Consideration”
shall mean the quotient obtained by dividing (x) the sum of
(1) $4,500,000, plus (2) any cash received upon the
exercise of the outstanding Company Options or Company Warrants
prior to the Effective Time, less (3) any other amounts
necessary to terminate Company Options in accordance with this
Agreement and less (4) an amount mutually determined by the
Parent and the Company with respect to contingencies of the
Company, such amount to not exceed $275,000 by (y) the
total number of shares of Company Common Stock outstanding
immediately prior to the Closing, rounded to the nearest
one-hundred thousandth (0.00001) (with amounts of 0.000005 and
above rounded up).
(gg) “Permits” shall mean
registrations, franchises, grants, authorizations (including
marketing authorizations), licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and
orders of any Governmental Entity necessary for each of the
Company or the CompanySubsidiaries to manufacture, market, sell
or distribute the Company’s products or to own, lease and
operate its properties or to carry on its business as it is now
being conducted.
(hh) “Person” shall mean a natural
person, corporation, limited liability company, association,
joint stock company, trust, partnership, governmental entity,
agency or branch or department thereof, or any other legal
entity.
(ii) “Related Party” shall mean any
officer, director or beneficial owner of more than 5% of the
outstanding voting securities of the Company or any Company
Subsidiary (or any entity of which such person is an officer,
director or beneficial owner of more than 5% of such
entity’s outstanding voting securities).
(jj) “SEC” shall mean the
Securities and Exchange Commission.
(kk) “Securities Act” shall mean
the Securities Act of 1933, as amended.
(ll) “Superior Proposal” shall mean
an unsolicited, bona fide written Acquisition Proposal by a
third party for all of the outstanding shares of the capital
stock or all of the voting power of the Company (x) which
each member of the Company’s Board of Directors reasonably
determines in good faith, by resolution duly adopted, to be more
favorable to the Company’s stockholders than the Merger,
after consultation with outside legal counsel and a financial
advisor of nationally recognized reputation, from a financial
point of view and, in addition, taking into account all the
terms and
conditions of the Acquisition Proposal and this Agreement, and
all legal, financial, regulatory and other aspects of such
Acquisition Proposal deemed relevant by the Company’s Board
of Directors, including the Termination Fee, (y) for which
financing, to the extent required, is then committed and
(z) which is reasonably likely to be consummated, within a
period of time not materially longer in duration that the period
of time reasonably believed to be necessary to consummate the
Merger, on the terms set forth.
(mm) “Tax” (and, with correlative
meaning, “Taxes” and
“Taxable”) shall mean (i) any net income,
alternative or add-on minimum tax, gross income, estimated,
gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital stock, profits, license, registration,
withholding, payroll, social security (or equivalent),
employment, unemployment, disability, excise, severance, stamp,
occupation, premium, property (real, tangible or intangible),
environmental or windfall profit tax, custom duty or other tax,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition
to tax or additional amount (whether disputed or not) imposed by
any Governmental Entity responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in clause (i)
of this sentence as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group for any
Taxable period, and (iii) any liability for the payment of
any amounts of the type described in clause (i) or
(ii) of this sentence as a result of being a transferee of
or successor to any Person or as a result of any express or
implied obligation to assume such Taxes or to indemnify any
other Person.
(nn) “Tax Return” shall mean any
return, statement, report or form (including estimated Tax
returns and reports, withholding Tax returns and reports, any
schedule or attachment, and information returns and reports)
required to be filed with respect to Taxes.
Subject to applicable Law, this Agreement may be amended,
modified, or supplemented only by written agreement of the
Parent, Merger Sub and the Company at any time prior to the
Effective Time with respect to any of the terms contained
herein. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
C:
9.2. Waiver of Compliance;
Consents.
Any failure of the Parent or Merger Sub on the one hand, or the
Company on the other hand, to comply with any obligation,
covenant, agreement, or condition herein may be waived by the
Company or the Parent, respectively, only by a written
instrument signed by an officer of the party granting such
waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement, or
condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any
party hereto, such consent shall be given in writing. Merger Sub
agrees that any consent or waiver of compliance given by the
Parent hereunder shall be conclusively binding upon Merger Sub,
whether or not given expressly on its behalf.
C:
9.3. Investigation; Survival
of Representations and Warranties.
The respective representations and warranties of the Parent and
the Company contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be
deemed waived or otherwise affected by any investigation made by
any party hereto. Each and every representation and warranty
contained herein shall be deemed to be conditions to the Merger
and shall not survive the
Merger. This Section 9.3 shall have no effect upon
any other obligation of the parties hereto, whether to be
performed before or after the Closing.
C:
9.4. Notices.
All notices and other communications hereunder shall be in
writing and shall be deemed given (a) on the date of
delivery if delivered personally, or by telecopy or facsimile,
upon electronic confirmation of receipt, (b) on the first
business day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the fifth
business day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder must be delivered as set forth
below, or pursuant to instructions as may be designated in
writing by the party to receive such notice:
The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that
each party shall be entitled to an injunction or restraining
order to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be
entitled under this Agreement, at law or in equity.
C:
9.6. Assignment.
Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or
in part, by operation of Law or otherwise by any of the parties
without the prior written consent of the other parties; any
instrument purporting to make such assignment shall be void.
Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
C:
9.7. Governing Law.
This Agreement shall be construed in accordance with and
governed by the Law of the State of Delaware (without giving
effect to choice of Law principles thereof).
C:
9.8. Interpretation.
The words “hereof,”“herein” and
“hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement, and Section
references are to this Agreement unless otherwise specified.
Whenever the words “include,”“includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation.” The table of contents, article and section
headings contained in this Agreement are inserted for reference
purposes only and shall not affect the meaning or interpretation
of this Agreement. This Agreement shall be construed without
regard to any presumption or other rule requiring the resolution
of any ambiguity regarding the interpretation or construction
hereof against the party causing this Agreement to be drafted.
C:
9.9. Entire Agreement.
This Agreement, including the annexes, exhibits and schedules
hereto, the Company Disclosure Schedule, and the Confidentiality
Agreement referred to herein, embodies the entire agreement and
understanding of the parties hereto in respect of the subject
matter contained herein and supersede all prior agreements and
the understandings between the parties with respect to such
subject matter, including that certain letter agreement between
the Parent and the Company, dated March 22, 2005. No
discussions regarding or exchange of drafts or comments in
connection with the transactions contemplated herein shall
constitute an agreement among the parties hereto. Any agreement
among the parties shall exist only when the parties have fully
executed and delivered this Agreement.
C:
9.10. Parties in
Interest.
This Agreement shall be binding upon and inure solely to the
benefit of each party hereto and its successors and permitted
assigns, and, except for the provisions of
Section 5.11, nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person
any rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement.
C:
9.11. Severability.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or
public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as
the economics or legal substance of the transactions
contemplated hereby are not affected in any manner materially
adverse to any party. Upon determination that any term or other
provision hereof is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted
by applicable Law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent
possible.
C:
9.12. Counterparts.
This Agreement may be executed by facsimile and in two or more
counterparts, each of which shall be deemed an original, and all
of which together shall constitute one and the same instrument.
This Agreement to Facilitate Merger (this
“Agreement”) is made and entered into as of
March 31, 2005, between Corillian Corporation, an Oregon
corporation (“Acquiror”), and the undersigned
stockholder (“Stockholder”) of InteliData
Technologies Corporation, a Delaware corporation (the
“Company”).
RECITALS
A. Concurrently with the execution of this Agreement,
Acquiror, the Company and Wizard Acquisition Corporation, a
Delaware corporation and wholly owned subsidiary of Acquiror
(“Merger Sub”), have entered into an Agreement
and Plan of Merger (the “Merger Agreement”)
which provides for the merger (the “Merger”) of
the Company with and into Merger Sub. Pursuant to the Merger,
each share of common stock, par value $0.001 per share, of
the Company (“Company Common Stock”) issued and
outstanding immediately prior to the effective time of the
Merger (other than Cancelled Shares, as defined in the Merger
Agreement) will be converted into the right to receive
(i) a certain fraction of a share of common stock, no par
value, of Acquiror and (ii) a cash payment, each on the
basis described in the Merger Agreement.
B. Stockholder is the record holder and beneficial owner
(as defined in Rule 13d-3 under the Exchange Act) of such
number of Shares as is indicated on the final page of this
Agreement.
C. As a condition to its willingness to enter into the
Merger Agreement, Acquiror has required that Stockholder enter
into this Agreement, and Stockholder is willing to enter into
this Agreement in order to induce Acquiror to enter into the
Merger Agreement.
NOW, THEREFORE, intending to be legally bound, the parties agree
as follows:
1. Certain
Definitions. For purposes of this Agreement, the
following terms shall have the meanings specified:
1.1. “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
1.2. “Expiration
Time” shall mean the earlier to occur of
(i) the Effective Time (as such term is defined in the
Merger Agreement) of the Merger and (ii) the termination of
the Merger Agreement pursuant to Article 7 thereof.
1.3. “Person”
means any individual, corporation, limited liability company,
partnership, trust or other entity or governmental authority.
1.4. “Shares”
means: (a) all equity securities of the Company (including
all shares of common stock or preferred stock, and all options,
warrants and other rights to acquire shares of common stock or
preferred stock) beneficially owned (as defined in
Rule 13d-3 under the Exchange Act) by Stockholder as of the
date of this Agreement and (b) all additional equity
securities of the Company (including all additional shares of
common stock or preferred stock, and all additional options,
warrants and other rights to acquire shares of common stock or
preferred stock) over which Stockholder acquires beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act)
during the period from the date of this Agreement through the
Expiration Time.
1.5. A Person shall be deemed to
have effected a “Transfer” of a security if
such Person directly or indirectly: (a) sells, assigns,
pledges, encumbers, grants an option with respect to, transfers,
distributes or disposes of (by gift, operation of law or
otherwise) such security or any interest in such security
(except that the exercise of an option to purchase Shares by
Stockholder shall not be deemed a Transfer); (b) enters
into an agreement or commitment providing for the sale of,
assignment of, pledge of, encumbrance of, grant of an option
with respect to, transfer of or disposition of (by
operation of law or otherwise) such security or any interest
therein; or (c) tenders, or agrees or commits to tender,
any Shares in a tender offer, exchange offer, or like
transaction.
1.6. All other capitalized terms
not defined in this Agreement shall have the meanings accorded
them in the Merger Agreement.
2. Agreement to Retain Shares
and Voting Rights.
2.1. Transfer and
Encumbrance. Stockholder shall not (except as may be
specifically required by court order) Transfer any of the Shares
or make any offer or agreement relating thereto at any time
prior to the Expiration Time; provided, however,
that nothing in this Agreement shall restrict Stockholder from
(a) exercising any options to acquire shares of Company
Common Stock, or (b) effecting any Transfer of the Shares
(i) by will or applicable laws of descent and distribution
or (ii) to any member of the immediate family of
Stockholder, or to any trust the beneficial ownership of which
is held by Stockholder or any such family member (each a
“Permitted Transferee”), so long as such
Permitted Transferee agrees in writing, in form and substance
reasonably satisfactory to Acquiror, to be bound by the terms of
this Agreement to the same extent as Stockholder is bound. Any
purported Transfer in violation of this Agreement shall be null
and void.
2.2. Voting Rights.
Stockholder shall not (except as may be specifically required by
court order) deposit (or permit the deposit of) any of the
Shares in a voting trust or grant any proxy or enter into any
voting agreement or similar agreement in contravention of the
obligations of Stockholder under this Agreement at any time
prior to the Expiration Time.
3. Agreement to Vote
Shares. At every meeting of stockholders of the Company
(or any adjournment thereof) called with respect to any of the
following, and on every action or approval by written consent of
the stockholders of the Company with respect to any of the
following, Stockholder shall vote the Shares in favor of
approval of the Merger and the Merger Agreement and any matter
that could reasonably be expected to facilitate the Merger.
Stockholder agrees not to take any actions contrary to
Stockholder’s obligations under this Agreement. Without
limiting the generality of the foregoing, Stockholder shall vote
against any proposal (other than the Merger Agreement) that
could reasonably be expected to (a) result in any change in
the directors of the Company, any change in the present
capitalization of the Company or any amendment to the
Company’s Certificate of Incorporation or Bylaws if the
effect of such amendment could reasonably be expected to
materially impair the consummation of the Merger;
(b) result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company
under the Merger Agreement; (c) impair in any material
respect the Company’s ability to perform its obligations
under the Merger Agreement; or (d) otherwise prevent or
materially delay the consummation of the transactions
contemplated by the Merger Agreement.
4. No Solicitation.
Prior to the Expiration Time, Stockholder shall not as a
stockholder, either individually or through any representatives
or agents (but may as an officer or director to the extent
permitted by the Merger Agreement): (a) solicit, initiate,
encourage or otherwise facilitate any inquiry, offer, proposal
or announcement that constitutes, or could be reasonably
expected to lead to, an Acquisition Proposal; (b) enter
into any agreement or letter of intent regarding, approve,
endorse or recommend, an Acquisition Proposal; or
(c) participate or engage in or encourage in any way
negotiations or discussions concerning, or provide any
non-public information to, any Person relating to, an
Acquisition Proposal, or which may reasonably be expected to
lead to, any Acquisition Proposal. Upon execution of this
Agreement, Stockholder shall (y) immediately terminate all
discussions with any Person; and (z) promptly (but in any
event within twenty-four hours) notify Acquiror if it receives
an Acquisition Proposal or any inquiry reasonably likely to lead
to an Acquisition Proposal or if any discussions or negotiations
are sought to be initiated or continued with such Stockholder
concerning an Acquisition Proposal.
5. Irrevocable Proxy.
Concurrently with the execution of this Agreement, Stockholder
shall deliver to Acquiror a proxy in the form attached hereto as
Exhibit A (the “Proxy”), which shall be
irrevocable to the extent provided therein, with the total
number of shares of outstanding capital stock of the Company
beneficially owned (as such term is defined in Rule 13d-3
under the Exchange Act) by Stockholder and subject to the Proxy
set forth therein.
6. Representations,
Warranties and Covenants of Stockholder. Stockholder
hereby represents and warrants to Acquiror that Stockholder
(a) is the sole record and beneficial owner of the Shares,
which at the date hereof and at all times up until the
Expiration Time will be free and clear of any liens, claims,
options, charges or other encumbrances; (b) does not
beneficially own any shares of capital stock of the Company
other than the Shares; and (c) has full power and authority
to make, enter into and carry out the terms of this Agreement
and the Proxy.
7. Additional
Documents. Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or
desirable, in the reasonable opinion of Acquiror, to carry out
the intent of this Agreement.
8. Consent and
Waiver. Stockholder hereby gives any consents or waivers
that are reasonably required for the consummation of the Merger
under the terms of any agreements to which Stockholder is a
party as a stockholder or pursuant to any rights Stockholder may
have as a stockholder.
9. No
Ownership Interest. Nothing contained in this
Agreement shall be deemed to vest in Acquiror any direct or
indirect ownership or incidents of ownership of or with respect
to any of the Shares, except as otherwise expressly provided
herein. All rights, ownership and economic benefits of and
relating to the Shares shall remain with, and belong to,
Stockholder, and this Agreement shall not be deemed to authorize
Acquiror to manage, direct, superintend, restrict, regulate,
govern or administer any of the policies or operations of the
Company or to direct Stockholder in the voting of any of the
Shares, except as otherwise expressly provided herein.
10. Termination. This
Agreement and the Proxy delivered in connection herewith shall
terminate and shall have no further force or effect as of the
Expiration Time.
11. Miscellaneous.
11.1. Severability.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
11.2. Binding Effect and
Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns, but, except as otherwise specifically provided herein,
neither this Agreement nor any of the rights, interests or
obligations of the parties hereto may be assigned by either of
the parties without the prior written consent of the other.
11.3. Amendments and
Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
11.4. Specific Performance;
Injunctive Relief. The parties hereto acknowledge that
Acquiror will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants
or agreements of Stockholder set forth herein. Therefore, it is
agreed that, in addition to any other remedies that may be
available to Acquiror upon any such violation, Acquiror shall
have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means
available to Acquiror at law or in equity.
11.5. Notices. All
notices, requests, claims, demands and other communications
hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telecopy, or sent by mail
To the address for notice set forth on the signature page hereof.
or to such other address as any party may have furnished to the
other in writing in accordance herewith. Notices shall only be
effective upon receipt.
11.6. Governing Law.
This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Delaware without
giving effect to the conflict of laws provision thereof.
11.7. Entire
Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter
hereof, and supersedes all prior negotiations and understandings
between the parties with respect to such subject matter.
11.8. Counterparts.
This Agreement may be executed in several counterparts, each of
which shall be an original, but all of which together shall
constitute one and the same agreement.
11.9. Effect of
Headings. The section headings herein are for
convenience only and shall not affect the construction of
interpretation of this Agreement.
11.10. Fiduciary Duty as
Director or Officer. The parties hereto acknowledge and
agree that Stockholder’s obligations hereunder are solely
in his or her capacity as a stockholder of the Company, and that
none of the provisions herein set forth shall be deemed to
restrict or limit any fiduciary duty the undersigned or any of
his or her respective affiliates may have as a member of the
Board of Directors of the Company or as an executive officer of
the Company or restrict or limit any actions taken by the
undersigned in his capacity as a member of the Board of
Directors of the Company or as an executive officer of the
Company; provided that no such duty shall excuse Stockholder
from his or her obligations as a stockholder of the Company to
vote Shares as herein provided and to otherwise comply with the
terms and conditions of this Agreement.
11.11. Waiver of Jury
Trial.Each party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to
involve complicated and difficult issues, and therefore each
such party hereby irrevocably and unconditionally waives any
right such party may have to a trial by jury in respect of any
litigation directly or indirectly arising out of or relating to
this Agreement or the transactions contemplated by this
Agreement. Each party certifies and acknowledges that
(a) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the
foregoing waiver, (b) each such party understands and has
considered the implications of this waiver, (c) each such
party makes this waiver voluntarily, and (d) each such
party has been induced to enter into this Agreement by, among
other things, the waivers and certifications in this
Section 11.11.
[Remainder of page intentionally left blank. Signature page
follows.]
The undersigned stockholder of InteliData Technologies
Corporation, a Delaware corporation (the
“Company”), hereby irrevocably appoints Alex P.
Hart and Erich Litch of Corillian Corporation, an Oregon
corporation (“Acquiror”), and each of them, as
the sole and exclusive attorneys and proxies of the undersigned,
with full power of substitution and resubstitution, to the full
extent of the undersigned’s rights with respect to the
shares of outstanding capital stock of the Company beneficially
owned by the undersigned as of the date hereof, which shares are
listed below (the “Shares”), and any and all
other shares or securities issued or issuable in respect thereof
on or after the date hereof, until such time as that certain
Agreement and Plan of Merger, dated as of the date hereof (the
“Merger Agreement”), by and among Acquiror, the
Company and Wizard Acquisition Corporation, a Delaware
corporation and wholly owned subsidiary of Acquiror, shall be
terminated in accordance with its terms or the Merger (as
defined in the Merger Agreement) is effective, whichever first
occurs. Upon the execution hereof, all prior proxies given by
the undersigned with respect to the Shares and any and all other
shares or securities issued or issuable in respect thereof on or
after the date hereof are hereby revoked and no subsequent
proxies will be given.
This proxy is coupled with an interest and is irrevocable, is
granted in order to secure the obligations under the Agreement
to Facilitate Merger, dated as of the date hereof, between
Acquiror and the undersigned stockholder (the “Agreement
to Facilitate Merger”), and is granted in consideration
of Acquiror entering into the Merger Agreement. The attorneys
and proxies named above will be empowered at any time prior to
termination of the Merger Agreement to exercise all voting and
other rights (including, without limitation, the power to
execute and deliver written consents with respect to the Shares)
of the undersigned at every annual, special or adjourned meeting
of the stockholders of the Company, and in every written consent
in lieu of such a meeting, or otherwise, in favor of the Merger
and the Merger Agreement and any matter that could reasonably be
expected to facilitate the Merger.
The attorneys and proxies named above may only exercise this
proxy to vote the Shares subject hereto at any time prior to
termination of the Merger Agreement at every annual, special or
adjourned meeting of the stockholders of the Company and in
every written consent in lieu of such meeting, in favor of
approval of the Merger and the Merger Agreement and any matter
that could reasonably be expected to facilitate the Merger, and
may not exercise this proxy on any other matter. The undersigned
stockholder may vote the Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding
upon the successors and assigns of the undersigned.
You have asked Wachovia Capital Markets, LLC (“Wachovia
Securities”) to advise you with respect to the fairness,
from a financial point of view, to the holders of the common
stock, par value $0.001 per share (the “Common
Stock”), of InteliData Technologies Corporation, a Delaware
corporation (the “Company”), of the aggregate
consideration to be received by such holders in exchange for the
Common Stock of the Company pursuant to that certain Agreement
and Plan of Merger, dated as of March 31, 2005 (the
“Agreement”), by and among the Company, Corillian
Corporation, an Oregon corporation (“Parent”), and
Wizard Acquisition Corporation, a Delaware corporation and
wholly-owned subsidiary of Parent (“Merger Sub”).
Capitalized terms in this letter shall have the meaning ascribed
to them in the Agreement unless the context clearly requires
otherwise.
The Agreement provides that the Company shall be merged with and
into Merger Sub (the “Merger”) and that each share of
Company Common Stock issued and outstanding immediately prior to
the Effective Time, other than the Cancelled Shares and any
Dissenting Shares, shall be converted into the right to receive
the Merger Consideration, consisting of (i) approximately
..0954 shares of Parent Common Stock, assuming all
in-the-money options are exercised, and (ii) the quotient
obtained by dividing (x) the sum of (1) $4,500,000,
plus (2) any cash received upon the exercise of the
outstanding Company Options or Company Warrants prior to the
Effective Time, less (3) any other amounts necessary to
terminate Company Options in accordance with the Agreement, and
less (4) an amount mutually determined by the Parent and
the Company with respect to contingencies of the Company, such
amount to not exceed $275,000, by (y) the total number of
shares of Company Common Stock outstanding immediately prior to
the Closing, together with any cash in lieu of fractional shares
of Parent Common Stock. Neither party would be permitted to
terminate the Agreement on the basis of changes in the stock
price of either Parent Common Stock, as quoted on the Nasdaq
National Market, or Company Common Stock, as quoted on the
Nasdaq SmallCap Market. No additional consideration would be
paid for any shares of Company Common Stock that are issuable
but not outstanding pursuant to pre-emptive rights, options,
warrants or otherwise.
In arriving at our opinion, we have, among other things:
•
Reviewed the Agreement.
•
Reviewed certain business, financial, and other information
regarding each of Parent and Company that was publicly available.
•
Reviewed certain business, financial, and other information
regarding Parent that was furnished to us by the management of
Parent, and discussed such information with Parent’s
management.
•
Reviewed certain business, financial, and other information
regarding the Company that was furnished to us by the management
of the Company, and discussed such information with the
Company’s management.
•
Participated in discussions and negotiations among
representatives of Parent and the Company.
Reviewed the current and historical market prices of Parent
Common Stock and Company Common Stock.
•
Compared the publicly available business, financial, and other
information regarding each of Parent and the Company with
similar information regarding certain other publicly traded
companies that we deemed relevant.
•
Compared the proposed financial terms of the Merger with the
financial terms of certain other business combinations and
transactions that we deemed relevant.
•
Developed discounted cash flow models for Parent based on Parent
management’s estimates.
•
Reviewed the potential pro forma impact of the Merger on
Parent’s financial statements.
•
Analyzed the premiums paid in certain other business
combinations and transactions that we deemed relevant.
•
Considered such other information as well as financial, economic
and market criteria that we deemed to be relevant.
•
Performed such other analyses and performed such other services
as we deemed appropriate.
In connection with our review, we have relied upon the accuracy
and completeness of the foregoing financial and other
information, and we have not assumed any responsibility for any
independent verification of such information. With respect to
the Company’s and Parent’s financial forecasts, we
have assumed that they have been reasonably prepared and reflect
the best currently available good faith estimates and judgments
of each respective management team as to the anticipated future
financial performance of Parent and the Company, respectively.
We have discussed both companies’ financial forecasts with
their respective management teams, but we assume no
responsibility for such forecasts or the assumptions upon which
they are based. In arriving at our opinion, we have not
incorporated any conclusions as a result of our limited physical
inspection of certain of the facilities of the Company and have
not made or been provided with any evaluations or appraisals of
the assets or liabilities of either of Parent or the Company.
In rendering our opinion, we have assumed that the Merger
contemplated by the Agreement will be consummated on the terms
described in the Agreement, without waiver of any material terms
or conditions, and that in the course of obtaining any necessary
legal, regulatory or third-party consents or approvals, no
restrictions will be imposed that will adversely affect the
terms of the Merger or other actions contemplated by the
Agreement. Our opinion is necessarily based on economic, market,
financial and other conditions and the information made
available to us as of the date hereof. Although subsequent
developments may affect this opinion, we do not have any
obligation to update, revise or reaffirm this opinion. Our
opinion does not address the relative merits of the Merger
contemplated by the Agreement compared with other business
strategies that may have been considered by the Company’s
management or its Board of Directors. Nor does our opinion
address the merits of the underlying decision by the Company to
enter into the Agreement.
Wachovia Securities is a trade name of Wachovia Capital Markets,
LLC, an investment banking subsidiary and affiliate of Wachovia
Corporation. We have been engaged to render financial advisory
services to the Company in connection with the Merger and will
receive fees for such services, which include the delivery of
this opinion. In addition to a fee for rendering this opinion,
which is payable upon delivery of this opinion, a significant
portion of our remuneration is contingent upon the consummation
of the Merger. In the ordinary course of our business, we and
our affiliates may actively trade or hold the securities of
either or both of Parent and the Company for our own account or
for the account of our customers and, accordingly, may at any
time hold a long or short position in such securities.
Additionally, in the ordinary course of business, we currently
provide, and may provide in the future, equity, or other
research coverage of the securities of Parent.
It is understood that this opinion is directed for the
information and use of the Board of Directors of the Company in
connection with its consideration of the Agreement and the
Merger, and our opinion does not constitute a recommendation as
to how any holder of the Company Common Stock should vote with
respect to the Merger. Our opinion may not be disclosed,
summarized, excerpted from, or otherwise publicly referred to
without our prior written consent, except that it may be
reproduced in full in any proxy statement or prospectus mailed
or provided to stockholders of the Company in connection with
the transactions contemplated by the Agreement.
We have not considered, nor are we expressing any opinion herein
with respect to, the prices at which Parent Common Stock or
Company Common Stock will trade following the announcement of
the Merger or the price at which Parent Common Stock will trade
following the consummation of the Merger.
Subject to the foregoing, and based upon our experience as
investment bankers, our work as described above, and such other
factors we deem to be relevant, we are of the opinion that, as
of the date hereof, the Merger Consideration to be received by
the holders of the Company Common Stock in the Merger pursuant
to the Agreement is fair, from a financial point of view, to
such holders.
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
§262. Appraisal rights
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this
section and who has neither voted in favor of the merger or
consolidation nor consented thereto in writing pursuant to
§228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder’s
shares of stock under the circumstances described in subsections
(b) and (c) of this section. As used in this section,
the word “stockholder” means a holder of record of
stock in a stock corporation and also a member of record of a
nonstock corporation; the words “stock” and
“share” mean and include what is ordinarily meant by
those words and also membership or membership interest of a
member of a nonstock corporation; and the words “depository
receipt” mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or
fractions thereof, solely of stock of a corporation, which stock
is deposited with the depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to §251
(other than a merger effected pursuant to §251(g) of this
title), §252, §254, §257, §258, §263 or
§264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of
§251 of this title.
(2) Notwithstanding paragraph (1) of this
subsection, appraisal rights under this section shall be
available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
§§251, 252, 254, 257, 258, 263 and 264 of this title
to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as
a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.
or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under §253 of this
title is not owned by the parent corporation immediately prior
to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this
section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or
(c) hereof that appraisal rights are available for any or
all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder’s
shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for
appraisal of such stockholder’s shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such stockholder’s
shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of
such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to
§228 or §253 of this title, then, either a constituent
corporation before the effective date of the merger or
consolidation, or the surviving or resulting corporation within
10 days thereafter, shall notify each of the holders of any
class or series of stock of such constituent corporation who are
entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this
section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation
the appraisal of such holder’s shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holder’s shares. If
such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of
the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded
appraisal of such holder’s shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than
10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective
date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice
is given prior to the effective date, the record date shall be
the close of business on the day next preceding the day on which
the notice is given.
(e) Within 120 days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections
(a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within
60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw
such stockholder’s demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within
120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and
with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written
statement shall be mailed to the stockholder within 10 days
after such stockholder’s written request for such a
statement is received by the surviving or resulting corporation
or within 10 days after expiration of the period for
delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining
their fair value exclusive of any element of value arising from
the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account
all relevant factors. In determining the fair rate of interest,
the Court may consider all relevant factors, including the rate
of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial
upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section
and who has submitted such stockholder’s certificates of
stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal
rights under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Court’s decree may be enforced as other decrees in the
Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorney’s fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholder’s demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the
merger or consolidation as provided in
subsection (e) of this section or thereafter with the
written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms
as the Court deems just.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
As an Oregon corporation, Corillian is subject to the laws of
the State of Oregon governing private corporations and the
exculpation from liability and indemnification provisions
contained therein. In accordance with Section 60.047(2)(d)
of the Oregon Revised Statutes (“ORS”),
Corillian’s Restated Articles of Incorporation (the
“Restated Articles”) eliminate the liability of
Corillian’s directors to Corillian or its shareholders
except for any liability related to (i) breach of the duty
of loyalty and (ii) acts or omissions not in good faith or
that involve intentional transactions from which the director
derived an improper personal benefit.
ORS Section 60.391 allows corporations to indemnify their
directors and officers against liability where the director or
officer has acted in good faith and with a reasonable belief
that actions taken were in the best interests of the corporation
or at least not opposed to the corporation’s best interests
and, if in a criminal proceeding, the individual had no
reasonable cause to believe the conduct in question was
unlawful. Under ORS Section 60.391, corporations may not
indemnify a director or officer against liability in connection
with a claim by or in the right of the corporation or for any
improper personal benefit in which the director or officer was
adjudged liable to the corporation. ORS Section 60.394
mandates indemnification of directors for all reasonable
expenses incurred in the successful defense of any proceeding to
which the director was a party because of being a director of
the corporation. Finally, in accordance with ORS
Section 60.401, a court may order indemnification in view
of all the relevant circumstances, whether or not the director
or officer met the good-faith and reasonable belief standards of
conduct set out in ORS Section 60.391.
ORS Section 60.414 also provides that the statutory
indemnification provisions are not deemed exclusive of any other
rights to which directors or officers may be entitled under a
corporation’s articles of incorporation or bylaws, any
agreement, general or specific action of the board of directors,
vote of shareholders or otherwise.
The Restated Articles provide that Corillian is required to
indemnify to the fullest extent not prohibited by law any
current or former director who is made, or threatened to be
made, a party to an action or proceeding by reason of the fact
that such person serves or served as a director of Corillian.
The Restated Articles also provide that Corillian is permitted
to indemnify to the fullest extent not prohibited by law any
current or former officer who is made, or threatened to be made,
a party to an action or proceeding by reason of the fact that
such person is or was an officer of Corillian.
Corillian has entered into indemnification agreements with its
directors and officers. These indemnification agreements provide
that Corillian will indemnify a director or officer who is made,
or threatened to be made, a party to an action or proceeding by
reason of the fact that such director or officer serves or
served as a director or officer of Corillian, but only if the
director or officer has acted in good faith and with a
reasonable belief that actions taken were in or not opposed to
Corillian’s best interests and, if in a criminal
proceeding, the director or officer had no reasonable cause to
believe the conduct in question was unlawful. The
indemnification agreements specify indemnification procedures
and further provide that Corillian will maintain liability
insurance for Corillian’s directors and officers in
reasonable amounts from reputable insurers.
Item 21.
Exhibits and Financial Statement Schedules.
The exhibits listed below in the “Exhibit Index”
are part of this Registration Statement and are numbered in
accordance with Item 601 of Regulation S-K.
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act.
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum offering price set forth
in the “Calculation of Registration Fee” table in the
effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the registrant’s annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of any employee benefit
plan’s annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as
follows: that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part
of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the
applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(d) The registrant undertakes that every prospectus:
(i) that is filed pursuant to paragraph (c)
immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to
Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment
is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions discussed in Item 20 above, or otherwise, the
registrant has been advised that in the opinion of the SEC such
indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond
to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or
13 of this Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the
effective date of the registration statement through the date of
responding to the request.
(g) The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in
the registration statement when it became effective.
Pursuant to the requirements of the Securities Act, the
Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Hillsboro, State of Oregon, on
June 17, 2005.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities indicated below on the 17th day of June,
2005.
Agreement and Plan of Merger by and among Corillian Corporation,
Wizard Acquisition Corporation and InteliData Technologies
Corporation dated as of March 31, 2005 (included as
Appendix A to this proxy statement/ prospectus and
incorporated herein by reference). (Pursuant to
Item 601(b)(2) of Regulation S-K promulgated by the
SEC, the annex, exhibits and schedules to the Agreement and Plan
of Merger have been omitted. Such annex, exhibits and schedules
are described in the Agreement and Plan of Merger. Corillian
hereby agrees to furnish to the SEC, upon its request, any or
all of such omitted annex, exhibits or schedules.)
Consent of KPMG LLP, independent registered public accounting
firm, regarding the audited financial statements and
management’s assessment of the effectiveness of internal
control over financial reporting as of December 31, 2004
and the effectiveness of internal control over financial
reporting as of December 31, 2004, of Corillian Corporation.
23
.2
Consent of Deloitte & Touche LLP, independent
registered public accounting firm, regarding the audited
financial statements and management’s report on the
effectiveness of internal control over financial reporting, of
InteliData Technologies Corporation.
23
.3
Consent of Perkins Coie LLP (included in Exhibits 5.1 and
8.1 hereto).
23
.4
Consent of Hunton & Williams LLP (included in
Exhibit 8.2 hereto).
