-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CMpIXiS/2IsRQPQPJMLO0bhlwLFNTRS8Nau4kvxDWbxAKmaCu6vIuRvQVzbXUnJ2 27Jdemptnzgjqu76I1zibw== /in/edgar/work/20000601/0000912057-00-027020/0000912057-00-027020.txt : 20000919 0000912057-00-027020.hdr.sgml : 20000919 ACCESSION NUMBER: 0000912057-00-027020 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 24 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EBIX COM INC CENTRAL INDEX KEY: 0000814549 STANDARD INDUSTRIAL CLASSIFICATION: [7373 ] IRS NUMBER: 770021975 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-15946 FILM NUMBER: 647633 BUSINESS ADDRESS: STREET 1: 3501 ALGONQUIN RD STREET 2: STE 500 CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 BUSINESS PHONE: 8475063100 MAIL ADDRESS: STREET 1: 3501 ALGONQUIN ROAD CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 FORMER COMPANY: FORMER CONFORMED NAME: DELPHI INFORMATION SYSTEMS INC /DE/ DATE OF NAME CHANGE: 19920703 10-K 1 a10-k.txt 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-15946 EBIX.COM, INC. (Exact name of registrant as specified in its charter) Delaware 77-0021975 (State or other jurisdiction of (I.R.S. Employer Identification incorporation) Number) 1900 E. Golf Road Schaumburg, Illinois 60173 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (847) 789-3047 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Title of each class Common Stock, par value $0.10 per share Preferred Share Purchase Rights Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. Yes / / No /X/ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. / / As of March 31, 2000, the number of shares of Common Stock outstanding was 11,367,574. As of such date, the aggregate market value of Common Stock held by nonaffiliates, based upon the last sale price of the shares as reported on the NASDAQ SmallCap Market System on such date, was approximately $78,464,618 (For this purpose, the Company has assumed, without determining, that Directors, Executive Officers, and holders of more than 10% of the Company's shares are affiliates). Documents Incorporated by Reference -- None. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EBIX.COM, INC. INDEX TO ANNUAL REPORT ON FORM 10-K
PAGE REFERENCE -------------- PART I Item 1. Business.................................................... 3 Item 2. Properties.................................................. 5 Item 3. Legal Proceedings........................................... 5 Item 4. Submission of Matters to a Vote of Security Holders......... 6 PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters..................................................... 7 Item 6. Selected Financial Data..................................... 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 10 Item 7A. Quantitative and Qualitative Disclosure About Market Risk... 20 Item 8. Financial Statements and Supplementary Data................. 21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................... 49 PART III Item 10. Directors and Executive Officers of the Registrant.......... 49 Item 11. Executive Compensation...................................... 51 Item 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 57 Item 13. Certain Relationships and Related Transactions.............. 59 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................................... 60
2 PART I ITEM 1. BUSINESS ebix.com, Inc., formerly Delphi Information Systems, Inc., ("the Company") was founded in 1976 as Delphi Systems, Inc., a California corporation. In this report, ebix.com, Inc. is referred to as the "Company" while ebix.com(1) refers to the Company's website, including the Company's Internet browser based products described below. In 1983, Delphi Information Systems, Inc., a Delaware corporation, was formed and acquired all of the outstanding shares of Delphi Systems, Inc. in an exchange offer. In June 1987, Delphi Systems, Inc. was merged into and with Delphi Information Systems, Inc. On July 23, 1996, the Company acquired a majority interest, and on January 1, 1999, the Company acquired the remaining minority interest in Complete Broking Systems ("CBS") of Auckland, New Zealand. On March 23, 1998, the Board of Directors adopted a resolution to change the Company's fiscal year end to December 31 effective in April 1998. On October 22, 1999, the Company's shareholders approved a proposal to amend the Certificate of Incorporation to change the name of the Company from Delphi Information Systems, Inc. to ebix.com, Inc. The Company is an international provider of software and Internet-based solutions for the insurance industry. The Company's revenue is derived primarily from the licensing and sale of software comprised of purchased software developed and third-party software and from professional services, maintenance, and support services. Professional services include consulting, implementation, training, and project management provided to the Company's customers with installed systems and those in the process of installing systems. The Company's software customer list includes a majority of the largest 100 brokerages and top 200 agencies in the United States and Canada, and many of the largest global brokers. The Company's software operates on approximately 75,000 workstations and terminals at more than 3,000 customer sites. PRODUCTS--The Company's product strategy focuses on the introduction and the successful commercialization of ebix.com. ebix.com is a website designed to meet the insurance needs of both the consumer and the insurance professional. ebix.com includes a virtual marketplace, ebix.mall, where consumers can define their desired policy coverages and seek competitive quotes from a number of agents, brokers and carriers in a timeframe defined by the consumer. ebix.com also includes ebix.link, an Internet browser-based product providing electronic information transmission between insurance carriers and insurance brokers. ebix.mall is expected to generate revenues through transaction fees and acceptance fees (currently, charges payable by an agent, broker or carrier, as the case may be, are $1.00 upon quoting and $20.00 upon processing a sale of a policy through the Company's site). ebix.link is expected to generate revenues through transaction fees. Although transactions have occurred on the website in 1999 and 2000, because the Company has not processed the charges, which are de minimis in amount, no revenue has been recognized to date. Transactions have not occurred on the website for ebix.link. In connection with the development of the website, the Company in August 1999, entered into agreements with Hewlett Packard and Infospace. See Note 14 to the consolidated financial statements. Because the Company does not have the substantial capital at this time to adequately promote the website, the Company cannot predict whether, when or how the product will generate substantial revenues. - ------------------------ (1) ebix.com is a registered trademark of ebix.com, Inc. 3 The Company continues to provide the agency management software product line which is comprised of "ebix.global" (formerly cd.global), a modular, state of the art, agency management solution providing flexibility and the ability to handle unstructured data and complex risk; and "ebix.one" (formerly cd.one), a structured system utilizing many features of the Company's previous products. The Company also has six "legacy" products including: INfinity, INSIGHT, PC-ELITE, Insurnet, SMART, and Vista. The legacy products provide basic functions such as policy administration, claims handling, accounting, and financial reporting. Legacy products will be maintained and supported as long as there is adequate economic and strategic justification. Customers utilizing legacy products will continue to be encouraged to migrate to newer products. During the second quarter of the fiscal year ended March 31, 1997 ("Fiscal 1997"), the Company discontinued the sale and marketing of computer hardware in order to focus the Company's resources on the development and sale of software and professional services. Subsequent to the Company's exit from the hardware sector, the Company continues to receive commissions from hardware vendors for product referrals although this is not a material source of revenue for the Company. The software products offered by the Company range in price from $350 to $1,700 on a per license basis, but the total contract value for certain multiple-site global brokers is over $1,000,000. In the fiscal year ended December 31, 1999 ("Fiscal 1999"), no customer represented more than 10% of consolidated revenue. In the nine-month period ended December 31, 1998 ("Transition Period 1998") and fiscal year ended March 31, 1998 ("Fiscal 1998"), one domestic customer (including its foreign subsidiaries) accounted for approximately 16% and 11% of consolidated revenue, respectively. The accounts receivable relating to this customer were zero and $583,000 for the Transition Period 1998 and Fiscal 1998, respectively. The customer is a publicly traded multi-national insurance company listed on the New York Stock Exchange. SYSTEM DESIGN AND ARCHITECTURE--The Company's new product offerings utilize the latest technology. "ebix.global" is a client/server based system, which runs on an Oracle relational database software technology. ebix.com is a website, while "ebix.one" is operational on Btrieve. PRODUCT DEVELOPMENT--At December 31, 1999, the Company employed 35 full-time employees engaged in product development activities. These activities include research and development of software enhancements such as adding functionality, improving usefulness, adaptation to newer software and hardware technologies, increasing responsiveness and the development and maintenance of the website. Product development expenditures were $5,452,000, $3,764,000, and $4,667,000 in Fiscal 1999, Transition Period 1998, and Fiscal 1998, respectively. COMPETITION--Management believes its principal competition is represented by four companies, two of which provide client/server based software systems that are comparable to those offered by the Company and two of which provide websites devoted to insurance sales. These companies are larger than the Company and may have greater financial resources. The Company believes that most insurance carriers are in the process of reducing or eliminating their in-house agency and brokerage automation efforts. Nevertheless, some insurance carriers continue to operate subsidiaries which actively compete with the Company. These carriers have much greater financial resources than the Company and have in the past subsidized the automation of independent agencies through various incentives offered to promote the sale of the carriers' insurance products. Accordingly, there can be no assurances that insurance carriers will continue to withdraw from competition with the Company. The Company is not aware of any large hardware company that offers software that specifically addresses the independent agency marketplace. However, certain large hardware suppliers do sell systems and systems' components to independent agencies. The Company, to a much lesser extent, also 4 experiences competition from small, independent or freelance developers and suppliers of software who sometimes work in concert with hardware companies to supply systems to independent agencies. Key competitive factors in the Company's market are product technology, features and functions, ease of use, price, reputation, reliability, effects of insurance regulation, and quality of customer support and training. Key features of the Company's new ebix.com website product that the Company believes will be of competitive significance include: (i) the ability to complete end-to-end conversion of data from input to policy issuance, (ii) offering of both personal and commercial lines, (iii) provision of a new market to insurance brokers, insurance carriers and agents for expansion of their business, (iv) affording to insurance customers a marketplace in which insurance can be priced on an objective competitive basis, and (v) the ability to complete transactions online. Management believes that overall the Company competes favorably with respect to these factors. PROPRIETARY RIGHTS--The Company regards its software as proprietary and attempts to protect it with copyrights, trade secret laws and restrictions on disclosure and transferring title. Despite these precautions, it may be possible for third parties to copy aspects of the Company's products or, without authorization, to obtain and use information which the Company regards as trade secrets. Existing copyright law affords only limited practical protection and the Company's software is unpatented. DEFERRED REVENUE--The Company traditionally invoices software maintenance and support on a quarterly or annual basis in advance of providing the service. The software maintenance fees are recorded as deferred revenue and recognized ratably over the term of the respective software maintenance agreements. EMPLOYEES--At December 31, 1999, the Company had 135 employees, including 13 employees in sales and marketing, 35 employees in product development, 57 employees in customer service and operations, and 30 employees in general management, administration and finance. None of the Company's employees are presently covered by a collective bargaining agreement. Management believes that employee relations are good. ITEM 2. PROPERTIES The Company's corporate headquarters are in Schaumburg (Chicago), Illinois, where it leases approximately 6,000 square feet of office space. Substantially all corporate executive and administrative functions are located in Schaumburg. The Schaumburg lease expires in December 2001. The Company leases additional office space of approximately 11,300 square feet in Atlanta, Georgia; approximately 12,000 square feet in Billerica, Massachusetts; approximately 12,000 square feet in Walnut Creek (San Francisco), California; approximately 17,500 square feet in Pittsburgh, Pennsylvania; approximately 6,000 square feet in Scarborough, (Toronto) Canada; approximately 1,500 square feet in Auckland, New Zealand; approximately 1,500 square feet in Sydney, Australia; approximately 1,000 square feet in London, England; and approximately 1,500 square feet in Singapore. Management believes its facilities are adequate for its current needs and that suitable additional or substitute space will be available as needed. ITEM 3. LEGAL PROCEEDINGS In the normal course of business, the Company is a party to various legal proceedings. The Company does not expect that any currently pending proceedings will have a material adverse effect on its business, results of operations or financial condition. 5 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of Stockholders, held on October 22, 1999, the following members were elected to the Company's Board of Directors, each by the vote indicated to the right of such nominee's name:
NOMINEE FOR WITHHELD - ------- --------- -------- Yuval Almog............................................. 8,811,518 256,648 William R. Baumel....................................... 9,011,853 56,313 Larry G. Gerdes......................................... 8,811,818 256,628
Abstentions and broker non-votes were not counted as either a vote for or withheld from the nominees for director and had no effect in determining the outcome of the election for directors. In addition to the election of the Company's Board of Directors, the stockholders of the Company approved the adoption of an amendment to the 1996 Stock Incentive Plan (the "1996 Plan"), which increased the number of shares of Common Stock available for grant under the 1996 Plan by 1,500,000 and which reflected the one-for-five reverse stock split effective May 6, 1998. The result of the vote by proxy and by ballot at such meeting was as follows: of the 9,068,166 shares constituting the quorum 4,616,117 votes for, 538,228 votes against and abstentions, which had the effect of votes against the proposal and 3,913,821 broker non-votes, which had no effect on the outcome of the proposal. The stockholders of the Company approved the adoption of the 1999 Stock Purchase Plan, which is intended to provide an opportunity for eligible employees to acquire a proprietary interest in the Company through the purchase of shares of Common Stock of the Company. The result of the vote by proxy and by ballot at such meeting was as follows: of the 9,068,166 shares constituting the quorum 4,702,759 votes for, 451,586 votes against and abstentions, which had the effect of a vote against the proposal and 3,913,821 broker non-votes, which had no effect on the outcome of the election. The stockholders of the Company also approved a proposal to amend the Company's Certificate of Incorporation to change the name of the Company from Delphi Information Systems, Inc. to ebix.com, Inc. The result of the vote by proxy and by ballot at such meeting was as follows: of the 9,068,166 shares constituting a quorum 9,035,059 votes for, 30,107 votes against and abstentions, which had the effect of a vote against the proposal. There were no broker non-votes, which would have had the effect of a vote against the proposed amendment. 6 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION The principal market for the Company's Common Stock is the Nasdaq SmallCap Market. The Company's Common Stock trades under the symbol "EBIX*". As of March 31, 2000, there were 150 shareholders of record. The Company has not paid dividends on its Common Stock to date. There are no plans in the foreseeable future to do so. The following tables set forth the high and low closing bid prices for the Company's Common Stock for each calendar quarter in Fiscal 1999, Transition Period 1998, and Fiscal 1998 as restated to reflect the one-for-five reverse stock split effective May 8, 1998.
TWELVE MONTHS ENDED DECEMBER 31, 1999 HIGH LOW - ------------------- -------- -------- First quarter............................................... $11.31 $7.56 Second quarter.............................................. 10.50 7.94 Third quarter............................................... 9.75 6.50 Fourth quarter.............................................. 11.19 6.69
NINE MONTHS ENDED DECEMBER 31, 1998 HIGH LOW - ----------------- -------- -------- April--June................................................. $5.19 $3.60 July--September............................................. 5.50 2.91 October--December........................................... 8.50 2.94
TWELVE MONTHS ENDED MARCH 31, 1998 HIGH LOW - ------------------- -------- -------- First quarter............................................... $7.50 $5.15 Second quarter.............................................. 9.05 4.70 Third quarter............................................... 7.05 4.40 Fourth quarter.............................................. 4.85 3.15
As of March 31, 2000 there were 11,367,574 shares of Common Stock outstanding and 221 shares of Series D Preferred Stock, par value $.10 per share outstanding. NASDAQ SMALL CAP MARKET On April 20, 2000, the Company was notified of the determination of the NASDAQ Stock Market Staff to delist the Company's stock because of the delay in the Company's filing of its Form 10-K for the year ended December 31, 1999. The Company appealed. The appeal will stay the delisting pending the decision of a NASDAQ Listing Qualifications Panel that is scheduled to hear the appeal on June 1, 2000. - ------------------------ * The symbol is EBIXE while the Company has overdue required filings with the Securities and Exchange Commission. The Company's Form 10-Q for the first quarter 2000 which was required to be filed by May 15, 2000, is expected to be filed in June 2000. 7 UNREGISTERED SECURITIES During fiscal 1999, the Company sold securities that were not registered under the Securities Act of 1933 as follows: (1) In connection with an agreement executed on August 20, 1999 with Hewlett-Packard Company, the Company issued warrants to purchase common stock of the Company, on the terms and for the consideration indicated in Note 11 to the Company's consolidated financial statements included in Item 8 of this Form 10-K and incorporated herein by reference. The exemption claimed from registration under the Securities Act of 1933 was Section 4(2), thereof, exempting transactions by an issuer not involving a public offering, based on the fact that the transaction was a private sale to a single substantial and sophisticated corporate investor. (2) In connection with an agreement executed on August 31, 1999 with InfoSpace.com, the Company issued warrants to purchase common stock of the Company, on the terms and for the consideration indicated in Note 14 to the Company's consolidated financial statements included in Item 8 of this Form 10-K and incorporated herein by reference. The exemption claimed from registration under the Securities Act of 1933 was Section 4(2) thereof, exempting transactions by an issuer not involving a public offering, based on the fact that the transaction was a private sale to a single substantial and sophisticated corporate investor. (3) The Company sold a total of 2,925,400 shares of its common stock on various dates in 1999 for an aggregate consideration of $21,940,500 to persons who held warrants issued in private placements by the Company in 1996 and 1997. The consideration paid per share consisted of the surrender of a warrant with respect to one share and $7.50 in cash. The exemption claimed from registration under the Securities Act of 1933 was Section 4(2) thereof, exempting transactions by an issuer not involving a public offering, based upon the fact that the sales were made exclusively to holders of warrants that had been issued in an earlier private placement. The shares issued on exercise of the warrants were subject to restrictions on resale. (4) The Company sold a total of 188,550 shares of its common stock for an aggregate consideration of $942,750 to persons who held warrants issued in a private placement by the Company in 1996 and 1997 to the placement agent for the 1996 and 1997 private placements referred to in (3), above. The consideration paid per share consisted of the surrender of a warrant with respect to one share and $5.00 in cash. The exemption claimed from registration under the Securities Act of 1933 was Section 4(2) thereof, exempting transactions of an issuer not involving a public offering, based upon the fact that the sales were made exclusively to holders of warrants that had been issued in an earlier private placement. The shares issued on exercise of the warrants were subject to restrictions on resale. (5) Options were granted to Tatum CFO Partners (see Item 11, Executive Compensation--Employment Agreement), on December 2, 1999, to a consultant to the Company, to purchase, respectively, 33,333 shares and 10,000 shares of the Company's Common Stock at per share exercise prices of $6.6656 and $9.1875, respectively. The consideration for such option issuances is services to the Company. The exemption claimed from registration under the Securities Act of 1933 was Section 4(2) thereof, exempting transactions by an issuer not involving a public offering, based on the fact that these transactions involved sales to an institution and a single consultant, respectively, in private transactions. 8 ITEM 6. SELECTED FINANCIAL DATA CONSOLIDATED FINANCIAL HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE DATA)
RESTATED (2) ------------------------------------------------------- YEAR NINE MONTHS FISCAL YEARS ENDED MARCH 31, ENDED ENDED ----------------------------------- DECEMBER 31, 1999 DECEMBER 31, 1998 1998 1997 1996 ----------------- ----------------- -------- ------------- -------- RESULTS OF OPERATIONS: Revenue.......................... $ 12,511 $13,402 $20,926 $27,714 $ 44,081 Operating loss................... (19,020) (5,346) (4,382) (6,028) (11,080) NET LOSS......................... $(19,060) $(5,754) $(3,806) $(6,037) $(11,793) NET LOSS PER SHARE: (1) Basic EPS........................ $ (2.05) $ (0.78) $ (0.52) $ (0.99) $ (6.84) Diluted EPS...................... $ (2.05) $ (0.78) $ (0.52) $ (0.99) $ (6.84) SHARES USED IN COMPUTING PER SHARE DATA: (1) Basic EPS........................ 9,279 7,395 7,347 6,093 1,724 Diluted EPS...................... 9,279 7,395 7,347 6,093 1,724 FINANCIAL POSITION: Assets........................... $ 13,389 $ 8,063 $ 9,702 $17,838 $ 20,429 Short-term debt.................. 217 4,032 1,923 1,600 3,030 Long-term debt................... 106 413 210 -- 1,500 Stockholders' equity (deficit)... $ (2,983) $(4,517) $ 1,256 $ 4,513 $ (3,306)
- -------------------------- (1) Net loss per share and share data restated to reflect the one-for-five reverse stock split effective May 8, 1998. (2) As a result of a comprehensive review that commenced in the first quarter of 2000, the Company determined that certain items of revenue and expense were incorrectly reported in previously issued financial statements. These principally related to revenue recognition, capitalized software and royalties. The Company has accordingly restated its financial results for the Transition Period 1998, Fiscal 1998, Fiscal 1997, Fiscal 1996 and prior. Unaudited quarterly financial data for Fiscal 1999 and Transition Period 1998 have also been restated. See Note 2 to the consolidated financial statements. 9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As more fully described in the Notes to Consolidated Financial Statements, certain financial information in this filing has been restated to correct previously issued financial statements. The discussion in this item reflects those restatements. The Company's current product strategy has added the design and development of ebix.com to the "ebix.global" product line. The Company launched its website on September 8, 1999. The Company is pursuing the successful commercialization of this e-commerce insurance portal. ebix.com is a website designed to meet the insurance needs of both the consumer and the insurance professional. ebix.com includes a virtual marketplace, ebix.mall, where consumers can define their desired policy coverages and seek competitive quotes from a number of agents, brokers and carriers in a timeframe defined by the consumer. ebix.com also includes ebix.link, an Internet browser-based product providing electronic information transmission between insurance carriers and insurance brokers. ebix.mall is expected to generate revenues through transaction fees and acceptance fees (currently, charges payable by an agent, broker or carrier, as the case may be, are $1.00 upon quoting, and $20.00 upon processing a sale of a policy through the Company's site). ebix.link is expected to generate revenues through transaction fees. Although transactions have occurred on the website in 1999 and 2000, because the Company has not processed the charges, which are de minimis in amount, no revenue has been recognized to date. Transactions have not occurred on the website for ebix.link. Because the Company does not have capital at this time to promote the website, the Company cannot predict whether, when or how the product will generate revenues. The insurance industry has undergone significant consolidation over the past several years driven by the need for, and benefits from, economies of scale and scope in providing low-cost insurance. Consolidation has involved both insurance brokerages, the Company's primary customers, and insurance companies, and is directly impacting the manner in which insurance products are distributed. Management believes the insurance industry will continue to experience significant changes in the next several years to meet the changing distribution model. Changes in the insurance industry may create opportunities and challenges for the Company. Management believes consolidation will force brokerages to decrease distribution costs and eliminate labor-intensive tasks via automation. Competition will force brokerages to increase service levels via improved automated processes such as quoting and claims processing. Management believes that the Company can partner with customers to provide integrated information management solutions, and fully leverage information technology and services. The consolidation of the industry will create a marketplace of fewer yet more sophisticated brokers and agents. In such an environment, the Company could be subject to heightened effects of competition, particularly with respect to product functionality, service and price. RECENT DEVELOPMENTS At the Company's Annual Meeting held on October 22, 1999, shareholders: (i) Approved a proposal to amend the Certificate of Incorporation to change the name of the Company from Delphi Information Systems, Inc. to ebix.com, Inc. Changing the Company's name reflects the migration of its products and services to the Internet and its introduction of the Internet insurance portal ebix.com. 10 (ii) Approved the adoption of an amendment to the 1996 Stock Incentive Plan which increased the number of shares of common stock available for grant under the 1996 Plan by 1,500,000 and which reflected the one-for-five reverse stock split effective May 6, 1998. (iii) Approved the adoption of the 1999 Stock Purchase Plan, which is intended to provide an opportunity for eligible employees to acquire a proprietary interest in the Company through the purchase of shares of common stock of the Company. On May 10, 1999, the Company dismissed Arthur Andersen LLP as the Company's independent accountants. On June 2, 1999, the Company engaged KPMG LLP as the Company's independent accountants. In April 2000, the Company engaged Arthur Andersen LLP to reaudit the Company's financial statements for the Transition Period 1998 and Fiscal 1998, and the financial statements included herein reflect the resulting restatements. See Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. Prior to January 1999, Delphi Information Systems International, Inc., a wholly-owned subsidiary of the Company, held a fifty-four percent interest in Complete Broking Systems Australia PTY, Ltd. Effective January 1, 1999, the Company acquired the remaining forty-six percent interest. The Company paid approximately $50,000 and issued 22,222 shares of the Company's common stock in exchange for the minority interest and a non-compete agreement from the two former shareholders. The fair market value of the consideration has been allocated to the non-compete agreement and is being amortized over the fifteen-month life of the agreement. An agreement was executed on August 20, 1999 with Hewlett-Packard Company ("H-P). An agreement with Infospace.com Inc. ("Infospace") was executed on August 31, 1999. See the discussion related to these agreements in the section Liquidity and Capital Resources. In the interest of making the comparisons of the results of operations in this report as meaningful as possible (in light of the effects of the change in the Company's fiscal year), the discussion below focuses on Fiscal 1999 compared to the pro forma twelve months ended December 31, 1998 as well as the Transition Period 1998 compared to the pro forma nine months ended December 31, 1997. 11 RESULTS OF OPERATIONS EBIX.COM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
PRO FORMA RESTATED(1) PRO FORMA TWELVE TRANSITION NINE YEAR MONTHS PERIOD MONTHS ENDED ENDED ENDED ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1999 1998 1998 1997 ------------ ------------ ------------ ------------ Revenue: Software.................................... 1,438 2,613 2,084 1,441 Services and other.......................... 11,073 16,135 11,318 14,139 ------- -------- ------ ------ Total revenue........................... 12,511 18,748 13,402 15,580 Operating expenses: Software costs.............................. 1,217 486 1,469 4,070 Services and other costs.................... 9,168 7,744 6,190 7,072 Product development......................... 5,452 5,451 3,764 2,980 Sales and marketing......................... 4,768 3,010 2,109 2,647 General and administrative.................. 10,551 6,478 5,026 2,895 Amortization and impairment of goodwill..... 375 222 190 1,001 ------- -------- ------ ------ Total operating expenses.................. 31,531 23,391 18,748 20,665 ------- -------- ------ ------ Operating (loss)............................ (19,020) (4,643) (5,346) (5,085)
- ------------------------ (1) As a result of a comprehensive review that commenced in the first quarter of 2000, the Company determined that certain items of revenue and expense were incorrectly reported in previously issued financial statements. These principally related to revenue recognition, capitalized software and royalties. The Company has accordingly restated its financial results for the Transition Period 1998, Fiscal 1998, Fiscal 1997 and Fiscal 1996 and prior. Unaudited quarterly financial data for Fiscal 1999 and Transition Period 1998 have also been restated. See Note 2 to the consolidated financial statements. TOTAL REVENUE--The Company's revenue is derived from the licensing and sale of proprietary software and third party software ("Software") and from professional services, maintenance services, and support services ("Services"). Professional services include consulting, implementation, training and project management provided to the Company's customers with installed systems and those in the process of installing systems. Total revenue is comprised of software revenue and service revenue. - Total revenue for Fiscal 1999 decreased $6,237,000 or 33.3% from the comparable prior twelve-month period ended December 31, 1998. - Total revenue for Transition Period 1998 decreased $2,178,000 or 14.0% from the comparable prior nine-month period ended December 31, 1997. SOFTWARE REVENUE--The Company's current product strategy is centered on a new generation of products, collectively referred to as the ebix (formerly "cd") product line and are comprised of ebix.global (formerly "cd.global"), a modular, state of the art, agency management solution providing flexibility and the ability to handle unstructured data and complex risk ebix.com, a website and ebix.one (formerly "cd.one"), a structured system utilizing many features of the Company's previous products. The Company also has six "legacy" products including; INfinity, INSIGHT, PC-ELITE, Insurnet, SMART, and Vista. The legacy products provide basic functions such as policy administration, claims 12 handling, accounting, and financial reporting. Current legacy products will be maintained and supported as long as there is adequate economic and strategic justification. Customers utilizing legacy products will continue to be encouraged to migrate to newer products. Software revenue is comprised of revenue from the sale of ebix (formerly "cd") products, current legacy products, and other third party software. During the second quarter of Fiscal 1997, the Company discontinued the sale and marketing of computer hardware. The sale of hardware was discontinued in order to focus the Company's resources on the development and sale of software and services. Subsequent to the Company's exit from the hardware sector, the Company continues to receive commissions from hardware vendors for product referrals although this is not a material source of revenue for the Company. This commission is included in other income. ebix.mall is expected to generate revenues through transaction fees and acceptance fees (currently, charges payable by an agent, broker or carrier, as the case may be, are $1.00 upon quoting and $20.00 upon processing a sale of a policy through the Company's site). ebix.link is expected to generate revenues through transaction fees. Although transactions have occurred on the website in 1999, because the Company has not processed the charges, which are de minimis in amount, no revenue has been recognized to date. Transactions have not occurred on the website for ebix.link. - Total software revenue for Fiscal 1999 decreased $1,175,000 or 45.0% from the comparable prior twelve-month period ended December 31, 1998. This decrease is due to Y2K purchase deferrals and a general decline in the software market for the Company's products. - Total software revenue for Transition Period 1998 increased $643,000 or 44.6% from the comparable prior nine-month period ended December 31, 1997. This increase is partially due to the introduction of ebix.global during the period. SERVICES REVENUE-- - Total services revenue for Fiscal 1999 decreased $5,062,000 or 31.4% from the comparable prior twelve-month period ended December 31, 1998. This decrease is due to a decrease in support revenue associated with legacy products and decreases in consulting and custom programming revenue. - Total services revenue for Transition Period 1998 decreased $2,821,000 or 20.0% from the comparable prior nine-month period ended December 31, 1997. This decrease is primarily due to a decrease in support revenues associated with legacy products. SOFTWARE COSTS--Cost of Software revenue includes the cost of third party software and the amortization of purchased software cost. - Total software costs for Fiscal 1999 increased $731,000 or 150.4% from the comparable prior twelve-month period ended December 31, 1998. This increase is due to royalties incurred from the sale of third party software. - Total software costs for Transition Period 1998 decreased $2,601,000 or 63.9% from the comparable prior nine-month period ended December 31, 1997. This decrease is due to a decrease in amortization of purchased software. SERVICES AND OTHER COSTS--Cost of Services revenue includes costs associated with support, consulting, implementation and training services. - Total services and other costs for Fiscal 1999 increased $1,424,000 or 18.4% from the comparable prior twelve-month period ended December 31, 1998. This increase is due to increased support costs associated with payments made under royalty agreements to buy back support business from a competitor. 13 - Total services and other costs for Transition Period 1998 decreased $882,000 or 12.5% from the comparable prior nine-month period ended December 31, 1997. This decrease is due to reduced service revenue for the period. PRODUCT DEVELOPMENT EXPENSES-- - Total product development expenses for Fiscal 1999 were comparable to prior twelve-month period ended December 31, 1998. This is related to development efforts associated with transferring the ebix.global and ebix.one projects to the website. - Total product development for Transition Period 1998 increased $784,000 or 26.3% from the comparable prior nine-month period ended December 31, 1997. This increase is primarily due to the increase in internal development costs related to ebix.global and ebix.one and the expenses associated with previously capitalized software costs. SALES AND MARKETING EXPENSES-- - Total sales and marketing expenses for Fiscal 1999 increased $1,758,000 or 58.4% from the comparable prior twelve-month period ended December 31, 1998. This increase is primarily attributable to the ebix.com product promotion. - Total sales and marketing expenses for Transition Period 1998 decreased $538,000 or 20.3% from the comparable prior nine-month period ended December 31, 1997. The decrease is due to lower than average personnel levels during Transition Period 1998. GENERAL AND ADMINISTRATIVE EXPENSES-- - Total general and administrative expenses for Fiscal 1999 increased $4,073,000 or 62.8% from the comparable prior twelve-month period ended December 31, 1998. This increase is due to higher expenditures for bad debts, legal and audit fees, costs associated with the opening of the London, Singapore, and Atlanta offices, employee benefits, and compensation expense related to the issuance of stock options and warrants. - Total general and administrative expenses for Transition Period 1998 increased $2,131,000 or 73.6% from the comparable prior nine-month period ended December 31, 1997. This increase is primarily due to higher expenditures for bad debts, personnel costs, and facility costs. AMORTIZATION AND IMPAIRMENT OF GOODWILL-- - Total amortization of goodwill for Fiscal 1999 decreased $30,000 or 13.5% from the comparable prior twelve-month period ended December 31, 1998. This decrease is attributable to the annual amortization expense. - Total amortization of goodwill for Transition Period 1998 decreased $811,000 or 81.0% from the comparable prior nine-month period ended December 31, 1997. This decrease is attributable to the period amortization expense. Additionally, during the second quarter of Fiscal 1998, the Company made a strategic decision to discontinue enhancing and selling technology acquired in certain acquisitions. As a result, the unamortized goodwill of $770 related to these acquisitions was written off. This amount is included in amortization and impairment of goodwill in the accompanying consolidated statements of operations. Fair value was determined based on the discounted estimated expected future cash flows related to the goodwill. 14 IMPACT OF RESTATEMENT ON QUARTERLY FINANCIAL INFORMATION The restatement of the financial statements for Transition Period 1998 and the first three quarters of fiscal 1999 had the following impact on previously reported quarterly financial information. The Transition Period 1998 represents a nine month period and the quarters indicated below for this period represent the three months ended June 30, 1998 (First Quarter), September 30, 1998 (Second Quarter), and December 31, 1998 (Third Quarter). The Fourth Quarter fiscal 1999 results were not previously reported.
FIRST QUARTER SECOND QUARTER THIRD QUARTER ---------------------- ---------------------- ---------------------- FOURTH AS REPORTED RESTATED AS REPORTED RESTATED AS REPORTED RESTATED QUARTER ----------- -------- ----------- -------- ----------- -------- --------- Transition Period December 31, 1998 Total revenues........................... $6,167 $5,386 $7,009 $4,735 $6,045 $3,281 -- Net income (loss)........................ 502 (339) 805 (1,122) (806) (4,293) -- Net income (loss) appliciable to common stockholders........................... 502 (339) 805 (1,122) (806) (4,293) -- Net income (loss) per common share Basic.................................... $ 0.07 $(0.05) $ 0.11 $(0.15) $(0.11) $(0.58) -- Diluted.................................. 0.07 (0.05) 0.11 (0.15) (0.11) (0.58) -- Year Ended December 31, 1999 Total revenues........................... $5,088 $4,429 $3,855 $3,690 $3,192 $2,928 $1,464 Net loss................................. (2,165) (1,992) (4,796) (4,448) (3,962) (4,568) (8,052) Net loss appliciable to common stockholders............................. (2,165) (1,992) (4,796) (4,448) (3,962) (5,837) (7,387) Net loss per common share Basic.................................... $(0.28) $(0.25) $(0.55) $(0.51) $(0.39) $(0.57) $(0.71) Diluted.................................. (0.28) (0.25) (0.55) (0.51) (0.39) (0.57) $(0.71)
15 LIQUIDITY AND CAPITAL RESOURCES During 1999 the Company experienced negative operating cash flow of $13,333,000. The Company funded cash used in operating activities and investing activities primarily through the use of cash proceeds from the exercise of stock warrants and employee stock options of approximately $23,922,000. Although the cash proceeds resulting from the exercise of stock warrants and options provide the Company with unused sources of capital, the Company continues to experience operating losses as well as negative cash flows. In addition, the Company's current product strategy has added the design and development of ebix.com, which was launched on September 8, 1999; the Company is aggressively pursuing the successful commercialization of this e-commerce insurance portal. However, ebix.com has not generated any revenue to date and there can be no assurance that ebix.com will ever create positive cash flows, increase revenues or achieve profitability. The Company believes its cash balances, available credit facility and funds from operations will be sufficient to meet all of its anticipated cash requirements for at least the next 12 months. However, the Company is currently faced with liquidity concerns. In order to meet the projected cash requirements of the business, it will be necessary for the Company to increase its revenue sources beyond those accessed during the past two years or secure financing sources, beyond those currently available, in order to continue as a going concern after the 2000 fiscal year. Management believes that the required financing sources to operate the business as a going concern will be secured, although there can be no assurances that such financing will be available or that it will be available on terms satisfactory to the Company. Management believes that there may be additional infusions of cash from the exercise of outstanding stock warrants. Management will endeavor to secure the necessary financing from other sources. Such sources could include one or more equity investors. Management intends to seek the required financing sources that are necessary in order to continue to operate the business. DEFERRED REVENUE--The Company traditionally invoices software maintenance and support in advance of providing the service. The software maintenance fees are recorded as deferred revenue and recognized ratably over the term of the software maintenance agreement. The Company's current liabilities at December 31, 1999 include deferred revenue of $3,045,865 and deposit liabilities of $2,323,709. The liability is satisfied through normal ongoing operations of the Company's service organization and generally does not require payment to third parties. PRODUCT DEVELOPMENT--At December 31, 1999, the Company employed 35 full-time employees engaged in product development and activities. These activities include research and development of software enhancements, improving usefulness, adaptation to newer software and hardware technologies, and increasing responsiveness. Product development expenditures were $5,452,000, $3,764,000, and $4,667,000 for Fiscal 1999, Transition Period 1998, and Fiscal 1998, respectively. BANK LINE OF CREDIT--Effective January 1997, the Company established a line of credit up to $4,000,000 subject to borrowing base limits. Borrowings are secured by accounts receivable and certain other assets. The agreement provides for a minimum monthly interest at the bank's prime lending rate plus two and one-half percent (2.5%) on the greater of the actual amount outstanding or $1,600,000. The agreement contains certain covenants including the maintenance of a minimum net worth of $2,000,000 and restrictions upon certain activities by the Company without the approval of the bank including the incurrence of senior debt, certain mergers or acquisitions, and the payment of dividends. At December 31, 1998, the Company was in technical default under certain provisions of the line of credit. In December 1997, March 1998, and September 1998, the Company executed amendments to the line of credit agreement extending the maturity date of the agreement to January 31, 2001, altering the 16 provisions of the early termination fee, and modifying the criteria for determining the amount available under the line. In accordance with the agreement, as amended, the Company could borrow one times average monthly recurring maintenance collections and seventy-five percent of eligible non-maintenance receivables, as defined. In April 1999 and October 1999 the Company executed additional amendments to the line of credit agreement. The April 1999 amendment waived the Company's previous default under the line of credit agreement. The October 1999 amendment provides for a forbearance period until the maturity date. Since July 1999 the Company has had no borrowings but, the Company is nevertheless obligated to pay to the lender minimum interest on the sum of $1,600,000 at prime plus 2.5%. NON-COMPETE NOTE PAYABLE--The Company entered into a non-compete agreement in connection with a January 1991 acquisition. The final installment of $400,000 was due on January 31, 1997, but was subsequently converted to an 11.75% interest bearing unsecured note. As of December 31, 1999, the remaining balance was due in two equal annual payments of $119,574 (principal and interest). The January 2000 payment was paid by the Company. PRIVATE EQUITY PLACEMENTS--The Company completed two private equity placements in Fiscal 1997. In May 1996, the Company issued 2,140,000 units at a price of $5.00 per unit. In January 1997, the Company issued 1,126,100 units at a price of $5.00 per unit. Each unit consists of one share of common stock and a redeemable warrant. The two private equity placements provided net proceeds of approximately $14,971,000 to the Company. In conjunction with the May 1996 equity placement, outstanding promissory notes of $1,500,000 were converted into 300,000 units. Each unit consists of one share of common stock and a redeemable warrant. In addition, all Series C Preferred Stock, and 16,135 of the 16,356 outstanding shares of Series D Preferred Stock were converted into 1,455,307 shares of common stock. REDEEMABLE WARRANTS--During the twelve months ended December 31, 1999, the Company received approximately $22,883,000 from the exercise of common stock warrants. These funds have been used to reduce borrowings and fund operating expenses and accounts payable. On March 31, 1999, the Company extended the expiration date to June 18, 1999, for unexercised warrants to acquire shares at an exercise price of $7.50 per share that had been issued in connection with the May 1996 private equity placement. The expiration date for the unexercised warrants was extended to allow warrant holders additional time to exercise the warrants, given the Company's need for additional capital. Although the proceeds from the exercise of the warrants currently provides the Company with adequate sources of capital, the Company expects to continue to require significant working capital as a result of operating losses and negative cash flows. As described above, in conjunction with the May 1996 and January 1997 private equity placements and conversion of a $1,500,000 outstanding promissory note, the Company issued units, each consisting of one share of common stock and one redeemable warrant to purchase one share of common stock at an exercise price of $7.50 per share, subject to certain anti-dilutive adjustments. The shares and redeemable warrants comprising the units are immediately detachable and separately transferable. The redeemable warrants were exercisable at any time after the date of issuance for a period of three years. The Company was entitled to redeem the redeemable warrants at any time subsequent to 180 days after issuance if the closing bid price for the common stock was at or above $10.00 per share for twenty consecutive trading days subsequent to when the redeemable warrants first were redeemable. Between January 1, 2000 and January 16, 2000, the remaining warrants, related to the January 1997 issue of 1,126,100, which were due to expire on January 16, 2000, were exercised resulting in the issuance of 595,700 shares of common stock generating approximately $4,467,750 in cash. 17 OTHER WARRANTS--In connection with the May 1996 private equity placement described above, the Company issued a warrant to the placement agent (the "Agent's Warrant") to purchase 200,000 shares of the Company's common stock at $5.00 per share. The Agent's Warrant is not subject to redemption and expires May 1, 2001. At December 31, 1999, 11,450 shares may still be purchased under this warrant. In connection with a renewal of a line-of-credit agreement in December 1994, the Company issued to a bank a five-year warrant to purchase 75,000 shares of common stock at $17.50 per share. This warrant expired on December 31, 1999. On August 20, 1999, the Company granted a two year warrant to Hewlett-Packard to purchase 4.9% of the Company's outstanding common stock for $15.00 per share during the first year of the warrant and $20.00 per share during the second year of the warrant. The Company also granted a second warrant to Hewlett-Packard under the same agreement for the purchase of 4.5% of the Company's outstanding common stock during the second year of the term of the agreement for $20.00 per share. The number of shares purchased upon exercise of the warrants will be measured based on the outstanding common stock as of the most recent quarter or year-end as reported on the Company's report on Form 10-Q or Form 10-K. At December 31, 1999, the warrants represent the rights to purchase 502,217 and 461,220 shares, respectively. For both warrants, if the fair value of the common stock is greater than the purchase price, Hewlett-Packard may elect to receive shares equal to the value of the warrant in lieu of exercising the warrant with cash. The Company also issued warrants in connection with the InfoSpace.com Internet Promotion Agreement dated August 31, 1999. The first warrant is for the purchase of 250,000 shares of the Company's common stock at a price of $15.00 per share if exercised during the first year of the agreement or $20.00 per share if exercised during the second year of the agreement. The warrant vests as follows: 62,500 on September 30, 1999, 62,500 on December 31, 1999 and 125,000 on March 31, 2000. The Company also granted a second warrant to InfoSpace.com under the same agreement for the purchase of 4.9% of the Company's outstanding common stock at August 31, 1999, on a fully diluted basis including conversion of this warrant. These warrants represent the rights to purchase 526,572 shares at a price of $15.00 per share if exercised during the first year of the agreement or $20.00 per share if exercised during the second year of the agreement. The second warrant is exercisable in lieu of the Company paying invoices rendered by InfoSpace.com. COMMON STOCK OPTIONS--During the twelve months ended December 31, 1999, the Company received approximately $1,039,000 from the exercise of outstanding stock options. As of December 31, 1999, there are outstanding vested options to purchase approximately 328,000 shares of common stock at an average exercise price of $5.34 per share. The majority of outstanding options have expiration dates in excess of five years from December 31, 1999. NEW ACCOUNTING STANDARDS--In June 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("Statement 133"), "Accounting for Derivative Instruments and Hedging Activities." This standard requires that an entity recognize derivatives as either assets or liabilities on its balance sheet and measure those instruments at fair value. As a result of Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities--Deferral of the Effective Date of Statement 133," the Company will adopt this standard in the first quarter of 2001. Based on current circumstances, the Company does not believe that the application of Statement 133 will have a material effect on the Company's financial condition or results of operations. EURO CONVERSION--Effective January 1, 1999, eleven of the fifteen member countries of the European Union (the "participating countries") have agreed to adopt a new common legal currency (the "euro"). The participating countries established fixed conversion rates between their existing sovereign currencies (the "legacy currencies") and the euro. Following the introduction of the euro, the 18 legacy currencies are scheduled to remain legal tender in the participating countries as denominations of the euro between January 1, 1999 and January 1, 2002 (the "transition period"). During the transition period transactions may be settled using either the euro or the participating country's legacy currency on a "no compulsion, no prohibition" basis. Conversion rates will no longer be computed directly from one legacy currency to another but rather will utilize a "triangulation" method specified by European Union regulations whereby payments made in a legacy currency are converted to the euro and subsequently converted to the recipient's desired legacy currency. Beginning January 1, 2002, the participating countries will issue new euro-denominated bills and coins for use in cash transactions. No later than July 1, 2002, the participating countries will withdraw all bills and coins denominated in legacy currencies such that legacy currencies will no longer be legal tender for any transactions, completing the euro conversion. The Company currently has no bank accounts denominated in any legacy currency and has not entered into any material transactions denominated in any legacy currency. The Company has produced enhancements to certain software products marketed in Europe to accommodate the euro conversion process (the "euro module"). The cost to develop the euro module was not material and will be provided at minimal cost to existing customers under maintenance agreements. Management believes the euro module allows for the continued marketing and sale of the Company's products to customers requiring euro conversion capabilities. SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE SECURITIES LITIGATION REFORM ACT OF 1995--This Annual Report on Form 10-K contains various forward-looking statements and information that are based on management's beliefs as well as assumptions made by and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, acceptance of the Company's products by the market and management's plans and objectives. Such statements are subject to various risks and uncertainties which could cause actual results to vary materially from those stated. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected or projected. Such risks and uncertainties include the Company's ability to overcome its recent history of operating losses and declining revenues, the availability and amount of future sources of capital and the terms thereof, the effects of the Company's possible delisting from the NASDAQ Small Cap Market and the effects of the restatement of the Company's financial statements on the availability and terms of future sources of capital, the effects of such possible delisting and such restatement on the market for the Company's common stock, the risks associated with future acquisitions, the willingness of independent insurance agencies to outsource their computer and other processing needs to third parties, the Company's ability to continue to develop new products to effectively address market needs in an industry characterized by rapid technological change, the Company's dependence on the insurance industry (and in particular independent agents), the highly competitive and rapidly changing automation systems market, the Company's ability to effectively protect its applications software and other proprietary information, the Company's ability to attract and retain quality management, and software, technical sales and other personnel, the risks of disruption of the Company's Internet connections or internal service problems, the possibly adverse effects of a substantial increase in volume of traffic on the Company's website, mainframe and other servers, possible security breaches on the Company's website, and the possible effects of insurance regulation on the Company's business. Certain of these as well as other risks and uncertainties are described in more detail in the Company's Registration Statement on Form S-3 filed under the Securities Act of 1933, Registration No. 333-12781, and the Company's periodic filings pursuant to the Securities Exchange Act of 1934. The Company undertakes no obligation to update any such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events or developments. 19 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company is subject to certain market risks, including foreign currency and interest rates. The Company has foreign subsidiaries in Australia, Canada, New Zealand, Singapore and the United Kingdom (UK) that develop and sell software products and services in those respective countries. The Company is exposed to potential gains and losses from foreign currency fluctuations affecting net investments and earnings denominated in foreign currencies. The Company's primary exposure is to changes in exchange rates for the U.S. Dollar versus the Australian, Canadian, New Zealand and Singapore Dollars and the British pound. In Fiscal 1999, the net change in the cumulative foreign currency translation adjustment account, which is a component of stockholder's equity, was an unrealized loss of $197,000. Unrealized foreign currency translation loss of $19,000 and $14,000 were recognized in the 1998 Transition Period and Fiscal 1998, respectively. ebix.com's exposure to interest rate risk relates to its debt obligations, which are primarily U.S. Dollar denominated. The Company's market risk therefore is the potential loss arising from adverse changes in interest rates. As further described in Note 7 to the consolidated financial statements included herein at Part II, Item 8, and incorporated herein by reference, prior to Fiscal 1999 the Company's debt consists primarily of a floating-rate bank line-of credit. There were no borrowings on the line of credit since July 1999, however, the Company is obligated to pay the lender minimum interest on the sum of $1,600,000. Market risk is estimated as the potential increase in pretax loss resulting from a hypothetical 10% increase in interest rates on the Company's debt. If such an increase occurred, the Company would incur approximately $17,000 per annum in additional interest expense based on the average debt during Fiscal 1999. The Company does not feel such additional expense is significant. The actual adverse effect of an increase in interest rates will be greater or less than such amount dependent upon whether interest rates increase by more or less than 10%. The Company does not currently use any derivative financial instruments. 20 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEPENDENT AUDITORS' REPORT The Board of Directors ebix.com, Inc.: We have audited the accompanying consolidated balance sheet of ebix.com, Inc. and subsidiaries (the Company) as of December 31, 1999, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the year then ended. In connection with our audit of the consolidated financial statements, we also have audited the financial statement schedule listed in Item 14(a)2. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ebix.com, Inc. and subsidiaries as of December 31, 1999 and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth herein. /s/ KPMG LLP Chicago, Illinois May 26, 2000 21 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of ebix.com, Inc.: We have audited the accompanying consolidated balance sheet of ebix.com, Inc. (formerly known as Delphi Information Systems, Inc.) (a Delaware Corporation) and Subsidiaries as of December 31, 1998 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the nine-month period ended December 31, 1998 and the year ended March 31, 1998 (1998 and prior as restated--See Note 2). These financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ebix.com, Inc. and Subsidiaries as of December 31, 1998, and the results of their operations and their cash flows for the nine-month period ended December 31, 1998 and the year ended March 31, 1998, in conformity with accounting principles generally accepted in the United States. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II listed in the index of financial statements is presented for purposes of complying with the Securities and Exchange Commission's rules and is not a part of the basic financial statements. This schedule for the nine-month period ended December 31, 1998 and year ended March 31, 1998 has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Arthur Andersen LLP Chicago, Illinois May 26, 2000 22 EBIX.COM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
RESTATED DECEMBER 31, 1999 DECEMBER 31, 1998 ----------------- ----------------- ASSETS Current assets: Cash and cash equivalents................................... $ 7,055 $ 1,053 Accounts receivable, less allowances of $1,004 and $1,068 respectively Unbilled receivables...................................... 120 763 Trade receivables......................................... 2,977 2,909 -------- -------- Total accounts receivable............................... 3,097 3,672 -------- -------- Other receivables........................................... 332 -- Prepaid expenses............................................ 57 217 Other current assets........................................ 112 66 -------- -------- TOTAL CURRENT ASSETS.................................... 10,653 5,008 Property and equipment, net................................. 2,059 1,841 Purchased software, net..................................... 97 185 Goodwill, net............................................... 503 685 Other assets................................................ 77 344 -------- -------- TOTAL ASSETS................................................ $ 13,389 $ 8,063 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Current portion of long term debt........................... $ 217 $ 4,032 Accounts payable and accrued expenses....................... 3,166 2,948 Accrued payroll and related benefits........................ 827 182 Current portion of capital lease payable.................... 97 22 Deposit liability........................................... 2,324 1,185 Deferred revenue............................................ 3,046 3,489 -------- -------- TOTAL CURRENT LIABILITIES............................... 9,677 11,858 Long term debt, less current portion........................ 106 413 Long term capital lease payable, less current portion....... 623 309 -------- -------- TOTAL LIABILITIES........................................... 10,406 12,580 -------- -------- STOCKHOLDERS' EQUITY (DEFICIT): Convertible Series D Preferred stock, $.10 par value, 2,000,000 shares authorized, 221 shares issued and outstanding............................................... 49 49 Common stock, $.10 par value, 20,000,000 shares authorized, 10,763,549 and 7,395,414 issued and outstanding, respectively.............................................. 1,076 740 Additional paid-in capital.................................. 76,687 48,717 Deferred compensation....................................... (1,549) -- Accumulated deficit......................................... (73,166) (54,106) Accumulated other comprehensive (loss) income............... (114) 83 -------- -------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT)........................ 2,983 (4,517) -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)........ $ 13,389 $ 8,063 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 23 EBIX.COM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
RESTATED ---------------------------------- NINE MONTHS YEAR ENDED ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 ----------------- ----------------- -------------- REVENUE: Software....................................... $ 1,438 $ 2,084 $ 1,970 Services and other............................. 11,073 11,318 18,956 -------- ------- -------- TOTAL REVENUE................................ 12,511 13,402 20,926 OPERATING EXPENSES: Software costs................................. 1,217 1,469 3,087 Services and other costs....................... 9,168 6,190 8,626 Product development............................ 5,452 3,764 4,667 Sales and marketing............................ 4,768 2,109 3,548 General and administrative..................... 10,551 5,026 4,347 Amortization and impairment of goodwill........ 375 190 1,033 -------- ------- -------- TOTAL OPERATING EXPENSES..................... 31,531 18,748 25,308 -------- ------- -------- OPERATING LOSS............................... (19,020) (5,346) (4,382) Interest income................................ (123) -- (120) Interest expense............................... 290 366 400 Minority interest.............................. -- 102 -- Other income................................... (220) (308) (757) -------- ------- -------- Loss before income taxes....................... (18,967) (5,506) (3,905) Income tax provision (benefit)................. 93 248 (99) -------- ------- -------- Net loss....................................... ($19,060) ($5,754) ($ 3,806) ======== ======= ======== Basic net loss per common share................ ($ 2.05) ($ 0.78) ($ 0.52) ======== ======= ======== Diluted net loss per common share.............. ($ 2.05) ($ 0.78) ($ 0.52) ======== ======= ======== Weighted average shares outstanding: Basic........................................ 9,279 7,395 7,347 ======== ======= ======== Diluted...................................... 9,279 7,395 7,347 ======== ======= ========
The accompanying notes are an integral part of these consolidated financial statements. 24 EBIX.COM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
PREFERRED STOCK COMMON STOCK ADDITIONAL ------------------- --------------------- PAID-IN DEFERRED ACCUMULATED SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT -------- -------- ---------- -------- ---------- ------------ ----------- BALANCE, MARCH 31, 1997, AS PREVIOUSLY REPORTED.................................. 221 $ 49 7,270,234 $ 727 $48,167 $ -- ($40,611) Cumulative effect of prior period adjustments............................... -- -- -- -- -- -- (3,935) -------- ------ ---------- ------ ------- ------- -------- RESTATED BALANCE, MARCH 31, 1997............ 221 49 7,270,234 727 48,167 -- (44,546) -------- ------ ---------- ------ ------- ------- -------- Net loss, restated.......................... -- -- -- -- -- -- (3,806) Other comprehensive loss--translation adjustment................................ -- -- -- -- -- -- -- Comprehensive loss........................ Exercise of stock options................... -- -- 112,100 12 489 -- -- Shares sold under employee stock purchase plan...................................... -- -- 2,126 -- 11 -- -- Issuance of common stock as consideration for services provided..................... -- -- 10,989 1 50 -- -- -------- ------ ---------- ------ ------- ------- -------- RESTATED BALANCE, MARCH 31, 1998............ 221 49 7,395,449 740 48,717 -- (48,352) -------- ------ ---------- ------ ------- ------- -------- Net loss, restated.......................... -- -- -- -- -- -- (5,754) Other comprehensive loss--translation adjustment................................ -- -- -- -- -- -- -- Comprehensive loss........................ Purchase of fractional shares due to reverse stock split............................... -- -- (35) -- -- -- -------- ------ ---------- ------ ------- ------- -------- RESTATED BALANCE, DECEMBER 31, 1998......... 221 49 7,395,414 740 48,717 -- (54,106) -------- ------ ---------- ------ ------- ------- -------- Net loss.................................... -- -- -- -- -- -- (19,060) Translation adjustment...................... -- -- -- -- -- -- -- Other comprehensive loss--translation adjustment................................ Exercise of stock options................... -- -- 231,963 23 1,016 -- Exercise of stock warrants.................. -- -- 3,113,950 311 22,572 -- Acquisition of Delphi Australia............. 22,222 2 187 Short swing profits......................... 285 Deferred compensation related to the issuance of options and warrants.......... 3,910 (1,549) -------- ------ ---------- ------ ------- ------- -------- BALANCE, DECEMBER 31, 1999.................. 221 $ 49 10,763,549 $1,076 $76,687 ($1,549) ($73,166) -------- ------ ---------- ------ ------- ------- -------- ACCUMULATED OTHER COMPREHENSIVE COMPREHENSIVE (LOSS) INCOME TOTAL LOSS ------------- -------- ------------- BALANCE, MARCH 31, 1997, AS PREVIOUSLY REPORTED.................................. $ 116 $ 8,448 Cumulative effect of prior period adjustments............................... (3,935) ------ ------- RESTATED BALANCE, MARCH 31, 1997............ 116 4,513 ------ ------- Net loss, restated.......................... -- (3,806) ($ 3,806) Other comprehensive loss--translation adjustment................................ (14) (14) (14) -------- Comprehensive loss........................ ($ 3,820) ======== Exercise of stock options................... -- 501 Shares sold under employee stock purchase plan...................................... -- 11 Issuance of common stock as consideration for services provided..................... -- 51 ------ ------- RESTATED BALANCE, MARCH 31, 1998............ 102 1,256 ------ ------- Net loss, restated.......................... -- (5,754) ($ 5,754) Other comprehensive loss--translation adjustment................................ (19) (19) (19) -------- Comprehensive loss........................ ($ 5,773) ======== Purchase of fractional shares due to reverse stock split............................... ------ ------- RESTATED BALANCE, DECEMBER 31, 1998......... 83 (4,517) ------ ------- Net loss.................................... -- (19,060) ($19,060) Translation adjustment...................... (197) (197) (197) -------- Other comprehensive loss--translation adjustment................................ ($19,257) ======== Exercise of stock options................... -- 1,039 Exercise of stock warrants.................. 22,883 Acquisition of Delphi Australia............. 189 Short swing profits......................... 285 Deferred compensation related to the issuance of options and warrants.......... 2,361 ------ ------- BALANCE, DECEMBER 31, 1999.................. ($ 114) $ 2,983 ------ -------
The accompanying notes are an integral part of these consolidated statements. 25 EBIX.COM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
RESTATED RESTATED ----------------- ---------- YEAR ENDED NINE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, 1999 DECEMBER 31, 1998 1998 ------------ ----------------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss.............................................. ($19,060) ($5,754) ($3,806) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Depreciation and amortization......................... 676 481 1,281 Amortization of purchased software.................... 88 360 818 Amortization and impairment of goodwill............... 182 190 1,033 Amortization of non-compete agreement................. 189 -- -- Stock-based compensation.............................. 2,361 -- 51 CHANGES IN ASSETS AND LIABILITIES: Accounts receivable, net.............................. (68) 1,135 434 Unbilled receivables, other receivables, prepaid expenses and other current assets................... 740 (162) (174) Accounts payable and accrued expenses................. 218 870 (2,589) Accrued payroll and related benefits.................. 645 (237) (201) Deposit liability and deferred revenue................ 696 1,092 (2,754) -------- ------- ------- Net cash used in operating activities................. (13,333) (2,025) (5,907) -------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures.................................. (894) (184) (980) Purchase of minority interest......................... (50) -- -- -------- ------- ------- Net cash used in investing activities................. (944) (184) (980) -------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on (repayments of) debt.................... (4,120) 2,312 533 Repayments of capital lease obligation................ 389 97 132 Proceeds from exercise of common stock warrants....... 22,883 -- -- Proceeds from exercise of common stock options........ 1,039 -- 512 Proceeds from investor short swing profits............ 285 -- -- -------- ------- ------- Net cash provided by financing activities............. 20,476 2,409 1,177 -------- ------- ------- Foreign currency translation adjustment............... (197) (19) (14) Net change in cash and cash equivalents............... 6,002 181 (5,724) Cash and cash equivalents at the beginning of the period.............................................. 1,053 872 6,596 -------- ------- ------- Cash and cash equivalents at the end of the period.... 7,055 1,053 872 -------- ------- ------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid......................................... $ 273 $ 355 $ 206 Income taxes paid..................................... 224 21 --
The accompanying notes are an integral part of these consolidated financial statements. 26 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 1--DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: NATURE OF BUSINESS--ebix.com, Inc. (formerly known as Delphi Information Systems, Inc.) and Subsidiaries, (the "Company") market software to independent insurance agents and brokers operating in the property and casualty insurance industry, and provide customer support and maintenance services, as well as other implementation and consulting services such as training, data conversion and installation. During 1999, the Company designed and developed ebix.link, an Internet browser-based product providing electronic transmission between insurance carriers and insurance brokers. The Company launched ebix.com on September 8, 1999. ebix.com is a website designed to meet the insurance needs of both the consumer and the insurance professional. ebix.com includes a virtual marketplace, ebix.mall, where consumers can define their desired policy coverages and seek competitive quotes from a number of agents, brokers and carriers in a timeframe defined by the consumer. ebix.com also includes ebix.link. The Company is pursuing the successful commercialization of this e-commerce insurance portal. FINANCING ISSUES--The Company experienced decreased revenue, net income and operating cash flow in the twelve months ended December 31, 1999 ("Fiscal 1999"). The Company had experienced significant operating losses in each fiscal year since 1993, along with declining revenue. During these loss periods, the Company financed its operations through bank financing and private placements of equity capital. The Company is currently faced with long term liquidity concerns. In order to meet the projected cash requirements of the business, it will be necessary for the Company to increase its revenue sources beyond those accessed during the past two years or secure financing sources, beyond those currently available, in order to continue as a going concern after the 2000 fiscal year. Management believes that the required financing to operate the business as a going concern will be obtained, although there can be no assurances that such financing will be available or that it will be available on terms satisfactory to the Company. Management believes that there may be additional infusions of cash from the exercise of outstanding stock warrants. Management will endeavor to secure the necessary financing from other sources. Such sources could include one or more equity investors. Management intends to aggressively seek the required capital sources that are necessary in order to continue to operate the business. Management continues to believe that the Company is well suited to take advantage of the current market opportunities. Upon obtaining the necessary financing, the Company will continue to aggressively market its products and services, fund development and monitor costs to ensure the Company's products incorporate state-of-the-art technologies and provide customers with value-added solutions. CONSOLIDATION--The consolidated financial statements include the accounts of ebix.com, Inc., ("ebix USA"), its wholly owned subsidiary, Delphi Information Systems International, Inc., ("Delphi International"), both Delaware corporations and all subsidiaries of Delphi International. Wholly owned subsidiaries of Delphi International include Canadian Insurance Computer Systems, Inc. ("Delphi Canada"), Delphi Information Systems, (UK) Ltd., Delphi Information Systems, (NZ) Ltd., Complete Broking Systems Australia PTY, Ltd, Complete Broking Systems (Malaysia), Sdn. Bhd. and Delphi Information Systems PTE (Singapore) Ltd. The Company has an insignificant amount of long-lived assets located outside of the United States in foreign operations as of December 31, 1999 and 1998. 27 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 1--DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) Foreign operations delivered software and provided related services to external customers accounting for approximately 18%, 23%, and 11% of consolidated revenue for Fiscal 1999, the nine-months ended December 31, 1998 ("Transition Period 1998") and the year ended March 31, 1998 ("Fiscal 1998"), respectively. FISCAL YEAR--Prior to April 1998, the Company's fiscal year consisted of the twelve-months ended March 31st. Effective April 1998, the Company changed its year-end to December 31st. REVENUE RECOGNITION--In October 1997, the AICPA issued Statement of Position ("SOP") 97-2, "Software Revenue Recognition", which supersedes SOP 91-1, "Software Revenue Recognition". Prior to March 31, 1998, the Company recorded revenue in compliance with SOP 91-1. The Company adopted SOP 97-2 for software transactions subsequent to March 31, 1998. The Company recognizes revenue for license fees from its software products upon delivery, provided that the fee is fixed and determinable, acceptance has occurred, collectibility is reasonably assured and persuasive evidence of an arrangement exists. Revenue from third party software is derived from the licensing of third party software products in connection with sales of the Company's software licenses, and is generally recognized upon delivery together with the Company's license revenue. Training, data conversion, installation and consulting services are generally recognized as revenue when the services are performed and collectibility is reasonably assured. Revenue for maintenance and support service is recognized ratably over the term of the support agreement. For certain contracts where services are deemed essential to the functionality of the software and the software has not been accepted by the customer, the software and related service revenue have not been recognized. In addition, all costs incurred in connection with these contracts have been expensed as the Company has been unable to estimate the total cost to achieve customer acceptance. Deferred revenue primarily includes maintenance and support payments or billings that have been received or recorded prior to performance. Deposit liability includes cash that has been received related to software products for which customer acceptance has not occurred. Revenue is allocated to each element of multi-element arrangements based on the price charged for the sale of each element separately. In certain contracts, maintenance for the first year is bundled with software fees. Unbundling of the maintenance is based on the price charged for renewal maintenance. CASH AND CASH EQUIVALENTS--The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Such investments are stated at cost which approximates fair value. COMPUTER SOFTWARE--Effective as of January 1, 1999, the Company has adopted the provisions of SOP 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use". Accordingly, certain costs to develop internal-use computer software are capitalized provided these costs will be recoverable. During 1999, $323 of costs related to the implementation of the Company's new accounting system were capitalized and will be amortized over the expected useful life of the new system of 5 years. SOFTWARE DEVELOPMENT COSTS AND PURCHASED SOFTWARE--The Company's policy is to capitalize internally generated software development costs and purchased software in compliance with Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of Computer Software To be Sold, Leased or Otherwise Marketed." Under SFAS 86, capitalization of software development 28 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 1--DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) costs begins upon the establishment of technological feasibility for the product. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs consider external factors including, but not limited to, anticipated future gross product revenues, estimated economic life and changes in software and hardware technology. The Company's internally developed software costs have been expensed due to the uncertainty of when technological feasibility was reached and the lack of underlying support. Purchased software relates to technology acquired in connection with the acquisition of Complete Brokering Systems of Auckland, New Zealand in Fiscal 1997 and the acquisition of Mountain States, Inc. in Fiscal 1994. Prior to Fiscal 1999, purchased software costs were amortized over 60 months. During Fiscal 1999, the amortization period was shortened to 45 months due to the introduction of ebix.com. Amortization expense was $87, $360 and $818 for Fiscal 1999, Transition Period 1998, and Fiscal 1998, respectively. Net purchased software costs at December 31, 1999 and December 31, 1998 consist of the following:
DECEMBER 31, 1999 DECEMBER 31, 1998 ----------------- ----------------- Total cost.................................. $345 $345 Less accumulated amortization............... (248) (160) ---- ---- $ 97 $185 ==== ====
PROPERTY AND EQUIPMENT--Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the assets' estimated useful lives. Leasehold improvements are amortized over the shorter of the expected life of the improvements or the lease term. Repairs and maintenance are charged to expense as incurred and major improvements are capitalized. Gains and losses resulting from sales or retirements are recorded as incurred, at which time related costs and accumulated depreciation are removed from the accounts. The estimated useful lives are as follows:
ASSET CATEGORY LIFE - -------------- -------- Computer equipment.......................................... 5 Computer software........................................... 3 Furniture, fixtures and other leasehold improvements........ 7
GOODWILL--Goodwill is amortized on the straight-line method over 5 years. Accumulated goodwill amortization was $764, $581, and $391 for Fiscal 1999, Transition Period 1998, and Fiscal 1998, respectively. Goodwill amortization expense was $182, $190 and $263 for Fiscal 1999, Transition Period 1998, and Fiscal 1998, respectively. Under certain conditions, such as a change in profitability, the Company estimates the future undiscounted net cash flows before interest of the operating units to which the goodwill relates in order to evaluate impairment. If impairment exists, the carrying amount of goodwill is reduced by the estimated shortfall of cash flows on a discounted basis. INCOME TAXES--The Company follows the asset and liability method of accounting for income taxes pursuant to (SFAS) No. 109, "Accounting for Income Taxes." Deferred income taxes are recorded to 29 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 1--DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. EARNINGS (LOSS) PER SHARE--Basic earnings per share ("EPS") is equal to net income (loss) divided by the weighted average number of shares of common stock outstanding for the period. The weighted average number of common shares outstanding for Fiscal 1999, Transition Period 1998, and Fiscal 1998 were 9,279,000, 7,395,000 and 7,347,000 respectively. Diluted EPS recognizes the dilutive effect of common stock equivalents and is equal to net income divided by the sum of the weighted average number of shares outstanding and common stock equivalents. At December 31, 1999 and 1998, the Company's common stock equivalents consist of stock options, common stock warrants, and convertible preferred stock. Consistent with previous standards, SFAS No. 128 prohibits inclusion of the impact of common stock equivalents in the calculation of EPS when inclusion results in antidilution. Accordingly, for Fiscal 1999, Transition Period 1998, and Fiscal 1998, basic and diluted EPS are equal because all potentially issuable common shares would be antidilutive. For Fiscal 1999, Transition Period 1998, and Fiscal 1998, there were 238,315, 18,574, and 21,744 shares, respectively, potentially issuable with respect to stock options, warrants and convertible preferred stock, which could dilute Basic EPS in the future. Between January 1, 2000 and January 16, 2000 warrants which were due to expire on January 16, 2000, were exercised for 595,700 shares of common stock generating approximately $4,468 in cash. FOREIGN CURRENCY TRANSLATION--The functional currency of the Company's foreign subsidiaries is the local currency of the country in which the subsidiary operates. The assets and liabilities of foreign subsidiaries are translated into U.S. Dollars at the rates of exchange at the balance sheet dates. Income and expense accounts are translated at the average exchange rates in effect during the period. Gains and losses resulting from the translation are deferred and included in the accompanying consolidated statements of stockholders' equity (deficit). USE OF ESTIMATES--The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. SEGMENT REPORTING--SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" established reporting standards for companies operating in more than one business segment. Since the Company manages its business as a single entity that provides software and related services to a single industry on a worldwide basis, the Company reports as a single segment. The applicable enterprise-wide disclosures required by SFAS No. 131 are included in Note 15. CONCENTRATIONS--The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and temporary investments with high quality financial institutions. Temporary investments are valued at the lower of cost or market and at the balance sheet dates approximate fair market value. In Fiscal 1999 no customer represented more than 10% of consolidated revenue. In Transition Period 1998 30 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 1--DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) and Fiscal 1998, one domestic customer (including its foreign subsidiaries) accounted for approximately 16% and 11% of consolidated revenue, respectively. The accounts receivable relating to this customer totaled zero and $583 at December 31, 1998 and March 31, 1998, respectively. The customer is a publicly traded multi-national insurance company listed on the New York Stock Exchange. The Company reviews a customer's credit history before extending credit. The Company currently utilizes hardware, software and services that support its website, an important component of its new operations, from two third-party vendors under operating service agreements. Although there is a limited number of website service companies, management believes that other vendors could provide the Company with these website services. The terms of the current operating service agreements provide for fixed and variable payments, which are based on revenues realized by the Company. EMPLOYEE STOCK OPTIONS--The Company accounts for stock options issued to employees in accordance with Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The Company has adopted the disclosure only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," for options and warrants issued to employees. Under APB No. 25, compensation expense is based on the difference, if any, on the measurement date, between the estimated fair value of the Company's stock and the exercise price of options to purchase that stock. The compensation expense is amortized on a straight-line basis over the vesting period of the options. NON-EMPLOYEE STOCK COMPENSATION--The Company accounts for stock compensation issued to non-employees in accordance with SFAS No. 123 and Emerging Issue Task Force ("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in conjunction with Selling Goods or Services." SFAS 123 establishes a fair value based method of accounting for stock based compensation plans. Under the fair value based method, compensation cost is measured at the grant date based on the value of the award, which is calculated using an option pricing model, and is recognized over the service period, which is usually the vesting period. ADVERTISING--Advertising costs are expensed as incurred. Advertising costs amounted to $2,035, $138 and $70 in Fiscal 1999, Transition Period 1998, and Fiscal 1998, respectively, and are included in sales and marketing expenses in the accompanying consolidated statements of operations. OTHER INCOME--Other income includes hardware sales and commissions, reimbursed travel and entertainment expenses, and sublease income. Reimbursed travel and entertainment expenses are offset by expenses incurred by the Company which total $358, $649 and $148, in Fiscal 1999, Transition Period 1998, and Fiscal 1998, respectively. Sublease income is offset by expenses incurred by the Company which total $206, $246 and $380, in Fiscal 1999, Transition Period 1998 and Fiscal 1998, respectively. 31 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 1--DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) Other income, net, is comprised of the following:
TRANSITION FISCAL PERIOD FISCAL 1999 1998 1998 -------- ---------- -------- Hardware............................................. $ 9 $378 $828 Reimbursed travel and entertainment.................. -- -- -- Sublease income...................................... 20 (70) (71) Gain on APT investment (Note 4)...................... 191 -- -- ---- ---- ---- Total................................................ $220 $308 $757 ---- ---- ----
FAIR VALUE OF FINANCIAL INSTRUMENTS--The following disclosures of the estimated fair value of financial instruments were made in accordance with the requirements of SFAS No. 107, "Disclosures about Fair Value of Financial Instruments." The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses--The carrying amount of these items are a reasonable estimate of their fair value due to the short maturity of these items. Notes payable--Rates currently available to the Company for notes payable with similar terms are used to estimate its fair value. Accordingly, the carrying amount of notes payable is a reasonable estimate of its fair value. NOTE 2. RESTATEMENTS AND RECLASSIFICATIONS: The Company has restated and reclassified its consolidated financial statements for Transition Period 1998 and Fiscal 1998. The cumulative after-tax effect for periods prior to April 1, 1997 has been reflected as a charge to beginning retained earnings in the consolidated statements of stockholders' equity (deficit). Unaudited quarterly financial data for Fiscal 1999 and Transition Period 1998, as shown in Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K, has also been restated and reclassified. Except as otherwise stated, all information presented in the consolidated financial statements and related notes reflects all such restatements and reclassifications. As a result of a comprehensive review that commenced in the first quarter of 2000, the Company determined that certain items of revenue and expense were incorrectly reported in previously issued financial statements. These items principally related to revenue, capitalized software and royalties. The revenue recognition restatements primarily related to the ebix.global product, for which customer acceptance was not achieved. The capitalized software restatements primarily relate to the uncertainty of when technological feasibility was reached and the lack of underlying support. The restatements to royalties primarily relate to the costs associated with third party software sales. Other restatements primarily relate to foreign taxes, minority interest and employee bonuses. 32 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 2. RESTATEMENTS AND RECLASSIFICATIONS: (CONTINUED) A summary of the restatement by category is as follows:
CUMULATIVE RESTATEMENTS THROUGH DECEMBER 31, 1998 ------------------------- Revenues.............................................. (3,817) Capitalized software.................................. (5,682) Royalties............................................. (343) Other................................................. (749) ------- Total................................................. (10,591) -------
The Company also reclassified certain income items in previously issued financial statements. The effect of such reclassification is to decrease various expense categories and increase other income by amounts which had been included in software revenue. Such reclassifications, which did not change the net loss, affected various line items within the consolidated statements of operations. 33 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 2. RESTATEMENTS AND RECLASSIFICATIONS: (CONTINUED) The effect of such reclassifications and the restatements discussed above on the statement of operations line items is shown in the following table:
AS PREVIOUSLY AS REPORTED RESTATEMENTS RECLASSIFICATIONS RESTATED ------------- ------------ ----------------- -------- FISCAL 1998 REVENUE: Software........................................... $ 3,509 ($ 71) ($1,468) $ 1,970 Services and other................................. 18,956 -- -- 18,956 -------- ------- ------- ------- TOTAL REVENUE.................................... 22,465 (71) (1,468) 20,926 Operating expenses: Software costs..................................... 2,795 419 (127) 3,087 Services and other costs........................... 9,203 -- (577) 8,626 Product development................................ 3,510 (92) 1,249 4,667 Sales and marketing................................ 3,587 -- (39) 3,548 General and administrative......................... 4,414 (6) (61) 4,347 Amortization and impairment of goodwill............ 136 -- 897 1,033 Restructuring charges.............................. 2,053 -- (2,053) -- -------- ------- ------- ------- TOTAL OPERATING EXPENSES......................... 25,698 321 (711) 25,308 -------- ------- ------- ------- OPERATING INCOME (LOSS).......................... (3,233) (392) (757) (4,382) Interest income.................................... (120) -- -- (120) Interest expense................................... 392 8 -- 400 Minority interest.................................. -- -- -- -- Other income....................................... -- -- (757) (757) -------- ------- ------- ------- Loss before income taxes........................... (3,505) (400) 0 (3,905) Income tax (benefit)............................... (99) -- -- (99) -------- ------- ------- ------- Net loss........................................... ($ 3,406) ($ 400) $ 0 ($3,806) ======== ======= ======= ======= TRANSITION PERIOD 1998 REVENUE: Software........................................... $ 6,375 ($3,087) ($1,204) $ 2,084 Services and other................................. 12,846 (1,528) -- 11,318 -------- ------- ------- ------- TOTAL REVENUE.................................... 19,221 (4,615) (1,204) 13,402 OPERATING EXPENSES: Software costs..................................... 2,337 (678) (190) 1,469 Services and other costs........................... 7,352 30 (1,192) 6,190 Product development................................ 2,160 1,641 (37) 3,764 Sales and marketing................................ 2,167 -- (58) 2,109 General and administrative......................... 4,370 265 391 5,026 Amortization and impairment of goodwill............ -- -- 190 190 -------- ------- ------- ------- TOTAL OPERATING EXPENSES......................... 18,386 1,258 (896) 18,748 -------- ------- ------- ------- OPERATING INCOME (LOSS).......................... 835 (5,873) (308) (5,346) Interest income.................................... -- -- -- Interest expense................................... 359 7 -- 366 Minority interest.................................. (47) 149 -- 102 Other income....................................... -- -- (308) (308) -------- ------- ------- ------- Income (loss) before income taxes.................. 523 (6,029) 0 (5,506) Income tax provision............................... 22 226 -- 248 -------- ------- ------- ------- Net income (loss).................................. $ 501 ($6,255) $ 0 ($5,754) ======== ======= ======= =======
34 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA These restatements decreased previously reported results and earnings per share as shown in the following table:
TRANSITION PERIOD FISCAL 1998 1998 ---------- ---------- Loss before income taxes............................. $ (5,506) $ (3,905) Income tax provision (benefit)....................... 248 (99) ---------- ---------- Net loss............................................. $ (5,754) $ (3,806) ========== ========== Basic net loss per common share...................... $ (0.78) $ (0.52) Diluted net loss per common share.................... $ (0.78) $ (0.52) Weighted average shares outstanding: Basic.............................................. 7,395,000 7,347,000 Diluted............................................ 7,395,000 7,347,000
NOTE 3--STOCKHOLDERS' EQUITY (DEFICIT): STOCKHOLDER RIGHTS AGREEMENT--On March 23, 1998, the Board of Directors of the Company adopted a stockholder rights plan (the "Stockholder Rights Plan") designed to protect the stockholders from certain unfair and coercive tactics. Pursuant to the Stockholder Rights Agreement (the "Rights Agreement") the Company declared a dividend of one preferred share purchase right ("Right") on each outstanding share of the Company's Common Stock, $.10 par value per share ("Common Shares"), payable to stockholders of record at the close of business on March 23, 1998. Each Right, when exercisable, other than Rights beneficially owned by an Acquiring Person, generally entitles the holder thereof to purchase from the Company at an exercise price of $125.00, subject to adjustment (the "Purchase Price"), either five one-hundredths of a share of Series A Junior Participating Preferred Shares, par value $.10 per share of the Company, or that number of Common Shares (or, in certain circumstances, cash, property or other securities of the Company) having a market value of two times the Purchase Price. Until the date an "Acquiring Person" is identified, the Rights are attached to the common shares and are not exercisable. An "Acquiring Person" is generally defined in the Rights Agreement as a person or group of affiliated persons, other than Exempt Persons (as defined), that have acquired beneficial ownership of 15% or more of the Company's outstanding Common Shares. The Rights, when exercisable, other than initial rights beneficially owned by an Acquiring Person, generally entitle the holders thereof to purchase equity from the Company (or a successor of the Company) on terms producing substantial dilution to an Acquiring Person. The terms of the Rights may be amended by the Board of Directors of the Company without the consent of the holders of the Rights, except that from and after such time as any person becomes an Acquiring Person no such amendment may make the Rights redeemable if the Rights are not then redeemable in accordance with the terms of the Rights Agreement or may adversely affect the interests of the holders of the Rights. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company. The Rights will expire on March 23, 2008, unless the Rights are 35 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 3--STOCKHOLDERS' EQUITY (DEFICIT): (CONTINUED) earlier redeemed or exchanged by the Company. The Rights are not calculated as weighted shares outstanding until they are exercised. Each Preferred Share will be entitled to the greater of (1) a preferential quarterly dividend payment of $100 per share, or (2) an aggregate dividend of 100 times the dividend declared per Common Share. In the event of liquidation, the holders of the Preferred Shares will be entitled to a preferential liquidation payment of $100 per share, plus an amount equal to 100 times the aggregate amount to be distributed per share of common stock. Each Preferred Share will have 100 votes, voting together with the Common Shares except as otherwise required by law. Finally, in the event of any merger, consolidation or other transaction in which Common Shares are exchanged, each Preferred Share will be entitled to receive 100 times the amount received per Common Share. REVERSE STOCK SPLIT--On May 6, 1998, the Company's stockholders approved an amendment to the Company's Certificate of Incorporation to effect a one-for-five reverse stock split of the Company's outstanding $.10 par value common stock and to reduce the number of authorized shares from 75,000,000 to 20,000,000 effective May 8, 1998. All share and per share information in these consolidated financial statements has been adjusted accordingly. PRIVATE EQUITY PLACEMENTS--In May 1996, the Company issued 2,140,000 units at a price of $5.00 per unit. In January 1997, the Company issued 1,126,100 units at a price of $5.00 per unit. Each unit consists of one share of common stock and a redeemable warrant. The two private equity placements provided net proceeds of approximately $14,971 to the Company. In conjunction with the May 1996 equity placement, outstanding promissory notes of $1,500 were converted into 300,000 units. Each unit consists of one share of common stock and a redeemable warrant (further described below). In addition, all Series C Preferred Stock, and 16,135 of the 16,356 outstanding shares of Series D Preferred Stock were converted into 1,455,307 shares of common stock. REDEEMABLE WARRANTS--As described above, in conjunction with the May 1996 and January 1997 private equity placements and conversion of a $1,500 outstanding promissory note, the Company issued units, each consisting of one share of common stock and one redeemable warrant to purchase one share of common stock at an exercise price of $7.50 per share, subject to certain anti-dilutive adjustments. The shares and redeemable warrants comprising the units are immediately detachable and separately transferable. These warrants expire from April 1999 to January 2000. For Transition Period 1998 and Fiscal 1998, there was no activity related to these warrants. The redeemable warrants were exercisable at any time after the date of issuance for a period of three years. The Company was entitled to redeem the redeemable warrants at any time subsequent to 180 days after issuance, if the closing bid price for the common stock was at or above $10.00 per share for twenty consecutive trading days subsequent to when the redeemable warrants first were redeemable. Between January 1, 2000 and January 16, 2000, all remaining warrants, which were due to expire on January 16, 2000, were exercised for 595,700 shares of common stock generating approximately $4,468 in cash. OTHER WARRANTS--In connection with the May 1996 private equity placement described above, the Company issued a warrant to the placement agent (the "Agent's Warrant") to purchase 200,000 shares of the Company's common stock at $5.00 per share. The Agent's Warrant is not subject to redemption 36 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 3--STOCKHOLDERS' EQUITY (DEFICIT): (CONTINUED) and expires May 1, 2001. For Transition Period 1998 and Fiscal 1998, there was no activity related to this warrant. At December 31, 1999, 11,450 shares may still be purchased under this warrant. In connection with a renewal of a line-of-credit agreement in December 1994, the Company issued to a bank a five-year warrant option to purchase 75,000 shares of common stock at $17.50 per share. For Transition Period 1998 and Fiscal 1998, there was no activity related to this warrant. This warrant expired on December 31, 1999. SERIES D CONVERTIBLE PREFERRED STOCK--At December 31, 1999 and 1998, the Company had 221 shares of Series D Convertible Preferred Stock issued and outstanding. Each share is convertible into 45 shares of common stock at the request of the holder. The preferred stock has voting rights equal to the number of common shares into which the preferred shares is convertible. The preferred stock is not entitled to dividends. In the event of liquidation, the holders of the Preferred Shares will be entitled to a preferential liquidation payment. NOTE 4--INVESTMENT IN APT: During Transition Period 1998 and Fiscal 1998, the Company owned approximately a 20% interest in the common stock of Alliance for Productive Technology, Inc. ("APT"), a privately held company formed as an alliance of agency automation vendors, insurance companies, agents' associations, and insurance industry organizations. This investment was accounted for using the equity method of accounting until Fiscal 1999 when the Company no longer exercised significant influence over APT. The Company's share of the results of operations of APT has been immaterial. The purpose of APT was to provide non-proprietary interface products and services to the insurance industry. The investment of $230 was recorded as a long-term other asset as of December 31, 1998. A portion of the Company's investment was held as security for a note payable to APT (see Note 7). During Fiscal 1999, the Company's ownership was diluted to 14.8%. The assets of APT were sold to a third party effective November 30, 1999. As a result of the sale, the Company received proceeds of approximately $421, which represented its 14.8% share of the sales proceeds of APT, gross of the Company's unpaid note to APT. A gain on investment of $191 was recorded during 1999 and is reflected in other income in the accompanying consolidated statement of operations. NOTE 5--PURCHASE OF MINORITY INTEREST: Prior to January 1999, Delphi Information Systems International, Inc., a wholly-owned subsidiary of the Company, held a fifty-four percent interest in Complete Broking Systems Australia PTY, Ltd. Effective January 1, 1999, the Company acquired the remaining forty-six percent interest. The Company paid approximately $50 and issued 22,222 shares of the Company's common stock in exchange for the minority interest and a non-compete agreement from the two former shareholders. The fair market value of the consideration has been allocated to the non-compete agreement and is being amortized over the fifteen-month life of the agreement. 37 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 6--PROPERTY AND EQUIPMENT: Property and equipment at December 31, 1999 and December 31, 1998 consists of the following:
1999 1998 -------- -------- Computer equipment and purchased software............... $ 7,667 $ 6,731 Leasehold improvements.................................. 981 975 Furniture, fixtures and other........................... 1,841 1,889 -------- -------- 10,489 9,595 Less accumulated depreciation and amortization.......... (8,430) (7,754) -------- -------- $ 2,059 $ 1,841 ======== ========
NOTE 7--DEBT: Notes payable at December 31, 1999 and December 31, 1998, are comprised of the following:
1999 1998 -------- -------- Bank line-of-credit......................................... $ -- $ 3,712 Non-compete note payable.................................... 216 300 Note payable--APT........................................... -- 230 Installment note............................................ 107 203 Less current portion........................................ (217) (4,032) ----- ------- $ 106 $ 413 ===== =======
BANK LINE OF CREDIT--Effective January 1997, the Company established a line of credit up to $4,000 subject to borrowing base limits. Borrowings are secured by accounts receivable and certain other assets. The agreement provides for a minimum monthly interest at the bank's prime lending rate plus two and one-half percent (2.5%) on the greater of the actual amount outstanding or $1,600. The agreement contains certain covenants including the maintenance of a minimum net worth of $2,000 and restrictions upon certain activities by the Company without the approval of the bank including the incurrence of senior debt, certain mergers or acquisitions, and the payment of dividends. At December 31, 1998, the Company was in technical default under certain provisions of the line of credit. In December 1997, March 1998, and September 1998, the Company executed amendments to the line of credit agreement extending the maturity date of the agreement to January 31, 2001, altering the provisions of the early termination fee, and modifying the criteria for determining the amount available under the line. In accordance with the agreement, as amended, the Company could borrow one times average monthly recurring maintenance collections and seventy-five percent of eligible non-maintenance receivables as defined. In April 1999 and October 1999 the Company executed additional amendments to the line of credit agreement. The April 1999 amendment waived the Company's previous default under the line of credit agreement. The October 1999 amendment provides for a forbearance period until the maturity date. In July 1999 the Company reduced the line of credit borrowings to zero. Since July 1999 the Company has had no borrowings but, the Company is nevertheless obligated to pay to 38 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 7--DEBT: (CONTINUED) the lender minimum interest on the sum of $1,600 at a rate of prime plus 2.5%. During 1999, the Company paid approximately $30 in minimum interest on the unused commitment. NON-COMPETE NOTE PAYABLE--The Company entered into a non-compete agreement in connection with an acquisition in 1991. The final installment of $400 was originally due on January 31, 1997, but was subsequently converted to an 11.75% interest bearing unsecured note due January 2001. As of December 31, 1999, the remaining balance is due in two equal annual payments of $119 (principal and interest). The commitment related to the non-compete agreement was amortized and expensed ratably over the life of the agreement. NOTE PAYABLE--APT--As discussed in Note 4, the Company issued a note payable secured by a portion of the Company's ownership of APT common stock. Interest was computed at the prime rate, 7.75% at December 31, 1998. The note was retired coincident with the Company's sale of the investment in APT. INSTALLMENT NOTE--The Company is obligated under an installment agreement for licensed software to pay a total of $203 in quarterly payments of $29, which includes interest at 12%, with the last payment due in December 2000. NOTE 8--ACCOUNTS PAYABLE AND ACCRUED EXPENSES: Accounts payable and accrued liabilities at December 31, 1999 and December 31, 1998, consist of the following:
1999 1998 -------- -------- Trade accounts payable...................................... $1,350 $2,324 Accrued royalty............................................. 267 342 Accrued audit and legal..................................... 580 103 Accrued and other liabilities............................... 969 179 ------ ------ $3,166 $2,948 ====== ======
39 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 9--INCOME TAXES: Loss before income taxes consisted of:
NINE-MONTHS YEAR ENDED ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 ----------------- ----------------- -------------- Domestic....................................... $(18,431) $(5,247) $(4,385) Foreign........................................ (536) (259) 480 -------- ------- ------- Total.......................................... $(18,967) $(5,506) $(3,905)
The income tax provision consisted of:
NINE-MONTHS YEAR ENDED ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 ----------------- ----------------- -------------- U.S. Federal................................... $ -- $ -- $ -- State.......................................... -- -- (48) Foreign........................................ 93 248 (51) --------- ---- ---- Total.......................................... $ 93 $248 $(99)
The income tax provision at the federal statutory rate differs from the effective rate because of the following items:
NINE-MONTHS YEAR ENDED ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 ----------------- ----------------- -------------- Statutory rate................................. (34.0%) 34.0% (34.0%) State income tax............................... -- 4.2 (1.1) Amortization of intangible assets relating to acquired businesses.......................... -- -- .3 Increase in valuation allowances............... 34.0 (38.2) 26.2 Other, net..................................... -- 4.5 6.1 ----- ----- ----- Effective rate................................. 0.0% 4.5% (2.5%)
Deferred income taxes reflect the impact of "temporary differences" between amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. Temporary 40 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 9--INCOME TAXES: (CONTINUED) differences and carryforwards which give rise to a significant portion of deferred tax assets and liabilities as of December 31, 1999 and 1998 are as follows:
DECEMBER 31, 1999 DECEMBER 31, 1998 DEFERRED TAX DEFERRED TAX ---------------------- ---------------------- ASSETS LIABILITIES ASSETS LIABILITIES -------- ----------- -------- ----------- Depreciation............................................ $ -- $ 144 $ -- $144 Accruals................................................ 342 -- 103 -- Bad debts............................................... 315 -- 299 -- NOL carryforwards....................................... 20,261 -- 12,738 -- Tax credit carryforwards................................ 814 -- 870 -- ------- ------- ------- ---- 21,732 144 14,010 144 Valuation allowance..................................... (21,588) -- (13,866) -- ------- ------- ------- ---- Total deferred taxes.................................... $ 144 $ 144 $ 144 $144 ======= ======= ======= ====
Due to the uncertainty of realizing any of the net deferred tax assets, the Company has provided a valuation allowance against the entire net amount. At December 31, 1999, the Company has available domestic net operating loss carryforwards of approximately $61,000 which are available to offset future Federal taxable income, if any, through 2019, and investment business tax credit carryforwards of approximately $814 which are available to offset future Federal taxable income, if any, through 2009. The Company accounts for the investment tax credits on the flow-through basis. The utilization of tax credits and net operating losses may be limited due to changes in ownership and other restrictions imposed by the Internal Revenue Code. NOTE 10--COMMITMENTS AND CONTINGENCIES: Lease Commitments: The Company leases office space under non-cancelable operating leases with expiration dates ranging through 2004, with various renewal options. Capital leases range from three to five years and are primarily for computer equipment. Assets under capital leases at December 31, 1999 and December 31, 1998 totaled $876 and $390, respectively and accumulated depreciation was $209 and $114, respectively. As of December 31, 1998, the current and long-term obligation under capital leases was $22 and $309, respectively. 41 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 10--COMMITMENTS AND CONTINGENCIES: (CONTINUED) Commitments for minimum rentals under noncancellable leases as of December 31, 1999 are as follows:
CAPITAL OPERATING YEAR LEASES LEASES - ---- -------- --------- 2000....................................................... $239 $1,009 2001....................................................... 206 754 2002....................................................... 170 617 2003....................................................... 141 517 2004....................................................... 105 30 ---- ------ Total minimum lease commitments............................ $861 $2,927 ====== Less: amount representing interest......................... (173) ---- Present value of obligations under capital leases.......... 688 Less: current portion...................................... (97) ---- Long-term obligations under capital leases................. $591 ====
Rental expense for office facilities and certain equipment subject to operating leases for Fiscal 1999, Transition Period 1998 and Fiscal 1998 aggregated $709, $1,326, and $1,756, respectively. Contingencies: The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity. NOTE 11--INTERNET SERVICES AND PROMOTION AGREEMENTS: On August 20, 1999, the Company entered into a Strategic Supply, Services and Promotion Agreement with the Hewlett-Packard Company. Pursuant to the terms of the agreement, the Company is required to pay Hewlett-Packard a variable fee based on the percentage of revenues generated through the ebix.com website in exchange for joint marketing, co-branding, Internet services, and hardware and software provided by Hewlett-Packard to run the ebix.com website. In addition, the Company has the right to purchase Hewlett-Packard hardware at a discount. The Company is required to use only Hewlett-Packard hardware, unless it is not available or functional to meet to Company's needs. The agreement is cancelable by Hewlett-Packard prior to its August 20, 2002 termination date in the event the Company does not realize specified levels of revenues through August 31, 2000 or through August 31, 2001. There is no compensation due to either party in the event of early termination. The Company records expense related to this agreement in the period incurred. However, as of December 31, 1999, the Company has not made any payments to Hewlett-Packard or recognized any expense given there have been no revenues generated through ebix.com website. On August 31, 1999, the Company entered into an Internet Promotion Agreement with InfoSpace.com. Pursuant to the terms of the agreement, the Company is required to pay InfoSpace.com 42 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 11--INTERNET SERVICES AND PROMOTION AGREEMENTS: (CONTINUED) the greater of a variable fee based on a percentage of revenues generated as a result of user traffic via the InfoSpace.com website or a fixed monthly fee of $25 in exchange for a specified number of impressions of ebix.com promotional placements on the InfoSpace.com website. The Company records expense related to this agreement in the period incurred. As of December 31, 1999, the Company has accrued for payments totaling $75 to InfoSpace.com. In addition, the Company granted warrants to InfoSpace.com for the purchase of 776,572 shares of common stock (see Note 14). The agreement terminates on August 31, 2001, unless terminated by either party for cause, as defined in the Internet Promotion Agreement. The Company also entered into Content Distribution and Content Provider Agreements with InfoSpace.com on August 31, 1999. These agreements provide for the mutual right to place hypertext links on the other party's website, including the right to reproduce each party's trademarks, and the right for InfoSpace to sell banner advertising. Under this agreement, the Company is entitled to receive a percentage share in banner advertising revenue received by InfoSpace on the co-branded web pages and the Company in turn must pay to InfoSpace.com a percentage fee based on revenues received by the Company as a result of user traffic on the Company's website via any link established by content page provided by InfoSpace.com. The Company's policy is to record the revenues or expenses related to these agreements in the period earned or incurred. As of December 31, 1999, the Company has not recognized any revenue under these agreements nor has it made any payments. During Fiscal 1999, the Company has also entered into five other strategic agreements for co-branding, content and a search and document retrieval service. Consideration for agreements primarily consists of revenue-sharing arrangements. The Company's policy is to record the revenues or expenses related to these agreements in the period earned or incurred. As of December 31, 1999, the Company has not recognized any revenue under these agreements nor has it made any payments to these third parties. NOTE 12--CASH OPTION PROFIT SHARING PLAN AND TRUST: Effective January 1, 1988, the Company adopted and implemented a 401(k) Cash Option Profit Sharing Plan which allows participants to contribute a percentage of their compensation to the Profit Sharing Plan and Trust up to a maximum of $10. The Company is under no obligation to contribute to the Plan. The Company's contributions to the plan were approximately $89 for Fiscal 1999 and zero for the Transition Period 1998 and Fiscal 1998. NOTE 13--STOCK OPTIONS: The Company's 1996 Stock Incentive Plan (the "Plan") provides for the granting of stock options and stock appreciation rights to officers, directors and employees. The total number of shares reserved for grant under the 1996 Stock Incentive Plan is 2,700,000 at December 31, 1999. Options granted under this plan may be incentive stock options as defined under current tax laws or nonstatutory options. Options are granted at prices determined by the Board of Directors (not less than 100 percent of the market price of the stock at the time of grant for incentive stock options and 110 percent with respect to incentive stock options granted to optionees who own 10 percent or more of the Company's stock). Stock options under this plan generally become exercisable in 25 percent increments vesting on each of the first through fourth anniversaries of the date of grant. All options must be exercised within 43 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 13--STOCK OPTIONS: (CONTINUED) ten years of the date of grant (with respect to incentive stock optionees owning ten percent or more of the Company's stock, the term may be no longer than five years). No stock appreciation rights have been issued under the Plan or are outstanding at December 31, 1999. The Company's 1998 Director Option Plan (the "Director Plan") provides for granting of up to 300,000 stock options to non-employee directors. Only nonstatutory options may be granted under this plan. Options are granted at prices not less than 100% of the market price of the stock at the time of grant. Stock options under this plan generally become exercisable over periods ranging from one to three years. All options must be exercised within ten years of the date of grant. During 1998, the Company granted 68,400 options (22,800 options per director). During 1999, the Company granted a total of 10,800 options (3,600 options per director) pursuant to the terms of the Director Plan. During 1999, the Company granted selected executives and key employees 466,000 incentive stock option awards whose vesting is contingent upon increases in the Company's stock price and other performance based measures, such as achieving specified revenues for new products. For these options, vesting generally occurs when the Company's stock price equals $9.00, $12.00, $15.00 and $20.00 per share. The exercise price of each option, which has a ten year life, is equal to the market price of the Company's stock on the date of grant. Compensation cost is measured and recorded for these options using variable plan accounting as prescribed by APB Opinion No. 25 at the end of each quarterly reporting period and is subsequently adjusted for increases or decreases in the Company's stock price until the exercise date. Compensation expense related to these incentive options of approximately $1,510 was recognized in 1999. At December 31, 1999, 91,813 of the incentive options were vested. The Company has granted nonstatutory and incentive options outside the Plan to purchase up to an aggregate of 44,333 shares. These options are granted at prices determined by the Board of Directors (no less than 100 percent of the market price). The options have a four year vesting period and must be exercised within ten years of the date of the grant. Included in these options are 43,333 options which the Company granted in 1999 and 1,000 options granted prior to 1999 to persons who were not directors, officers or employees during 1999. These non-employee options were valued pursuant to SFAS No. 123. The majority of these options are performance based awards, with no service commitment and subject to vesting only if the Company's stock price reaches a certain price. At December 31, 1999, 9,584 of the non-employee options were vested. Accordingly, the Company has recognized compensation expense of approximately $214 related to these options during the year ended December 31, 1999. Assumptions used in valuing the options are the same as those described below for employee options except the 10-year contractual life was substituted for the expected life of the option as required by SFAS No. 123. 44 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA The Company applies APB Opinion 25 and related Interpretations in accounting for its employee stock-based compensation plans. Had compensation cost for these stock-based compensation plans been determined based on the fair value method prescribed by SFAS No. 123, using the Black-Scholes option-pricing model with the assumptions summarized below, the Company's net loss and net loss per share would have been the pro forma amounts indicated below:
NINE MONTHS YEAR ENDED ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 ----------------- ----------------- -------------- Net loss as reported........... $19,060 $5,754 $3,806 Pro forma net loss............. $18,100 $6,303 $4,817 Net loss per share, as reported..................... $ 2.05 $ 0.78 $ 0.52 Net loss per share, pro forma........................ $ 1.95 $ 0.85 $ 0.66
The pro forma net loss and net loss per share for Fiscal 1999 results are less than the as reported amounts because the total expense for financial statement purposes of $1,510 recorded under APB Opinion No. 25 exceeds the total expense of $550 had such options been recorded pursuant to SFAS No. 123. The per share weighted-average fair values of stock options granted during Fiscal 1999, Transition Period 1998 and Fiscal 1998 were $4.16, $2.38 and $4.50, respectively, on the date of grant. The options exercisable at December 31 and March 31, 1998 are 229,031 and 206,901, respectively. Both the pro forma disclosures and the weighted-average fair value of stock options on the date of grant were calculated using the Black-Scholes option-pricing model with the following assumptions:
NINE MONTHS YEAR ENDED ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 ----------------- ----------------- -------------- Expected volatility............ 69% 44% 64% Expected dividends............. none none none Weighted average risk-free interest rate................ 5.98% 5.30% 6.21% Expected life of stock options...................... 4 years 6 years 10 years
45 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA Stock option activity during the last three periods was as follows:
WITHIN PLAN WEIGHTED- ------------------------ AVERAGE NONSTATUTORY INCENTIVE OUTSIDE EXERCISE EXERCISE OPTIONS OPTIONS PLAN PRICE RANGES PRICE ------------ --------- -------- ------------------- --------- Options outstanding at March 31, 1997......... 503,258 -- 1,000 $ 3.45--$36.90 5.15 Option activity: Granted..................................... 826,151 -- -- 3.28--7.50 4.65 Exercised................................... (112,100) -- -- 3.44--5.00 4.62 Canceled.................................... (370,301) -- -- 3.44--7.50 5.20 --------- ------- ------ ------------------- ---- Options outstanding at March 31, 1998......... 847,008 -- 1,000 3.28--33.75 4.77 Option activity: Granted..................................... 548,400 -- -- 3.38--5.12 5.07 Exercised................................... -- -- -- -- -- Canceled.................................... (318,915) -- -- 3.28--33.75 4.59 --------- ------- ------ ------------------- ---- Options outstanding at December 31, 1998...... 1,076,493 -- 1,000 2.93--26.25 4.59 Option activity: Granted..................................... 290,895 432,250 43,333 6.66-10.00 7.54 Exercised................................... (229,975) -- -- 6.53-11.00 8.13 Canceled.................................... (533,113) -- -- 2.94-10.00 5.59 --------- ------- ------ ------------------- ---- Options outstanding at December 31, 1999...... 604,300 432,250 44,333 2.93-26.25 6.21 ========= ======= ------------------- ----
The following table summarizes information about stock options outstanding as of December 31, 1999:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------- WEIGHTED- ------------------- AVERAGE WEIGHTED- WEIGHTED- REMAINING AVERAGE AVERAGE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE RANGE OF EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE - ------------------------ ----------- ----------- --------- ----------- --------- $2.906--3.938 110,250 8.31 yrs $3.339 55,050 $3.214 3.939--5.940 318,155 7.85 5.187 163,630 5.005 5.950--6.750 472,178 9.61 6.668 88,434 6.664 6.760--9.625 180,300 9.65 8.614 20,763 8.280 --------- ------- 1,080,883 327,877 ========= =======
Effective July 1, 1999, the Company approved the 1999 Stock Purchase Plan (Purchase Plan), which provides for eligible employees to acquire an interest in the Company through the purchase of shares of common stock. The Purchase Plan has 2,000,000 shares of common stock reserved for sale to employees and is intended to qualified under Section 423 of the Internal Revenue Code. Under the Purchase Plan, each employee can choose each year to have up to 10 percent of his or her base earnings, up to $25, withheld to purchase common stock during each accumulation period (generally six months). The purchase price of the stock is 85% of the lower of its beginning-of-accumulation period or end-of-accumulation period market price. At December 31, 1999, the Plan held $16 in funds of participants but no shares have been sold to date. 46 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 14--WARRANTS: On August 20, 1999, the Company granted a two year warrant to Hewlett Packard to purchase 4.9% of the Company's outstanding common stock for $15.00 per share during the first year of the warrant and $20.00 per share during the second year of the warrant. The Company also granted a second warrant to Hewlett-Packard for the purchase of 4.5% of the Company's outstanding common stock during the second year of the term of the agreement for $20.00 per share. The number of shares purchased upon exercise of the warrants will be measured based on the outstanding common stock as of the most recent quarter or year-end as reported on the Company's report on Form 10-Q or Form 10-K. At December 31, 1999, the warrants represented rights to purchase 502,217 and 461,220 shares, respectively. For both warrants, if the fair value of the common stock at the exercise date is greater than the purchase price, Hewlett-Packard may elect to receive net shares equal to the value of the warrant in lieu of exercising the warrant with cash. The Hewlett-Packard warrants were valued pursuant to SFAS No. 123 and EITF Issue No. 96-18. The fair value of these warrants using the Black-Scholes option-pricing model and the same assumptions as in Note 13 for employee stock options, except a contractual life of two years, was approximately $424 and $597 respectively. The compensation expense will be recognized over the contractual period. In 1999, total expense of $263 was recognized. The Company also issued warrants in connection with the InfoSpace.com Internet Promotion Agreement dated August 31, 1999 (see Note 11). The first warrant is for the purchase of 250,000 shares of the Company's common stock at a price of $15.00 per share if exercised during the first year of the agreement or $20.00 per share if exercised during the second year of the agreement. The warrant vests as follows: 62,500 on September 30, 1999, 62,500 on December 31, 1999 and 125,000 on March 31, 2000. The Company also granted a second warrant to InfoSpace.com under the same agreement for the purchase of 4.9% of the Company's outstanding common stock on a fully diluted basis, including the warrant, at August 31, 1999. These warrants allow for the purchase of 526,572 shares at a price of $15.00 per share if exercised during the first year of the agreement or $20.00 per share if exercised during the second year of the agreement. The second warrant is exercisable in lieu of the Company paying invoices rendered by InfoSpace.com. The InfoSpace.com warrants were valued pursuant to SFAS No. 123 and EITF Issue No. 96-18. The fair value of these warrants using the Black-Scholes option-pricing model and the same assumptions as above, except a contractual life of two years, was approximately $81 and $813 respectively. Compensation expense for the first warrant will be recognized over the vesting period and compensation expense for the second warrant will be recognized over the contractual period. In 1999, total expense of $385,000 was recognized. 47 EBIX.COM, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA NOTE 15--GEOGRAPHIC INFORMATION: The following information relates to geographic locations: Year ended December 31, 1999
DOMESTIC AUSTRALIA OTHER TOTAL -------- --------- -------- -------- Revenue.................................................... $10,218 $1,486 $806 $12,510 Fixed Assets............................................... $ 1,941 $ 64 $ 54 $ 2,059 Goodwill (long-lived assets)............................... $ 503 -- -- $ 503
Year ended December 31, 1998
DOMESTIC AUSTRALIA OTHER TOTAL -------- --------- -------- -------- Revenue.................................................... $10,361 $2,381 $660 $13,402 Fixed Assets............................................... $ 1,738 $ 60 $ 43 $ 1,841 Goodwill (long-lived assets)............................... $ 685 -- -- $ 685
NOTE 16--RELATED PARTY: The Company incurred royalty expense of approximately $25, $143 and $79 during Fiscal 1999, Transition Period 1998 and Fiscal 1998, respectively to APT (see Note 4). NOTE 17--IMPAIRMENT CHARGE: During the second quarter of Fiscal 1998, the Company made a strategic decision to discontinue enhancing and selling technology acquired in certain acquisitions. As a result, the unamortized goodwill of $770 related to these acquisitions was written off. This amount is included in amortization and impairment of goodwill in the accompanying consolidated statements of operations. Fair value was determined based on the discounted estimated expected future cash flows related to the goodwill. NOTE 18--SUBSEQUENT EVENTS: In May 2000 the Company's corporate headquarters were relocated to Schaumburg, Illinois (Schaumburg) from Rolling Meadows, Illinois (Rolling Meadows). This relocation was made due to the Company's decision to reduce rent expense and reduce office space. The Rolling Meadows location was 20,000 square feet while the Schaumburg location is 6,000 square feet. In addition, the monthly rent expense on the Rolling Meadows location was approximately $40 per month while the rent expense at the Schaumburg location, subleased from an unrelated third party is $8 per month with a sublease term ending December 31, 2001. In April 2000 the Company and an unrelated third party entered into a sublease agreement relating to the Rolling Meadows location. This sublease will continue until the end of the master lease which is September 30, 2003. The total loss on this sublease over the sublease period is $411, which will be recorded in the Company's second quarter 2000. 48 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On May 14, 1999, the Company filed a report on Form 8-K advising of the dismissal of Arthur Andersen LLP as the Company's independent accountants and of disagreements with Arthur Andersen LLP. On June 4, 1999, the Company filed a report on Form 8-K advising of the engagement of KPMG LLP as the Company's independent accountants. These matters were also reported in the Company's Proxy Statement dated September 22, 1999. In April 2000, the Company engaged Arthur Andersen LLP to reaudit the Company's financial statements for the Transition Period 1998 and Fiscal 1998. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers and senior management of the Company are as follows:
NAME AGE POSITION - ---- -------- ---------------------------------------- Robin Raina.......................... 32 President, Chief Executive Officer Richard J. Baum...................... 61 Senior Vice President-Finance & Administration, Chief Financial Officer and Secretary
The executive officers of the Company are elected annually by the Board. Robin Raina joined the Company in October 1997 as Vice President--Professional Services and was promoted to Senior Vice President--Sales and Marketing in February 1998. Mr. Raina was promoted to Executive Vice President, Chief Operating Officer in December 1998. Mr. Raina was appointed Chief Executive Officer effective September 23, 1999 and President effective August 2, 1999. Prior to joining the Company, from 1990 to 1997 Mr. Raina held senior management positions for Mindware/BPR serving in Asia and North America. While employed by Mindware/BPR, an international technology consulting firm, Mr. Raina was responsible for managing projects for multinational corporations including setting-up offshore laboratories, building intranets, managing service bureaus and support centers, providing custom programming, and year 2000 conversions. Mr. Raina holds an Industrial Engineering degree from Thapar University in Punjab, India. Richard J. Baum has been Senior Vice President--Finance & Administration, Chief Financial Officer and Secretary since July 21,1999, having joined the Company as Senior Controller in June 1999. Since 1988 he had been President of Consulting Capabilities Corp., a general business consulting firm specializing in turnaround and crisis management, which became inactive when he joined the Company. His prior executive level posts include Chief Financial Officer of General American Equities (1983-1987), Vice President of American Invesco Corp (1979-1983), Chief Financial Officer of Norlin Music, Inc (1977-1979), Chief Financial Officer and member of the Board of Midas International Corp., (1972-1977). He is a CPA and holds an MBA from the University of Chicago. The directors of the Company are as follows: YUVAL ALMOG, 49, was elected a director of the Company in September 1991 and was elected Chairman of the Board of Directors on November 30, 1993. Mr. Almog is President of Coral Group, Inc. and Managing Partner of its venture capital partnerships. He joined the Coral Group in 1986 and became its Managing Partner in 1991. Mr. Almog is also a director of RT-Set, Ltd., Tricord System, and various private companies. WILLIAM R. BAUMEL, 32, was appointed a director of the Company in July 1996. In mid 2000, Mr. Baumel is joining RWI Group as general partner. RWI is an early stage venture capital firm. From 49 1996 until mid 2000 Mr. Baumel has been a partner with Coral Group, where he specializes in information services and technology investing. From 1994 to 1996, Mr. Baumel held various positions with the Private Markets Group of Brinson Partners, Inc., institutional money manager. Mr. Baumel previously held positions with Proctor & Gamble, a consumer products company, and Deloitte & Touche, an international accounting and consulting firm. Mr. Baumel also serves on the Boards of Integral Access, Magnet Communications, Optical Solutions, Inc, and Purepacket Communications. LARRY G. GERDES, 50, was elected a director of the Company in 1985. Since 1991, Mr. Gerdes has been Chief Executive Officer of Transcend Services, Inc., a provider of outsourced services to hospitals in the health management area. Mr. Gerdes is also a director of Transcend Services, Inc. Prior to Transcend, Mr. Gerdes spent over 14 years in various executive capacities at HBO & Company, including serving as Chief Financial Officer of HBO & Company and as Chief Executive Officer of Medical Systems Support, Inc., a wholly owned subsidiary of HBO & Company. Since 1983 Mr. Gerdes has been a general partner of Sand Hill Financial Company, a venture capital partnership. Additionally, since 1991 Mr. Gerdes has been a general partner in Gerdes Huff Investments, a private investment partnership located in Atlanta. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires the Company's officers, directors and persons who beneficially own more than ten percent of a registered class of the Company's equity securities to file with the Securities and Exchange Commission reports of securities ownership on Form 3 and changes in such ownership on Forms 4 and 5. Officers, directors and more than ten percent beneficial owners also are required by rules promulgated by the Securities and Exchange Commission to furnish the Company with copies of all such Section 16(a) reports that they file. Based solely upon a review of the copies of Forms 3, 4, and 5 furnished to the Company, the Company believes that during the period from January 1 through December 31, 1999, all of its directors, officers and more-than-ten-percent beneficial owners filed all such reports on a timely basis, except: Mr. Robin Raina made a late filing of Form 4 with respect to the Company's grant of options to him to purchase 180,000 shares of the Company's Common Stock. Mr. Richard J. Baum made a late filing of Form 3 to report his having become an executive officer with the Company. The Company understands that Messrs. Yuval Almog, William Baumel and Larry Gerdes will be making a late filing of Form 5 with respect to the Company's grant of options to them. The Company believes that, on or about May 6, 1999, Bay Area Micro-Cap Fund, L.P. ("Bay Area") became the beneficial owner of more than 10% of the Company's Common Stock, thereby becoming subject to the reporting requirements under Section 16(a) of the Exchange Act. Although William A. Smart III, Peter L. Holland and Gregory F. Wilbur, managing members of Bay Area Micro-Cap Management, LLC, the general partner of Bay Area, each made a late filing of Form 3 with respect to Bay Area's acquisition of a more than ten percent ownership position (which was disclosed in such Forms 3), Bay Area has not filed a Form 3 in respect of such ownership position. 50 ITEM 11. EXECUTIVE COMPENSATION Set forth in the table below is information regarding the annual and long-term compensation for the year ended December 31, 1999, the nine months ended December 31, 1998 and the fiscal year ended March 31, 1998, for the current and former Chief Executive Officers and the other current executive officer (collectively, the "Named Officers"). No other executive officers received salary and bonus compensation in excess of $100,000 in Fiscal 1999. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION ------------------------------------- ------------------------------- NAME AND PERIOD SALARY BONUS OTHER ANNUAL STOCK OPTIONS ALL OTHER CURRENT POSITION (A) ($) ($) COMPENSATION(B) (# OF SHARES) COMPENSATION(C) - ---------------- --------- -------- -------- --------------- ------------- --------------- Robin Raina(1)--............ FY 1999 174,519 52,644 -- 180,000 President and Chief TP 1998 115,385 83,929 55,834 90,000 -- Executive Officer FY 1998 66,692 20,000 -- 90,000 -- Richard J. Baum(2)--........ FY 1999 93,558 26,250 -- 100,000 -- Senior Vice President-- TP 1998 -- -- -- -- -- Finance & Administration FY 1998 -- -- -- -- and Chief Financial Officer W. Max Seybold(3)--......... FY 1999 155,769 50,300 -- -- 59,676 President and Chief TP 1998 153,366 80,103 137,044 180,000 -- Executive Officer FY 1998 29,423 23,538 91,000 180,000 --
- ------------------------ (A) Periods designated as "FY 1999" refers to the fiscal year ended December 31, 1999, "TP 1998" refers to the nine month 1998 transition period ended December 31, 1998, and "FY 1998" for the twelve month fiscal year ended March 31, 1998, respectively. (B) Amounts shown in TP 1998 represent reimbursement for relocation expenses. Amounts shown in FY 1998 represent payments to Mr. Seybold for services performed prior to his employment by the Company. (C) Represents severance payments. (1) Mr. Raina joined the Company effective October 1997. Mr. Raina was appointed President of the Company August 2, 1999 and Chief Executive Officer of the Company Effective September 23, 1999. (2) Mr. Baum joined the Company effective June 1999. Mr. Baum was appointed Senior Vice President--Finance & Administration and Chief Financial Officer on July 21, 1999. (3) Mr. Seybold joined the Company effective January 9, 1998, resigned as President effective July 31, 1999 and resigned as Chief Executive Officer effective September 15, 1999. 51 OPTION GRANTS FOR THE YEAR ENDED DECEMBER 31, 1999 Set forth in the table below is information regarding individual grants of stock options to purchase shares of Common Stock made during the year ended December 31, 1999 to each of the Named Officers. OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK APPRECIATION INDIVIDUAL GRANTS(A) FOR TERM ------------------------------------------------------------------ -------------------- % OF TOTAL OPTIONS NUMBER OF SECURITIES GRANTED TO EXERCISE UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION NAME GRANTED(#) FISCAL YEAR SHARE DATE 5%($) 10%($) - ---- -------------------- ------------------ --------- ---------- -------- --------- Robin Raina................. 180,000(1) 24% 6.66 8/4/09 753,489 1,909,488 Richard J. Baum............. 100,000(1) 13% 6.66 8/4/09 418,605 1,060,827 W. Max Seybold.............. -- -- -- -- -- --
- ------------------------ (A) All options were granted under the Company's 1996 Stock Incentive Plan. (1) Granted on August 4, 1999. AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES Set forth in the table below is information regarding the exercise of stock options of Common Stock during the year ended December 31, 1999 by each of the Named Officers and the value as of December 31, 1999 of unexercised stock options of Common Stock.
NUMBER OF VALUE REALIZED NUMBER OF SECURITIES VALUE OF UNEXERCISED SHARES (MARKET PRICE AT UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT UNDERLYING EXERCISE DATE OPTIONS AT YEAR-END YEAR-END($) OPTIONS LESS EXERCISE --------------------------- --------------------------- NAME EXERCISED(#) PRICE)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---- ------------ ---------------- ----------- ------------- ----------- ------------- Robin Raina................. -- -- 110,000 250,000 647,829 1,348,286 Richard J. Baum............. -- -- 25,000 75,000 113,283 339,848 W. Max Seybold.............. 78,550 525,282 3,750 -- 29,653 --
52 EMPLOYMENT AGREEMENT Mr. Baum became the chief financial officer of the Company pursuant to an agreement dated July 15, 1999 among the Company, Mr. Baum, and Tatum CFO Partners, LLP ("Tatum"). Tatum, of which Mr. Baum is a partner, furnishes chief financial officers to businesses. The agreement, which is terminable by any of the parties on 30 days notice, provides that the Company pays Mr. Baum, as an officer and employee of the Company, a monthly salary of $14,593.33, and pays Tatum monthly fees of $2,916.67, for making certain of its resources available to Mr. Baum in his performance of his services to the Company. Under the agreement, the Company also granted options on 100,000 shares of Common Stock to Mr. Baum and 33,333 shares of Common Stock to Tatum, each with an exercise price of $6.66 per share and vesting as the stock price rises. The vesting is 25% at $9, 25% at $12 and 50% at $15. The agreement provides for semi-annual bonuses of up to an aggregate of $35,000 to Mr. Baum (who receives 75% of any such bonus) and Tatum (which receives 25% of any such bonus) based on Mr. Baum's performance, and also provides for certain Company indemnification of Tatum. DIRECTOR COMPENSATION Non-employee directors do not receive an annual retainer or any other fees for their service as directors. At the Annual Meeting of Stockholders held September 10, 1998, the stockholders of the Company adopted the Delphi Information Systems, Inc. Non-Employee Director Stock Option Plan (the "1998 Director Option Plan"), under which the Company's non-employee directors, each an "Eligible Director" Messrs. Almog, Baumel and Gerdes, each received options to acquire 22,800 shares of common stock. Of the 22,800 shares of common stock: (i) 15,600 shares are exercisable at a price per share of $5.00 at any time prior to September 3, 2006; (ii) 3,600 shares are exercisable at a price per share of $5.94 at any time prior to September 3, 2007 and (iii) 3,600 shares are exercisable at a price per share of $2.91 at any time prior to September 9, 2008. In addition, the 1998 Director Option Plan provides for each Eligible Director, immediately following each annual meeting of stockholders of the Company, to be granted an option to purchase 3,600 shares of Common Stock at an exercise price per share of 100% of the fair market value of a share of Common Stock on the date of the grant. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee are Mr. Almog and Mr. Gerdes. Neither Mr. Almog nor Mr. Gerdes are or have been a Company officer or employee. No Company executive officer currently serves on the Compensation Committee or any similar committee or as a director of another public company. REPORT OF COMPENSATION COMMITTEE The Compensation Committee of the Board of Directors reviews and makes recommendations to the Board of Directors regarding salaries, compensation and benefits of officers and other key employees of the Company and grants options to purchase Common Stock. COMPENSATION PHILOSOPHY. The Company's goals are to reward executives consistent with the Company's performance and to encourage the executives to increase stockholder value. To achieve these goals, the Compensation Committee has adopted the following objectives as guidelines: - Display a willingness to pay executives compensation necessary to attract and retain highly qualified executives. - Be willing to compensate executives for superior performance or for assuming new responsibilities or new positions within the Company. 53 - Take into account historical levels of executive compensation and compensation structures competitive with other similar companies. - Implement a balance between short and long-term compensation to complement the Company's annual and long-term business objectives and strategies. - Provide different compensation opportunities based on the performance of the Company, encourage stock ownership by executives and align executive compensation with the interests of stockholders. COMPENSATION PROGRAM COMPONENTS. The Compensation Committee regularly reviews the Company's compensation program to ensure that pay levels and incentive opportunities are competitive with the market and reflect the performance of the Company. The particular elements of the compensation program for executive officers are further explained below. BASE SALARY. The Company's base pay levels are largely determined by evaluating the responsibilities of the position held and the experience of the individual and by comparing the salary scale with companies of similar size and complexity. Actual base salaries are kept within a competitive salary range for each position that is established through job evaluation and market comparisons and approved by the Committee as reasonable and necessary. ANNUAL INCENTIVES. The Company has historically awarded cash bonuses to certain salaried employees (including the Named Officers) of the Company. Bonuses are based on various factors, including profitability, revenue growth, management development and other specific performance criteria. The Company awarded bonuses to Mr. Seybold, Mr. Raina, and Mr. Baum and one other executive officer during Fiscal 1999. STOCK OPTION PROGRAM. The Compensation Committee strongly believes that by providing those persons who have substantial responsibility over the management and growth of the Company with an opportunity to increase their ownership of the Company's stock, the interests of stockholders and executives will be closely aligned. Therefore, the Company's officers (including the Named Officers) and other key employees are eligible to receive either incentive stock options or nonqualified stock options as the Compensation Committee may determine from time to time, giving them the right to purchase shares of Common Stock at an exercise price equal to 100 percent of the fair market value of the Common Stock at the date of grant. The number of stock options granted to executive officers is based on competitive practices. CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Raina became the Chief Executive Officer of the Company, effective September 23, 1999, having been the Executive Vice President and Chief Operating Officer of the Company commencing in December, 1998. Mr. Raina's compensation during the portion of Fiscal 1999 that he served as Chief Executive Officer was based on the compensation level of his predecessor and the Compensation Committee's general understanding of compensation levels in the marketplace for chief executive officers of comparable public companies. In connection with becoming the Chief Executive Officer, Mr. Raina received a grant of options on 180,000 shares of the Company's common stock (with vesting levels dependent on the Company's stock price levels), intended to align a significant portion of his compensation with the performance of the Company's common stock. In addition, and continuing a bonus structure that was established when Mr. Raina was the Executive Vice President and Chief Operating Officer, a potentially substantial part of his compensation (up to 75%) of base salary was contemplated to consist of a bonus, based on success in meeting goals relating to the Company's financial performance, establishment of the ebix.mall website, and hiring of certain officers, and considering such factors, and the limited portion of the year in which he served as Chief Executive Officer, a bonus was paid to Mr. Raina with respect to Fiscal 1999 of $125,000. Mr. Baumel, a director who is not a member of the Compensation Committee, acted with the Committee with respect to Mr. Raina's compensation. 54 FORMER CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Seybold resigned as Chief Executive Officer of the Company effective September 15, 1999. Mr. Seybold's salary during the portion of Fiscal 1999 that he served as Chief Executive Officer was based on his salary in the prior year, and the Compensation Committee's general understanding of compensation levels in the marketplace for chief executive officers of comparable public companies. As part of his compensation with respect to 1999, in December 1998, Seybold received a grant of options of 180,000 and bonus of $50,300 with respect to 1999. SUMMARY. After its review of all existing programs, the Compensation Committee continues to believe that the total compensation program for executives of the Company is focused on enhancing corporate performance and increasing value for stockholders. The Compensation Committee believes that the compensation of executive officers is properly tied to stock appreciation through awards to be granted under the 1996 Stock Incentive Plan and that executive compensation levels at the Company are competitive with the compensation programs provided by other corporations with which the Company competes. The foregoing report has been approved by all members of the Compensation Committee. Section 162(m) of the Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to public companies for compensation over $1 million paid to the corporation's Chief Executive Officer or four other most-highly compensated executive officers. The Compensation Committee has reviewed the possible effect on the Company of Section 162(m), and it does not believe that Section 162(m) will be applicable to the Company in the foreseeable future, but will review compensation practices as circumstances warrant. Respectfully submitted, Yuval Almog Larry G. Gerdes William Baumel (solely with respect to Mr. Raina's Compensation) 55 PERFORMANCE GRAPH The line graph below compares the yearly percentage change in cumulative total stockholder return on the Company's Common Stock for the last five fiscal years with the Nasdaq Stock Market stock index and the Nasdaq Computer Data Processing Index. The following graph assumes the investment of $100 on December 31, 1994, and the reinvestment of dividends (rounded to the nearest dollar). COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG EBIX.COM, INC. (FORMERLY DELPHI INFORMATION SYSTEMS, INC.), THE NASDAQ STOCK MARKET (U.S.) INDEX AND THE NASDAQ COMPUTER DATA PROCESSING INDEX [GRAPH]
12/94 12/95 12/96 12/97 12/98 12/99 -------- -------- -------- -------- -------- -------- DELPHI INFORMATION SYSTEMS, INC............................. 100 160 160 120 218 287 NASDAQ STOCK MARKET (U.S.).................................. 100 141 174 213 300 542 NASDAQ COMPUTER; DATA PROCESSING............................ 100 152 188 231 412 871
56 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of March 31, 2000, the ownership of Common Stock and Series D Preferred Stock by each director of the Company, by each current executive officer of the Company, by each of the Named Officers, by all current executive officers and directors of the Company as a group, and by all persons known to the Company to be beneficial owners of more than five percent of the Common Stock or the Series D Preferred Stock. The Common Stock and the Series D Preferred Stock are the Company's only outstanding classes of voting securities. The information set forth in the table as to the current directors and executive officers is based upon information provided to the Company by such persons in connection with the preparation of this annual report on Form 10-K.
COMMON STOCK SERIES D PREFERRED ------------------------- ------------------------- PERCENT OF PERCENT OF OWNERSHIP(2) CLASS(3) OWNERSHIP(2) CLASS ------------ ---------- ------------ ---------- NAME AND POSITION OF BENEFICIAL OWNER(1) - ------------------------------------------------- Bay Area Micro-Cap Fund, L.P. (4) (13)........... 1,765,400 15.53% -- -- Covington Associates (5)......................... -- -- 221 100.0% Coral Partners II, a limited partnership (6)..... 1,282,623 11.3% -- -- Roy L. Rogers (7)................................ 636,860 5.6% -- -- Rennes Foundations (8) (14)...................... 1,967,800 17.3% -- -- Yuval Almog Director and Chairman of the Board (9)......... 1,342,323 11.8% -- -- William Baumel Director (10).................................. 1,318,223 11.6% -- -- Larry Gerdes Director (11).................................. 80,368 * -- -- Max Seybold (12)................................. 3,750 * Robin Raina President and Chief Executive Officer (12)..... 110,000 1% -- -- Richard J. Baum Senior Vice President, Finance and Administration; Chief Financial Officer (12)... 25,000 * All directors and executive officers as a group (6 persons).................................... 1,597,041 14.% -- --
- ------------------------ (1) Except where otherwise indicated, the mailing address of each of the stockholders named in the table is c/o ebix.com, Inc. (formerly Delphi Information Systems, Inc.), 1900 Golf Road, Suite 1200, Schaumburg, Illinois 60008. (2) Each holder has sole voting and investment power with respect to the shares listed unless otherwise indicated. (3) Percentages less than one percent are indicated by an asterisk. (4) Of the 1,765,400 shares of Common Stock, 1,676,100 are held by Bay Area Micro-Cap Fund, 78,300 shares of Common Stock are held by Gregory F. Wilbur, a managing member of Bay Area Micro-Cap Management Company, LLC which is the general partner of Bay Area Micro-Cap Fund, L.P., 3,000 shares of Common Stock are held by William A. Smart III, a managing partner of Bay Area Micro-Cap Management Company, LLC which is the general partner of Bay Area Micro-Cap Fund, L.P and 8,000 shares of Common Stock are owned by Smart, Holland Value Fund, L.P of which Mr. William A. Smart III is sole general partner. The address of Bay Area Micro-Cap Fund, L.P is 1151 Bay Laurel Drive, Menlo Park, California 94025. 57 (5) The address of Covington Associates is 60 State Street, Boston, Massachusetts 02109. (6) The address of Coral Partners II is 60 South Sixth Street, Suite 3510, Minneapolis, Minnesota 55402. (7) Of the 636,860 shares of Common Stock, 476,860 shares are held by the Roy Family Trust dated January 21, 1981, as amended, 140,000 are held by Roy-Ruth Rogers Unitrust and 20,000 are held by the Roy L Rogers IRA Account. The address of Roy L. Rogers is 2700 Sand Hill Road, Menlo Park, California 94025. (8) The address of the Rennes Foundation is Aeulestrasse 38, FL 9490 Vaduz Principality Liechtenstein. (9) Of the 1,342,323 shares of Common Stock, 1,282,623 shares of Common Stock are held by Coral Partners II, 10,000 shares are held by Coral Group, Inc. Retirement Plan for the benefit of Yuval Almog, 20,000 shares of Common Stock are held by Mr. Almog, 23,700 shares of Common Stock could be purchased by exercising outstanding options within 60 days after March 31, 2000 and 6,000 shares of Common Stock are held by Mr. Almog and his wife who have shared voting and investment power. Mr. Almog is the Managing General Partner of Coral Partners II. Mr. Almog disclaims beneficial ownership of the shares held by Coral Partners II. The address of Mr. Almog is 60 South Sixth Street, Suite 3510, Minneapolis, Minnesota 55402. (10) Of the 1,318,223 shares of Common Stock, 1,282,623 shares of Common Stock are held by Coral Partners II, 1,400 shares are held by Coral Group, Inc. Retirement Plan for the benefit of William Baumel, 9,000 shares of Common Stock are held by Mr. Baumel, 23,700 shares of Common Stock could be purchased by exercising outstanding options within 60 days after March 31, 2000 and 1,500 shares of Common Stock are held by Mr. Baumel and his wife who have shared voting and investment power. Until mid 2000, Mr. Baumel is a Venture Partner of Coral Partners II. Mr. Baumel disclaims beneficial ownership of the shares held by Coral Partners II. The address of Coral Partners II is 60 South Sixth Street, Suite 3510, Minneapolis, Minnesota 55402. (11) Includes 23,700 shares of Common Stock, which Mr. Gerdes could purchase by exercising outstanding options within 60 days after March 31, 2000. The address of Mr. Gerdes is 3353 Peachtree Road, N.E., Suite 1030, Atlanta, Georgia 30326. (12) Represents shares of Common Stock subject to stock options, which may be exercised within 60 days after March 31, 2000. (13) Although ownership of 15 percent of the Company's outstanding common stock generally is the threshold for becoming an "Acquiring Person" and triggering the Company's Stockholder Rights Plan (the "Rights Plan"), Bay Area has advised the Company (and the Board of Directors of the Company has determined) that Bay Area's acquisition of ownership exceeding the "Acquiring Person" threshold was inadvertent. Bay Area has also advised the Company that it will divest as promptly as practicable, as required by the Rights Plan, a sufficient number of shares of the Company's common stock so as to bring it below the 15 percent ownership level. Accordingly, and assuming such divestiture is effected. Bay Area will be deemed under the Rights Plan not to have become an "Acquiring Person" and the Rights Plan will not be triggered as a result of such stockholder's inadvertent actions. (14) Although ownership of 15 percent of the Company's outstanding common stock generally is the threshold for becoming an "Acquiring Person" and triggering the Company's Stockholder Rights Plan (the "Rights Plan"), Rennes has advised the Company (and the Board of Directors of the Company has determined) that Rennes's acquisition of ownership exceeding the "Acquiring Person" threshold was inadvertent. Rennes has also advised the Company that it will divest as 58 promptly as practicable, as required by the Rights Plan, a sufficient number of shares of the Company's common stock so as to bring it below the 15 percent ownership level. Accordingly, and assuming such divestiture is effected. Bay Area will be deemed under the Rights Plan not to have become an "Acquiring Person" and the Rights Plan will not be triggered as a result of such stockholder's inadvertent actions. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS See Item 11, Executive Compensation; Employment Agreement. 59 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. FINANCIAL STATEMENTS. The following consolidated financial statements and supplementary data of the Company and its subsidiaries, required by Part II, Item 8 are filed herewith: - Reports of Independent Public Accountants - Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998 - Consolidated Statements of Operations for the Year Ended December 31, 1999, the nine months ended December 31, 1998 and for the Year Ended March 31, 1998 - Consolidated Statements of Stockholders' Equity (Deficit) for the Year Ended December 31, 1999, the nine months ended December 31, 1998 and for the Year Ended March 31, 1998 - Consolidated Statements of Cash Flows for the Year Ended December 31, 1999, the nine months ended December 31, 1998 and for the Year Ended March 31, 1998 - Notes to Consolidated Financial Statements (a) 2. FINANCIAL STATEMENTS. The following financial statement schedule is filed herewith: Schedule II--Valuation and Qualifying Accounts for the year ended December 31, 1999, the nine months ended December 31, 1998 and for the year ended March 31, 1998. Schedules other than those listed above have been omitted because they are not applicable or the required information is included in the financial statements or notes thereto.
EXHIBITS 3.1 Certificate of Incorporation, as amended (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-8 (No. 333-23361), and incorporated herein by reference). 3.2 Bylaws of the Company 3.3 Certificate of Amendment of Certificate of Incorporation (filed as Exhibit 3.1 to the Company's Form 10-Q for the quarter ended June 30, 1998, and incorporated herein by reference). 3.4* Certificate of Amendment of Certificate of Incorporation dated November 5, 1999. 4.1 Form of Redeemable Warrant to purchase shares of common stock of Ebix.com, Inc. (filed as Exhibit 4.12 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996, and incorporated herein by reference). 4.2 Form of Unit Investment Agreement to purchase common stock and warrants of Delphi Information Systems, Inc. (filed as Exhibit 4.13 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996, and incorporated herein by reference). 4.3 Form of Warrant to purchase shares of common stock of Delphi Information Systems, Inc. held by R.J. Steichen & Company (filed as Exhibit 4.14 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1996, and incorporated herein by reference).
60 4.4 Rights Agreement between Delphi Information Systems, Inc. and ChaseMellon Shareholder Services, LLC, as Rights Agent (filed as Exhibit 99.1 to the Company's Registration of Certain Classes of Securities on Form 8-A (No. 000-15946) and incorporated herein by reference). MATERIAL CONTRACTS 10.1 Delphi Information Systems, Inc. 1983 Stock Incentive Plan, as amended (filed as Exhibit 10.1 to the Company's Registration Statement on Form S-1 (No. 33-45153) and incorporated herein by reference). + 10.2 Delphi Information Systems, Inc. Cash Option Profit Sharing Plan (filed as Exhibit 4.2 to the Company's Registration Statement on Form S-8 (No. 33-19310) and incorporated herein by reference). + 10.3 Delphi Information Systems, Inc. 1989 Stock Purchase Plan (included in the prospectus filed as part of the Company's Registration Statement on Form S-8 (No. 33-35952) and incorporated herein by reference). + 10.4 Delphi Information Systems, Inc. Non-Qualified Stock Option Plan for Directors (filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1992, and incorporated herein by reference). 10.5 Delphi Information Systems, Inc. 1996 Stock Incentive Plan (filed as Exhibit 4.3 to the Company's Registration Statement on Form S-8 (File No. 33323261), and incorporated herein by reference). + 10.6 Stock Purchase Warrant dated June 5, 1992, issued by the Company to Silicon Valley Bank, and related Registration Rights Agreement (filed as Exhibit 10.12 to the Company's Registration Statement on Form S-1 (No. 33-45153) and incorporated herein by reference). 10.7 Lease between the Company and Westlake Renaissance Court for office space in Westlake Village, California, as amended (filed as Exhibit 10.5 to the Company's Registration Statement on Form S-1 (No. 33-14501) and incorporated herein by reference). 10.8 Lease dated April 17, 1986, between Mortimer B. Zuckerman and Edward H. Linde, as Trustees, as Landlord and McCracken Computer Inc., as Tenant, relating to premises at 10-20 Burlington Mall Road, Burlington, Massachusetts, as amended (filed as Exhibit 10.22 to the Company's Form S-1 Registration Statement (No. 33-45153) and incorporated herein by reference). 10.10 Form of Stock Purchase Warrant between the Company and Silicon Valley Bank (filed as Exhibit 10.26 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1995, and incorporated herein by reference). 10.11 Loan and Security Agreement as amended between the Company and Coast Business Credit dated January 1997 and related Schedule and Capex Promissory Note. (filed as Exhibit 10.11 to the Company's Annual Report on Form 10K for the fiscal year ended March 31, 1997, and incorporated herein by reference). 10.12 Second Amendment dated December 18, 1997 to Loan and Security Agreement between the Company and Coast Business Credit dated January 1997. (filed as Exhibit 10.12 to the Company's Form 10-Q for the quarter ended December 31, 1997, and incorporated herein by reference.) 10.13 Third Amendment dated March 23, 1998 to Loan and Security Agreement between the Company and Coast Business Credit dated January 1997. (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1998 and incorporated herein by reference.)
61 10.14 Fourth Amendment dated September 30, 1998 to Loan and Security Agreement between the Company and Coast Business Credit dated January 1997. (filed as Exhibit 10.14 to the Company's Form 10-Q for the quarter ended September 30, 1998, and incorporated herein by reference.) 10.15 Lease agreement dated September 1998 between the Company and Crossroads of Commerce III, relating to premises at 3501 Algonquin Road, Rolling Meadows, IL. 10.16 Lease agreement effective October, 1998 between the Company and 485 Properties LLC relating to premises at Five Concourse Parkway, Atlanta, Georgia. 10.17 Delphi Information Systems, Inc. 1998 Non-Employee Director's Stock Option Plan (the "1998 Director Option Plan"). (filed as Exhibit A to the Company's proxy statement dated August 12, 1998, and incorporated herein by reference.)+ 10.18* Waiver Agreement dated April 14, 1999 and September 16, 1999 between the Company and Coast Business Credit. 10.19* Strategic Supply, Service and Promotion Agreement between Hewlett Packard and Company, dated August 20, 1999. 10.20* Related Agreement Number One, Strategic Supply, Services and Promotion Agreement between Hewlett Packard and Company, dated August 20, 1999. 10.21* Terms and condition of sale and service between Hewlett Packard and Company, dated August 20, 1999. 10.22* Warrant to purchase shares of common stock between Hewlett Packard and Company, dated August 20, 1999. 10.23* Internet Content (World Wide Web Site) Distribution Agreement between Infospace and Company, dated August 31, 1999. 10.24* Content Provider Agreement between Infospace and Company, dated August 31, 1999. 10.25* Internet Promotion Agreement between Infospace and Company, dated August 31, 1999. 10.26* Agreement between Infospace and Company Exhibit D. 10.27* Agreement between Infospace and Company Exhibit C. 10.28* Agreement dated as of July 15, 1999, between the Company, Tatum CFO Partners, LLP and Richard J. Baum. 10.29* Sublease agreement dated April 20, 2000 between the Company and Philips Electronics North American Company relating to the premises at 1900 Golf Road, Schaumburg, Illinois. 10.30* Sublease agreement dated April 20, 2000 between the Company and Pepsi-Cola General Bottlers relating to the premises at 1300 Algonquin Road in Rolling Meadows, Illinois. 10.31* Sublease agreement dated July 22, 1999 between the Company and Air Liquid America Corporation relating to the premise at Walnut Creek California. 10.32* First Amendment to the Delphi Information Systems, Inc. 1996 Stock Incentive Plan. 10.33* Delphi Information Systems, Inc. 1999 Stock Purchase Plan. 21.1* The subsidiaries of the Company. 23.1* Consent of KPMG LLP 23.2* Consent of Arthur Andersen LLP
62 27.1* Financial Data Schedule--December 31, 1999 27.2* Restated Financial Data Schedule--December 31, 1998 27.3* Restated Financial Data Schedule--March 31, 1998 * Filed herewith ** Confidential treatment has been requested for portions of this document. The redacted material has been filed with the commission pursuant to an application for confidential treatment.
+ Management Contracts and Compensation Agreements (b) REPORTS ON FORM 8-K There were no reports filed on Form 8-K in the quarter ended December 31, 1999. 63 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ebix.com, Inc. (Registrant) By: /s/ ROBIN RAINA ----------------------------------------- Robin Raina PRESIDENT AND CHIEF EXECUTIVE OFFICER AND DIRECTOR
Date: June 1, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ YUVAL ALMOG ------------------------------------ Chairman of the Board June 1, 2000 (Yuval Almog) /s/ ROBIN RAINA ------------------------------------ President and Chief Executive June 1, 2000 (Robin Raina) Officer /s/ RICHARD J. BAUM Senior Vice President-Finance & ------------------------------------ Administration, Chief Financial June 1, 2000 (Richard J. Baum) Officer, and Secretary /s/ WILLIAM R. BAUMEL ------------------------------------ Director June 1, 2000 (William R. Baumel) /s/ LARRY G. GERDES ------------------------------------ Director June 1, 2000 (Larry G. Gerdes)
64 SCHEDULE II EBIX.COM, INC. SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 1999, THE NINE MONTHS ENDED DECEMBER 31, 1998 AND FISCAL YEAR ENDED MARCH 31, 1998. Allowance for doubtful accounts receivable.
NINE MONTHS FISCAL YEAR ENDED ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 MARCH 31, 1998 ----------------- ----------------- -------------- Beginning balance.............. $1,068,000 860,000 $ 1,613,000 Provision for allowance........ -- 699,000 356,000 Write-off of accounts receivable against allowance............ (64,000) (491,000) (1,109,000) ---------- ---------- ----------- $1,004,000 $1,068,000 $ 860,000 ========== ========== ===========
65 EX-3.4 2 ex-3_4.txt EXHIBIT 3.4 Exhibit 3.4 State of Delaware Office of the Secretary of State -------------------------------- I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CORRECTION OF "EBIX.COM, INC.", FILED IN THIS OFFICE ON THE SECOND DAY OF NOVEMBER, A.D. 1999, AT 5 O'CLOCK P.M. A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS. [SEAL] /s/ Edward J. Freel --------------------------------------- Edward J. Freel, Secretary of State 2015436 8100 AUTHENTICATION: 0067324 991465733 DATE: 11-05-99 STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 05:00 PM 11/02/1999 991465733-2015436 CERTIFICATE OF CORRECTION FILED TO CORRECT A CERTAIN ERROR IN THE CERTIFICATE OF AMENDMENT OF EBIX.COM, INC. FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON OCTOBER 22, 1999 EBIX.COM, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: 1. The name of the corporation is EBIX.COM, INC. 2. That a Certificate of Amendment to the Certificate of Incorporation was filed by the Secretary of State of Delaware on October 22, 1999, and that said Certificate requires correction as permitted by Section 103 of the General Corporation Law of the State of Delaware. 3. The inaccuracy or defect of said Certificate to be corrected is as follows: The name of the corporation should be in lower case letters with the exception of the corporate ending, which is initial capitalization. 4. The FIRST Article of the Certificate is corrected to read as follows: The name of the corporation is ebix.com, Inc. IN WITNESS WHEREOF, said ebix.com, Inc. has caused this Certificate to be signed by Norma Sutton, its Assistant Secretary this 4th day of November, 1999. ebix.com, Inc. By /s/ Norma Sutton ---------------------------- Assistant Secretary EX-10.18 3 ex-10_18.txt EXHIBIT 10.18 Exhibit 10.18 WAIVER AGREEMENT This Waiver Agreement (this "Waiver") is entered into as of this 14th day of April, 1999, between DELPHI INFORMATION SYSTEMS, INC. ("Borrower") and COAST BUSINESS CREDIT, a division of Southern Pacific Bank ("Lender"), with respect to the following: A. Borrower and Lender have previously entered into that certain Loan and Security Agreement dated January 8, 1997, as amended (the "Loan Agreement"). Capitalized terms are used in this Waiver as defined in the Loan Agreement, unless otherwise defined herein. B. Borrower has requested that Lender waive Borrower's violation of certain covenants under the Loan Agreement. Lender is willing to waive such violations on the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the terms and conditions hereof, the parties hereto agree as follows: 1. WAIVERS OF DEFAULTS. (a) Borrower acknowledges that for the period of December 31, 1998 to March 31, 1999, Borrower had accounts payable that were more than ninety (90) days past due in violation of Section 7(2) of the Schedule to the Loan Agreement. Borrower further acknowledges that the foregoing violation constitutes an Event of Default under the Loan Agreement. Lender hereby waives such Event of Default for the period through March 31, 1999. (b) Borrower acknowledges that an Event of Default has occurred under the Loan Agreement as a result of Borrower's failure to comply with Section 1(a) of the Schedule to the Loan Agreement, which provides in part: "Loans ("the Receivable Loans") [are] not to exceed the following amounts: ...(ii) from January 1, 1999 through March 31, 1999, two (2) times Monthly Collections." Lender hereby waives such Event of Default for the period through March 31, 1999. (c) Borrower acknowledges that as a result of the occurrence of the Event of Default described in paragraph (b) above, overadvances occurred on one or more occasions in January, 1999 in that the loans exceeded the Credit Limit in Section 1 of the Schedule to the Loan Agreement, thereby constituting additional Events of Default under the Loan Agreement. Lender hereby waives the Events of Default caused by such overadvances for the time periods in January. (d) Borrower acknowledges that for the period December 29, 1998 to January 12, 1999, Borrower failed to remit to Lender all proceeds arising out of the disposition of any Collateral in violation of Section 4.5 of the Loan Agreement. Borrower further acknowledges that such violation constitutes an Event of Default under the Loan Agreement. Lender hereby waives such Event of Default for the time period December 29, 1998 to January 12, 1999. (e) The foregoing waivers are on-time waivers only and shall apply only to the matters and time periods specifically set forth in this Paragraph 1. Without limiting the generality of the foregoing, these waivers shall not apply to any future failure by Borrower to comply any provision of the Loan Agreement at any time. (f) Lender reserves all of its rights and remedies with respect to all other obligations of Borrower under the Loan Agreement and all other Loan Documents. 2. WAIVER FEE. In addition to all other fees and expenses, Borrower shall pay to Lender a fee of Fifteen Thousand Dollars ($15,000) in consideration of the waivers provided to Borrower herein, fully earned and payable on the date hereof. 3. REAFFIRMATION. Except as provided herein, the Loan Agreement and each other Loan Document remains in full force and effect in accordance with its terms. If there is any conflict between the terms and provisions of this Waiver and the terms and provisions of the Loan Agreement or any other Loan Document, the terms and provisions of this Waiver shall govern. 4. COUNTERPARTS. This Waiver may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 5. GOVERNING LAW. This Waiver shall be governed by and construed according to the laws of the State of California. 6. ATTORNEYS' FEES. Borrower shall pay, on demand, all attorneys' fees and costs incurred in connection with the documentation and execution of this Waiver. If any legal action or proceeding shall be commenced at any time by any party to this Waiver in connection with its interpretation or enforcement, the prevailing party or parties in such action or proceeding shall be entitled to reimbursement of its reasonable attorneys' fees and costs in connection therewith, in addition to all other relief to which the prevailing party or parties may be entitled. 2 IN WITNESS WHEREOF, the parties hereto have duly executed this Waiver as of the date first above written. DELPHI INFORMATION SYSTEMS, INC. By: /s/ Edward J. O'Connell ------------------------------------------ Title: SR VP FINANCE & CFO --------------------------------------- COAST BUSINESS CREDIT, a division of Southern Pacific Bank By: /s/ Karen Sperry ------------------------------------------ Title: VP --------------------------------------- 3 AMENDMENT TO LOAN AND SECURITY AGREEMENT This Amendment to Loan and Security Agreement ("AMENDMENT") is entered into as of this 16th day of September, 1999, between Delphi Information Systems, Inc. ("BORROWER") and Coast Business Credit-Registered Trademark-, a division of Southern Pacific Bank ("COAST") in reference to that certain Loan and Security Agreement between Borrower and Coast dated January 8, 1997, as amended ("LOAN AGREEMENT"). All capitalized terms not defined herein shall have the meaning given in the Loan Agreement. The parties desire that the Loan Agreement be modified as follows: 1. FORBEARANCE PERIOD. The current outstanding balance of the Borrower's Obligations under the Loan Agreement is approximately $9,000 along with all unpaid interest and fees. In order to accommodate Borrower, Coast and Borrower have mutually agreed that as of the Effective Date (defined below) and until Coast determines that Borrower's reporting mechanisms and reports generated thereby are satisfactory to Coast in its discretion, Coast shall, except as provided in the next sentence, cease making loans as otherwise set forth under the Loan Agreement. During this period (the "Forbearance Period"), the Borrower will pay to Coast minimum interest on the sum of $1,600,000 at the rate equal to the difference between the applicable rate set forth in the Loan Agreement for loans and the Prime Rate minus three points. Once Coast in its discretion has determined that the Forbearance Period should be terminated, Coast's loans will be made under the terms of the Loan Agreement as they existed prior to this Amendment. 2. TERMINATION OF THE FORBEARANCE PERIOD. Before Coast can determine whether the Forbearance Period should be terminated, Borrower shall have submitted new reports in form and substance acceptable to Coast and Coast shall have performed the necessary audits to confirm the accuracy of such reports. 3. COLLECTIONS. During the Forbearance Period, Borrower will not be required to remit to Coast any proceeds of Borrower's Receivables or other collections and Borrower may use such monies in the ordinary course of its business. 4. MORATORIUM ON REPORTING AND AUDITS. Except as noted above, during the Forbearance Period, (a) Borrower will not be required to comply with the reporting requirements under the Loan Agreement except that Borrower shall continue to provide Coast with quarterly 10Q's as required by the Loan Agreement, and (b) Coast will not require that any audits be performed. 5. MINIMUM INTEREST. Coast hereby waives the minimum monthly interest requirement under the Loan Agreement for the time period beginning July 1, 1999 through and including the Effective Date of this Amendment. The foregoing waiver is a one-time waiver only and not a continuing waiver, and shall apply only to the matters and time periods specifically set forth in this Waiver. Without limited the generality of the foregoing, this waiver shall not apply to any future failure by Borrower to comply with the terms of the Loan Agreement referenced above or any other term therein. 6. LOCKBOX. Borrower agrees that once the Forbearance Period has ended, all proceeds of Collateral shall be deposited by Borrower into a lockbox account, pursuant to a lockbox agreement in such form as Coast may specify. 7. MAXIMUM DOLLAR AMOUNT. Borrower agrees that the existing Maximum Dollar Amount shall remain at $4,000,000. 8. CONDITIONS TO EFFECTIVENESS. The "Effective Date" of this Amendment is the date upon which each of the following shall have occurred: a. This Amendment shall have been duly executed and delivered by each party hereto. b. Borrower shall repay the Obligations in full. c. Coast shall have received such other documents, instruments, approvals and opinions as Coast may reasonably request. 9. REAFFIRMATION. Except as amended by terms herein, the Loan Agreement remains in full force and effect. If there is any conflict between the terms and provisions of this Amendment and the terms and provisions of the Loan Agreement, the terms and provisions of this Amendment shall govern. 10. COUNTERPARTS. This Amendment may be executed in one or more counterparts. 11. GOVERNING LAW. This Amendment shall be governed by the laws of the State of California. 12. ATTORNEYS' FEES. If any action or proceeding shall be commenced at any time by any party to this Amendment to enforce, interpret or otherwise concerning the terms herein, the prevailing party in such action shall be entitled to reimbursement of its costs and reasonable attorneys' fees. EACH OF THE PARTIES HERETO WAIVES TRIAL BY JURY IN CONNECTION WITH ANY ACTION DESCRIBED IN THE PRECEDING SENTENCE. In addition to all other fees and charges, Borrower shall reimburse Coast, upon demand, for all attorneys' fees and costs incurred in connection with the negotiation, documentation and closing of this Amendment. "Coast" "Borrower" COAST BUSINESS CREDIT, DELPHI INFORMATION SYSTEMS, INC. A DIVISION OF SOUTHERN PACIFIC BANK By: /s/ Karen Sperry By: /s/ J. Baum -------------------------------- -------------------------------- Its: VP Its: CFO ------------------------------- ------------------------------- 2 EX-10.19 4 ex-10_19.txt EXHIBIT 10.19 Exhibit 10.19 CONFIDENTIAL DRAFT Confidential treatment has been requested for portions of this document. Redacted material is identified by double asterisks (i.e. "**"). The redacted material has been filed separately with the Securities and Exchange Commission pursuant to an application for confidential treatment. STRATEGIC SUPPLY, SERVICES AND PROMOTION AGREEMENT This Strategic Supply, Services and Promotion Agreement (this "Agreement") is entered into as of 20th August, 1999 (the "Effective Date"), between HEWLETT-PACKARD COMPANY, a Delaware corporation ("HP") and DELPHI INFORMATION SYSTEMS, INC., a Delaware corporation ("Delphi"). 1. DEFINITIONS 1.1 "Delphi Logos" means Delphi's name and logo(s), including all artwork, graphics, icons and other content to be displayed, at Delphi's sole discretion, on Ebix.com. 1.2 "Ebix.com" (electronic brokers and insurers express) means that Delphi insurance portal ebix.com which also includes ebix.mall and ebix.link e-commerce services, as it now exists and as it may hereafter be modified or replaced, that facilitates commercial and consumer insurance transactions over the Web. As of the Effective Date the URL of Ebix.com is http://www.ebix.com.. 1.3 "Co-Location Services" means providing power (facility, physical location and power), pipes (network connectivity and bandwidth) and ping for Ebix.com. 1.4 "Competitor" means any entity which HP reasonably considers to be its competitor of its hardware, software or services. 1.5 "Effective Date" has the meaning given to such term in the introductory paragraph. 1.6 "Fees" has the meaning given to such term in Section 5.1. 1.7 "HP Hardware" means the HP computer systems, peripherals, terminals, and all related hardware products owned or leased by HP, listed on Exhibit A, which HP will provide to Delphi under the Related Agreements. 1.8 "HP Logos" means HP's name and such logo(s) and taglines as HP shall designate from time to time, including all artwork, graphics, icons and other content, to be displayed on Ebix.com. 1.9 "HP Services" means the services to be made available by HP as defined in Exhibit A, and any other services to be performed by HP under the terms of this Agreement or any Related Agreement. 1.10 "HP Software" means the HP software products listed on Exhibit A, which HP will provide to Delphi under the Related Agreements. 1 08/20/99 CONFIDENTIAL DRAFT 1.11 "Intellectual Property Rights" means rights in patents, copyrights, trademarks, trade secrets and all other similar intellectual property rights. 1.12 "Joint Promotional Plan" may include: (a) public relations activities including joint press releases concerning this Agreement and analyst presentations on the relationship of the Parties; (b) demonstration of HP and Delphi's products working together to press or other individuals or organizations, as appropriate; (b) distribution of promotional literature to the parties; (c) convention activities including industry and sponsored shows and events; (d) additional press activities including statements refining product positioning, cooperation on product reviews; (e) customer testimonials from Ebix.com users, and (f) advertisements in a variety of publications and possibly other media. 1.13 "Logos" means the Delphi Logos or the HP Logos, as appropriate. 1.14 "Management Team" has the meaning given to such term in Section 6.1(A). 1.15 "Net Revenues" means, with respect to any calendar quarter, the amount of revenue and other income recognized by Delphi under GAAP from Other Fees (defined below) generated from Ebix.com for such calendar quarter, less any credits, discounts, returns, amounts used to purchase additional HP Hardware, HP Software or HP Services pursuant to Section 2.2, and reasonable reserves for bad debt related to such revenues. For purposes of this Agreement "Other Fees" means all fees and charges which are recognized by Delphi under GAAP as revenue generated from the Ebix.com, including: (a) all amounts charged to carriers, agents, brokers and all other third parties for use of Ebix.com, (b) those fees for product sales or services, marketing, advertising, and promotions, (c) those fees for support provided to carrier/agent/broker subscribing to Ebix.com, and (d) fees for content placement, carrier/broker/agent enrollment, carrier/broker/agent transactions, payment services, logistic tracking, e-commerce enablement of carriers, agents or brokers benchmarking services, forums or sales of third party products or services transacted through the Ebix.com, and (e) transaction fees. 1.16 "Party" means HP or Delphi. 1.17 "Related Agreement" means any agreement hereafter entered into by HP and Delphi under which HP agrees to provide to Delphi, HP hardware, HP software or HP services, whether invoiced or not, as contemplated by this Agreement. 1.18 "Service Provider" means the provider of some or all of the Co-Location Services for the Ebix.com. 1.19 "Term" means the period beginning on the Effective Date and ending on August 19, 2002, or such shorter period as may occur in the event of termination under Section 12. 2 08/20/99 CONFIDENTIAL DRAFT 2. SUPPLY OF PRODUCTS AND SERVICES 2.1 Related Agreements. HP will provide the HP Software, HP Hardware and HP Services under the Related Agreements. HP and Delphi agree to negotiate in good faith and execute the Related Agreements as quickly as possible after the Effective Date. It is agreed that the Related Agreements will be substantially similar in content to HP's then-current Terms and Conditions of Sales and Service. Purchase orders from Delphi for HP Hardware, HP Software or HP Services will reference the appropriate Related Agreement. 2.2 Additional Purchases and Discounts. Delphi may purchase quantities of HP Hardware, HP Software and HP Services in excess of that which is ** to Delphi as described in Exhibit A. Unless HP has waived Delphi's obligation to only use HP Hardware, HP Software and HP Services to operate Ebix.com as set forth in Section 2.3(b), for any purchases by Delphi of HP products listed in Exhibit A, Delphi may purchase such items during the Term at the respective price indicated in HP's then-current corporate price list less ten percent (10%), provided that the parties agree that such additional purchases are consistent with Delphi's growth and scalability requirements, given mutually agreed to transaction and revenue growth projections. HP agrees that its then-current price list will be competitive with market prices of comparable products with comparable functionality from third parties. It is expected that the Parties will ** related to Ebix.com. 2.3 Use Limits: Requirements for Ebix.com. (a) Use Limits. All HP Hardware, HP Software and HP Services purchased or made available to Delphi under this Agreement or the Related Agreements may only be used on, or in connection with, Ebix.com. Delphi may not during the Term sell to any third party any HP Hardware purchased or made available to Delphi under this Agreement. (b) Requirements for Ebix.com. **. Provided, however, (i) before Delphi may purchase ** products or services for use on Ebix.com, Delphi must indicate to HP, Delphi's functional and performance needs and ** to satisfy such requirements (to which HP must respond promptly), and (ii) Delphi may only use ** products or services if ** to promptly and adequately respond and is unable to provide competitive functionality and price or ** to such use. (c) Such obligation shall apply to all activities performed by or for Delphi for Ebix.com, including hosting, serving, replicating, caching, or similar 3 08/20/99 CONFIDENTIAL DRAFT activities, and to all hardware and software used in connection therewith, (a) regardless of where it is located if Delphi is providing the hardware or software, as applicable, and (b) in all events, for Ebix.com hardware located on premises owned, leased or otherwise controlled by Delphi. 2.4 Indemnity. (a) Delphi Indemnity. Delphi shall indemnify, defend and hold harmless HP and its affiliates, suppliers and agents from any liability, damages or costs (including attorneys' fees and expenses) arising from, or relating to, a claim (a) that Ebix.com, including any technology or method therein and any product or service provided by Delphi thereunder, violates the Intellectual Property Rights of a third party, or (b) by a third party arising from (i) the operation of the Ebix.com or any related product or service, or (ii) Delphi's advertising and marketing of HP's and Delphi's joint activities. (b) Indemnity Limits. Delphi shall not be liable for a particular claim under the indemnity in Section 2.4 unless HP shall (a) promptly provide notice of any claim, (b) permit Delphi to assume control over the defense and/or settlement of such claim, and (c) at Delphi's cost, provide reasonable assistance to Delphi in the defense and/or settlement of such claim. Delphi shall not be required to indemnify HP to the extent that such claim is caused by (i) HP Hardware, HP Software, or HP Services, or the combination of such items into the Ebix.com, provided such combination was made or suggested by HP or if such claim would have been avoided if such HP Hardware, HP Software, or HP Services had not been so included, (b) any modification of the Ebix.com by HP if such claim would have been avoided if such modification had not occurred, and (c) any HP Logos or other materials provided by HP. 3. SERVICE PROVIDERS Delphi may elect to negotiate a co-location/services agreement with a Service Provider(s). The selection of the Service Provider is subject to HP's written approval, which will not be unreasonably withheld and, if given, will be provided to Delphi within three (3) business days. In the event that Delphi signs up a Service Provider, the co-locations/services agreement will provide that title to the HP hardware provided by HP to Delphi ** hereunder will remain with Delphi. With respect to HP Software, Delphi may grant to the Service Provider those limited license rights necessary for the Service Provider to provide co-location services, provided that the Service Provider agrees to be bound by the terms of the Related Agreements. Any chosen Service Provider must be capable of operating HP Hardware and HP Software and must provide high levels of redundancy. 4 08/20/99 CONFIDENTIAL DRAFT 4. MARKETING; BRANDING; LOGOS; PROMOTION 4.1 Marketing Planning. As promptly as possible following the Effective Date the Parties will commence preparation, to be completed within ** from the Effective Date, of the Joint Promotional Plan. The Joint Promotional Plan will be **. Implementation of the Joint Promotional Plan, including the day to day decisions shall be determined by Delphi in good faith. **. As part of the Joint Promotional Plan, **. 4.2 Branding of the Ebix.com and Related Materials. During the Term, Ebix.com shall be co-branded with the HP Logos and the Delphi Logos. The applicable HP Logos, including the tagline "HP Enabled E-Service", shall be prominently displayed on the mutually agreed upon Ebix.com web pages, in all written collateral and advertisements for Ebix.com as Delphi in its reasonable discretion deems appropriate, and other locations as mutually agreed upon by both Parties. Delphi agrees that (a) the HP Logo will be the most prominent logo, after the Ebix logo, on Ebix.com and in all written advertising and collateral material, (b) the HP Logo will be placed in the primary navigation bar of the Ebix.com, (c) the HP Logo will appear "above the fold" on the initial page of Ebix.com on browsers set for an 800 x 600 screen size, and (d) Delphi will use commercially reasonable efforts to design the other pages on which its primary navigation bar appears to show the HP Logo "above the fold" on browsers set for an 800 x 600 screen size. HP reserves the right to require that the HP Logos be removed from any or all of such locations. 4.3 Logos. HP and Delphi each will have the right, without separate charge, to use solely as expressly allowed under the terms of this Agreement, the Joint Promotional Plan and any other marketing plan agreed to by the Parties, the other Party's Logos. Each Party's use of the other Party's Logos will adhere to the respective owner's trademark guidelines for such Logos, as revised from time to time with reasonable notice. Neither party is granted any ownership in or, except as expressly provided herein, license to the trademarks or trade names of the other party, including the Logos. Each Party agrees (a) to always identify the other's Logos as being the property of such other Party, and (b) that all use of the other's Party's Logos will inure to the benefit of, and be on behalf of, such other Party. 4.4 No Similar Arrangements. In consideration of the investments and efforts by HP in furtherance of this Agreement, **. Delphi will notify HP as soon as possible if and when **, and will, at the very least, provide HP with thirty (30) 5 08/20/99 CONFIDENTIAL DRAFT days notice prior to the anticipated announcement **, so that HP has adequate time to **. 5. FEES AND REPORTING 5.1 Fees. Delphi shall pay to HP within thirty (30) days of the end of each calendar quarter during the term, ** (the "Fees") for such preceding calendar quarter. Notwithstanding the terms of this Agreement or any Related Agreement, Fees, and other amounts due under this Agreement or any Related Agreement may not be offset against any amounts due to or from the other Party under this Agreement or any Related Agreement. HP is not obligated to make any payment to Delphi due to Net Revenues for any calendar quarter being less than zero. The payments are exclusive of sales, use, service, value added or like taxes, or customs duties. A non-binding projection of Fees is attached hereto as Exhibit B. 5.2 Reporting: Interest. (a) Delphi's Reporting. Within thirty (30) days following the end of calendar quarter during the term, Delphi will provide to HP a report for HP to determine the Fees and other amounts agreed to after the Effective Date to which it is entitled under Section 5.1 or otherwise under this Agreement. Such report will include: Delphi's gross revenues relating to the Ebix.com from Other Fees; related discounts; related refunds; related collection reserves debits and credits; other permitted debits and credits. Delphi hereby agrees that each year, upon HP's request, it will require that its independent auditors verify the accuracy of such reports as part of their annual audit of Delphi's books and records and certify the results thereof to HP. Certification by Delphi's auditors should be done upon HP's written request at a minimum of ** prior to Delphi's year end (December 31) so that Delphi can ask its auditors to include this activity in their audit. Any additional fees and expenses charged by such independent auditors for the work relating to verifying the accuracy of such reports and providing such certification shall be borne by HP; provided that Delphi will allow HP to negotiate directly with such auditor the amount of such fees. (b) Overdue Interest. Any payments due hereunder which are not paid when due shall accrue interest from the date due until paid at the per annum rate of ** or the maximum rate permitted by applicable law, whichever is less. Interest will not accrue unless HP provides written notice and such payment is more than ** late. 6 08/20/99 CONFIDENTIAL DRAFT 5.3 Audit Rights. (a) Audit by HP. Delphi agrees to maintain for at least ** from the date each payment under this Agreement is due, complete books, records, invoices and accounts with respect to the amounts due to HP hereunder. Upon ** prior written notice to Delphi, HP may, at its own expense, appoint a nationally recognized independent auditor to audit Delphi's records relevant to this agreement at Delphi's offices during normal business hours, solely for the purpose of confirming the accuracy of the Fees and other amounts payable to HP hereunder. HP will make all reasonable attempts while conducting any audit to ensure that such does not unreasonably interfere with Delphi's business activities. Any such auditors shall (i) agree to be bound by Delphi's standard nondisclosure agreement, and (ii) only report to HP whether or not the payments were accurate, and if not accurate, the amount of the deficiency or surplus, and (iii) provide the same information to Delphi, as well as their basis for their conclusions. Such audit may be no more often than once every calendar year. If an audit reveals an overpayment by Delphi, HP agrees to promptly refund Delphi for such overpaid amount within ** of such an audit report. If an audit reveals an underpayment by Delphi, Delphi agrees to promptly pay HP the amount of such underpayment, together with overdue interest thereon as specified above. In addition, if such underpayment is greater than ** of the amounts due for the period so audited, Delphi will also promptly reimburse HP for the cost of the audit as evidenced from such independent auditor's bill. 5.4 Non-Discriminatory Treatment. (a) Features. Delphi agrees that it will not create another web site similar to Ebix.com and that the features which it adds to other portions of its web related business rather than Ebix.com, including the design and architecture of Ebix.com, will not be allocated so as to unreasonably and adversely affect the amount of Fees to be collected by HP. (b) Pricing. ** 6. MANAGEMENT TEAM; OTHER PERSONNEL; OTHER OPPORTUNITIES 6.1 Management Team. 7 08/20/99 CONFIDENTIAL DRAFT (a) Team Members. Delphi and HP shall each appoint members to a project management team to oversee the relationship between the Parties (the "Management Team"). Each Party shall specify the initial Management Team members within ** days of the Effective Date. Each Party may substitute members of the Management Team upon fourteen (14) days' prior written notice to the other. (b) Duties. The Management Team shall meet periodically according to a mutually agreed upon schedule, and more frequently, if requested by one of the members. Among the responsibilities of the Management Team shall be managing the relationship between the Parties with respect to performance under this Agreement. 6.2 Other Assigned Personnel. The Parties shall each designate primary day to day contacts to provide the following: (a) From HP: ** who can provide HP marketing support as well as product and services pricing and technical support. (b) From Delphi: ** employees who can coordinate the relationship with HP. Each Party may substitute these contacts upon ** prior written notice to the other. 6.3 Other Opportunities. No joint development is contemplated by virtue of this Agreement. If the Parties agree to participate in joint development activities, the rights and obligations resulting from such activities will be covered in a separate agreement. 7. CONFIDENTIAL INFORMATION 7.1 During the term of this Agreement, either Party may receive or have access to technical information, as well as information about product plans and strategies, promotions, customers and related non-technical business information which the disclosing party considers to be confidential ("Confidential Information"). Before such Confidential Information is disclosed, the Parties shall first agree to disclose and receive such information in confidence. If then disclosed, the Confidential Information shall be marked as confidential at the time of disclosure, or if disclosed orally but stated to be confidential, shall be designated as confidential in a writing by the disclosing party summarizing the Confidential Information disclosed and sent to the receiving party within ** after such oral disclosure. 7.2 Confidential Information may be used by the receiving party only with respect to the performance of its obligations under this Agreement, and only by those 8 08/20/99 CONFIDENTIAL DRAFT employees of the receiving party and its subcontractors who have a need to know such information for purposes related to this Agreement, provided that such subcontractors have signed separate agreements containing substantially similar confidentiality provisions. The receiving party shall protect the Confidential Information of the disclosing party by using the same degree of care (but not less than a reasonable degree of care) to prevent the unauthorized use, dissemination or publication of such Confidential Information, as the receiving party uses to protect its own Confidential Information of like nature. The receiving party's obligation under this Section 7 shall be for a period of ** after the date of disclosure. 7.3 The obligations stated in this Section 7 shall not apply to any information which is: 7.3.1 Already known by the receiving party prior to disclosure. 7.3.2 Publicly available through no fault of the receiving party. 7.3.3 Rightfully received from a third party without a duty of confidentiality. 7.3.4 Disclosed by the disclosing party to a third party without a duty of confidentiality on such third party. 7.3.5 Independently developed by the receiving party prior to or independent of the disclosure. 7.3.6 Disclosed under requirement of law. 7.3.7 Disclosed by the receiving party with the disclosing party's prior written approval, pursuant to a subpoena or judicial order, provided that, to the extent reasonably possible, the receiving party is given notice and an opportunity to object. 8. WARRANTIES 8.1 HP Warranties. HP represents and warrants to Delphi that HP has full power and authority to enter into and perform this Agreement. EXCEPT FOR THE WARRANTIES PROVIDED ABOVE OR IN ANY RELATED AGREEMENT WITH RESPECT TO SPECIFIC HP HARDWARE, HP SOFTWARE OR HP SERVICES, HP MAKES NO WARRANTY, WHETHER EXPRESS OR IMPLIED, TO ANY PERSON OR ENTITY WITH RESPECT TO THE HP HARDWARE, HP SOFTWARE OR HP SERVICES, AND HP DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. 9 08/20/99 CONFIDENTIAL DRAFT 8.2 Delphi Warranties. Delphi represents and warrants to HP that DELPHI HAS FULL POWER AND AUTHORITY TO ENTER INTO AND PERFORM THIS AGREEMENT. EXCEPT FOR THE WARRANTIES PROVIDED ABOVE, DELPHI MAKES NO WARRANTY, WHETHER EXPRESS OR IMPLIED, TO ANY PERSON OR ENTITY WITH RESPECT TO EBIX.COM AND DELPHI DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. 9. INTELLECTUAL PROPERTY RIGHTS 9.1 All copyrights and other Intellectual Property Rights existing prior to the Effective Date shall belong to the Party that owned such rights immediately prior to the Effective Date. 9.2 Neither party shall gain by virtue of this Agreement any rights of ownership of any Intellectual Property Rights owned by the other. 9.3 HP shall own all Intellectual Property Rights, title and interest in or pertaining to all products and services developed by HP for purposes of this Agreement, except that for any development commissioned by or on behalf of Delphi, the rights and obligations resulting from such activity will be covered in a separate agreement. 9.4 No joint development is contemplated by virtue of this Agreement. If the parties agree to participate in joint development activities, the rights and obligations resulting from such activities will be covered in a separate agreement. 10. INTELLECTUAL PROPERTY PROTECTION 10.1 HP will defend or settle any claim against Delphi that the HP Hardware, Software or Services delivered under and used in accordance with this Agreement infringes Intellectual Property Rights in the country where such Hardware, Software or Services are used or receive HP support. 10.2 The protections provided in Section 10.1 above will apply provided Delphi promptly notifies HP in writing of the claim, and Delphi cooperates with HP in and grants HP sole control of the defense or settlement. For infringement claims covered by this Section 10, HP will pay **. 10.3 HP has no obligation for any claim of infringement arising from: 10.3.1 HP's compliance with or use of Delphi's information, Delphi content, technology, designs, specifications or instructions. 10.3.2 Modifications by Delphi or a third party. 10 08/20/99 CONFIDENTIAL DRAFT 10.3.3 Use prohibited by HP product manuals, datasheets or related application notes. 10.3.4 Use of the HP Hardware or Software with products not supplied by HP. 10.4 This Section 10 states HP's entire liability for claims of intellectual property infringement. 11. LIABILITY LIMITATION EXCEPT FOR BODILY INJURY AND OTHER THAN BREACH OF, OR LIABILITY UNDER, SECTION 7, NEITHER PARTY SHALL BE LIABLE WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES. NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY OR ANY OTHER TERM OF THIS AGREEMENT, EXCEPT FOR BODILY INJURY AND BREACH OF, OR LIABILITY UNDER SECTIONS 2.4(A), 7, or 10, THE TOTAL LIABILITY OF EITHER PARTY TO THE OTHER UNDER THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION, SHALL NOT EXCEED **. 12. TERM AND TERMINATION 12.1 Term. This Agreement shall expire at the end of the Term unless the Parties agree, **, to extend the Term. 12.2 Termination for Breach. Either Party may terminate this Agreement if: (a) The other Party is in material breach of this Agreement and fails to cure such breach within ** of notice by the terminating Party of such breach; provided, that such ** period shall be automatically extended up to an additional **, if the breach is of such a nature that it cannot be corrected within such ** period (provided that the breach does not involve the non-breaching Party's intellectual property rights) and the breaching Party is using its best efforts to correct such breach throughout such cure period; or (b) The other Party is in material breach of any Related Agreement and fails to cure such breach in accordance with the procedures, including time for cure, if any, specified in such Related Agreement; or (c) The other Party becomes the subject of a petition in bankruptcy, whether voluntary or involuntary, which if involuntary is not dismissed within 11 08/20/99 CONFIDENTIAL DRAFT sixty (60) days, or becomes insolvent, or ceases to do business in the normal course. 12.3 Termination Due to Failure to Achieve Minimum Fees. HP may terminate this Agreement upon thirty (30) days written notice to Delphi, if the total Fees received by HP from the Effective Date through the date of payment for the last month of the first year, do not equal at least **, or if the total Fees received by HP through the date of payment for the last month of the second year do not equal at least **. 12.4 Termination Due to **. HP **. 12.5 Effect of Termination. (a) Unless otherwise provided in a Related Agreement, the Related Agreement(s) will terminate upon expiration or termination of this Agreement. (b) In the event the Agreement is terminated by HP pursuant to Sections 12.3 and 12.4, then Delphi will, at its option, either (a) return all HP Hardware and HP Software to HP, or (b) purchase the HP Hardware and HP Software at fair market value. 12.6 Termination of Related Agreement(s). Unless otherwise provided in a Related Agreement, the Related Agreement(s) will terminate upon expiration or termination of this Agreement. 12.7 No Compensation for Termination. Unless otherwise provided under this Agreement, and without limiting any of the Parties' remedies at law or equity, neither Party shall be entitled to any compensation (whether for loss of rights, goodwill or otherwise) as a result of the expiration or termination of this Agreement in accordance with its terms. 12.8 Survival. Termination or expiration of this Agreement shall not affect Delphi's obligation to pay all Fees and other amounts due to HP hereunder accrued prior to termination (or, where applicable, after termination). Neither the expiration nor 12 08/20/99 CONFIDENTIAL DRAFT termination of this Agreement (however occasioned) shall affect Sections 1, 2.4, 5, 7, 8, 9, 10, 11 and 12, each of which shall continue in full force and effect. 13. MISCELLANEOUS 13.1 Headings: Plural Terms. Headings in this Agreement are for convenience of reference only and are not part of the substance hereof. All terms defined in this Agreement in the singular form shall have comparable meanings when used in the plural form and vice versa. 13.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its provisions concerning the applicability of the laws of other jurisdictions and without regard to The United Nations Convention on the International Sale of Goods. 13.3 Construction. This Agreement is the result of negotiations among, and has been reviewed by, HP, Delphi and their respective counsel. Accordingly, this Agreement shall be deemed to be the product of both Parties, and no ambiguity shall be construed in favor of or against HP or Delphi. 13.4 Entire Agreement: Priority. This Agreement, together with each Related Agreement hereafter executed by the Parties, constitute and contain the entire agreement of HP and Delphi and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the Parties, whether written or oral, respecting the subject matter hereof. This Agreement and the Related Agreements shall supersede any provision of any purchase order or other document submitted by Delphi or any invoice or other document provided by HP hereunder, notwithstanding any provision in such purchase order or document to the contrary. If the terms of this Agreement conflict with the terms of any Related Agreement, the terms of such Related Agreement shall control. 13.5 Other Interpretive Provisions. References in this Agreement to "Sections," and "Exhibits" are to sections and exhibits herein and hereto unless otherwise indicated. The words "include" and "including" and words of similar import when used in this Agreement shall not be construed to be limiting or exclusive. 13.6 Non-Restrictive Relationship. This Agreement does not prevent either Party from (a) entering into similar agreements with others, whether or not in the same industry, or (b) independently developing (without breach of Section 7) materials, products and services the same as or similar to the materials, products or services provided by the other Party hereunder. 13.7 No Publication. Except as contemplated by the Joint Promotional Plan or with the prior written consent of both Parties (a) neither Party may publicize or disclose to 13 08/20/99 CONFIDENTIAL DRAFT any third Party the terms of this Agreement, and (b) no press releases may be made regarding this Agreement or the relationship of the Parties. 13.8 Relationship of the Parties. Notwithstanding any provision hereof this Agreement does not create, and is not intended to create, a joint venture, partnership or agency relationship between the parties. For all purposes of this Agreement, each Party shall be and act as an independent contractor and not as partner, joint venturer, or agent of the other and shall not bind nor attempt to bind the other to any contract. Neither Party shall have any responsibility or liability of any kind to any subcontractors or third parties providing services to or for the benefit of the other Party. Each Party shall be free to manage and control its business as it sees fit, without the management, control or assistance of the other Party, except as otherwise prescribed herein. 13.9 Ownership. Neither Party is granted any right, title nor interest to intellectual property owned by the other Party, either express or implied, except as may be explicitly provided herein or in any Related Agreement. 13.10 Export Administration. It is Delphi's responsibility to comply with all relevant export control laws and regulations of the United States with respect to Ebix.com and the products and services provided by HP to Delphi hereunder, and to assure that such products are not (a) exported, directly or indirectly, in violation of such export control laws, or (b) intended to be used for any purposes prohibited by such export control laws, including, without limitation, nuclear, chemical or biological weapons proliferation. 13.11 No Assignment. Neither Party may assign any rights or obligations under this Agreement without the prior written consent of the other Party. 13.12 Notices. All notices that are required to be given under this Agreement shall be in writing and shall be sent to the respective address set forth below, or such other address as each Party may designate by notice given in accordance with this Section. Any such notice may be delivered by hand, by overnight courier, by first class pre-paid letter or by facsimile transmission, and shall be deemed to have been received: (a) by hand delivery, at the time of delivery; (b) by overnight courier, on the succeeding business day; (c) by first class mail, two business days after the date of mailing; and (d) by facsimile, immediately upon confirmation of transmission provided a confirmatory copy is sent by first class pre-paid, by overnight courier or by hand by the end of the next business day. 14 08/20/99 CONFIDENTIAL DRAFT For HP: For Delphi: Hewlett-Packard Company Delphi Information Systems, Inc. 3501 Algonquin Road Rolling Meadows, IL 60008 Attention: Attention: Richard Baum, CFO Telephone: Telephone: 847-506-3100 Facsimile: Facsimile: 847-590-8280 With a copy of all notices (other than notices of a primarily technical nature) to: Hewlett-Packard Legal Delphi Legal Hewlett-Packard Company 3501 Algonquin Road Rolling Meadows, IL 60008 Attention: Richard Baum, CFO Telephone: 847-506-3100 Facsimile 847-590-8280 13.13 Waiver and Modification. The failure of either Party to enforce its rights under this Agreement at any time for any period shall not be construed as a waiver of such rights. No changes, modifications or waivers are to be made to this Agreement unless evidenced in writing and signed for and on behalf of both Parties. 13.14 Severability. If any provision in Agreement is found or held to be invalid or unenforceable, then the meaning of such provision shall be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement which shall remain in full force and effect. However, if the severed provision is essential and material to the rights or benefits received by either Party, the Parties shall use their best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects their intent in entering into this Agreement. 13.15 Force Majeure. Nonperformance of either Party will be excused to the extent that performance is rendered impossible by earthquake, strike, fire, flood, governmental acts or order or restrictions or other similar reason where failure to perform is beyond the control and not caused by the negligence of the non-performing Party, provided that the nonperforming Party gives prompt notice of such conditions to the other Party and makes all reasonable efforts to perform. 13.16 Jurisdiction; Prevailing Party. HP consents to the exclusive jurisdiction and venue of the courts located in Cook County, Illinois for any and all actions brought by HP with respect to this Agreement. Delphi consents to the exclusive jurisdiction and venue of the courts located in Santa Clara County, California for any and all actions brought by Delphi with respect to this Agreement. In any 15 08/20/99 CONFIDENTIAL DRAFT action or proceeding to enforce rights under this Agreement, the prevailing Party will be entitled to recover costs and attorneys fees. 13.17 Dispute Resolution. In the event that the Parties are unable to agree upon any matters pursuant to this Agreement, the disputed matter shall be referred in the first instance to the appointed representatives of the Parties. If the representatives are unable to resolve the disputed matter within a reasonable time, they shall refer the matter to Controller for HP and Dick Baum, CFO for Delphi. If these two representatives cannot reach a mutually acceptable agreement within the following two (2) weeks, or such other period as may be agreed between the Parties, the matter shall be referred to General Manager for HP and Robin Raina, President for Delphi. In the event they cannot reach a mutually acceptable resolution within a reasonable time, either Party shall be entitled to seek all available remedies, including legal remedies. Notwithstanding the foregoing, either Party may seek injunctive relief with respect to any disputed matter without following the dispute resolution procedure set forth above. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date. HEWLETT-PACKARD COMPANY DELPHI INFORMATION SYSTEMS, INC. By: /s/ Illegible By: /s/ Robin Raina ----------------------------- ----------------------------- Print Name: Print Name: Robin Raina Title: Title: President, Delphi 16 08/20/99 CONFIDENTIAL DRAFT EXHIBIT A HP Hardware - terms to be covered under Related Agreements. ** HP Software - terms to be covered under Related Agreements. ** HP Services - terms to be covered under Related Agreements HP will provide consulting to evaluate Delphi's environment and ensure optimal configuration and usage of **, including an initial analysis and deployment as well as ongoing refinement and use of advanced functionality in subsequent phases over the Term of the Agreement. 17 CONFIDENTIAL DRAFT EXHIBIT B PROJECTED FEES Year 1 Year 2 Year 3 Total ---------------------------------------------- Ebix Revenues ** HP's ** Share ("Fees") ** Transaction Projections: Year 01 ** Year 02 & Year 03 ** 18 EX-10.20 5 ex-10_20.txt EXHIBIT 10.20 Exhibit 10.20 Confidential treatment has been requested for portions of this document. Redacted material is identified by double asterisks (i.e. "**"). The redacted material has been filed separately with the Securities and Exchange Commission pursuant to an application for confidential treatment. RELATED AGREEMENT NUMBER ONE TO STRATEGIC SUPPLY, SERVICES AND PROMOTION AGREEMENT Effective August 20, 1999 This Related Agreement Number One to Strategic Supply, Services and Promotion Agreement (the "Related Agreement No. 1") is entered into by and between Hewlett-Packard Company (hereinafter called "HP") whose primary offices are in Palo Alto, California and Delphi Systems Informations, Inc. (hereinafter called "Delphi" or "Customer") whose primary offices are in Rolling Meadow, Illinois. WHEREAS, HP and Delphi have entered into the Strategic Supply, Services and Promotion Agreement effective August 20th, 1999 (the "Original Agreement"); and WHEREAS, said Original Agreement contemplates one or more "Related Agreements" to set forth additional terms and conditions that apply to Delphi's purchase of HP products and services; and WHEREAS, Delphi desires to purchase products, software licenses, and support services for such products from HP under the terms of the Original Agreement and the additional terms set forth herein; and WHEREAS, HP desires to sell such products, software licenses, and services to Delphi under the Original Agreement and the additional terms set forth herein; NOW THEREFORE, Delphi and HP agree as follows: 1. ORIGINAL AGREEMENT The terms and conditions of the Original Agreement are incorporated herein. Delphi and HP mutually agree that the terms of this Related Agreement No. 1, shall apply to all orders placed by Delphi under the Original Agreement for HP Hardware, HP Software and standard maintenance and support of such HP Hardware and HP Software. This Related Agreement No. 1 shall not apply to orders placed by Delphi under the Original Agreement for HP Services, as defined in the Original Agreement. 2. DEFINITIONS Unless otherwise stated in this Related Agreement No. 1, capitalized terms shall have the meaning as defined in the Original Agreement. 1 of 3 Pages 3. ADDITIONAL TERMS AND CONDITIONS Delphi and HP mutually agree that HP's Terms and Conditions of Sale and Service attached in Exhibit E16 hereto, shall govern all orders placed by Delphi under the Original Agreement and this Related Agreement No. 1 for HP Hardware, HP Software and standard maintenance and support of such HP Hardware and HP Software, provided that: 3.1 As used throughout Exhibit E16: (i) the term "Products" shall mean "HP Hardware" and "HP Software"; (ii) the term "Software" shall mean "HP Software"; and (iii) the term "Support" does not include the HP Services. 3.2 Section **. 3.4 Sections **. 4. ORDERS (a) Purchase orders from Delphi under the Original Agreement and this Related Agreement No. 1 shall reference this Related Agreement No. 1. (b) **. 5. EXHIBITS Exhibit E16 HP's Terms and Conditions of Sale and Service are hereby made part of this Related Agreement No. 1. 6. CONFLICTS To the extent there is a conflict between this Exhibit and the Original Agreement, the Original Agreement will control. 2 of 3 Pages IN WITNESS WHEREOF, THE PARTIES HERETO HAVE ENTERED INTO THIS RELATED AGREEMENT NO. 1 THIS 20th DAY OF August, 1999. HEWLETT-PACKARD COMPANY DELPHI INFORMATION SYSTEMS, INC. By: /s/ Illegible By: /s/ Robin Raina ------------------------------ ---------------------------- Name: Name: Robin Raina Title: Title: President, COO Delphi 3 of 3 Pages EX-10.21 6 ex-10_21.txt EXHIBIT 10.21 Exhibit 10.21 Confidential treatment has been requested for portions of this document. Redacted material is identified by double asterisks (i.e. "**"). The redacted material has been filed separately with the Securities and Exchange Commission pursuant to an application for confidential treatment. HP TERMS AND CONDITIONS OF SALE AND SERVICE HP's sale of Products and Support and HP's license of Software are governed by these HP Terms and Conditions of Sale and Service. 1. DEFINITIONS a) "Delivery" means standard HP shipping to and arrival at the receiving area at the "Ship To" address in the country where Customer's order is placed, unless otherwise indicated on the quotation. b) "Exhibits" means attachments that describe or otherwise apply to the sale or license of Products or Support. c) "Products" means hardware, Software, documentation, accessories, supplies, parts and upgrades that are determined by HP to be available from HP upon receipt of Customer's order. "Custom Products" means Products modified, designed or manufactured to meet Customer requirements. d) "Software" means one or more programs capable of operating on a controller, processor or other hardware Product ("Device"). Software is either a separate Product, included with another Product ("Bundled Software"), or fixed in a Device and not removable in normal operation ("Firmware"). e) "Specifications" means specific technical information about HP Products which is published in HP Product manuals and technical data sheets in effect on the date HP ships Customer's order. f) "Support" means hardware maintenance and repair; Software updates and maintenance; training; and other standard support services provided by HP. "Custom Support" means any agreed non-standard Support, including consulting and custom project services. 2. PRICES a) Prices include Delivery charges, unless otherwise indicated on the quotation, and are valid for the period indicated on the quotation or for the applicable purchase agreement ordering period, whichever expires first. Prices remain valid for ** from the original order date unless otherwise indicated on the quotation. Change orders that extend Delivery beyond those validity periods become new orders at prices in effect when HP receives the change orders. Support prices, except for Custom and prepaid Support, may be changed by HP upon 60 days written notice. b) Prices are exclusive of, and Customer will pay, applicable sales, use, service, value added or like taxes, unless Customer has provided HP with an appropriate exemption certificate for the Delivery jurisdiction. 3. ORDERS a) All orders are subject to acceptance by HP. Product orders must specify Delivery within ** from order date, unless otherwise agreed or indicated on the quotation. b) Customer will specify Ship To addresses within the country where the order is placed, unless otherwise agreed. c) Customer may cancel orders for Products (except Custom Products) prior to shipment at no charge. Customer will pay all charges for returning Products to HP's shipping location if Product orders are cancelled after shipment. 4. DELIVERY HP will make reasonable efforts to meet Customer's Delivery requirements. If HP is unable to meet Customer's Delivery requirements, alternative arrangements may be agreed. In the absence of such agreement, Customer's sole remedy is to cancel the order. 5. SHIPMENT AND RISK OF LOSS HP will ship according to HP's standard commercial practice, and risk of loss and damage will pass to Customer at Ship To address. If special packing or shipping instructions are agreed, charges will be billed separately to Customer, and risk of loss and damage will pass to Customer on delivery to Customer's carrier. Page 1/6 HP TERMS AND CONDITIONS OF SALE AND SERVICE 6. INSTALLATION AND ACCEPTANCE a) Product installation information is available with Products, on quotations or upon request. Installation by HP, when included in the purchase price, is complete when the Product passes HP's installation and test procedures. b) For Products with installation included in the purchase price, acceptance by Customer occurs upon completion of installation by HP. For Products without installation included in the purchase price, acceptance by Customer occurs upon Delivery, and will be presumed unless Customer demonstrates within ** after Delivery that the Product does not pass HP's established test procedures or programs. c) If Customer schedules or delays installation by HP more than ** after Delivery, Customer acceptance of the Product(s) will occur on the ** after Delivery. 7. PAYMENT a) Payment terms are subject to HP credit approval. Payment is due 30 days from HP's invoice date. Invoices for contractual support services and maintenance will be issued in advance of the Support period. HP may change credit or payment terms at any time when, in HP's opinion, Customer's financial condition, previous payment record, or the nature of Customer's relationship with HP so warrants. b) HP may discontinue performance if Customer fails to pay any sum due, or fails to perform under this or any HP related agreement if, after ** written notice, the failure has not been cured. c) Title to hardware Products will pass upon the later of full payment or Delivery of Products. 8. SUPPORT a) Customer may order Support from HP's then current Support offering. Some Support (and related Products) may not be available in all countries. Orders for Support are subject to the terms of the Support Exhibit or quotation in effect on the date of order. b) To be eligible for Support, Products must be at current specified revision levels and, in HP's reasonable opinion, in good operating condition. c) HP may, at **, modify Products to improve operation, supportability and reliability, or to meet legal requirements. d) Relocation of Products is Customer's responsibility. Relocation may result in additional Support charges and modified service response times. Support of Products moved to another country is subject to availability. e) HP will provide Support for products not supplied by HP when approved by HP in writing. HP will provide Support for HP Products when Customer allows HP to perform modifications if requested by HP under Section 8. c) above. Customer is responsible for removing any products not eligible for Support to allow HP to perform Support services. If Support services are made more difficult because of such product(s), HP will charge Customer for the extra work at HP's standard rates. f) Support does not cover any damage or failure caused by: 1) use of non-HP media, supplies and other products; or 2) site conditions that do not conform to HP's site specifications; or 3) neglect, improper use, fire or water damage, electrical disturbances, transportation by Customer, work or modification by people other than HP employees or subcontractors, or other causes beyond HP's control; or 4) inability of any non-HP products in Customers environment to correctly process, provide or receive date data (i.e., representations for month, day, and year), and to properly exchange date data with the Products supplied by HP. g) Customer is responsible for maintaining a procedure external to the Products to reconstruct lost or altered Customer files, data or programs. Customer will have a representative present when HP provides Support services at Customer's site. Customer will notify HP if Products are being used Page 2/6 HP TERMS AND CONDITIONS OF SALE AND SERVICE in an environment which poses a potential health hazard to HP employees or subcontractors; HP may require Customer to maintain such Products under HP supervision. h) Customer may delete Products under Support or cancel Support orders upon 30 days written notice. Upon 60 days written notice, HP may cancel Support orders or delete Products no longer included in HP's Support offering. 9. WARRANTY a) Product warranty period and additional information is available with Products, on quotations, or upon request. b) Products purchased from HP outside the U.S. will receive the standard warranty in the country of purchase. If Customer moves such Products to another country where HP has Support presence, then Customer will receive the destination country standard warranty. c) Products purchased in the U.S. based on the **. A global warranty means that the Product will include the destination country's standard warranty in any country where the Product is moved provided that HP has Support presence in that country. d) Additional warranty coverage may be purchased and that warranty will be limited to the country in which the additional coverage was purchased. Customer may receive a different warranty when the Product is purchased as part of a system. HP reserves the right to change the warranty. Such changes will affect only new orders. e) The warranty period begins on the date of Delivery, or the date of installation if installed by HP. If Customer schedules or delays installation by HP more than ** after Delivery, the warranty period begins on the ** after Delivery. f) HP warrants HP hardware Products against defects in materials and workmanship. HP further warrants that HP hardware Products conform to Specifications. These warranties do not include periodic recalibration (recommended for some HP Products), unless specifically covered in the warranty terms for such Products. g) HP warrants that Software will not fail to execute its programming instructions due to defects in materials and workmanship when properly installed and used on the Device designated by HP. HP further warrants that HP owned standard Software will substantially conform to Specifications. HP does not warrant that Software will operate in hardware and software combinations selected by Customer, or meet requirements specified by Customer. h) HP does not warrant that the operation of Products will be uninterrupted or error free. i) HP warrants that each HP hardware, software, and firmware Product delivered under these HP Terms and Conditions of Sale and Service will be able to accurately process date data (including, but not limited to, calculating, comparing, and sequencing) from, into, and between the twentieth and twenty-first centuries, and the years 1999 and 2000, including leap year calculations, when used in accordance with the Product documentation provided by HP (including any instructions for installing patches or upgrades), provided that all other products (e.g. hardware, software, firmware) used in combination with such HP Product(s) properly exchange date data with it. If the Specifications require that specific HP Products must perform as a system in accordance with the foregoing warranty, then that warranty will apply to those HP Products as a system, and Customer retains sole responsibility to ensure the Year 2000 readiness of its information technology and business environment. The duration of this warranty extends through **. To the extent permitted by local law, this warranty applies only to branded HP Products and not to products manufactured by others that may be sold or distributed by HP. This warranty Section 9 i) applies only to HP Products shipped after **. The remedies applicable to this Section, 9 i), are those provided in Section 9 j) below. Nothing in this warranty will be construed to limit any rights or remedies provided elsewhere in these HP Terms and Conditions of Sale and Service with respect to matters other than Year 2000 compliance. j) If HP receives notice of defects or non-conformance to hardware Specifications, or substantial non-conformance to HP owned standard Software Specifications during the warranty period, HP will, at its option, repair (and recalibrate only as necessitated by repairs), or replace the affected Products. If HP is unable, within a reasonable time, to repair, replace or correct a defect or non-conformance in a Product to a condition as warranted, Customer will be entitled to a refund of the purchase price upon prompt return of the Product to HP. Customer will pay expenses for return of such Products to HP. HP will pay expenses for shipment of repaired or replacement Products, except for Products returned to Customer from another country. Page 3/6 HP TERMS AND CONDITIONS OF SALE AND SERVICE k) HP warrants that HP Support will be provided in a professional and workmanlike manner. HP will replace, at no charge, parts which are defective and returned to HP within ** of delivery. l) Some newly manufactured HP Products may contain and HP Support may use remanufactured parts which are equivalent to new in performance. m) The above warranties do not apply to defects resulting from improper or inadequate maintenance or calibration by Customer; Customer or third party supplied software, interfacing or supplies; unauthorized modification; improper use or operation outside of the Specifications for the Product; abuse, negligence, accident, loss or damage in transit; improper site preparation; or unauthorized maintenance or repair. n) THE ABOVE WARRANTIES ARE EXCLUSIVE AND NO OTHER WARRANTY, WHETHER WRITTEN OR ORAL, IS EXPRESSED OR IMPLIED. HP SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 10. LICENSES "Use" means storing, loading, installing, executing or displaying Software on a Device. "Software License" means the Use authorization(s) for the Software specified by HP: in its quotation, invoice or other documentation. Each Software License has a corresponding License Fee. "License Fee" means the fee or fees designated by HP for Use of Software. Different License Fees may apply to particular Software if more than one Software License is available for that Software. a) In return for the License Fee, HP grants Customer a non-exclusive license to Use the Software listed in Customer's order in conformance with the applicable Software License. Details of the types of Software Licenses offered are available from HP on request. If no Software License is specified, then, in return for the applicable fee, HP grants Customer a license to Use one copy of the Software on one Device at any one time. All Software Licenses will be perpetual unless terminated, transferred or otherwise specified. If Customer is an HP authorized reseller, Customer may sublicense the Software to an end-user for its Use, or (if applicable) sublicense the Software to an HP authorized reseller for subsequent distribution to an end-user for its Use. These sublicenses must incorporate the terms of this Section 10 in a written sublicense agreement, which will be made available to HP upon request. b) Unless otherwise permitted by HP, Customer may only make copies or adaptations of the Software for archival purposes or when copying or adaptation is an essential step in the authorized Use of the Software on a backup Device, provided that copies and adaptations are used in no other manner and provided further that the Use on the backup Device is discontinued when the original or replacement Device becomes operable. c) Customer must reproduce all copyright notices in or on the original Software on all permitted copies or adaptations. Customer may not copy the Software onto any public or distributed network. d) Bundled Software or Firmware provided to Customer may only be used when operating the associated Device in configurations as sold or subsequently upgraded by HP. Customer may transfer Firmware only upon transfer of the associated Device. e) Updates, upgrades or other enhancements are available under HP Support agreements. HP reserves the right to require additional licenses and fees for Use of the Software on upgraded Devices. f) The Software is owned and copyrighted by HP or by third party suppliers. Customer's license confers no title or ownership and is not a sale of any rights in the Software, its documentation, or the media on which they are recorded or printed. Third party suppliers may protect their rights in the Software in the event of any infringement. g) Customer will not disassemble or decompile the Software without HP's prior written consent. Where Customer has other rights under statute, Customer will provide HP with reasonably detailed information regarding any intended disassembly or decompilation. Customer will not decrypt the Software unless necessary for legitimate use of the Software. h) Customer's Software License is transferable subject to HP's prior written authorization and payment to HP of any applicable fees. Customer will immediately upon transfer deliver all copies of the Software to the transferee. The transferee must agree in writing to the terms of Customer's license. All license terms will be binding on involuntary transferees, notice of which is hereby given. Customer's license will automatically terminate upon transfer. Page 4/6 HP TERMS AND CONDITIONS OF SALE AND SERVICE i) HP may terminate Customer's or any transferee's or sublicensee's Software License upon five (5) days notice for failure to comply with any applicable license terms. Immediately upon termination, the Software and all copies of the Software will be destroyed or returned to HP. Copies of the Software that are merged into adaptations, except for individual pieces of data in Customer's or transferee's or sublicensee's data base, will be removed and destroyed or returned to HP. With HP's written consent, one copy of the Software may be retained subsequent to termination for archival purposes. j) If the Software is licensed for use in the performance of a U.S. government prime contract or subcontract, Customer agrees that Software is delivered as "Commercial computer software" as defined in DFARS 252.227-7013 (Oct 1988), DFARS 252.211-7015 (May 1991) or DFARS 252.227-7014 (Jun 1995), or as a "commercial item" as defined in FAR 2.101(a), or as "Restricted computer software" as defined in FAR 52.227-19 (Jun 1987), whichever is applicable. Customer agrees that the regulations and obligations in Exhibit U1 apply to all such Software and that the Software is adequately marked when the Restricted Rights legend in Exhibit U1 is affixed to the Software media. Customer further agrees that the Software has been developed entirely at private expense. 11. INTELLECTUAL PROPERTY RIGHTS a) HP will defend or settle any claim against Customer, (or third parties to whom Customer is authorized by HP to resell or sublicense), that Products or Support (excluding Custom Products and Custom Support), delivered under these HP Terms and Conditions of Sale and Service infringe a patent, utility model, industrial design, copyright, trade secret, mask work or trademark in the country where Products are used, sold or receive Support, provided Customer: 1) promptly notifies HP in writing; and 2) cooperates with HP in, and grants HP sole control of the defense or settlement. b) HP will pay infringement claim defense costs, settlement amounts and court-awarded damages. If such a claim appears likely, HP may modify the Product, procure any necessary license, or replace it. If HP determines that none of these alternatives is reasonably available, **. c) HP has no obligation for any claim of infringement arising from: 1) HP's compliance with Customer's designs, specifications or instructions; 2) HP's use of technical information or technology provided by Customer; 3) Product modifications by Customer or a third party; 4) Product use prohibited by Specifications or related application notes; or 5) use of the Product with products not supplied by HP. d) These terms state HP's entire liability for claims of intellectual property infringement. 12. LIMITATION OF LIABILITY AND REMEDIES a) Products are not specifically designed, manufactured or intended for sale as parts, components or assemblies for the planning, construction, maintenance, or direct operation of a nuclear facility. Customer is solely liable if Products or Support purchased by Customer are used for these applications. Customer will indemnify and hold HP harmless from all loss, damage, expense or liability in connection with such use. b) To the extent HP is held legally liable to Customer, HP's liability is limited to: 1) **; 2) **; 3) **; 4) **; and Page 5/6 HP TERMS AND CONDITIONS OF SALE AND SERVICE 5) other direct damages for any claim based on a material breach of any other term of these HP Terms and Conditions of Sale and Service, up to a limit of U.S.$1,000,000 or the amount paid to HP for the associated Product, whichever is less. c) Notwithstanding Section 12 b) above, in no event will HP or its affiliates, subcontractors or suppliers be liable for any of the following: 1) actual loss or direct damage that is not listed in 12 b) above; 2) damages for loss of data, or software restoration; 3) damages relating to Customer's procurement of substitute products or services (i.e., "cost of cover"); or 4) incidental, special or consequential damages (including downtime costs or lost profits, but excluding payments described in Section 11 above and damages for bodily injury). d) THE REMEDIES IN THESE HP TERMS AND CONDITIONS OF SALE AND SERVICE ARE CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES. 13. GENERAL a) Transactions may be conducted through Electronic Data Interchange ("EDI") or other electronic methods, as agreed. b) HP will not be liable for performance delays or for non-performance, due to causes beyond its reasonable control. c) If either party becomes insolvent, is unable to pay its debts when due, files for bankruptcy, is the subject of involuntary bankruptcy, has a receiver appointed, or has its assets assigned, the other party may cancel any unfulfilled obligations. d) Neither party may assign any rights or obligations hereunder without prior written consent of the other party. e) Customer who exports, re-exports or imports Products, technology or technical data purchased hereunder, assumes responsibility for complying with applicable laws and regulations, and for obtaining required export and import authorizations. HP may suspend performance if Customer is in violation of applicable regulations. f) Disputes arising in connection with these HP Terms and Conditions of Sale and Service will be governed by the laws of the country and locality in which HP accepts the order. g) Provisions herein which by their nature extend beyond the termination of any sale or license of Products or Support will remain in effect until fulfilled. h) These HP Terms and Conditions of Sale and Service and any Exhibits constitute the entire agreement between HP and Customer, and supersede any previous communications, representations or agreements between the parties, whether oral or written, regarding transactions hereunder. Customer's additional or different terms and conditions will not apply. Customer's purchase or license of Products and Support will constitute Customer's acceptance of these HP Terms and Conditions of Sale and Service, which may not be changed except by an amendment signed by an authorized representative of each party. Page 6/6 EX-10.22 7 ex-10_22.txt EXHIBIT 10.22 Exhibit 10.22 THIS WARRANT EVIDENCED HEREBY AND THE SHARES OF STOCK ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR BLUE SKY LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT AND LAWS, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT. WARRANT To Purchase Shares of Common Stock of Delphi Information Systems, Inc. August 20, 1999 This certifies that for good and valuable consideration, receipt of which is hereby acknowledged, Hewlett-Packard Company, a Delaware corporation (the "Warrantholder"), is entitled to subscribe for and purchase from the Company, on the terms set forth herein, shares of Common Stock as follows: a) During the period (i) commencing August 20, 1999 and ending August 19, 2000, shares equal to 4.9% for the number of shares of Common Stock outstanding on the date set forth in paragraph (c) below, at an exercise price equal to $15.00 per share, and (ii) commencing August 20, 2000 and ending August 19, 2001, shares equal to 4.5% of the number of shares of Common Stock outstanding on the date set forth in paragraph (c) below, at an exercise price equal to $20.00 per share. b) If the Warrantholder has not exercised its right to purchase any of the shares under subparagraph (i) of paragraph (a) above, then, during the period commencing August 20, 2000 and ending August 19, 2001, shares equal to 4.9% of the number of shares of the Common Stock outstanding on the date set forth in paragraph (c) below, at an exercise price equal to $20.00 per share (in addition to the number of shares which the Warrantholder has the right to purchase under subparagraph (ii) of paragraph (a) above). c) The number of outstanding shares of Common Stock shall be as stated in the Company's most recent filing on Form 10-K or 10-Q, adjusted ratably for any stock split, stock dividend, reverse stock split or any other recapitalization effecting the Common Stock, after the date for which the number of shares of the Common Stock are reported in such Form 10-K or 10-Q. The number of shares of Common Stock which the Warrantholder has a right to purchase and the purchase price at which such shares may be purchased may be adjusted from time to time as described in this Warrant. Within 10 days of the filing of the Company's Form 10-K or 10-Q, the Company shall provide the Warrantholder with an updated Calculation Form in the form attached hereto, which 1 shall state the number of shares of Common Stock purchasable pursuant to this Warrant. At the date hereof, the number of shares of Common Stock purchased or purchasable pursuant to this Warrant are as stated in the attached Calculation Form. 1. DEFINITIONS. For the purposes of this Warrant, the following terms shall have following meanings: "COMMISSION" shall mean the Securities and Exchange Commission, or any other federal agency then administering the Securities Act. "COMPANY" shall mean Delphi Information Systems, Inc., a Delaware corporation, and any corporation which shall succeed to, or assume, the obligations of such corporation hereunder. "COMMON STOCK" shall mean the shares of Common Stock of the Company, $0.10 par value. "EXPIRATION DATE" shall mean August 19, 2001. "OTHER SECURITIES" shall mean any stock (other than Common Stock) or other securities of the Company which the Warrantholder at any time shall be entitled to receive, or shall have received, upon the exercise of the Warrants, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities. "PURCHASE PRICE" shall mean the price at which the Warrantholder may purchase a share of Common Stock as provided in paragraphs (a) and (b) above and as adjusted from time to time pursuant to paragraph 6 below. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, as in effect at the time. "SUBSCRIPTION FORM" shall mean the subscription forms attached hereto. "TRANSFER" shall mean any sale, assignment, pledge, or other disposition of any Warrants and/or Warrant Shares, or of any interest in either thereof, which would constitute a sale thereof within the meaning of Section 2(3) of the Securities Act. "WARRANT SHARES" shall mean the shares of Common Stock purchased or purchasable by the Warrantholder upon the exercise of the Warrants pursuant to Section 2 hereof. "WARRANTHOLDER" shall mean the holder or holders of the Warrants or any related Warrant Shares. 2 "WARRANTS" shall mean that certain Warrant issued to the Warrantholder on August 20, 1999 and any warrant(s) issued upon the transfer or exchange thereof. All terms used in this Warrant which are not defined in Section 1 hereof have the meanings respectively set forth elsewhere in this Warrant. 2. EXERCISE OF WARRANT, ISSUANCE OF CERTIFICATE AND PAYMENT FOR WARRANT SHARES. (a) Subject to Section 5 hereof, the rights represented by this Warrant may be exercised at any time after the date of this Warrant and prior to the Expiration Date, by the Warrantholder, in whole or in part (but not as to any fractional share of Common Stock), by: (a) delivery to the Company of a completed Full or Partial Subscription Form in the form attached hereto, (b) surrender to the Company of this Warrant properly endorsed and signature guaranteed, and (c) delivery to the Company of a certified or cashier's check made payable to the Company in an amount equal to the aggregate Purchase Price of the shares of Common Stock being purchased, at its principal office, 3501 Algonquin Road, Suite 500, Rolling Meadows, Illinois 60008 (or such other office or agency of the Company as the Company may designate by notice in writing to the holder hereof). The Company agrees and acknowledges that the shares of Common Stock so purchased shall be deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant, properly endorsed, and the Full or Partial Subscription Form shall have been surrendered and payment made for such shares as aforesaid. Upon receipt thereof, the Company shall, as promptly as practicable, and in any event within fifteen (15) days thereafter, execute or cause to be executed and deliver to the Warrantholder a certificate or certificates representing the aggregate number of shares of Common Stock specified in such Subscription Form. Each stock certificate so delivered shall be in such denomination as may be requested by the Warrantholder and shall be registered in the name of the Warrantholder or such other name as shall be designated by the Warrantholder. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of such stock certificate or certificates, deliver to the Warrantholder a new Warrant evidencing the rights of such holder to purchase the remaining shares of Common Stock covered by this Warrant. The Company shall pay all expenses, taxes, and other charges payable in connection with the preparation, execution, and delivery of stock certificates pursuant to this Section 2, except that, in case any such stock certificate or certificates shall be registered in a name or names other than the name of the Warrantholder, funds sufficient to pay all stock transfer taxes which shall be payable upon the execution and delivery of such stock certificate or certificates shall be paid by the Warrantholder to the Company at the time of delivering this Warrant to the Company as mentioned above. (b) Notwithstanding any provisions herein to the contrary, if the fair market value of one share of the Common Stock is greater than the Purchase Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Warrantholder may elect to receive shares equal to the value (as determined below) of this Warrant (or any portion thereof being exercised) by surrender of this Warrant at the principal office of the Company, together with the properly endorsed 3 Notice of Exercise and notice of such election, in which event the Company shall issue to the Warrantholder a number of shares of Common Stock computed using the following formula: X = Y(A-B)/A Where X = the number of shares of Common Stock to be issued to the Warrantholder Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation) A = the fair market value of one share of Common Stock (at the date of such calculation) B = Purchase Price (as adjusted at the date of such calculation) For purposes of the above calculation, the fair market value of one share of Common Stock shall be the average of the closing prices quoted on the NASDAQ Small Cap Market or such other market or exchange where the Common Stock may be traded for the 5-day period ending on the trading day immediately prior to the date of exercise of this Warrant. 3. OWNERSHIP OF THIS WARRANT. The Company may deem and treat the registered Warrantholder as the holder and owner hereof (notwithstanding any notations of ownership or writing made hereon by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for transfer as provided herein and then only if such transfer meets the requirements of Section 5. 4. EXCHANGE, TRANSFER, AND REPLACEMENT. Subject to Section 5 hereof, this Warrant is exchangeable upon the surrender hereof by the Warrantholder to the Company at its office or agency described in Section 2 hereof for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Warrantholder at the time of such surrender. Subject to Section 5 hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon the books of the Company by the Warrantholder in person or by duly authorized attorney, and a new Warrant of the same tenor and date as this Warrant, but registered in the name of the transferee, shall be executed and delivered by the Company upon surrender of this Warrant, duly endorsed, at such office or agency of the Company. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new 4 Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange, transfer, or replacement. The Company shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 4. 5. RESTRICTIONS ON TRANSFER AND EXERCISE. Subject to the conditions specified in this Section 5 with respect to compliance with the provisions of the Securities Act, this Warrant shall be freely transferable by the Holder. The holder of this Warrant agrees that such holder will not transfer this Warrant or the related Warrant Shares (a) prior to delivery to the Company of an opinion of counsel selected by the Warrantholder and reasonably satisfactory to the Company, stating that such transfer is exempt from registration under the Securities Act, or (b) until registration of such Warrants and/or Warrant Shares under the Securities Act has become effective and continues to be effective at the time of such transfer. An appropriate legend may be endorsed on the Warrants and the certificates of the Warrant Shares evidencing these restrictions. Notwithstanding any provision contained in this Warrant to the contrary, the Warrantholder shall not be entitled to exercise this Warrant to the extent that such exercise would cause the Company or the Warrantholder to violate the Securities Act or applicable state securities laws. This Warrant shall not be transferable to any person or entity (other than an affiliate of the Warrantholder), which is engaged in the business of insurance-related e-commerce or agency management software, without the prior written consent of the Company. 6. ANTIDILUTION PROVISIONS. The rights granted hereunder are subject to the following: (a) STOCK SPLITS AND REVERSE SPLITS. In case at any time the Company shall subdivide its outstanding shares of Common Stock into a greater number of shares, the Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of Warrant Shares purchasable pursuant to this Warrant immediately prior to such subdivision shall be proportionately increased, and conversely, in case at any time the Company shall combine its outstanding shares of Common Stock into a smaller number of shares, the Purchase Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares purchasable upon the exercise of this Warrant immediately prior to such combination shall be proportionately reduced. Except as provided in this paragraph (a), no adjustment in the Purchase Price and no change in the number of Warrant Shares so purchasable shall be made pursuant to this Section 6 as a result of or by reason of any such subdivision or combination. (b) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION MERGER, OR SALE. If any capital reorganization or reclassification or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation, shall be effected in such a way that holders of shares of Common Stock shall be entitled to receive Common Stock, Other Securities or assets with respect to or in exchange for shares of Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provision shall be made whereby the Warrantholder shall thereafter have 5 the right to purchase and receive upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the Warrants such shares of Common Stock, Other Securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore purchasable and receivable upon the exercise of the Warrants had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the Warrantholder so that the provisions of the Warrants (including, without limitation, provisions for adjustment of the Purchase Price and the number of shares purchasable upon the exercise of the Warrants) shall thereafter be applicable, as nearly as may be, in relation to any shares of Common Stock, Other Securities or assets thereafter deliverable upon the exercise of the Warrants. No such reorganization or reclassification or merger shall be effected until and unless the person resulting from such reorganization, reclassification or merger (if not the Company), or such successor person, shall expressly assume, by supplemental agreement reasonably satisfactory in form to the then Majority Holders (as defined below) and executed and delivered to the Warrantholder, the due and punctual performance and observance of each and every covenant and condition of this Agreement to be performed and observed by the Company. "Majority Holders" as of any date, shall mean the holders of this Warrant (or replacement warrants issued pursuant hereto) who together have rights to exercise such warrants for a majority of the Warrant Shares. The Company shall use reasonable efforts to provide written notice to the Warrantholder reasonably in advance of the closing of any such reorganization or reclassification. Notwithstanding the foregoing, in the event that, as a result of any action described in this paragraph (b), the Company's stockholders immediately prior to such transaction own less than 50% of the voting securities of the surviving corporation in any such reorganization or reclassification, then the number of shares issuable upon exercise of this Warrant shall cease to be based on the percentage of the outstanding shares of the Company as set forth in the most recent Form 10-K or 10-Q of the Company prior to the closing of such transaction, and rather will be based on the percentage of the shares of the Company that are outstanding immediately prior to the closing of such transaction. (c) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY. If while this Warrant, or any portion herefor, remains outstanding and unexpired the holders of the Common Stock of the Company shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of Common Stock receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of Common Stock receivable upon exercise of this Warrant on the date hereof and 6 had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 6. (d) LIMITATION OF ADJUSTMENT. Notwithstanding paragraphs (a), (b) and (c), in the event of any capital event or series of capital events that otherwise would require an increase or change in the kind of securities or property issuable upon exercise of this Warrant or a decrease in the Purchase Price, no adjustment shall be made unless and until such increase or decrease, respectively, exceeds 1%; provided, however, that any adjustments which by reason of this Section 6(d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. 7. SPECIAL AGREEMENTS FOR THE COMPANY. (a) WILL RESERVE SHARES. The Company will reserve and set apart and have at all times the number of shares of authorized but unissued Common Stock deliverable upon the exercise of the Warrants, and it will have at all times any other rights or privileges provided for herein sufficient to enable it at any time to fulfill all of its obligations hereunder. (b) WILL AVOID CERTAIN ACTIONS. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, issue or sale of securities or otherwise, avoid or take any action which would have the effect of avoiding the observance or performance hereunder by the Company, but will at all times in good faith assist in carrying out of all the provisions of the Warrants and in taking all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment. 8. INTENTIONALLY OMITTED. 9. NO RIGHTS AS SHAREHOLDERS, LIMITATION OF LIABILITY. This Warrant shall not entitle any holder hereof to any of the rights of a stockholder of the Company. No provisions hereof, in the absence of affirmative action by the holder hereof to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such holder for Purchase Price or as a stockholder of the Company whether such liability is asserted by the Company or by creditors of the Company. 10. REGISTRATION RIGHTS. Warrantholders shall have the right to request registration of their Warrant Shares pursuant to Sections 10(a) and 10(b). (a) REQUIRED REGISTRATION. After receipt of a written request from the holders of Warrants and/or Warrant Shares representing at least an aggregate of 33-1/3% of the total of (i) all Warrant Shares then subject to purchase upon exercise of all Warrants and (ii) all 7 Warrant Shares then outstanding, requesting that the Company effect the registration of Warrant Shares issuable upon the exercise of such holders' Warrants or of any of such holders' Warrant Shares under the Securities Act and specifying the intended method or methods of disposition thereof, the Company shall (i) promptly notify all holders of Warrants and Warrant Shares in writing of the receipt of such request and each such holder may elect (by written notice sent to the Company within ten business days from the date of such holder's receipt of the aforementioned Company's notice) to have its shares of Warrant Shares included in such registration thereof; and (ii) as expeditiously as is possible, use its best efforts to effect the registration under the Securities Act of all Warrant Shares which the Company has been so requested to register by such holders for sale, all to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the Warrant Shares so registered; PROVIDED, HOWEVER, that the Company shall not be required to effect more than three registrations of any Warrant Shares pursuant to this Section 10(a). Notwithstanding the other provisions of this Section 10(a), (i) the Company shall not be required to use its best efforts to register any Warrant Shares pursuant to this Section 10(a) within a one hundred and eighty (180) day period after the effective date of any other registration statement of the Company effected under this Section 10(a) and (ii) the Company may defer the obligation to file any registration statement under this Section 10(a) for up to one hundred and twenty (120) days upon delivery to the requesting Warrantholders of a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholder, or for any transaction contemplated by the Company, for such registration statement to be effected at such time (provided, however, that such right to delay may be exercised by the Company no more than twice in any twelve-month period). In the event that any registration pursuant to this Section 10(a) is to be underwritten, the Company shall have the right to select the underwriters, with the consent of the Warrantholders holding a majority of the Warrant Shares to be included in such registration (which consent shall not be unreasonably withheld). (b) INCIDENTAL REGISTRATION. If the Company at any time proposes to file on its behalf and/or on behalf of any of its security holders ("the demanding security holders") a registration statement under the Securities Act on any form (other than a registration statement on Form S-4 or S-8 or any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of the Company pursuant to any employee benefit plan, respectively) for the general registration of securities to be sold for cash with respect to its Common Stock, it will give written notice to all holders of Warrants or Warrant Shares at least fifteen (15) days before the initial filing with the Commission of such Registration Statement, which notice shall set forth the intended method of disposition of the securities proposed to be registered by the Company. The notice shall offer to include in such filing the aggregate number of shares of Warrant Shares as such holders may request. Nothing herein shall preclude the Company from discontinuing the registration of its securities being effected on its behalf at any time prior to the effective date of the registration relating thereto. 8 Each holder of any such Warrants or any such Warrant Shares desiring to have Warrant Shares registered under this Section 10(b) shall advise the Company in writing within 30 days after the date of receipt of such offer from the Company, setting forth the amount of such Warrants Shares for which registration is requested. The Company shall thereupon include in such filing the number of Warrant Shares for which registration is so requested, subject to the next sentence, and shall use its best efforts to effect registration under the Securities Act of such Warrants and shares. If the managing underwriter of a proposed public offering shall advise the Company in writing that, in its opinion, the distribution of the shares of Common Stock into which the Warrants are exercisable and the Warrant Shares requested to be included in the registration concurrently with the securities being registered by the Company or such demanding security holder would adversely affect the distribution of such securities by the Company or such demanding security holder, then all demanding security holders' (other than any selling security holder who requested such registration and the Company (unless such Registration Statement was filed at the request of a demanding security holder)) shall reduce the amount of securities each intended to distribute through such offering on a pro rata basis. Except as otherwise provided in Section 10(d), all expenses of such registration shall be borne by the Company. The holders of Warrant Shares shall have no right to select or approve, or participate in the selection or approval of, the underwriters in connection with any offering pursuant to a registration pursuant to this Section 10(b). (c) REGISTRATION PROCEDURES. If the Company is required by the provisions of this Section 10 to effect the registration of any of its securities under the Securities Act, the Company will, as expeditiously as possible: (i) promptly prepare and file with the Securities and Exchange Commission (the "Commission") a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective; (ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such registration statement whenever the seller or sellers of such securities shall desire to sell or otherwise dispose of such securities; (iii) furnish to any selling security holders such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as such selling security holders may reasonably request; (iv) use its best efforts to register or qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions within the United States as each holder of such securities shall request, and do such other 9 reasonable acts and things as may be required of it to enable such holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement (provided, however, that the Company shall not be obligated, in connection therewith, to qualify to do business or to file a general consent to service of process in any such jurisdictions); (v) use its best efforts to furnish, at the request of any underwriter, (1) a copy of an opinion, dated such date, of the independent counsel representing the Company for the purposes of such registration in containing customary opinions, conditions, qualifications an assumptions; and (2) a letter from the independent certified public accountants of the Company, addressed to the underwriters and containing customary terms, conditions and qualifications, stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the Registration Statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act. (vi) enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such registrable securities; (vii) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission; and (i) give the holders of Warrant and their underwriters, if any, and their respective counsel and accountants the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof and supplement thereto, and give each of them such access to its books and records and facilities, and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements, as shall be necessary, in the opinion of such holders, such underwriters (or their counsel), such counsel or such accountants (or their counsel), to conduct a reasonable investigation within the meaning of the Securities Act. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Section 10 in respect of the securities which are to be registered at the request of any holder of Warrants or Warrant Shares that such holder shall furnish to the Company such information regarding the securities held by such holder and the intended method of disposition thereof as the Company shall reasonably request and as shall be required in connection with the action taken by the Company. (d) EXPENSES; LIMITATIONS ON REGISTRATION. All expenses incurred in complying with Section 10, including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD, printing expenses, fees and disbursements of 10 counsel and auditors for the Company,the reasonable fees and expenses of one counsel for the selling security holders (selected by those holding a majority of the Warrant Shares being registered), expenses of any special audits incident to or required by any such registration and expenses of complying with the securities or blue sky laws of any jurisdictions, shall be paid by the Company, except that the Company shall not be liable for any fees, discounts or commissions to any underwriter or any fees or disbursements of counsel for any underwriter in respect of the securities sold by such holder of Warrant Shares. (e) INDEMNIFICATION. (i) In the event of any registration of any of the Warrant Shares under the Securities Act pursuant to this Section 10, the Company shall indemnify and hold harmless the holder of such Warrant Shares, such holder's directors and officers, and each other person (including each underwriter) who participated in the offering of such Warrant Shares and each other person, if any, who controls such holder or such participating person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such holder or any such director or officer or participating person or controlling person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any alleged untrue statement of any material fact contained, on the effective date thereof, in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such holder or such director, officer or participating person or controlling person for any legal or any other expenses reasonably incurred by such holder or such director, officer or participating person or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any alleged untrue statement or alleged omission made in such registration statement, preliminary prospectus, prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such holder specifically for use therein. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such holder or such director, officer or participating Person or controlling Person, and shall survive the transfer of such securities by such holder. (ii) Each holder of any Warrant Shares, by acceptance thereof, agrees to indemnify and hold harmless the Company, its directors and officers and each other Person, if any, who controls the Company within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or any such Person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or 11 actions in respect thereof) arise out of or are based upon information in writing provided to the Company by such holder of such Warrants and Warrant Shares contained, on the effective date thereof, in any registration statement under which securities were registered under the Securities Act at the request of such holder, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto; PROVIDED, HOWEVER, that such Holder's obligation under this Section to indemnify and hold harmless the Company shall in no event exceed the proceeds received by such person from the proceeds of shares of Common Stock sold pursuant to such Registration Statements. (iii) If the indemnification provided for in this Section from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or related to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent representation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (iv) Each party entitled to indemnification under this paragraph 10 (the "INDEMNIFIED PARTY") shall give notice to the party required to provide indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense; PROVIDED, HOWEVER, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one 12 separate counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. The failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2, unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claims or litigation. 11. COVENANTS RELATING TO RULE 144. The Company will file reports in compliance with the Securities Exchange Act of 1934, as amended, and comply with all rules and regulations of the Commission applicable to the use of Rule 144. 12. GOVERNING LAW. This Warrant shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to conflicts of laws principles. 13. MISCELLANEOUS (a) This Warrant and any provision hereof may be changed, waived, discharged, or terminated only by an instrument in writing signed by the party (or any predecessor in interest thereof) against which enforcement of the same is sought; provided, however that the terms of the Warrants (other than the Purchase Price and the number of shares issuable hereunder) may be amended with the consent of the Holders of outstanding Warrants which would be exercisable to purchase a majority of the Warrant Shares outstanding and issuable upon the exercise of all then outstanding Warrant Shares. The headings in this Warrant are for purposes of reference only and shall not affect the meaning or construction of any of the provisions hereof. (b) All notices, requests, consents and other communications hereunder shall be in writing, shall be sent by confirmed facsimile or mailed by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, and shall be deemed given when so sent in the case of facsimile transmission, or when so received in the case of mail or courier, and addressed as follows: if to the Company, to: Delphi Information Systems, Inc. 3501 Algonquin Road Rolling Meadows, Illinois 60008 13 Attention: Law Department Phone: (847) 506-3100 Fax: (847) 590-8280 with a copy to the Chief Financial Officer of the Company at the same address, and if to the Warrantholder, to: Hewlett-Packard Company 3000 Hanover Street Mail Stop 20 BQ Palo Alto, California 94304 Attention: General Counsel Phone: (650) 857-1501 Fax: (650) 857-4392 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by a duly authorized officer and to be dated as of the 20th day of August, 1999. DELPHI INFORMATION SYSTEMS, INC. By: [ILLEGIBLE] ______________________________ Its: Vice President _____________________________ 14 FULL SUBSCRIPTION FORM To Be Executed By the Registered Warrantholder if It/ She/He Desires to Exercise in Full the Within Warrant The undersigned hereby (A) exercises the right to purchase the ___________ shares of Common Stock covered by the within Warrant at the date of this subscription and herewith makes payment of the sum of $____________________ representing the Purchase Price of $___________________ per share in effect at that date or (B) elects to exercise this Warrant for the purchase of _______________ shares of Common Stock, pursuant to the provisions of Paragraph 2(b) of the attached Warrant. Certificates for such shares shall be issued in the name of and delivered to the undersigned, unless otherwise specified by written instructions, signed by the undersigned and accompanying this subscription. Dated: ______________________________ Signature: ______________________ Address: 15 PARTIAL SUBSCRIPTION FORM To Be Executed by the Registered Warrantholder if It/ She/He Desires to Exercise in Part Only the Within Warrant The undersigned hereby (A) exercises the right to purchase ______________ shares of the total shares of Common Stock covered by the within Warrant at the date of this subscription and herewith makes payment of the sum of $__________________ representing the Purchase Price of $____________ per share in effect at this date or (B) elects to exercise this Warrant for the purchase of _______________ shares of Common Stock, pursuant to the provisions of Paragraph 2(b) of the attached Warrant. Certificates for such shares and a new Warrant of like tenor and date for the balance of the shares not subscribed for (if any) shall be issued in the name of and delivered to the undersigned, unless otherwise specified by written instructions, signed by the undersigned and accompanying this subscription. [The following paragraph need be completed only if the Purchase Price and number of shares of Common Stock specified in the within Warrant have been adjusted pursuant to Section 6.] The shares hereby subscribed for constitute _______________ shares of Common Stock (to the nearest whole share) resulting from adjustment of _______________ shares of the total of ________________ shares of Common Stock covered by the within Warrant, as such shares were constituted at the date of the Warrant. Dated: ______________________________ Signature: ____________________________ Address: 16 CALCULATION FORM 1. As of _____________, 1999 (which is the last day of the Company's most recent fiscal quarter) (the "Calculation Date"), the number of the Company's outstanding shares of Common Stock was ___________________, as reported on the Company's Form [10-K/10-Q] for the fiscal [year/quarter] ended ____________, ____. 2. As of the Calculation Date, the Warrantholder may purchase, pursuant to the Warrant, [4.9%] of the outstanding shares of the Common Stock which, as of the Calculation Date, is equal to _____________ shares and such shares may be purchased during the period commencing August __, 1999 and ending August __, 2000, at an exercise price equal to [$15.00] per share. 3. As of the Calculation Date, the Warrantholder may purchase, pursuant to the Warrant, [4.5%] of the outstanding shares of the Common Stock which, as of the Calculation Date, is equal to _________________ shares, and such shares may be purchased during the period commencing August __, 2000 and ending August __, 2001, at an exercise price equal to [$20.00] per share. 4. As of the Calculation Date, the Warrantholder, to the extent it has not exercised its right to purchase any of the shares under paragraph 2 above, may purchase, pursuant to the Warrant, in addition to the number of shares the Warrantholder may purchase under paragraph 2 above, [4.9%] of the outstanding shares of the Common Stock, which, as of the Calculation Date, is equal to _____ shares, as such shares may be purchased during the period commencing August __, 2000 and ending August __, 2001 at an exercise price equal to [$20.00] per share. DELPHI INFORMATION SYSTEMS, INC. Signature: ________________________________ Date: ______________________________________ 17 EX-10.23 8 ex-10_23.txt EXHIBIT 10.23 Exhibit 10.23 [LOGO] Info The Ultimate Directory Space www.infospace.com ----------------------------- INTERNET INFOSPACE CONTENT (WORLD WIDE WEB SITE) DISTRIBUTION AGREEMENT THIS AGREEMENT, dared as of August 31. 1999 (the "Effective Date"), is made by and between InfoSpace.com, Inc., a Delaware corporation, ("InfoSpace"), with offices at 15375 NE 9Oth Street Redmond, WA 98052, and Delphi information Systems, Inc., a Delaware corporation ("Company), with offices at 3501 Algonquin Road, Rolling Meadows, IL 60008 RECITALS This Agreement is entered into with reference to the following facts: A. InfoSpace maintains on Certain locations of its Web Sites (its defined below) and makes available to internet users certain content, resources, archives, indices, catalogs and collections of information (collectively, such materials are identified in Exhibit A and referred to herein as the "Content") B. InfoSpace wishes to grant certain rights and licenses to Company with respect to access to me Content and certain other matters, and Company wishes to grant certain rights and licenses to InfoSpace with respect to the Company Web Sites (as defined below) and certain other matters, as set forth in this Agreement C. Company and InfoSpace have entered into related agreements of even dates herewith, including an Internet Promotion Agreement ("Promotion Agreement") and a Content Provider Agreement. AGREEMENT The parties agree as follows. Section 1. Definitions. As used herein, the following terms have the following defined meanings: "Banner Advertisement" means a rotating banner advertisement of approximately 468 x 60 pixels located at the top and/or bottom of a Web Page. "Co-branded Pages" means, collectively, Query Pages and Results Pages. "Company Marks" means those Trademarks of Company set forth on Exhibit B hereto and such other Trademarks (if any) as Company may from time to time notify InfoSpace in writing to be "Company Marks" within the meaning of this Agreement. "Company Web Sites" means, collectively, all Web Sites maintained by or on behalf of Company and its affiliates. "Graphical User Interface" means a graphical user interface, to be designed by Company and InfoSpace and implemented by InfoSpace pursuant to the terms of this Agreement, that contains or implements branding, graphics, navigation. Content or other characteristics or features such that a user reasonably would conclude that such interface is pan of the Company Web Sites -1- "Impression" means a user's viewing of any discrete screen of a Co-branded Page containing any Banner Advertisement. "InfoSpace Marks" means those Trademarks of InfoSpace (if any) set forth on Exhibit B hereto and such other Trademarks as InfoSpace may from time to time notify Company in writing to be "InfoSpace Marks" within the meaning of this Agreement. "InfoSpace Web Sites" means, collectively: (a) the Web Site the primary home page of which is located at http://www.infospace.com; and (b) other Web Sites maintained by InfoSpace and its affiliates. "Intellectual Property Rights" means any parent, copyright, rights in Trademarks, trade secret rights, moral rights and other intellectual property or proprietary rights arising under the laws of any jurisdiction. "Person" means any natural person, corporation, partnership, limited liability company or other entity "Query Page" means any page hosted on the InfoSpace Web Sites which incorporates the Graphical User Interface and on which users may input query and searches relating to the Content. "Results Page" means any page hosted on the InfoSpace Web Sites which incorporates the Graphical User Interface and displays Content in response to queries and searches made on a Query Page. "Term" is defined on Exhibit C. "Trademarks" means any trademarks, service marks, trade dress, trade names, corporate names, proprietary logos or indicia and other source or business identifiers. "Web Site" means any point of presence maintained on the Internet or on any other public data network. With respect to any Website maintained on the World Wide Web, such Website includes all HTML pages (or similar unit of information presented in any relevant data protocol) that either (a) are identified by the same second-level domain (such as infospace.com) or by the same equivalent level identifier in any relevant address scheme, or (b) contain branding, graphics, navigation or other characteristics such that a user reasonably would conclude that the pages are part of an integrated information or service offering. 2. Certain Rights Granted. 2.1 InfoSpace Grant. Subject to the terms and conditions of this Agreement, InfoSpace hereby grants to Company the following rights: (a) the right to include on the Company Web Sites hypertext links (whether in graphical, text or other format) which enable "point and click" access to locations of the InfoSpace Web Sites specified by InfoSpace (and subject to change by InfoSpace from time to time), and (b) the right to permit users to link to Results Pages via Query Pages hosted on the Company Web Sites; and (c) the right to include XML Feeds of certain Content to be determined solely by InfoSpace on the Company Web Sites. 2.2 Company Grant. Subject to the terms and conditions of this Agreement. Company hereby grants InfoSpace the following rights: -2- (a) the right to include on the InfoSpace Web Sites hypertext links (whether in graphical, text or other format) which enable "point and click" access to locations of the Company Web Sites specified by Company (and subject to change by Company from time to time); (b) the right to sell and serve Banner Advertisements directly on the Co-branded Pages as provided in Section 4, and (c) the right to track the number of Impressions. 2.3 Limitations. Company and its affiliates shall have no right to reproduce or sub-license, re-sell or otherwise distribute (other than as provided in this Agreement) all or any portion of the Content to any Person via the Internet (including the World Wide Web) or any successor public or private data network. Company understands that if this Agreement and delivery of the Content or any portion hereunder to Company shall cause InfoSpace to be in violation of any law of any jurisdiction or third party agreement, then InfoSpace may at any time modify its grant of rights to the extent necessary to ensure compliance. In addition, neither party shall have any right to: (a) edit or modify any Banner Advertisements, submitted for a Co-branded Page (but without limiting InfoSpace's right to reject any Banner Advertisements pursuant to Section 4.1); or (b) remove, obscure or alter any notices of Intellectual Property Rights appearing in or on any materials (including Banner Advertisements) provided by the other party. 2.4 Company Marks License. Subject to Section 2.6, Company hereby grants InfoSpace the rights to use, reproduce, publish, perform and display the Company Marks: (a) on the InfoSpace Web Sites in connection with the posting of hyperlinks to the Company Web Sites; (b) in and in connection with the development, use, reproduction, modification, adaptation, publication, display and performance of the Graphical User Interface and Results Pages; and (c) in promotional and marketing materials, content directories and indices, and electronic and printed advertising, publicity, press releases, newsletters and mailings about InfoSpace. 2.5 InfoSpace Marks License. Subject to Section 2.6, InfoSpace hereby grants the right to use, reproduce, publish, perform and display the InfoSpace Marks: (a) on the Company Web Sites in connection with the posting of hyperlinks to the InfoSpace Web Sites; (b) in and in connection with the development, use, reproduction in promotional and marketing materials, content directories and indices, and electronic and printed advertising, publicity, press releases, newsletters and mailings about Company. 2.6 Approval of Trademark Usage. InfoSpace shall not use or exploit in any manner any of the Company Marks, and Company shall not use or exploit in any manner any of the InfoSpace Marks, except in such manner and media as the other party may consent to in writing, which consent shall not be unreasonably withheld or delayed. Either party may revoke or modify any such consent upon written notice to the other party. 2.7 Nonexclusivity. Each party acknowledges and agrees that the rights granted to the other party in this Agreement are non-exclusive, and that, without limiting the generality of the foregoing, nothing in this Agreement shall be deemed or construed to prohibit either party from participating in similar business arrangements as those described herein including soliciting third party advertisements or other materials, serving advertisements or other materials to third parties' Web Sites, or hosting or permitting third parties to place advertisements on such party's Web Site, whether or not, in each such case, such advertisements are competitive with the products, services or advertisements of the other party. 3. Certain Obligations of the Parties. 3.1 Graphical User Interface and Co-branded Pages. Company and InfoSpace will cooperate to design the user-perceptible elements of the Graphical User Interface, with the goals of: (a) conforming the display output of the "look and feel" associated with the applicable Company Web Sites, and (b) maximizing the commercial effectiveness thereof. Following agreement by the parties upon the -3- design specifications thereof, InfoSpace will use commercially reasonable efforts to develop the Graphical User Interface and to implement the same on Co-branded Pages in a timely manner. InfoSpace shall have no liability or obligation (or failure to develop or implement the Graphical User Interface or any Co-branded Pages as contemplated by this Section 3.1, or for any nonconformity with the design specifications agreed upon by the parties, provided InfoSpace has used technically reasonable efforts to develop and implement the same as provided in this Section 3 1. The URL for the Co-Branded Pages shall not include Company's domain name. Any re-designs or non-standard designs requested by Company (beyond the initial standard template design contemplated by this section) shall be charged at InfoSpace's then current published rates, under a separate agreement. 3.2 Data Feeds. A its sole discretion, InfoSpace shall to provide Company data feeds ("Data Feeds") for Stock Quotes and Weather in a format to be determined by InfoSpace. InfoSpace shall have no liability or obligation for failure to develop or implement the Data Feeds as contemplated by this Section 3.2. or for any nonconformity with the design specifications agreed upon by the parties, provided InfoSpace has used commercially reasonable efforts to develop and implement the same in a timely manner as provided in this Section 3.2. Any re-designs or non-standard designs requested by Company for Data Feeds shall be charged at InfoSpace's then current published rates. 3.3 The InfoSpace logo and at least one other link pointing in pages of the InfoSpace Web Sites specified by InfoSpace (and subject to change by InfoSpace front time to time) will be present on all Co-branded Pages. Each link contemplated by this Section 3.2 shall be: (a) prominent in relation to links to other Web Sites on the applicable page (and in any event at least an prominent as any link to any third party Web Site); and (b) above-the-fold (i.e., immediately visible to any user accessing the applicable page without the necessity of scrolling downward or horizontally). 3.4 Accessibility of Web Sites. Each party will use commercially reasonable efforts to ensure accessibility of its Web Sites (including, in the case of InfoSpace, the accessibility of the Content). 3.5 Impression Information. InfoSpace shall track and allow the Company to remotely access in electronic form information maintained by InfoSpace concerning the number of Impressions. 3.6 Publicity. The parties may work together to issue publicity and general marketing communications concerning their relationship and other mutually agreed-upon matters, provided, however, that neither party shall have any obligation to do so. In addition, neither party shall issue such publicity and general marketing communications concerning their relationship without the prior written consent of the other party (not to be unreasonably withheld). Neither party shall disclose the terms of this Agreement to any third party other than its outside counsel, auditors, and financial advisors, except as required by law. 4. Placement of Banner Advertisements. In addition to the terms and conditions otherwise set forth in this Agreement, Banner Advertisements sold on the Co-branded Pages shall be governed by the terms and conditions set forth on Exhibit C. 5. Warranties, Indemnification and Limitation of Direct Liability. 5.1 Warranties Each party to this Agreement represents and warrants to the other party that: a) it has the full corporate right, power and authority to enter into this Agreement and to perform the acts required of it hereunder; -4- b) its execution of this Agreement by such party and performance of its obligation hereunder, do not and will not violate any agreement to which it is a party or by which it is bound; c) when executed and delivered, this Agreement will constitute the legal, valid and binding obligation of such party, enforceable against it in accordance with its terms; and its Web Sites and the content contained therein, and all Banner Advertisements served or submitted by it to the Co-branded Pages, as the case may be, will not contain any material that is adult content, alcohol products, tobacco products, violence obscene, pornographic, libelous defamatory, infringing of any third party Intellectual Property Rights, invasion of privacy or publicity or highly offensive or immoral d) Each party will perform its obligations under this Agreement in a timely manner as contemplated by this Agreement. Further, InfoSpace warrants to Company that, to the best of its knowledge, it operates its website in compliance with applicable laws. 5.2 Indemnification. Each party (the "Indemnifying Party") will defend, indemnify and hold harmless the other party (the indemnified Party"), and the respective directors, officers, employees, agents and its successors and assigns of the Indemnified Party, from and against any and all claims, costs, losses, damages, judgments and expenses (including reasonable attorneys' fees) arising out of or in connection with any third-party claim alleging any breach of such party's representations or warranties or covenants set forth in this Agreement. The Indemnified Party agrees that the Indemnifying Party shall have sole and exclusive control ova the defense and settlement of any such third party claim. The Indemnified Party shall promptly notify the Indemnifying Party of any such claim of which it becomes aware and shall: (a) at the Indemnifying Party's expense, provide reasonable cooperation to the Indemnifying Party in connection with the defense or settlement of any such claim; and (b) at the Indemnified Party's expense, be entitled to participate in the defense of any such claim. The Indemnifying Party shall not acquiesce to any judgment or enter into any settlement that adversely affects the Indemnified Party's rights or interests without prior written consent of the Indemnified Party. 5.3 Limitation of Liability; Disclaimer. (a) Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. EITHER PARTY'S LIABILITY (WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE AND NOTWITHSTANDING ANY FAULT, NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED), PRODUCT LIABILITY OR STRICT LIABILITY OP INFOSPACE) UNDER THIS AGREEMENT OR WITH REGARD TO ANY OF THE PRODUCTS OR SERVICES RENDERED BY INFOSPACE UNDER THIS AGREEMENT (INCLUDING ANY SERVERS OR OTHER HARDWARE, SOFTWARE AND ANY OTHER ITEMS USED OR PROVIDED FLY INFOSPACE OR ANY OTHER PARTIES IN CONNECTION WITH HOSTING THE CO-BRAND) PAGES), THE INFOSPACE WEB SITES AND ANY OTHER ITEMS OR SERVICES FURNISHED UNDER THIS AGREEMENT WILL IN NO EVENT EXCEED THE COMPENSATION PAID BY COMPANY TO INFOSPACE UNDER THIS AGREEMENT. (b) No Additional Warranties. EXCEPT AS SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.), AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS ANY CLAIM IN -5- TORT (INCLUDING NEGLIGENCE). IN EACH CASE. REGARDING THEIR WEB SITES, ANY PRODUCTS OR SERVICES DESCRIBED THEREON, ANY BANNER ADVERTISEMENTS, OR ANY OTHER ITEMS OR SERVICES PROVIDED UNDER TILLS AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, COMPANY ACKNOWLEDGES THAT THE INFOSPACE WEB SITES AND THE CONTENT (INCLUDING ANY SERVERS OR, OTHER HARDWARE, SOFTWARE AND ANY OTHER ITEMS USED OR PROVIDED BY INFOSPACE OR ANY THIRD PARTIES IN CONNECTION WITH HOSTING TILE INFOSPACE WEB SITES OR THE CONTENT OR PERFORMANCE OF ANY SERVICES HEREUNDER) ARE PROVIDED "AS IS" AND THAT I.NFOSPACE MAKES NO WARRANTY THAT IT WILL CONTINUE TO OPERATE ITS WEB SITES IN THEIR CURRENT FORM, THAT ITS WEB SITES WILL. BE ACCESSIBLE WITHOUT INTERRUPTION. THAT WEB SITES WILL MEET THE REQUIREMENTS OR EXPECTATIONS OF THE OTHER PARTY, OR THAT THE CONTENT OR ANY OTHER ANY MATERIALS ON ITS WEB SITES OR THE SERVERS AND SOFTWARE THAT MAKES ITS WEB SITES AVAILABLE ARE FREE FROM ERRORS, DEFECTS, DESIGN FLAWS OR OMISSIONS. 6. Term and Termination. 6.1 Term. The term of this Agreement is as set forth on Exhibit C. 6.2 Termination. Either party may terminate the Term upon not less than thirty (30) days' prior written notice to the ocher party of any material breach hereof by such ocher party. provided that such ocher party has not cured such material breach within such thirty (30) day period. 6.3 Effect of Termination. Upon termination or expiration of the Term for any reason. all rights and obligations of the parties under this Agreement shall be extinguished, except that: (a) all accrued payment obligations hereunder shall survive such termination or expiration: and (b) the rights and obligations of the parties under Sections 4.2, 5, 6, 7 and S shall survive such termination or expiation. 7. Intellectual Property. 7.1 Company. As between the parties, Company retains all right, title and interest in and to the Company Web Sites (including, without limitation, any and all content, data, URLs, domain names, technology, software, code, user interfaces, "look and feel", Trademarks and other items posted thereon or used in connection or associated therewith; bar excluding any Content or ocher items supplied by InfoSpace) and the Company Marks along with all Intellectual Property Rights associated with any of the foregoing. All goodwill arising out of InfoSpace's use of any of the Company Marks shall inure solely to the benefit of Company. 7.2 InfoSpace. As between the parties, InfoSpace retains all right, title and interest in and to the Content and the InfoSpace Web Sites (including, without limitation, any and all content, data, URL's, domain names, technology, software, code, user interfaces, "look and feel", Trademarks and other items posted thereon or used in connection or associated therewith; but excluding any items supplied by Company) and the InfoSpace Marks, along with all Intellectual Property Rights associated with any of the foregoing All goodwill arising out of Company's use of any of the InfoSpace Marks shall inure solely to the benefit of InfoSpace. 7.3 Copyright Notices. All Co-branded Pages will include the following acknowledgment, along with the InfoSpace logo. "Powered by InfoSpace" or "Powered by InfoSpace.com" InfoSpace and Company acknowledge that the Co-branded Pages may also contain copyright and patent notices of copyrighted or copyrightable works, including those of InfoSpace Content providers. InfoSpace agrees and acknowledges that the Co-branded Pages will also contain copyright and patent notices of copyrighted or copyrightable works to be designated by Company. -6- 7.4 Other Trademarks. InfoSpace shall not register or attempt to register any of the Company Marks or any Trademarks which Company reasonably deems to be confusingly similar to any of the Company Marks. Company shall not register or attempt to register any of the InfoSpace Marks or any Trademarks which InfoSpace reasonably deems to be confusingly similar to any of the InfoSpace Marks. 7.5 Further Assurances. Each party shall take, at the other party's expense, such action (including, without limitation, execution of affidavits or other documents) as the other party may reasonably request to effect, perfect or confirm such other party's ownership interests and other rights as set forth above in this Section 7. 8. General Provisions. 8.1 Confidentiality. Each party (the "Receiving Party") undertakes to retain in confidence the terms of this Agreement and all other non-public information and know-how of the other party disclosed or acquired by the Receiving Party pursuant to or in connection with this Agreement which is either designated as proprietary and/or confidential or by the nature of the circumstances surrounding disclosure, ought in good faith to be treated as proprietary and/or confidential ("Confidential Information"); provided that each party may disclose the terms and conditions of this Agreement to its immediate legal and financial consultants in the ordinary course of its business. Each party agrees to use commercially reasonable efforts to protect Confidential Information of the other party, and in any event, to cake precautions at least as great as those taken to protect its own confidential information of a similar nature. Both parties acknowledge that the terms of this Agreement are Confidential Information. The foregoing restrictions shall not apply to any information that: (a) was known by the Receiving Party prior to disclosure thereof by the other party, (b) was in or entered the public domain through no fault of the Receiving Party; (c) is disclosed to the Receiving Party by a third party legally entitled to make such disclosure without violation of any obligation of confidentiality; (d) is required to be disclosed by applicable laws or regulations (but in such event, only to the extent required to be disclosed and after notice is given or the other party with an opportunity to object), or (e) is independently developed by the Receiving Party without reference to any Confidential Information of the other party. Upon request of the other party, or in any event upon any termination or expiration of the Term, each party, shall return to the other all materials, in any medium, which contains, embody, reflect or reference all or any part of any Confidential Information of the other party. Each party acknowledges that breach of this provision by it would result in inseparable harm to the other party, for which money damages would be an insufficient remedy, and therefore that the other party shall be entitled to seek injunctive relief to enforce the provisions of this Section 8.1. 8.2 Independent Contractors. Company and InfoSpace are independent contractors under this Agreement, and nothing herein shall be construed to create a partnership, joint venture, franchise or agency relationship between Company and InfoSpace. Neither party has any authority to enter into agreements of any kind on behalf of the other party. 8.3 Assignment. Neither party may assign this Agreement or any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other party, not to be unreasonably withheld; except that either party may, without the other party's consent, assign this Agreement or any of its rights or delegate any of its duties under this Agreement: (a) to any affiliate of such party, or (b) to any purchaser of all or substantially all of such party's assets or to any successor by way of merger, consolidation or similar transaction. Subject to the foregoing, this Agreement will be binding upon, enforceable by, and inure to the benefit of the parties and their respective successors and assigns. 8.4 Choice of Law; Forum Selection. This Agreement shall be governed by. and construed in accordance with, the laws of jurisdiction of the defendant without reference to its choice of the rules. -7- 8.5 Nonwaiver. No waiver of any breach of any provision of this Agreement shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provisions hereof, and no waiver shall be effective unless made in writing and signed by an authorized representative of the waiving party. 8.6 Force Majeure. Neither party shall be deemed to be in default of or to have breached any provision of this Agreement as a result of any delay, failure in performance or interruption of service, resulting directly or indirectly from acts of God, acts of civil or military authorities, civil disturbances, wars, strikes or other labor disputes, fires, transportation contingencies, interruptions in telecommunications or Internet services or network provider services, failure of equipment and/or software, other catastrophes or any other occurrences which are beyond such party's reasonable control. 8.7 Notices. Any notice or other communication required or permitted to be given hereunder shall be given in writing and delivered in person, wailed via confirmed facsimile or e-mail, or delivered by recognized courier service, properly addressed and stamped with the required postage, to the person signing this Agreement on behalf of the applicable party at its address specified in the opening paragraph of the agreement and shall be deemed effective upon receipt. Either party may from time to time change the person to receive notices or its address by giving the other party notice of the change in accordance with this section. In addition, a copy of any notice sent to InfoSpace or Company, as applicable, shall also be sent to the following address: InfoSpace.com, Inc. Delphi Information Systems. Inc. 15375 NE 90th Street 3501 Algonquin Road Redmond, WA 98052 Rolling Meadows, IL 60008 Fax: (425) 883-4846 Fax 847-590-8280 Attention: General Counsel Attention: Legal Department 8.8 Savings. In the event any provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, the remaining provisions shall remain in full force and effect. If any provision of this Agreement shall, for any reason, be determined by a court of competent jurisdiction to be excessively broad or unreasonable as to scope or subject, such provision shall be enforced to the extent necessary to be reasonable under the circumstances and consistent with applicable law while reflecting as closely as possible the intent of the parties as expressed herein. 8.9 Integration. This Agreement contains the entire understanding of the parties hereto with respect to the transactions and matters contemplated hereby, supersedes all previous agreements or negotiations between InfoSpace and Company concerning the subject matter hereof, and cannot be amended except by a writing signed by both parties. This Agreement does not constitute an offer by InfoSpace and it shall not be effective until signed by both parties. 8.10 Counterparts; Electronic Signature. This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which together constitute one and the same instrument. To expedite the process of entering into this Agreement, the parties acknowledge that Transmitted Copies of the Agreement will be equivalent to original documents until such time as original documents are completely executed and delivered. "Transmitted Copies" will mean copies that are reproduced or transmitted via photocopy, facsimile or other process of complete and accurate reproduction and transmission. IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the Effective Date. -8- Delphi Information Services InfoSpace.com, Inc. - --------------------------- ------------------- - ----------- ("InfoSpace") ("Company") ------------- - ----------- By (signature) /s/ Robin Raina By (signature) /s/ Bernee D.L. Strom - ------------------------------ ------------------------------------ Name ROBIN RAINA Name BERNEE D.L. STROM - ------------------------------ ------------------------------------ Title PRESIDENT Title President & CEO - ------------------------------ ------------------------------------ -9- EXHIBIT A CONTENT The Content consists of the following indices, directories and other items and services (as the same may by updated, revised or modified by InfoSpace in its sole discretion from time to time): 1. Stock Quotes 2 Weather 3 Mapping and Driving Directions 4 Other items and services that may from time to time be added to the InfoSpace Web Sites by InfoSpace (in its sole discretion) Note: The actual name of these services may change. -10- EXHIBIT B TRADEMARKS Company Marks - ------------- ebix ebix.com ebix.com-- The Electronic Brokers & Insurers Express ebix.mall ebix.mall.com ebix.link ebix.link.com ebix.marketplace Internet Insurance Exchange (as supplemented from time to time by Company) InfoSpace Marks - --------------- InfoSpace InfoSpace.com [GRAPHIC OMITTED] Powered By InfoSpace Powered by InfoSpace.com The Ultimate Directory ActiveShopper PageExpress Search Engine For The Real World The Stuff That Portals Are Made Of -11- EXHIBIT C 1. Definitions. As used in this Agreement, the following terms have the following defined meanings: "Banner Advertising Revenue" means the gross revenues payable to third parties that is received by InfoSpace for delivering Banner Advertisement Impressions. 2. Term. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated or extended as provided below, shall end upon the second (2) year anniversary of this Agreement; provided that the Term shall be automatically be renewed for successive one-year periods unless either party provides written notice of termination to the other party at least thirty (30) days prior to the end of the then-current Term. 3. Banner Advertisements, InfoSpace shall have the exclusive right to serve and sell Banner Advertisements on the Co-branded Pages. The appearance of the Banner Advertisements will be as reasonably determined by InfoSpace: provided, that InfoSpace may reject any Banner Advertisement if such Banner Advertisement would materially adversely affect the download time or performance of such Co-branded page. Neither party will submit for any Co-branded Page any Banner Advertisement which contains any material that is adult content, alcohol products, tobacco products, violence obscene, pornographic, libelous defamatory, infringing of any third party Intellectual Property Rights, invasion of privacy or publicity or highly offensive or immoral. 4. Banner Advertising Revenue Share. The parties will share Banner Advertising Revenues as follows: InfoSpace shall remit to Company twenty-one percent (21%) of the Banner Advertising Revenue received by InfoSpace for Banner Advertisements on the Co-branded Pages. Banner Advertising Revenue Share payments will be reconciled and paid within thirty (30) days following the calendar quarter in which the applicable Advertising Revenues are received by InfoSpace. InfoSpace will invoice the Company at the end of each calendar quarter for that quarter's Banner Advertising Revenues and shall indicate in such invoice whether Company shall pay such Banner Advertising Revenues in cash or in shares of stock as set forth in Section 4.1 of the Promotion Agreement. InfoSpace will provide with each such invoice a report setting forth Banner Advertising Revenues received by it for such quarter and the percentage thereof payable to Company. 5. Records and Audit; Late Payments. During the Term, InfoSpace shall maintain records of the Banner Advertising Revenues received pursuant to this Agreement. Company at its expense, and upon ten (10) days advance notice to InfoSpace, shall have the right once each year during the Term to examine or audit such records in order to verify the figures reported in any quarterly report. In the event that any such audit shall reveal an underdelivery of more than 5% of the Banner Advertising Revenue Share for any quarter, Company shall have the right to conduct an additional audit during the year, and InfoSpace shall be responsible to pay the reasonable cost of an audit which determined the discrepancy of more than 5%. Any such audit shall be conducted, to the extent possible, in a manner that does not interfere with the ordinary business operations of InfoSpace. -12- EX-10.24 9 ex-10_24.txt EXHIBIT 10.24 Exhibit 10.24 Confidential treatment has been requested for portions of this document. Redacted material is identified by double asterisks (i.e. "**"). The redacted material has been filed separately with the Securities and Exchange Commission pursuant to an application for confidential treatment. CONTENT PROVIDER AGREEMENT This Content Provider Agreement (this "Agreement"), dared as of August 31, 1999 (the "Effective Date"), is made by and between InfoSpace.com, Inc. a Delaware corporation having a principal place of business at 15375 NE 90th Street, Redmond, WA 98052 ("InfoSpace"), and Delphi Information Systems, Inc., a Delaware corporation having a principal place of business at 3501 Algonquin Road, Rolling Meadows, IL 60008 ("Provider"). InfoSpace and Provider agree as follows: RECITALS A. InfoSpace provides information and other content in various media to end users via the World Wide Web and other electronic media environments; B. Provider is the owner of the Content (as defined below and as described in Exhibit A); and C. Provider desires to supply, and InfoSpace desires to procure the Content for the purpose of use and display on the InfoSpace Web Sites (as defined below). AGREEMENT NOW, THEREFORE, the parties agree as follows: Section 1. Definitions Wherever used in this Agreement with initial terms capitalized, the following terms shall have the following defined meanings: "Content" means any text, graphics, pictures, sound, video, data and other content (other than the Provider Marks) provided by Provider to InfoSpace under this Agreement. "Content Page" means any Web Page on any InfoSpace Web Site on which the entire version of any portion of the Content appears (e.g., an entire article), but specifically excluding any Web Page on any InfoSpace Web Site on which a link or button to access the Content appears (e.g., a Web Page containing only a description or summary of an article). "Content Usage Reports" means a report (in a form generally maintained by InfoSpace for its internal use and/or other third parties) detailing the number of times that a Content Page was viewed on an InfoSpace Web Site. All Content Usage Reports shall constitute Confidential Information of InfoSpace. "Identifying Data" means, with respect to any Content, the data fields specified on Exhibit A hereto. "InfoSpace Marks" means those Trademarks of InfoSpace (if any) set forth on Exhibit B hereto and such other Trademarks as InfoSpace may from time to time notify Provider in writing to be "InfoSpace Marks" within the meaning of this Agreement. PAGE 1 "InfoSpace Partner" means any third party with whom InfoSpace has entered into any agreement whereby InfoSpace is granted the right to post and maintain content on such third party's Web Site. "InfoSpace Web Sites" means, collectively, all Web Sites maintained by InfoSpace or its affiliates or any InfoSpace Partners. "Intellectual Property Rights" means any patent, copyright, rights in Trademarks, trade secret rights, moral rights and other intellectual property or proprietary rights arising under the laws of any jurisdiction. "Person" means any individual, corporation, partnership, joint venture, association, trust or other entity or group. "Provider Marks" means those Trademarks of Provider set forth on Exhibit B hereto and such other Trademarks (if any) as Provider may from time to time notify InfoSpace in writing to be "Provider Marks" within the meaning of this Agreement. "Term" means the term of this Agreement as defined on Exhibit C. "Trademarks" means any trademarks, service marks, trade dress, trade names, corporate names, proprietary logos or indicia and other source or business identifiers. "Web Page" means a single HTML document (or similar document) which is all or a portion of a Web Site. "Web Site" means, with respect to any Person, all points of presence and/or services maintained by such Person on or electronically connected with the Internet (including, without limitation, the World Wide Web) or on any successor public data network. Section 2. SERVICES AND LICENSES 2.1 Posting of Content. Subject to and in accordance with the terms of this Agreement, InfoSpace may use commercially reasonable efforts to post and maintain the Content on such pages and other locations of the InfoSpace Web Sites as InfoSpace may determine from time to time and may deliver the Content via conventional markup languages used on the internet and use caching as required on the InfoSpace Web Sites; provided, that InfoSpace may, at its discretion, signify its agreement to any pages or locations proposed by Provider by posting Content via such pages or locations, without any requirement of a separate written agreement between the parties with respect thereto. The position and prominence of any posted Content shall be determined by InfoSpace in its sole discretion InfoSpace may store the Content (subject to InfoSpace's standard policies in effect from time to time relating to retention and discarding of content and this Section 2.1) on its servers in such a manner that the Content can be made available throughout the InfoSpace Web Sites. 2.2 Delivery of Content. At Provider's sole discretion, Provider will provide Content to InfoSpace. Unless otherwise agreed by the parties, the Content will be delivered on a daily basis using either e-mail or FTP transfer methodologies. Without limiting the generality of the foregoing, all time sensitive Content (i.e. market sensitive information) shall be provided to InfoSpace by Provider within such time period sufficient to allow the Content maintained on the InfoSpace Web PAGE 2 Sites to mirror to a reasonable degree the Content maintained on Provider's Internet web site and any other third party web site to whom Provider may provide all or any portion of such Content. Each Content transfer shall be accompanied by the applicable Identifying Data. InfoSpace shall upload to the InfoSpace Web Sites any Content transferred to InfoSpace pursuant to this Section 2.2 on schedules set forth in, and otherwise in accordance with, its standard uploading policies in effect from time to time. 2.3 License to Content. With respect to any Content provided to InfoSpace pursuant to Section 2.2, Provider hereby grants InfoSpace a non-exclusive, royalty-free, worldwide license to use, reproduce, distribute, adopt, modify, make derivative works of, publish, display, perform and otherwise exploit the Content in connection with posting and maintaining the same on the InfoSpace Web Sites, and as provided in Section 2.1, subject to the prior written approval of Provider. All rights with respect to the Content not expressly granted to InfoSpace by the foregoing are reserved to Provider. 2.4 License to Provider Marks. Subject to Section 2.5, Provider hereby grants InfoSpace a non-exclusive, nontransferable, royalty-free, worldwide license to use, reproduce, publish, perform and display the Provider Marks: (a) on the InfoSpace Web Sites in connection with posting and maintaining the Content thereon; and (b) in promotional and marketing materials, content directories and indexes, and electronic and printed advertising, publicity, press releases, newsletters and mailings about InfoSpace. 2.5 Approval of Trademark Usage. InfoSpace shall not use or exploit in any manner any of the Provider Marks except in such manner and media as Provider may consent to in writing, which consent shall not be unreasonably withheld or delayed. Provider may revoke or modify any such consent upon written notice to InfoSpace (provided, that such revocation or modification shall not be applicable to any materials produced or published in accordance with this Section 2.5 prior to the date of such revocation or modification). 2.6 Publicity. The parties may work together to issue publicity and general marketing communications concerning their relationship and other mutually agreed-upon matters, provided, however, that neither party shall have any obligation to do so. In addition, neither party shall issue such publicity and general marketing communications concerning their relationship without the prior written consent of the other party (not to be unreasonably withheld). Neither party shall disclose the terms of this Agreement to any third party, except as required by law. 2.7 Nonexclusivity. InfoSpace acknowledges that nothing in this Agreement shall be deemed or construed to prohibit Provider from providing the Content or similar materials to any third party for any use or exploitation whatsoever. Provider acknowledges that nothing in this Agreement shall be deemed or construed to prohibit InfoSpace from securing, posting or maintaining any content, whether or not similar to or competitive with the Content, on the InfoSpace Web Sites or otherwise. 2.8 Sponsorships and Promotions. Provider acknowledges and agrees that InfoSpace may sell and maintain one or more third party sponsorships or promotional placements throughout the InfoSpace Web Sites during the Term, including, without limitation, on one or more of the Content Pages. The sale, size, identity, placement and prominence of any such sponsorships or PAGE 3 promotional placements within any portion of any InfoSpace Web Site shall be in InfoSpace's sole discretion. InfoSpace shall have no obligation to share, or account to Provider regarding, any sums received by InfoSpace by virtue of any such sponsorships or promotional placements. 2.9 Content Usage Reports. During the Term. InfoSpace shall allow Provider to electronically access a Content Usage Report maintained by InfoSpace on its servers. Section 3. TERM AND TERMINATION 3.1 Term. The Term is set forth on Exhibit C. 3.2 Termination. Either party may terminate the Term upon not less than thirty (30) days prior written notice to the other party of any breach hereof by such other party, provided that such other party has not cured such breach within such thirty (30) day period. 3.3 Effect of Termination. Upon termination or expiration of the Term for any reason, all rights and obligations of the parties under this Agreement shall be extinguished, except that the rights and obligations of the parties under Sections 2.8, 5, 6, 7 and & shall survive any termination or expiration of the Term. Section 4. CONTENT 4.1 Provider Responsibility. Subject to InfoSpace's rights under Section 4.2: (a) Provider is solely responsible for the creation and delivery of the Content to InfoSpace; and (b) Provider shall manage, renew, create, delete, edit and otherwise control the editorial content of the Content. InfoSpace will not be responsible for reviewing the Content prior to uploading the Content onto the InfoSpace Web Sites.. Provider shall ensure that the Content shall be and remain fully compatible with the InfoSpace Web Sites; provided, however, upon request from Provider, and at Provider's sole expense, InfoSpace shall make commercially reasonable efforts to assist Provider in resolving any Content related compatibility problem. 4.2 InfoSpace Editorial Control. InfoSpace shall have the right (but not the obligation) to refuse to post, remove & edit any Content which, in its sole discretion, InfoSpace considers actually or potentially obscene, indecent, offensive, defamatory, unlawful, infringing of third-parry Intellectual Property Rights, third-party contractual rights, or otherwise objectionable or unsuitable (defined as adult content, alcohol products, tobacco products, violence, pornographic, libelous, defamatory, invasion of privacy or publicity or highly offensive or immoral for posting on the InfoSpace Web Sites (including, without limitation, hyperlinks, framed content or meta tags included in any Content). 4.3 Credits. On any pages or other locations in which InfoSpace posts or maintains any Content. InfoSpace may publish a notice, the prominence and placement of which will be determined by InfoSpace in its sole discretion, stating that certain content on such page or other location was provided by Provider. Nothing in this Agreement shall limit or restrict InfoSpace's right to publish any other credits, disclaimers or other materials on any location of the InfoSpace Web Sites as InfoSpace deems appropriate in its sole discretion. PAGE 4 Section 5. REPRESENTATIONS AND WARRANTIES; INDEMNITY 5.1 Representations, Warranties and Certain Covenants. To induce InfoSpace to enter into this Agreement. Provider represents. warrants and covenants that: (a) the performance by Provider pursuant to this Agreement and/or the rights herein granted to InfoSpace will not conflict with or result in a breach or violation of any of the terms or provisions, or constitute a default, under any agreement by which Provider is bound; (b) Provider owns all right, title and interest in and to the Content and all associated Intellectual Property Rights, and none of the Content, the Provider Marks or any other items delivered to InfoSpace by Provider to the best of its' knowledge violate, misappropriate or infringe any Intellectual Property Right or other right of any Person, or constitute legally obscene or indecent materials or a libel or defamation of any Person. With respect to the performance of its obligations hereunder, including, without limitation, the provision of the Content, each party r shall comply with all applicable laws, rules and regulations (including, without limitation, export control and obscenity laws). Additionally, each party warrants that they will perform their obligations under this Agreement in a timely manner as contemplated by this Agreement. 5.2 Indemnity. Provider will defend, indemnify and hold harmless InfoSpace from and against any and all claims, costs, losses, damages, judgments and expenses (including reasonable attorneys' fees) arising out of or in connection with the Content or the Provider Marks or any actual or alleged breach of any of Providers representations. warranties or covenants set forth in Section 5.1 above. InfoSpace shall promptly notify Provider of any third-party claim of which it becomes aware for which its seeks indemnification pursuant to this Section 5.2 and shall: (a) at Provider's expense, provide reasonable cooperation to Provider in connection with the defense or settlement of any such claim; and (b) at InfoSpace's expense, be entitled to participate in the defense of any such claim. Neither party r shall acquiesce to any judgment or enter into any settlement that adversely affects the other party's rights or interests without prior written consent of such affected party.. Provider shall not indemnify InfoSpace for any claims based on InfoSpace's negligence or based on misuse of Provider's Content. Section 6. EXCLUSIONS; NO LIABILITY 6.1 WARRANTIES EXCLUDED. EXCEPT AS SET FORTH [N SECTION 5 1, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND. EXPRESS OR IMPLIED. WITH RESPECT TO THE INFOSPACE WEB SITES, OR ANY ITEMS OR SERVICES PROVIDED HEREUNDER. INCLUDING. WITHOUT LIMITATION, ANY IMPLIED WARRANTY ARISING BY USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE AND ANY IMPLIED WARRANTY OP NON-INFRINGEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PROVIDER PAGE 5 ACKNOWLEDGES THAT THE INFOSPACE WEB STIES (INCLUDING ANY SERVERS OR OTHER HARDWARE, SOFTWARE AND ANY OTHER ITEMS USED OR PROVIDED BY INFOSPACE IN CONNECTION WITH HOSTING THE INFOSPACE WEB SITES OR PERFORMANCE OF ANY SERVICES HEREUNDER) ARE PROVIDED "AS IS" AND THAT INFOSPACE MAKES NO WARRANTY THAT THE INFOSPACE WEB SITES OR ANY SERVERS HOSTING THE INFOSPACE WEB SITES WILL BE FREE FROM BUGS. FAULTS, DEFECTS OR ERRORS OR THAT ACCESS TO ANY OF THE INFOSPACE WEB SITES WILL BE UNINTERRUPTED. 6.2 LIMITATION Of LIABILITY. EXCEPT FOR THE INDEMNITY OBLIGATIONS OF PROVIDER SET FORTH IN SECTION 5 ABOVE, NEITHER PARTY WILL HAVE ANY LIABILITY FOR. AND EACH PARTY HEREBY WAIVES AND DISCLAIMS, ANY AND ALL CLAIMS AND CAUSES OF ACTION, WHETHER IN CONTRACT. TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE AND STRICT LIABILITY), WARRANTY OR OTHERWISE. RELATING TO ANY LOSS OR DAMAGE TO PROPERTY. BUSINESS OR DATA FROM ANY CAUSE, OR ANY, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES, IN EACH CASE, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT (INCLUDING ANY BREACH HEREOF) OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. EITHER PARTY'S LIABILITY (WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE AND NOT WITHSTANDING ANY FAULT, NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED), PRODUCT LIABILITY OR STRICT LIABILITY OF INFOSPACE) UNDER THIS AGREEMENT OR WITH REGARD TO ANY OF THE PRODUCTS OR SERVICES RENDERED BY INFOSPACE UNDER THIS AGREEMENT (INCLUDING ANY SERVERS OR OTHER HARDWARE, SOFTWARE AND ANY OTHER ITEMS USED OR PROVIDED BY INFOSPACE OR ANY THIRD PARTIES IN CONNECTION WITH HOSTING THE CONTENT PAGES), THE INFOSPACE WEB SITES AND ANY OTHER ITEMS OR SERVICES FURNISHED UNDER THIS AGREEMENT WILL IN NO EVENT EXCEED FIVE THOUSAND DOLLARS. Section 7.OWNERSHIP 7.1 Provider. As between the parties, Provider retains all right, title and interest in and to the Content and the Provider Marks, along with all Intellectual Property Rights associated with any of the foregoing. AU goodwill arising out of InfoSpace's use of any of the Provider Marks shall inure solely to the benefit of Provider. 7.2 InfoSpace. As between the parties, except as expressly provided in Section 7.1, InfoSpace retains all right, title and interest in and to the InfoSpace Web Sites (including, without limitation, any and all content, data. URLs, domain names, technology, software, code, user interfaces. "look and feel". Trademarks and other items posted thereon or used in connection or associated therewith) and the InfoSpace Marks, along with all Intellectual Property Rights associated with any of the foregoing. All goodwill arising out of Provider's use of any of the InfoSpace Marks shall inure solely to the benefit of InfoSpace. PAGE 6 7.3 Other Trademarks. InfoSpace shall not register or attempt to register any of the Provider Marks or any Trademarks which Provider reasonably deems to be confusingly similar to any of the Provider Marks. Provider shall not register Or attempt to register any of the InfoSpace Marks or any Trademarks which InfoSpace reasonably deems to be confusingly similar to any of the InfoSpace Marks. 7.4 Further Assurances; Limitations. Each party shall take, at the other party's expense, such action (including, without limitation, execution of affidavits or other documents) as the other party may reasonably request to effect, perfect or confirm such other party's ownership interests and other rights as set forth above in this Section 7. This Agreement and delivery of the Content or any portion hereunder shall not cause InfoSpace to be in violation of any law of any jurisdiction or third party agreement, and InfoSpace may modify terms of delivery of the Content if necessary in InfoSpace's sole discretion to avoid any such potential violation. Section 8. GENERAL PROVISIONS 8.1 Independent Contractors. Provider and InfoSpace are independent contractors under this Agreement, and nothing herein shall be construed to create a partnership, joint venture, franchise or agency relationship between Provider and InfoSpace. Neither party has any authority to enter into agreements of any kind on behalf of the other party. 8.2 Assignment. Neither party may assign this Agreement or any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other party, not to be unreasonably withheld, except that either party may, without the other party's consent, assign this Agreement or any of its rights or delegate any of its duties under this Agreement: (a) to any affiliate of such party; or (b) to any purchaser of all or substantially all of such party's `assets or to any successor by way of merger, consolidation or similar transaction. Subject to the foregoing, this Agreement will be binding upon, enforceable by, and inure to the benefit of the parties and their respective successors and assigns. 8.3 Choice of Law; Forum Selection. This Agreement shall be governed by, and construed in accordance with, the laws of the jurisdiction of the defendant without reference to its choice of law rules. 8.4 Nonwaiver. No waiver of any breach of any provision of this Agreement shall constitute a. waiver of any prior, concurrent or subsequent breach of the same or any other provisions hereof, and no waiver shall be effective unless made in writing and signed by an authorized representative of the waiving party. 8.5 Force Majeure. Neither party shall be deemed to be in default of or to have breached any provision of this Agreement as a result of any delay, failure in performance or interruption of service, resulting directly or indirectly from acts of God, acts of civil or military authorities, civil disturbances, wars, strikes or other labor disputes, fires, transportation contingencies, interruptions in telecommunications or Internet services or network provider services, failure of equipment and/or software, other catastrophes or any other occurrences which are beyond such party's reasonable control. 8.6 Notices. Any notice or other communication required or permitted to be given hereunder shall be given in writing and delivered in person, mailed via confirmed facsimile or e-mail, PAGE 7 or delivered by recognized courier service, properly addressed and stamped with the required postage, to the individual signing this agreement on behalf of the applicable party at its address specified above and shall be deemed effective upon receipt. Either party may from time to time change the individual to receive notices or its address by giving the other party notice of the change in accordance with this section. In addition, a copy of any notice sent to InfoSpace or Provider, as applicable shall also be sent to the following address: InfoSpace.com. Inc. Delphi Information Systems, Inc. 15375 NE 90th Street 3501 Algonquin Road Redmond, WA 98052 Rolling Meadows, IL. 60008 Fax: (425) 883-4846 Fax: 847-890-8280 Attention: General Counsel Attention: Legal Department 8.7 Savings. In the event any provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, the remaining provisions shall remain in full force and effect. If any provision of this Agreement shall, for any reason, be determined by a court of competent jurisdiction to be excessively broad or unreasonable as to scope or subject, such provision shall be enforced to the extent necessary to be reasonable under the circumstances and consistent with applicable law while reflecting as closely as possible the intent of the parties as expressed herein. 8.8 Integration. This Agreement contains the entire understanding of the parties hereto with respect to the transactions and matters contemplated hereby, supersedes all previous agreements or negotiations between InfoSpace and Provider concerning the subject matter hereof, and cannot be amended except by a writing signed by both parties. This Agreement does nor constitute an offer by InfoSpace and it shall not be effective until signed by both parties. 8.9 Counterparts; Electronic Signature. This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which together constitute one and the same instrument. To expedite the process of entering into this Agreement, the parties acknowledge that Transmitted Copies of the Agreement will be equivalent to original documents until such time as original documents are completely executed and delivered. "Transmitted Copies" will mean copies that are reproduced or transmitted via photocopy, facsimile or other process of complete and accurate reproduction and transmission. 8.10 Confidentiality. Each party (the "Receiving Party") undertakes to retain in confidence the terms of this Agreement and all other non-public information and know-how of the other party disclosed or acquired by the Receiving Party pursuant to or in connection with this Agreement which is either designated as proprietary and/or confidential or by the nature of the circumstances surrounding disclosure, ought in good faith to be treated as proprietary and/or confidential ("Confidential Information"); provided that each party may disclose the terms and conditions of this Agreement to its immediate legal and financial consultants in the ordinary course of its business. Each party agrees to use commercially reasonable efforts to protect Confidential Information of the other party, and in any event, to take precautions at least as great as those taken to protect its own confidential information of a similar nature. Both parties acknowledge that the terms of this Agreement are Confidential Information. The foregoing restrictions shall not apply to any information that: (a) was known by the Receiving Party prior to disclosure thereof by the other party; (b) was in or entered the public domain through no fault of the Receiving Party; (c) is disclosed to the Receiving Party by a third party legally entitled to make such disclosure without violation of any PAGE 8 obligation of confidentiality; (d) is required to be disclosed by applicable laws or regulations (but in such event, only to the extent required to be disclosed and after notice is given to the other party with an opportunity to object); or (e) is independently developed by the Receiving Party without reference to any Confidential Information of the other party. Upon request of the other party, or in any event upon any termination or expiration of the Term, each party shall return to the other all materials, in any medium, which contain, embody, reflect or reference all or any part of any Confidential Information of the other party. Each party acknowledges that breach of this provision by it would result in irreparable harm to the other party, for which money damages would be an insufficient remedy, and therefore that the other party shall be entitled to seek injunctive relief to enforce the provisions of this Section 8.1. IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the Effective Date. INFOSPACE PROVIDER InfoSpace.com, Inc. Delphi Information Services, Inc. By: /s/ Bernee D.L. Strom By: /s/ Robin Raina ----------------------- ----------------------------- Name: BERNEE D.L. STROM Name: ROBIN RAINA ---------------------- --------------------------- Title: President & CEO Title: President -------------------- -------------------------- EXHIBIT A IDENTIFYING DATA FOR CONTENT Provider will provide content feed featuring insurance information and derivative content elements, including Ebix Mall and Ebix Link to enable InfoSpace Insurance Center and other various areas of the InfoSpace Web Sites. Delphi shall provide InfoSpace with the opportunity to include an Insurance Center channel within the InfoSpace Web Sites. PAGE 10 EXHIBIT B TRADEMARKS The following Trademarks of Provider are "Provider Marks" as that term is used in this Agreement: ebix ebix.com ebix.com-- The Electronic Brokers & Insurers Express ebix.mall ebix.mall.com ebix.link ebix.link.com ebix.marketplace Internet Insurance Exchange (as supplemented from time to time by Company) The following Trademarks of InfoSpace are "InfoSpace Marks" as that term is used in this Agreement: [insert specified InfoSpace Marks (if applicable)] InfoSpace InfoSpace.com [GRAPHIC OMITTED] PAGE 11 Powered By InfoSpace Powered by InfoSpace.com The Ultimate Directory ActiveShopper PageExpress Search Engine For The Real World The Stuff That Portals Are Made Of PAGE 12 EXHIBIT C 1. Definitions. As used in this Agreement, the following terms have the following defined meanings: "Banner Advertisement" means a rotating banner advertisement of approximately 60 x 400 pixels located at the top and/or bottom of a Web Page. "Impression" means a user's viewing of any discrete screen of a Content Page, including containing a text link, button or Banner Advertisement. 2. Term. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated or extended as provided below, shall end upon the second anniversary of this Agreement; provided that the Term shall be automatically be renewed for successive one year periods unless either party provides written notice of termination to the other party at least thirty (30) days prior to the end of the then-current Term. 3. Banner Advertisements. As between the parties, ** all available inventory of Banner Advertisements for the Content Pages and any other portion of any of the InfoSpace Web Sites, consistent with the terms of this Agreement. ** for any such Banner Advertisements and **. 4. License to InfoSpace Marks. InfoSpace hereby grants Provider a non-exclusive, nontransferable, royalty-free, worldwide right and license to use, reproduce, publish, perform and display the InfoSpace Marks in promotional and marketing materials, content directories and indices, and electronic and printed advertising, publicity, press releases, newsletters and mailings about Provider. Provider shall not use or exploit in any manner any of the InfoSpace Marks, except in such manner and media as InfoSpace may consent to in writing, which consent shall not be unreasonably withheld or delayed. InfoSpace may revoke or modify any such consent upon written notice to Provider (provided, that such revocation or modification shall not be applicable to any materials produced or published in accordance with this paragraph prior to the date of such revocation or modification). 5. Links on Content Pages; Revenue Share. InfoSpace may **. Company shall pay to InfoSpace 20% of all revenue "Link Revenue Share") received by Company as a result of user traffic to the Company Web Sites via any such link on any Content Page. PAGE 13 EX-10.25 10 ex-10_25.txt EXHIBIT 10.25 Exhibit 10.25 Confidential treatment has been requested for portions of this document. Redacted material is identified by double asterisks (i.e. "**"). The redacted material has been filed separately with the Securities and Exchange Commission pursuant to an application for confidential treatment. INTERNET PROMOTION AGREEMENT THIS AGREEMENT, dated as of August 31, 1999 (the "Effective Date"), is made by and between InfoSpace.com, Inc., a Delaware corporation, ("InfoSpace"), with offices at 15375 NE 90th Street, Redmond, WA 98052, and Delphi Information Systems, Inc. a Delaware corporation ("Company"), with offices at 3501 Algonquin Road, Rolling Meadows, IL, 60008. RECITALS This Agreement is entered into with reference to the following facts: A. InfoSpace maintains on certain locations of its Web Sites (as defined below) and makes available to Internet users certain content, resources, archives, indices, catalogs and collections of information (collectively, "Content"). B. Company wishes to have InfoSpace to post and maintain on the InfoSpace Web Sites certain advertising and promotional placements, in exchange for payment to InfoSpace of certain cash consideration and Company Warrants representing shares of the common stock of the Company, as set forth herein and in Exhibit B. C. Company and InfoSpace have entered into related agreements of even dates herewith, including an Internet Infospace Content (World Wide Web Site) Distribution Agreement ("Cobrand Agreement") and Content Provider Agreement ("Content Agreement"). AGREEMENT The parties agree as follows: Section 1. Definitions. As used herein, the following terms have the following defined meanings: "Company Marks" means those Trademarks of Company set forth on Exhibit A hereto and such other Trademarks (if any) as Company may from time to time notify InfoSpace in writing to be "Company Marks" within the meaning of this Agreement. "Company Web Sites" means, collectively, all Web Sites maintained by or on behalf of Company and its affiliates. "Impression" means a user's viewing of any discrete screen of any InfoSpace Web Site on which a Promotional Placement is displayed. "InfoSpace Web Sites" means, collectively: (a) the Web Site the primary home page of which is located at http://www.infospace.com; and (b) other Web Sites maintained by InfoSpace and its affiliates. "Intellectual Property Rights" means any patent, copyright, rights in Trademarks, trade secret rights, moral rights and other intellectual property or proprietary rights arising under the laws of any jurisdiction. "Person" means any natural person, corporation, partnership, limited liability company or other entity. -1- "Promotional Placement" means any banner advertisement, button or other Website-based promotional placement specified on Exhibit B. "Trademarks" means any trademarks, service marks, trade dress, trade names, corporate names, proprietary logos or indicia and other source of business identifiers. "Web Site" means any point of presence maintained on the Internet or on any other public data network. With respect to any Website maintained on the World Wide Web, such Website includes all HTML pages (or similar unit of information presented in any relevant data protocol) that either (a) are identified by the same second-level domain (such as infospace.com) or by the same equivalent level identifier in any relevant address scheme, or (b) contain branding, graphics, navigation or other characteristics such that a user reasonably would conclude that the pages are part of an integrated information or service offering. 2. Certain Rights Granted 2.1 Company Grant. Subject to the terms and conditions of this Agreement, Company hereby grants InfoSpace the right to: (a) post and maintain Promotional Placements on the InfoSpace Web Sites; and (b) use, reproduce, publish, perform and display the Company Marks on the InfoSpace Web Sites in connection with the posting of Promotional Placements and in promotional and marketing materials, content directories and indices, and electronic and printed advertising, publicity, press releases, newsletters and mailings about InfoSpace. Company acknowledges and agrees that InfoSpace may upon written notice to Company delete or refuse to post all or any portions of any Promotional Placements if InfoSpace deems the same to be "unsuitable" (defined as, adult content, alcohol products, tobacco products, violence, obscene, pornographic, libelous, defamatory, infringing of any third party Intellectual Property Rights, invasion of privacy or publicity or highly offensive or immoral) for posting on the InfoSpace Web Sites. In consultation with Company, InfoSpace may alter or modify all or any portion of any Promotional Placements if InfoSpace deems the same to be unsuitable, as defined above, for posting an the InfoSpace Web Sites. 2.2 Approval of Trademark Usage. InfoSpace shall nor use or exploit in any manner any of the Company Marks except in the form delivered by Company in any Promotional Placements or in such other manner and media as Company may consent, which consent shall not be unreasonably withheld or delayed. InfoSpace shall not be deemed to be in breach of this Agreement (including by reason of any failure to deliver any guaranteed Impressions) by reason of any delay in or failure by the Company to timely approve any proposed usage or exploitation of any Company Marks by InfoSpace. InfoSpace acknowledges and agrees that Company may request, upon written notice to InfoSpace, that its Promotional Placements be removed from a Web Site should that Web Site contain content or material deemed unsuitable (as defined above) by Company, and InfoSpace shall use its commercially best efforts to remove the Promotional Placement from such Web Site as soon as possible, but in no event in less than two(2) business days. 2.3 Nonexclusivity. Each party acknowledges and agrees that the rights granted to the other party in this Section 2 are non-exclusive, and that, without limiting the generality of the foregoing, nothing in this Agreement shall be deemed or construed to prohibit either party from participating in similar business arrangements as those described herein including soliciting third party advertisements or other materials, serving advertisements or other materials to third parties' Web Sites, or hosting or permitting third parties to place advertisements on such party's Web Site, whether or not, in each such case, such advertisements are competitive with the products, services or advertisements of the other party. 3. Certain Obligations of the Parties. 3.1 Promotional Placements. Company, in consultation with InfoSpace, shall design and deliver in InfoSpace the Promotional Placements called for by Exhibit B. InfoSpace shall be entitled to -2- reject or require modification of any proposed Promotional Placements if, in its sole discretion, it determines that such Promotional Placements are unsuitable for posting on the InfoSpace Web Sites. During the Term, InfoSpace will post and maintain approved Promotional Placements on the InfoSpace Web Sites. Except as otherwise specified on Exhibit B, the positioning and prominence of all Promotional Placements shall be determined by InfoSpace in its sole discretion. 3.2 Accessibility of Web Sites. Each party will use commercially reasonable efforts to ensure accessibility of its Web Sites in accordance with industry standards. 3.3 Impression Information. InfoSpace shall track and use commercially reasonable efforts to allow the Company to remotely access in electronic form information maintained by InfoSpace concerning the number of Impressions delivered. Within thirty (30) days after the end of each quarter during the Term, InfoSpace shall deliver to Company a report of the Impressions delivered in the preceding quarter. 3.4 Publicity. The parties may work together to issue publicity and general marketing communications concerning their relationship and other mutually agreed-upon matters, provided, however, that neither party shall have any obligation to do so. In addition, neither party shall issue such publicity and general marketing communications concerning their relationship without the prior written consent of the other party (not to be unreasonably withheld or delayed). Neither party shall disclose the terms of this Agreement to any third party other than its outside counsel, auditors, and financial advisors, except as required by law. The parties will agree as to the timing, content and discloser of the initial public announcement concerning the Agreement. 4. Payments. 4.1 Remuneration. a. Dollar Fees: Company will pay InfoSpace the dollar amounts as set forth on Exhibit B. Unless explicitly stated on Exhibit B, all amounts payable Agreement shall be denominated in United States dollars and Company will pay all amounts payable under this Agreement in lawful money of the United States. b. Warrant; Vesting: Company shall grant to InfoSpace a warrant (the "Warrant") to purchase 250,000 shares of the Company's common stock for a price of $15 per share (subject to adjustment as provided in Exhibit C). The Warrant shall vest quarterly commencing on September 30, 1999 and shall have an exercise period of one year commencing one year from the Effective Date. The terms of the Warrant shall be substantially as set forth in the form of warrant attached hereto as Exhibit C. c. Conversion of Monthly Fees: Company shall grant InfoSpace a warrant (the "Conversion Warrant") to purchase shares of Common Stock (subject to adjustment) by the application of some or all of the Monthly Fees and Revenue Share (as defined in Exhibit B) to be paid by Company to InfoSpace pursuant to this Agreement, the Banner Advertising Revenue to be paid by Company to InfoSpace pursuant to the Cobrand Agreement and the Link Revenue Share to be paid by Company to InfoSpace pursuant to the Content Agreement (the Monthly Fees, Revenue Share, Banner Advertising Revenue and Link Revenue Share are referred to herein, collectively, as the "Fees"), provided that InfoSpace shall not be entitled to acquire more than 4.9% shares of Common Stock of the Company on a fully diluted basis not including this Conversion Warrant and the Warrant. The exercise price of the Conversion Warrant (which will be subject to adjustment in accordance with the terms thereof) will be $15 per share for the first year of this Agreement and $20 per share for the second year. InfoSpace shall invoice the Company at the end of each calendar quarter for that quarter's Fees and shall elect whether to take Fees in cash or to use them in exercise the Conversion Warrant at the time it provides Company with such invoice. The terms of the Conversion Warrant shall be substantially as set forth in the form of warrant -3- attached hereto as Exhibit D. InfoSpace shall be entitled to the registration rights set forth in Exhibit E hereto with respect to the shares issued upon exercise of the Warrant and the Conversion Warrant, provided that, as a result of the exercise of the Conversion Warrant and the Warrant, InfoSpace shall not be entitled to acquire an aggregate number of shares which is more than 4.9% of the shares of Common Stock of the Company outstanding on the date hereof (on a fully diluted basis not including the Conversion Warrant and the Warrant). 4.2 Records and Audit; Late Payments. During the Term, InfoSpace shall maintain records of Impressions delivered pursuant to this Agreement. Company **, and upon ** advance notice to InfoSpace, shall have the right once each year during the Term to examine or audit such records in order to verify the figures reported in any quarterly report. In the event that any such audit shall reveal an underdelivery of more than ** of the guaranteed number of Impressions for any quarter, Company shall have the right to conduct an additional audit during the year, and InfoSpace shall be responsible to pay the reasonable cost of an audit which determined the discrepancy of more than **. Any such audit shall be conducted, to the extent possible, in a manner that does not interfere with the ordinary business operations of InfoSpace. 5. Warranties, Indemnification and Limitation of Direct Liability. 5.1 Warranties Each party represents and warrants to the other that: a) it has the full corporate right, power and authority to enter into this Agreement and to perform the acts required of it hereunder; b) its execution of this Agreement and performance of its obligations hereunder, do not and will not violate any agreement to which it is a party or by which it is bound; and c) when executed and delivered, this Agreement will constitute the legal, valid and binding obligation of such party, enforceable against it in accordance with its terms. d) Each party will perform its obligations under this Agreement in a timely manner as contemplated by this Agreement. 5.2 Indemnification. Each party (the "Indemnifying Party") will defend, indemnify and hold harmless the other party (the "Indemnified Party"), and the respective directors, officers; employees agents and its successors and assigns of the Indemnified Party, from and against any and all claims, costs, losses, damages, judgments and expenses (including reasonable attorneys' fees) arising out of or in connection with any third-party claim alleging any breach of such party's representations or warranties or covenants set forth in this Agreement. In addition, Company (as the Indemnifying Party) shall defend, indemnify and hold harmless InfoSpace from and against any and all claims, costs, losses, damages, judgments and expenses (including reasonable attorneys' fees) arising out of or in connection with any third-party claim alleging that any Promotional Placements, any other materials or content provided by Company to InfoSpace, or the Company Web Site, contain any material that adult content, alcohol products, tobacco products, violence obscene, pornographic, libelous defamatory, infringing of any third party Intellectual Property Rights, invasion of privacy or publicity or highly offensive or immoral. Additionally, InfoSpace (as the Indemnifying Party) shall defend, indemnify and hold harmless Company from and against any and all claims, costs, losses, damages, judgments and expenses (including reasonable attorneys' fees) arising out of or in connection with any third-party claim alleging that materials or content (other than Company's) on InfoSpace Web Site, contain any material that adult content, alcoholic products, tobacco products, violence obscene, pornographic, libelous defamatory, infringing of any third party Intellectual Property Rights, invasion of privacy or publicity or highly offensive or immoral. The Indemnified Party agrees that the Indemnifying Party shall have sole and exclusive control over the defense and settlement of any such third party claim. The Indemnified Party shall promptly notify the Indemnifying Party of any such claim of -4- which it becomes aware and shall: (a) at the Indemnifying Party's expense, provide reasonable cooperation to the Indemnifying Party in connection with the defense or settlement of any such claim; and (b) at the Indemnified Party's expense, be entitled to participate in the defense of any such claim. The Indemnifying Party shall not acquiesce to any judgment or enter into any settlement that adversely affects the Indemnified Party's rights or interests without prior written consent of the Indemnified Party. 5.3 Limitation of Liability; Disclaimer. (a) Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. EITHER PARTY'S LIABILITY, EXCEPT FOR CLAIMS RELATING TO INFRINGEMENT OF A PARTY'S INTELLECTUAL PROPERTY RIGHTS (WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE AND NOTWITHSTANDING ANY FAULT, NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED), PRODUCT LIABILITY OR STRICT LIABILITY OF INFOSPACE) UNDER THIS AGREEMENT OR WITH REGARD TO ANY OF THE PRODUCTS OR SERVICES RENDERED BY INFOSPACE UNDER THIS AGREEMENT (INCLUDING ANY SERVERS OR OTHER HARDWARE, SOFTWARE AND ANY OTHER ITEMS USED OR PROVIDED BY INFOSPACE OR ANY THIRD PARTIES IN CONNECTION WITH HOSTING THE CO-BRAND PAGES), THE INFOSPACE WEB SITES AND ANY OTHER ITEMS OR SERVICES FURNISHED UNDER THIS AGREEMENT WILL IN NO EVENT EXCEED THE COMPENSATION PAID BY COMPANY TO INFOSPACE UNDER THIS AGREEMENT. (b) No Additional Warranties. EXCEPT AS SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.), AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS ANY CLAIM IN TORT (INCLUDING NEGLIGENCE). IN EACH CASE, REGARDING THEIR WEB SITES, ANY PRODUCTS OR SERVICES DESCRIBED THEREON. ANY PROMOTIONAL PLACEMENTS, OR ANY OTHER ITEMS OR SERVICES PROVIDED UNDER THIS AGREEMENT, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, COMPANY ACKNOWLEDGES THAT THE INFOSPACE WEB SITES AND THE CONTENT (INCLUDING ANY SERVERS OR OTHER HARDWARE, SOFTWARE AND ANY OTHER ITEMS USED OR PROVIDED BY INFOSPACE OR ANY THIRD PARTIES IN CONNECTION WITH HOSTING THE INFOSPACE WEB SITES OR THE CONTENT OR PERFORMANCE OF ANY SERVICES HEREUNDER) ARE PROVIDED "AS IS" AND THAT INFOSPACE MAKES NO WARRANTY THAT IT WILL CONTINUE TO OPERATE ITS WEB SITES IN THEIR CURRENT FORM, THAT ITS WEB SITES WILL BE ACCESSIBLE WITHOUT INTERRUPTION, THAT THE SITES WILL MEET THE REQUIREMENTS OR EXPECTATIONS OF THE OTHER PARTY, OR THAT THE CONTENT OR ANY OTHER ANY MATERIALS ON ITS WEB SITES OR THE SERVERS AND SOFTWARE THAT MAKES ITS WEB SITES AVAILABLE ARE FREE FROM ERRORS, DEFECTS, DESIGN FLAWS OR OMISSIONS. 6. Term and Termination 6.1 Term. The term of this Agreement is as set forth on Exhibit B. 6.2 Termination. (a) InfoSpace may terminate this Agreement upon not less than 30 days' prior written notice to Company of any material breach of the terms of this Agreement by Company, including Company's failure to pay consideration to InfoSpace as provided herein, provided that Company has not cured such material breach within such thirty (30) day period; (b) Company may terminate this Agreement by prior written notice to Infospace of any material breach of the terms of this Agreement by -5- Infospace, provided that InfoSpace has not cured such material breach within the time period specified in this Agreement, or if no time period is so specified, within thirty (30) days after written notice to InfoSpace of any material breach of the terms of this Agreement by InfoSpace; or (c) if InfoSpace no longer operate its website the primary home page of which is located at http://www.infospace.com. Either party may terminate this Agreement if the other party ceases to conduct business in a normal course, becomes insolvent or is declared bankrupt, merges or becomes amalgamated with another firm, person or corporation which is a competitor of the terminating party. 6.3 Effect of Termination. Upon termination or expiration of the Term for any reason, all rights and obligations of the parties under this Agreement shall be extinguished, except that: (a) payment and remuneration obligations hereunder up to the date of termination shall survive such termination or expiration; and (b) the rights and obligations of the parties under Sections 4.2,, 5, 6, 7 and 8 shall survive such termination or expiration. 7. Intellectual Property. 7.1 Company. As between the parties, Company retains all right, title and interest in and to the Company Web Sites and Promotional Placements (including, without limitation, any and all content, data, URLs, domain names, technology, software, code, user interfaces, "look and feel", Trademarks and other items posted thereon or used in connection or associated therewith; but excluding any Content or other items supplied by InfoSpace) and the Company Marks along with all Intellectual Property Rights associated with any of the foregoing. All goodwill arising out of InfoSpace's use of any of the Company Marks shall inure solely to the benefit of Company. 7.2 InfoSpace. As between the parties, InfoSpace retains all right, title and interest in and to the Content and the InfoSpace Web Sites (including, without limitation, any and all content, data, URLs, domain names, technology, software, code, user interfaces, "look and feel", Trademarks and other items posted thereon or used in connection or associated therewith; but excluding any items supplied by Company) and the InfoSpace Marks, along with all Intellectual Property Rights associated with any of the foregoing. All goodwill arising out of Company's use of any of the InfoSpace Marks shall inure solely to the benefit of InfoSpace. 7.3 Other Trademarks. InfoSpace shall not register or attempt to register any of the Company Marks or any Trademarks which Company reasonably deems to be confusingly similar to any of the Company Marks. Company shall not register or attempt to register any of the InfoSpace Marks or any Trademarks which InfoSpace reasonably deems to be confusingly similar to any of the InfoSpace Marks. 7.4 Further Assurances. Each party shall take, at the other party's expense, such action (including, without limitation, execution of affidavits or other documents) as the other party may reasonably request to effect, perfect or confirm such other party's ownership interests and other rights as set forth above in this Section 7. 8. General Provisions. 8.1 Confidentiality. Each party (the "Receiving Party") undertakes to retain in confidence the terms of this Agreement and all other non-public information and know-how of the other party disclosed or acquired by the Receiving Party pursuant to or in connection with this Agreement which is either designated as proprietary and/or confidential or by the nature of the circumstances surrounding disclosure, ought in good faith to be treated as proprietary and/or confidential ("Confidential Information"); provided that each party may disclose the terms and conditions of this Agreement to its immediate legal and financial consultants in the ordinary course of its business. Each party agrees to use commercially reasonable efforts to protect Confidential Information of the other party, and in any event, to take precautions at least as great as those taken to protect its own confidential information of a similar nature. Both parties acknowledge that the terms of this Agreement are Confidential Information. The foregoing restrictions shall not apply to any information that: (a) was known by the Receiving Party prior to disclosure thereof by the other party. -6- (b) was in or entered the public domain through no fault of the Receiving Party; (c) is disclosed to the Receiving Party by a third party legally entitled to make such disclosure without violation of any obligation of confidentiality; (d) is required to be disclosed by applicable laws or regulations (but in such event, only to the extent required to be disclosed and after notice is given to the other party party with an opportunity to object); or (e) is independently developed by the Receiving Party without reference to any Confidential Information of the other party. Upon request of the other party, or an any event upon any termination or expiration of the Term, each party shall return to the other all materials, in any medium, which contain, embody, reflect or reference all or any part of any Confidential information of the other party. Each party acknowledges that breach of this provision by it would result in irreparable harm to the other party, for which money damages would be an insufficient remedy, and therefore that the other party shall be entitled to seek injunctive relief to enforce the provisions of this Section 8.1. 8.2 Independent Contractors. Company and InfoSpace are independent contractors under this Agreement, and nothing herein shall be construed to create a partnership, joint venture, franchise or agency relationship between Company and InfoSpace. Neither party has any authority to enter into agreements of any kind on behalf of the other party. 8.3 Assignment. Neither party may assign this Agreement or any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other party, not to be unreasonably withheld; except that either party may, without the other party's consent, assign this Agreement or any of its rights or delegate any of its duties under this Agreement: (a) to any affiliate of such party; or (b) to any purchaser of all or substantially all of such party's assets or to any successor by way of merger, consolidation or similar transaction. Subject to the foregoing, this Agreement will be binding upon, enforceable by, and inure to the benefit of the parties and their respective successors and assigns. 8.4 Choice or Law; Forum Selection. This Agreement shall be governed by, and construed in accordance with, the laws of the jurisdiction of the defendant without reference to its choice of law rules. 8.5 Nonwaiver. No waiver of any breach of any provision of this Agreement shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provisions hereof, and no waiver shall be effective unless made in writing and signed by an authorized representative of the waiving party. 8.6 Force Majeure. Neither party shall be deemed to be in default of or to have breached any provision of this Agreement as a result of any delay, failure in performance or interruption of service, resulting directly or indirectly from acts of God, acts of civil or military authorities, civil disturbances, wars, strikes or other labor disputes, fires, transportation contingencies, interruptions in telecommunications or Internet services or network provider services, failure of equipment and/or software, other catastrophes or any other occurrences which are beyond such party's reasonable control. 8.7 Notices. Any notice or other communication required or permitted to be given hereunder shall be given in writing and delivered in person, mailed via confirmed facsimile or e-mail, or delivered by recognized courier service, properly addressed and stamped with the required postage, to the individual signing this Agreement on behalf of the applicable party at its address specified in the opening paragraph of the agreement and shall be deemed effective upon receipt. Either party may from time to time change the individual to receive notices or its address by giving the other party notice of the change in accordance with this section. In addition, a copy of any notice sent to InfoSpace or Company, as applicable, shall also be sent to the following address: InfoSpace.com, Inc. Delphi Information Systems, Inc. 15375 NE 90th Street 3501 Algonquin Road Redmond, WA 98052 Rolling Meadows, IL 60008 Fax: (425) 883-4846 Fax: 847/590-8280 Attention: General Counsel Attention: Legal Department -7- 8.8 Integration. This Agreement contains the entire understanding of the parties hereto with respect to the transactions and matters contemplated hereby, supersedes all previous agreements or negotiations between InfoSpace and Company concerning the subject matter hereof, and cannot be amended except by a writing signed by both parties. 8.9 Savings. In the event any provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, the remaining provisions shall remain in full force and effect. If any provision of this Agreement shall, for any reason, be determined by a court of competent jurisdiction to be excessively broad or unreasonable as to scope or subject, such provision shall be enforced to the extent necessary to be reasonable under the circumstances and consistent with applicable law while reflecting as closely as possible the intent of the parties as expressed therein. 8.10 Counterparts; Electronic Signature. In the event any provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, the remaining provisions shall remain in full force and effect. If any provision of this Agreement shall, for any reason, be determined by a court of competent jurisdiction to be excessively broad or unreasonable as to scope or subject, such provision shall be enforced to the extent necessary to be reasonable under the circumstances and consistent with applicable law while reflecting as closely as possible the intent of the parties as expressed herein. -8- IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the Effective Date. Delphi Information Services InfoSpace.com, Inc. - --------------------------- ------------------- ("Company") ("InfoSpace") - ----------- ------------- By (signature) /s/ Robin Raina By (signature) /s/ Bernee D.L. Strom - ---------------------------------- ------------------------------------ Name ROBIN RAINA Name BERNEE D.L. STROM - ---------------------------------- ------------------------------------ Title PRESIDENT Title PRESIDENT & CEO - ---------------------------------- ------------------------------------ EXHIBIT A TRADEMARKS Company Marks - ------------- ebix ebix.com ebix.com - The Electronic Brokers & Insurers Express ebix.mall ebix.mall.com ebix.link ebix.link.com ebix.marketplace Internet Insurance Exchange (as supplemented from time to time by Company) -10- EXHIBIT B 1. Promotional Placements. Subject to Section 3.1, Company will design and deliver Promotional Placements, and InfoSpace shall integrate such Promotional Placements which shall point to the Company Web Sites in the following areas of the InfoSpace Web Sites: a. Insurance Center. Promotions shall be placed within the "More Insurance Services" area within InfoSpace's Insurance Center and shall include links for auto, home, health and life insurance. InfoSpace shall place a rotating banner advertisement on the Insurance Center home page and a rotating button within the "Preferred Services" area within the Insurance Center. b. InfoSpace Financial Center. InfoSpace shall provide a link within the InfoSpace Finance Channel to co-branded content sponsored and provided by Company. Such content will contain links to Company Web Sites. c. Merchant.com. InfoSpace shall place a rotating banner advertisement within the "Top Picks" area of Merchant.com. d. Business Services. Promotions shall be placed within the "Resources for Business Professionals" area within InfoSpace's Business Services and shall include links for auto, home, health and life insurance. InfoSpace shall place a rotating banner advertisement on the Business Services home page and a rotating button within the "Preferred Services" area within the Business Services. e. Yellow Pages. Promotions shall be placed within the "Insurance" category within InfoSpace's Yellow Pages. InfoSpace shall place a rotating banner advertisement between the "Our Sponsors" and the Tab section of the "Insurance" category. f. Placements of Promotions. InfoSpace shall place Promotional Placements provided by Company in other areas on the InfoSpace Web Sites at its sole discretion. 2. Term. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated as provided in Section 6 or extended by the parties, shall end upon the two (2) year anniversary of this Agreement (the "Term"). 3. Placement Fee. Subject to Section 4.1, the Company will pay to InfoSpace the following placement fees in consideration of InfoSpace's posting of Promotional Placements and this Agreement: a. Revenue Share. Company shall pay to InfoSpace 20% of all revenue ("Revenue Share") received by Company as a result of user traffic to the Company Web Sites via any Promotional Placement on any InfoSpace Web Site. b. Minimum Fee. Company shall pay InfoSpace a minimum $25,000 per month ("Monthly Fee") for the term of this Agreement in consideration for InfoSpace's placement and maintenance of Promotional Placements pursuant to this Agreement. If the Revenue Share -11- received by InfoSpace is greater than $25,000 for any given month, then the Minimum Fee shall be waived for that month. c. Warrant. In consideration of InfoSpace's continuous posting of Promotional Placements throughout the Term of this Agreement, the Company shall within 30 days of the date of this Agreement grant to InfoSpace the Warrant, which shall vest quarterly commencing on September 30, 1999 and shall have an exercise period of one year commencing one year from the Effective Date. The terms of the Warrant shall be substantially as set forth in the form of warrant attached hereto as Exhibit C. 4. Guaranteed Impressions. Subject to Paragraph 5 below, InfoSpace shall deliver at least ** Impressions per month during the Term. 5. Guarantees. In the event that any guarantee or minimum Impressions to be delivered is set forth in Paragraph 4 above, Company's **. -12- EXHIBIT E REGISTRATION RIGHTS AGREEMENT SECTION 1. Registration Rights 1.1 Certain Definitions Capitalized terms used herein, but not otherwise defined shall have the meanings set forth below, or if there is no such definition below, as defined in the Agreement to which this is an Exhibit: "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Holder" shall mean the Holder and any person holding Registrable Securities to whom the rights under this Agreement have been transferred in accordance with Section 1.13 hereof. "Initial Public Offering" shall mean the first public offering of Common Stock by the Company to the public pursuant to a registration statement filed with, and declared effective by, the Commission under the Securities Act. The terms "register", "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registration Expenses" shall mean all expenses incurred by the Company in complying with Sections 1.2 and 1.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). "Registrable Securities" means the Common Stock issuable upon exercise of the Warrant and/or the Conversion Warrant ("Warrant Stock") or other securities issued or issuable with respect to Warrant Stock upon any stock split, stock dividend, recapitalization or similar event; provided, however, that Registrable Securities shall not be deemed to include any securities after such securities have been registered under the Securities Act and sold pursuant to such registration or any shares sold without registration under Rule 144, pursuant to any other exemption from registration under the Securities Act to a Person who is free to resell such securities without registration under the Securities Act; and provided, further, Registrable Securities shall not include -1- any securities which are eligible to be sold without registration under the Securities Act in compliance with subsection (k) of Rule 144. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Selling Expenses" shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders and all fees and disbursements of counsel for the Holders (as limited by Section 1.4). 1.2 Company Registration (a) Notice of Registration. If at any time or from time to time the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than (x) a registration relating solely to employee benefit plans or (y) a registration relating solely to a Commission Rule 145 transaction, the Company will: (i) promptly give to each Holder written notice thereof, and (ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests made within fifteen (15) days after receipt of such written notice from the Company by any Holder. (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holder as a part of the written notice given pursuant to Section 1.2(a)(i). In such event, the right of any Holder to registration pursuant to Section 1.2 shall he conditioned upon such Holder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting, to the extent requested, to the extent provided herein. The Holder shall (together with the Company and the other holders distributing their securities through such underwriting (the "Other Participating Holders")) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 1.2, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the number of Registrable Securities to be included in the registration and underwriting, on a pro rata basis based on the total number of securities (including, without limitation, Registrable Securities) requested to be registered pursuant to registration rights granted to the Holder and the Other Participating Holders by the Company; provided, however that the right of the underwriters to exclude shares (including Registrable Securities) from the registration and underwriting as described above shall be restricted so that the number of Registrable Securities included in any such registration is not reduced below twenty-five percent (25%) of the shares included in the registration. Notwithstanding any other provision of this Section 1.2. if the managing underwriter of a proposed public offering shall advise the Company in writing that, in its opinion, the distribution of the shares of Registrable Securities requested to be included in the registration concurrently with the securities being registered by the Company or the Other Participating Holder would adversely affect the distribution of such securities by the Company or the Other Participating Holders, then the Holders of Registrable Securities, the Other Participating Holders (other than any Other Participating Holder who initially requested such registration, any Holder of Registrable Securities participating in such registration pursuant to Section 12 hereof) and the Company shall reduce the amount of securities each intended to distribute through such offering on a pro rata basis. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to the Holder or the Other Participating Holders to the nearest one hundred (100) shares. If the Holder or any Other Participating Holder disapproves of the terms of any such underwriting, it, he or she may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to one hundred and eighty (180) days after the effective date of the registration statement relating thereto. (c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.2 prior to the effectiveness of such registration, whether or not any Holder has elected to include securities in such registration. 1.3 Registration on Form S-3 If any Holder of Registrable Securities requests that the Company file a registration statement on Form S-3 (or any successor form to Form S-3) for a public offering of Registrable Securities, the reasonably anticipated aggregate price to the public of which, net of underwriting discounts and commissions, would exceed $1,000,000, and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall use its best efforts to cause such Registrable Securities to be registered for the offering on such form. The Company will (i) promptly give written notice of the proposed registration to all other Holders and (ii) as soon as practicable use its best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within fifteen (15) days after receipt of such written notice from the Company. In no event shall the Company be required to take any action to keep any such registration statement effective for more than ninety (90) days. The substantive provisions of Section 1.2(b) shall be applicable to each registration initiated under this Section 1.2. (b) Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 1.3: (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (ii) during the period starting with the date sixty (60) days prior to the Company's estimated date of filing of, and ending on the date six (6) months immediately following the effective date of a registration statement (other than with respect to a registration statement relating to a Rule 145 transaction, an offering solely to employees or any other registration which is not appropriate for the registration of Registrable Securities), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; (iii) in any twelve month period after the Company has effected a registration pursuant to this Section 1.3 in such calendar year arid each such registration has been declared or ordered effective and has remained effective for the period specified in Section 1.5(a) of this Agreement; and (iv) if the Company shall furnish to such Holder a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company or its stockholders for registration statements to be filed in the near future, then the Company's obligation to use its best efforts to file a registration Statement shall be deferred for a period not to exceed one hundred twenty (120) days from the receipt of the request to file such registration by such Holder or Holders; provided, however, that the Company may not utilize this right more than twice in any twelve (12) month period. 1.4 Expenses of Registration All Registration Expenses incurred in connection with any registration pursuant to Section 1.2 or Section 1.3, and, the reasonable cost of one special legal counsel to all holders of securities of the Company exercising registration rights in any such registration shall be borne by Company If a registration proceeding is begun upon the request of the Holder pursuant to Section 1.3 but such request is subsequently withdrawn, then the Holder may either (i) bear all Registration Expenses of such proceeding, in which case the Company shall be deemed not to have effected a registration pursuant to Section 1.3 of this Exhibit, or (ii) require the Company to bear all Registration Expenses of such proceeding, in which case the Company shall be deemed to have effected a registration pursuant to Section 1.3 of this Exhibit. The preceding sentence shall not apply if, at the time of such withdrawal, the Holder has learned of a material adverse change in the condition, business or prospects of the Company from that known to the holder at the time of their request. Unless otherwise stated, all other Selling Expenses relating to securities registered on behalf of the Holder shall be borne by the Holder. 1.5 Registration Procedures In the case of each registration, qualification or compliance effected by the Company pursuant to this Section 1, the Company will: (a) Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective until the distribution described in the registration statement has been completed, but in no event longer than ninety (90) days; and (b) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. (c) Furnish to the Holders participating in such registration and to the underwriters, if any, of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities. (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act. (e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. (f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or other trading market on which similar securities issued by the Company are then listed. (h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. (i) Use its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 1, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities arc being sold through underwriters, (i) an opinion. dated such date, of the counsel representing the Company for the purposes of such registration, in form substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters and to the Holder requesting registration of Registrable Securities. 1.6 Indemnification (a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Section 1, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all actual out-of-pocket expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in any litigation or in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, preliminary prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation or any alleged violation by the Company of the Securities Act or the Exchange Act or any state securities law, or of any rule or regulation promulgated under any of the foregoing applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other actual out-of-pocket expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 1.6(a) shall not apply to amounts paid in settlement of any such matter if the settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld; and provided further that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by such Holder, controlling person or underwriter specifically for use therein. (b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all actual out-of-pocket expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation. commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein, in light of the circumstances in which they were made, or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, persons, underwriters or control persons for any legal and any other actual out-of-pocket expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, as such expenses are incurred, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder specifically for use therein; provided, however, that the indemnity agreement contained in this Section 1.6(b) shall not apply to amounts paid in settlement of any matter if the settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided, further, that the maximum liability of each selling Holder under this Section 1.6(b) shall be equal to the net proceeds to such selling Holder as a result of such registration and offering. (c) Each party entitled to indemnification under this Section 1.6 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense; provided, however, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses of such counsel to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. The failure of any indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 1.6 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (not to be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. (d) If the indemnification provided for in this Section 1.6 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid of payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations; provided, however, that, in no event shall any contribution by a Holder under this subsection 1.6(d) exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwriting public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. (f) The obligations of the Company and Holders under this Section 1.6 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise. Rule 144 Reporting With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Shares to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act so long as the Company is subject to the reporting requirements of the Exchange Act; and b) So long as the Holder owns any Registrable Securities, to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule, and of the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration. 1.8 Transfer of Registration Rights The rights to cause the Company to register securities granted to the Holder under Sections 1.2 and 1.3 may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by the Holder (together with any affiliate); provided, however, that (a) such transfer may otherwise be effected in accordance with applicable securities laws and the terms of the Warrant and/or the Conversion Warrant, as applicable, (b) notice of such assignment is given to the Company, (c) such transferee or assignee (i) is a wholly-owned subsidiary or constituent partner (including limited partners, retired partners, spouses and ancestors, lineal descendants and siblings of such partners or spouses who acquire Registrable Securities by gift, will or intestate succession) of the Holder, or (ii) acquires from the Holder at least 10% of the Holder's Registrable Securities and (d) agrees to be bound by the terms and conditions of this Exhibit E. 1.9 Market Standoff If the Company registers shares of Common Stock (or other securities of the Company) for sale in a firm underwritten public offering, upon notice thereof to each Holder by the Company, as required by the underwriters in such offering, each Holder of Registrable Securities shall not sell or otherwise transfer of dispose of any shares of Common Stock (or other equity securities of the Company) held by such Holder (other than those included in such registration) for a period specified by the representative of the underwriters nor to exceed one hundred and eighty (180) days following the effective date of such registration statement, provided, that all officers and directors of the Company enter into similar agreements. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities of the Company) subject to the foregoing restriction until the end of the applicable period. 1.10 Termination of Rights The rights of any particular Holder to cause the Company to register securities under Sections 1.2 and 1.3 shall terminate with respect to such Holder on the earlier of (a) the third anniversary of the date of the Agreement and (b) such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all such Holders securities during a three (3)-month period without registration. EX-10.26 11 ex-10_26.txt EXHIBIT 10.26 Exhibit 10.26 Exhibit D NEITHER THE SECURITY EVIDENCED BY THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE LAW, AND NO INTEREST HEREIN OR THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (B) THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF SAID SECURITIES (REASONABLY CONCURRED WITH BY LEGAL COUNSEL FOR THE COMPANY) STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION. FURTHERMORE, THIS WARRANT MAY NOT, UNDER ANY CIRCUMSTANCES, BE TRANSFERRED BY THE HOLDER HEREOF WITHOUT THE PRIOR WRITTEN CONSENT OF THE ISSUER, SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD, AND ANY SUCH TRANSFER IN CONTRAVENTION OF THE FOREGOING SHALL BE NULL AND VOID. No. _____ ISSUED: August 31, 1999 VOID AFTER: August 31, 2001 DELPHI INFORMATION SYSTEMS, INC. WARRANT THIS IS TO CERTIFY that, subject to the terms and conditions hereof, InfoSpace.com, Inc. (the "Holder") or assigns is entitled, at any time on or after the date hereof, but not later than 5:00 p.m. Chicago time, on August 31, 2001 (the "Exercise Period"), subject to the provisions hereof, to purchase in whole or from time to time in part up to 4.9% of the shares of Common Stock of the Company outstanding on the date hereof (on a fully diluted basis including the Conversion Warrant and the Warrant, as defined in the Promotion Agreement), fully paid and nonassessable shares of Common Stock, $.10 par value per share, of Delphi Information Systems, Inc., a Delaware corporation (the "Company"), at a price of $15.00 per share for the period from the date hereof until August 31, 2000 and, thereafter, $20.00 per share between August 31, 2000 and August 31, 2001 (the "Exercise Price") (such number of shares subject to this Warrant and such Exercise Price being subject to adjustment as provided in Section 5 hereof). As used herein, the term "Warrant Stock" shall mean the Company's Common Stock. This Warrant is being issued pursuant to an Internet Promotion Agreement dated as of August 31, 1999 between the Holder and the Company (the "Promotion Agreement"). All capitalized terms used but nor otherwise defined herein shall have the meaning ascribed to such terms in the Promotion Agreement. Notwithstanding the foregoing, in the event that the Promotion Agreement is terminated for any reason whatsoever, this Warrant shall terminate in its entirety. 1. Exercise This Warrant may be exercised by the Holder simultaneously with the delivery of its quarterly invoice for Fees by delivering to the Company simultaneously with such invoice, at the address of the Company set forth in Section 17, (a) the form of Exercise Notice attached hereto duly completed and executed by the Holder and (b) this Warrant certificate. Upon any such exercise, the Holder will be deemed to have converted an amount of Fees equal to the Exercise Price multiplied by the number of shares for which this Warrant is being exercised (the "Purchase Price"); provided, that the Purchase Price may not exceed the amount of unpaid fees indicated on such invoice. The Holder will be deemed to be the holder of record of the shares of Common Stock as to which the Warrant was exercised in accordance with this Warrant, effective at the close of business, Chicago time, on the date such exercise is completed and all documents specified above are delivered to the Company, and the Fees converted into Warrant Shares shall be deemed to have been irrevocably paid in full as of such time. 2. Delivery of Stock Certificate Within twenty days after the exercise of this Warrant (in full or in part), the Company at its expense shall issue in the name of and deliver to the Holder (a) a certificate or certificates for the number of fully paid and nonassessable shares of Warrant Stock to which the Holder shall be entitled upon such exercise and (b) if applicable, a new Warrant of like tenor to purchase up to that number of shares of Warrant Stock, if any, as to which this Warrant shall not have been previously exercised by the Holder or repurchased by the Company. 3. Covenants as to Warrant Stock The Company covenants and agrees that the Company will at all times have authorized and reserved a sufficient number of shares of Warrant Stock to provide for the exercise of the rights represented by this Warrant. The Company further covenants that all shares of Warrant Stock which may be issued upon the exercise of the rights represented by this Warrant, will, upon issuance, be validly issued, fully paid and non-assessable and free from all taxes, liens and charges solely with respect to the issuance thereof. The Company further covenants and agrees that the Company will from time to time take all such action as may be requisite to assure that the stated or par value per share of Warrant Stock is at all times equal to or less than the then effective Exercise Price per share of Warrant Stock issuable upon exercise of this Warrant. If and so long as the Common Stock issuable upon the exercise of the rights represented by this Warrant is listed on any national securities exchange or quotation system, the Company will, if permitted by the rules of such exchange or quotation system, use its best efforts to list and keep listed on such exchange or quotation system, upon official notice of issuance, all shares of such capital stock. 4. Termination Upon Reorganization Simultaneous with the closing of a merger, consolidation, acquisition of all or substantially all of the assets or stock, of the Company by another entity (the "Surviving Entity") as a result of which the stockholders of the Company will own less than 50% of the voting capital stock of the surviving entity or the entity that controls such surviving entity immediately after the transaction or, -2- in the case of a sale of assets, the Company will own after the transaction less than 50% of the assets owned by the Company prior to the transaction (collectively, a "Reorganization") prior to the expiration of the Exercise Period, as a result of which the stockholders of the Company receive cash, stock or other property in respect of their shares of Warrant Stock, this Warrant shall be canceled and all rights granted hereunder shall terminate; provided, however, that (a) the Company shall have delivered to the Holder notice of the Reorganization no less than ten (10) business days before the date scheduled for closing of the Reorganization, and (b) at the closing of such Reorganization this Warrant will be exchanged for a warrant to purchase such kind and number of shares of capital stock or other securities or property of the Company or the Surviving Entity to which the Holder would have been entitled if it had held the Warrant Stock issuable upon the exercise hereof immediately prior to such Reorganization, which warrant shall have the same terms and conditions hereof. 5. Adjustments for Certain Issuances 5.1 Stock Splits and Reverse Stock Splits If the Company shall issue any shares of Warrant Stock as a stock dividend or subdivide the number of outstanding shares of Warrant Stock into a. greater number of shares, then, in either such case, the Exercise Price in effect before such dividend or subdivision shall be proportionately reduced and the number of shares of Warrant Stock at that time purchasable pursuant to this Warrant shall be proportionately increased; and, conversely, if the Company shall reduce the number of outstanding shares of Warrant Stock by combining such shares into a smaller number of shares, then the Exercise Price in effect before such combination shall be proportionately increased and the number of shares of Warrant Stock at that time purchasable pursuant to this Warrant shall be proportionately decreased. Upon each adjustment in the Exercise Price pursuant to this Section 5, the number of shares of Warrant Stock purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying such number of shares purchasable immediately prior to such adjustment in the Exercise Price by a fraction, the numerator of which shall be the Exercise Price immediately prior to such adjustment and the denominator of which shall be the Exercise Price immediately thereafter. The Holder shall be entitled to the same notice and information regarding such dividend or subdivision as is furnished to holders of Warrant Stock, which notice shall be sent to the Holder no later than the date such notice is sent to all holders of Warrant Stock. 5.2 Other Dividends and Distributions In case the Company shall take a record of the holders of its Warrant Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them in receive any dividend or other distribution other than as described in Section 5.1, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, then the Company will mail or cause to be mailed to the Holder a notice specifying the date on which a record is to be taken for the purpose of such dividend, distribution or right (the "Record Date"), and stating the amount and character of such dividend, distribution or right. Such notice shall be mailed at least 5 days prior to the Record Date therein specified. -3- 6. Fractional Shares No fractional shares shall be issued upon the exercise of this Warrant. In lieu of fractional shares, the Company shall pay the Holder a sum in cash equal to the fair market value of the fractional shares (as determined under paragraph 1.3 above) on the date of exercise. 7. Restrictions on Transfer This Warrant may not be transferred by the Holder without the prior written consent of the Company, which consent shall not be unreasonably withheld. Any transfer of this Warrant in contravention of the foregoing shall be null and void. In addition, neither this Warrant nor any securities purchased upon exercise of this Warrant may be transferred unless (a) such transfer is registered under the Securities Act of 1933, as amended (the "Securities Act"), and any applicable state securities or blue sky laws, (b) the Company has received a legal opinion reasonably satisfactory to the Company to the effect that the transfer is exempt from the prospectus delivery and registration requirements of the Securities Act and any applicable state securities or blue sky laws, or (c) the Company otherwise satisfies itself that such transfer is exempt from registration. 8. Legend A legend setting forth or referring to the above restrictions shall be placed on this Warrant, any replacement hereof and any certificate representing a security issued pursuant to the exercise hereof, and a stop transfer restriction or order shall be placed on the books of the Company and with any transfer agent until such securities may be legally sold or otherwise transferred; provided, however, that such legend shall not be required and a stop transfer restriction order shall not be placed if (i) in the opinion of counsel to the Holder (reasonably concurred with by counsel to the Company) registration of any future transfer is not required by the applicable provisions of the Securities Act or (ii) the Company shall have waived the requirements of such legends. 9. Holder its Owner Subject to the terms of Section 7, the Company may deem and treat the Holder of this Warrant as the absolute owner hereof for all purposes regardless of any notice to the contrary. 10. Warrantholder Rights 10.1 Registration Rights in Connection with Warrant Stock Upon exercise of all or part of this Warrant, the holder of the Warrant Stock shall be entitled to the registration rights with respect to the Warrant Stock set forth in Exhibit E of the Promotion Agreement. 10.2 No Rights As a Stockholder Other than as set forth in Section 10.1 above, this Warrant shall not entitle the Holder to any voting rights or any other rights as a stockholder of the Company or to any other rights whatsoever except the rights stated herein; and except as otherwise provided herein, no dividend or interest shall -4- be payable or shall accrue in respect of this Warrant or the Warrant Stock purchasable hereunder unless, until and to the extent that this Warrant shall be exercised. 11. Construction The validity and interpretation of the terms and provisions of this Warrant shall be governed by the laws of the State of Delaware. The descriptive headings of the several sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions thereof. 12. Expiration This Warrant shall be void and all rights represented thereby shall cease unless exercised during the Exercise Period. All restrictions set forth herein on the shares of capital stock issued upon exercise of any rights hereunder shall survive such exercise and expiration of the rights granted hereunder. 13. Exchange of Warrant This Warrant is exchangeable upon the surrender hereof by the Holder at the office of the Company for new Warrants of like tenor representing in the aggregate the rights to subscribe for and purchase the number of shares which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by the Holder at the time of such surrender. 14. Lost Warrant Certificate If this Warrant is lost, stolen, mutilated or destroyed, the Company shall, upon request in writing from the Holder and subject to compliance by Holder with the following sentence, issue a new Warrant of like denomination, tenor and date as this Warrant, subject to the Company's right to require the Holder to give the Company a bond or other satisfactory security sufficient to indemnify the Company against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft, mutilation or destruction of this Warrant or the issuance of such new Warrant. The Holder shall reimburse the Company for any and all expenses and costs incurred by the Company in connection with issuing a new Warrant under this Section. 15. Waivers and Amendments This Warrant or any provision hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. 16. Successors and Assigns. This Warrant shall be binding upon the Company and inure to the benefit of InfoSpace.com and its successors and assigns. -5- 17. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be delivered by personal delivery, reputable overnight courier service, telecopier or mailed by United States mail, first-class postage prepaid, or by registered or certified mail with return receipt requested, addressed as follows: If to the Holder: InfoSpace.com, Inc. 15375 N.E. 90th Street Redmond, WA 98052 Fax: (425) 883-4846 Attention: General Counsel If to the Company: Delphi Information Systems, Inc. 3501 Algonquin Road Suite 500 Rolling Meadows, Illinois 60008 Attention: Chief Financial Officer With copies to: Delphi Information Systems, Inc. Law Department Each of the foregoing parties shall be entitled to specify a different address by giving five days' advance written notice as aforesaid to the other parties. All such notices and communications shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery and (ii) in the case of mailing, on the third business day following the date of such mailing. 18. Investment Intent By accepting this Warrant, the Holder represents that it is acquiring this Warrant (and upon exercise hereof will acquire any Warrant Stock) for investment and not with a view to, or for sale in connection with, any distribution thereof. Furthermore, the Company reserves the right, in connection with the exercise hereof, to require the Holder hereof to make appropriate representations and warranties regarding their status as an accredited investor and their investment intent, as the Company (in consultation with its counsel) determines to be necessary or appropriate. -6- IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. DELPHI INFORMATION SERVICES, INC. By: /s/ Richard J. Baum ------------------------------------- Its: CFO ------------------------------------ ACCEPTED AND AGREED: InfoSpace.com, Inc. By: /s/ Bernee D.L. Strom -------------------------------- Its: President & CEO ------------------------------- Date: 8/31/97 ------------------------------ NOTICE OF EXERCISE TO DELPHI INFORMATION SYSTEMS, INC. 1. The undersigned hereby elects to purchase _____________ shares of Common Stock of Delphi Information Systems, Inc. pursuant to the terms of the attached Warrant. 2. The undersigned elects to exercise the attached Warrant by the conversion of $ _____ of the outstanding Fee reflected on the attached invoice. 3. Please issue a certificate or certificates representing said shares of Warrant Stock in the name of the undersigned or in such other name as is specified below: ------------------------------------------ (Name) ------------------------------------------ ------------------------------------------ (Address) 4. The undersigned hereby agrees with and represents to the Company that said shares of common stock are acquired for investment and not with a view to, or for sale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended, and agrees that the exercise of the Warrant and the issuance and transfer of the common stock to be purchased are subject to Section 7 of the Warrant. Dated: ------------- ------------------------------------ Holder By: --------------------------------- Its: --------------------------------- EX-10.27 12 ex-10_27.txt EXHIBIT 10.27 Exhibit 10.27 Exhibit C NEITHER THE SECURITY EVIDENCED BY THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE LAW, AND NO INTEREST HEREIN OR THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (B) TILE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF SAID SECURITIES (REASONABLY CONCURRED WITH BY LEGAL COUNSEL FOR THE COMPANY) STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION. No. ______ ISSUED: August 31, 1999 VOID AFTER: August 31, 2001 DELPHI INFORMATION SYSTEMS, INC. WARRANT THIS IS TO CERTIFY that, subject to the terms and conditions hereof, InfoSpace.com, Inc. (the "Holder") or assigns is entitled, at any time on or after August 31, 2000 but not later than 5:00 p.m., Seattle time, on August 31, 2001 (the "Exercise Period"), subject to the provisions hereof, to purchase in whole or from time to time in part up to 250,000, fully paid and nonassessable shares of Common Stock, $.10 par value per share, of Delphi Information Systems, Inc., a Delaware corporation (the "Company"), at a price of $15.00 per share for the period beginning the date hereof until August 31, 2000, and, thereafter, $20.00 per share between August 31, 2000 until August 31, 2001 (the "Exercise Price") (such number of shares subject to this Warrant and such Exercise Price being subject to adjustment as provided herein). As used herein, the term "Warrant Stock" shall mean the Company's Common Stock. This Warrant is being issued pursuant to an Internet Promotion Agreement dated as of August 31, 1999 between the Holder and the Company (the "Promotion Agreement"). All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Promotion Agreement. 1. Exercise 1.1 Warrant Stock Eligible to be Purchased 1.1.1 Vesting of Warrants Subject to the provisions of Section 1.1.2, the right to purchase Warrant Stock shall vest according to the following schedule (each date upon which such shares vest being referred to herein as a "Vesting Date"): Number of Shares or Warrant Stock Eligible to be Purchased Vesting Dare (the "Eligible Shares") - -------------------------------------------------------------------------------- September 30, 1999 62,500 - -------------------------------------------------------------------------------- December 31, 1999 62,500 - -------------------------------------------------------------------------------- March 31, 2000 125,000 - -------------------------------------------------------------------------------- 1.1.2 Condition to Vesting On each Vesting Date, if Holder has failed to post Promotional Placements pursuant to the terms of the Promotion Agreement, then the Eligible Shares that would otherwise vest on such Vesting Date shall not vest as of such date and shall not be eligible to be purchased pursuant to this Warrant. 1.1.3 Termination of Vesting; Accelerated Vesting In the event that the Promotion Agreement is terminated for any reason other than as a result of a material breach by the Company, then all future vesting shall terminate as of the date of such termination, and any shares of Warrant Stock that are unvested on such date shall not be eligible to be purchased pursuant to this Warrant. In the event that InfoSpace.com terminates the Promotion Agreement due to a material breach by the Company that is not cured as provided in Section 6.2 of the Promotion Agreement, then this Warrant shall vest in full upon such termination and all shares of Warrant Stock shall become Eligible Shares. In the event that the Company terminates the Promotion Agreement due to a material breach by InfoSpace.com then this Warrant shall terminate immediately, and InfoSpace.com shall forfeit the right to purchase any additional shares pursuant hereto, whether or not such shares are Eligible Shares as of the date of such termination. 1.2 Procedure for Exercise Subject to the foregoing, this Warrant may be exercised by the Holder, as to those shares of Warrant Stock for which this Warrant is then exercisable as determined in accordance with Section 1.1, at any time during the Exercise Period in whole or part by delivering to the Company, at the address of the Company set forth in Section 17, (a) the form of Exercise Notice attached hereto duly completed and executed by the Holder, (b) this Warrant certificate, and (c) cash or a bank cashier's check payable to the Company in the amount of the Exercise Price multiplied by the number of shares for which this Warrant is being exercised (the "Purchase Price"). The Holder will be deemed to be the holder of record of the shares of Common Stock as to which the Warrant was exercised in accordance with this Warrant, effective at the close of business, Seattle time, on the date such exercise is completed and all documents specified above are delivered to the Company. -2- 1.3 Net Exercise Notwithstanding the payment provisions set forth above, the Holder may elect to exercise this Warrant by converting this Warrant into shares of Warrant Stock as provided in this Section 1.3, such election to be effected by surrender of this Warrant at the principal office of the Company, together with the Notice of Exercise indicating such election, in which case the Company shall issue to the Holder the number of shares of Warrant Stock determined as follows: X = Y (A-B) ------- A Where: X = the number of shares of Warrant Stock to be issued Y = the number of shares of Warrant Stock as to which the Warrant is being exercised (which in no case may exceed the number of Eligible Shares which remain to be exercised as of such date) A = the Fair Market Value (as defined below) of one (1) share of Warrant Stock B = the Exercise Price For purposes of this Section 1.3, the Fair Market Value of a share of Warrant Stock shall mean: 1.3.1 The average of the closing bid and asked prices of the Warrant Stock quoted in the Over-the-Counter Market Summary or the closing price quoted on the Nasdaq National Market, Nasdaq SmallCap Market or any exchange on which the Common Stock is listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the ten trading days prior to the date of determination of fair market value (with appropriate adjustments being made to reflect any stock split, stock dividend, stock combination or similar recapitalization affecting the Common Stock from the first day of such ten trading day period until the date of determination); 1.3.2 If the Warrant Stock is not traded Over-the-Counter or on the Nasdaq National Market, the Nasdaq SmallCap Market or an exchange, fair market value of the Warrant Stock per share shall be the price per share which the Company could obtain from a willing buyer for shares sold by the Company from authorized but unissued shares of Warrant Stock as such price shall be agreed by the parties hereto, or if agreement cannot be reached within five (5) business days of delivery of the notice pursuant to Section 1(b) hereof, as shall be determined by a panel of appraisers. One appraiser shall be selected by the Holder, one appraiser shall be chosen by the Company and the third appraiser shall be chosen by the first two appraisers. If the appraisers cannot reach agreement as to the fair market value on the foregoing basis on or before the thirtieth (30th) day following the Holder's notice of election pursuant to this Section 1.3, then each appraiser shall deliver its appraisal and the appraisal which is neither the highest nor the lowest shall be the fair market value of a share of Warrant Stock. In the event that the Company fails to choose an appraiser or the three appraisers fail to deliver an appraisal on or before the thirtieth (30th) day after such notice, the appraisal of the appraiser selected by the Holder shall control and shall be fair market value for the purposes of this Warrant. The cost of the appraiser selected by each party shall be borne by that party and the cost of the third appraiser shall be borne one-half (1/2) by each party. In the event that the Company does not select an appraiser or three appraisals are not received on or before the thirtieth (30th) day after such notice of election, the Company shall pay one-half (1/2) the -3- cost of the Holder's appraiser. Appraisers selected under this Section 1.3.2 must be unaffiliated with the Holder and the Company and must have reasonable professional qualifications for the appraisal. 1.3.3 In the event this Warrant is exercised for the purpose of offering the Warrant Stock in a firm underwritten public offering of Common Stock with a fixed offering price (as opposed to an auction rate or other market driven price), the Fair Market Value per share shall be deemed to be equal to the per share offering price to the public in such public offering. In such event, at the election of the Holder, this Warrant may be exercised contingent upon and effective as of the closing of such public offering and, at the election of the Holder, the exercise of this Warrant may be further conditioned upon the sale of all or a portion of such Warrant Stock in such public offering. 1.3.4 In conjunction with a Reorganization (as defined in Section 4), then the Fair Market Value per share shall be the value received by the holders of Warrant Stock pursuant to such transaction for each share of Warrant Stock, and such purchase shall be effective upon the closing of such transaction, subject to the due, proper and prior surrender of this Warrant. 2. Delivery of Stock Certificate Within twenty days after the exercise of this Warrant (in full or in part) and payment of the Purchase Price then due, the Company at its expense shall issue in the name of and deliver to the Holder (a) a certificate or certificates for the number of fully paid and nonassessable shares of Warrant Stock to which the Holder shall be entitled upon such exercise and (b) if applicable, a new Warrant of like tenor to purchase up to that number of shares of Warrant Stock, if any, as to which this Warrant shall not have been previously exercised by the Holder or repurchased by the Company. 3. Covenants as to Warrant Stock The Company covenants and agrees that the Company will at all times have authorized and reserved a sufficient number of shares of Warrant Stock to provide for the exercise of the rights represented by this Warrant. The Company further covenants that all shares of Warrant Stock which may be issued upon the exercise of the rights represented by this Warrant, will, upon issuance, be validly issued, fully paid and non-assessable and free from all taxes, liens and charges solely with respect to the issuance thereof. The Company further covenants and agrees that the Company will from time to time take all such action as may be requisite to assure that the stated or par value per share of Warrant Stock is at all times equal to or less than the then effective Exercise Price per share of Warrant Stock issuable upon exercise of this Warrant. If and so long as the Common Stock issuable upon the exercise of the rights represented by this Warrant is listed on any national securities exchange or quotation system, the Company will, if permitted by the rules of such exchange or quotation system, use its best efforts to list and keep listed on such exchange or quotation system, upon official notice of issuance, all shares of such capital stock. 4. Termination Upon Reorganization Simultaneous with the closing of a merger, consolidation, acquisition of all or substantially all of the assets or stock, of the Company by another entity (the "Surviving Entity") as a result of -4- which the stockholders of the Company will own less than 50% of the voting capital stock of the surviving entity or the entity that controls such surviving entity immediately after the transaction or, in the case of a sale of assets, the Company will own after the transaction less than 50% of the assets owned by the Company prior to the transaction (collectively, a "Reorganization") prior to the expiration of the Exercise Period, as a result of which the stockholders of the Company receive cash, stock or other property in respect of their shares of Warrant Stock, this Warrant shall be canceled and all rights granted hereunder shall terminate; provided, however, that (a) the Company shall have delivered to the Holder notice of the Reorganization no less than ten (10) business days before the date scheduled for closing of the Reorganization, and (b) at the closing of such Reorganization this Warrant will be exchanged for a warrant to purchase such kind and number of shares of capital stock or other securities or property of the Company or the Surviving Entity to which the Holder would have been entitled if it had held the Warrant Stock issuable upon the exercise hereof immediately prior to such Reorganization, which warrant shall have the same terms and conditions hereof. 5. Adjustments for Certain Issuances 5.11 Stock Splits and Reverse Stock Splits If the Company shall issue any shares of Warrant Stock as a stock dividend or subdivide the number of outstanding shares of Warrant Stock into a greater number of shares, then, in either such case, the Exercise Price in effect before such dividend or subdivision shall be proportionately reduced and the number of shares of Warrant Stock at that time purchasable pursuant to this Warrant (and the number of Eligible Shares then existing and which will become Eligible Shares on all of the succeeding Vesting Dates) shall be proportionately increased; and, conversely, if the Company shall reduce the number of outstanding shares of Warrant Stock by combining such shares into a smaller number of shares, then the Exercise Price in effect before such combination shall be proportionately increased and the number of shares of Warrant Stock at that time purchasable pursuant to this Warrant (and the number of Eligible Shares then existing and which will become Eligible Shares on all the succeeding Vesting Dates) shall be proportionately decreased. Upon each adjustment in the Exercise Price pursuant to this Section 5, the number of shares of Warrant Stock purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying such number of shares purchasable immediately prior to such adjustment in the Exercise Price by a fraction, the numerator of which shall be the Exercise Price immediately prior to such adjustment and the denominator of which shall be the Exercise Price immediately thereafter. The Holder shall be entitled to the same notice and information regarding such dividend or subdivision as is furnished to holders of Warrant Stock, which notice shall be sent to the Holder no later than the date such notice is sent to all holders of Warrant Stock. 5.2 Other Dividends and Distributions In case the Company shall take a record of the holders of its Warrant Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution other than as described in Section 5.1, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, then the Company will mail or cause to be mailed to the Holder a notice specifying the date on which a record is to be taken for the purpose of such dividend, distribution or right (the -5- "Record Date"), and stating the amount and character of such dividend, distribution or right. Such notice shall be mailed at least 5 days prior to the Record Date therein specified. 6. Fractional Shares No fractional shares shall be issued upon the exercise of this Warrant. In lieu of fractional shares, the Company shall pay the Holder a sum in cash equal to the fair market value of the fractional shares (as determined under paragraph 1.3 above) on the date of exercise. 7. Restrictions on Transfer Neither this Warrant nor any securities purchased upon exercise of this Warrant may be transferred unless (a) such transfer is registered under the Securities Act of 1933, as amended (the "Securities Act"), and any applicable state securities or blue sky laws, (b) the Company has received a legal opinion reasonably satisfactory to the Company to the effect that the transfer is exempt from the prospectus delivery and registration requirements of the Securities Act and any applicable state securities or blue sky laws; or (c) the Company otherwise satisfies itself that such transfer is exempt from registration. 8. Legend A legend setting forth or referring to the above restrictions shall be placed on this Warrant, any replacement hereof and any certificate representing a security issued pursuant to the exercise hereof, and a stop transfer restriction or order shall be placed on the books of the Company and with any transfer agent until such securities may be legally sold or otherwise transferred; provided, however, that such legend shall not be required and a stop transfer restriction order shall not be placed if (i) in the opinion of counsel to the Holder (reasonably concurred with by counsel to the Company) registration of any future transfer is not required by the applicable provisions of the Securities Act; or (ii) The Company shall have waived the requirements of such legends. 9. Holder its Owner Subject to the terms of Section 7, the Company may deem and treat the Holder of this Warrant as the absolute owner hereof for all purposes regardless of any notice to the contrary. 10. Warrantholder Rights 10.1 Registration Rights in Connection with Warrant Stock Upon exercise of all or part of this Warrant, the holder of the Warrant Stock shall be entitled to the registration rights with respect to the Warrant Stock set forth in Exhibit E of the Promotion Agreement. 10.2 No Rights As a Stockholder Other than as set forth in Section 10.1 above, this Warrant shall not entitle the Holder to any voting rights or any other rights as a stockholder of the Company or to any other rights whatsoever -6- except the rights stated herein; and except as otherwise provided herein, no dividend or interest shall be payable or shall accrue in respect of this Warrant or the Warrant Stock purchasable hereunder unless, until and to the extent that this Warrant shall be exercised. 11. Construction The validity and interpretation of the terms and provisions of this Warrant shall be governed by the laws of the State of Delaware. The descriptive headings of the several sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions thereof. 12. Expiration This Warrant shall be void and all rights represented thereby shall cease unless exercised during the Exercise Period. All restrictions set forth herein on the shares of capital stock issued upon exercise of any rights hereunder shall survive such exercise and expiration of the rights granted hereunder. 13. Exchange of Warrant This Warrant is exchangeable upon the surrender hereof by the Holder at the office of the Company for new Warrants of like tenor representing in the aggregate the rights to subscribe for and purchase the number of shares which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by the Holder at the time of such surrender. 14. Lost Warrant Certificate If this Warrant is lost, stolen, mutilated or destroyed, the Company shall, upon request in writing from the Holder and subject to compliance by Holder with the following sentence, issue a new Warrant of like denomination, tenor and date as this Warrant, subject to the Company's right to require the Holder to give the Company a bond or other satisfactory security sufficient to indemnify the Company against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft, mutilation or destruction of this Warrant or the issuance of such new Warrant. The Holder shall reimburse the Company for any and all expenses and costs incurred by the Company in connection with issuing a new Warrant under this Section. 15. Waivers and Amendments This Warrant or any provision hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. 16. Successors and Assigns. This Warrant shall be binding upon the Company and inure to the benefit of lnfoSpace.com and its successors and assigns. -7- 17. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be delivered by personal delivery, reputable overnight courier service, telecopier or mailed by United States mail, first-class postage prepaid, or by registered or certified mail with return receipt requested, addressed as follows: If to the Holder: InfoSpace.com, Inc. 15375 N.E. 90th Street Redmond, WA 98052 Fax:(425) 883-4846 Attention: General Counsel If to the Company: Delphi Information Systems, Inc. 3501 Algonquin Road Suite 500 Rolling Meadows, Illinois 60008 Attention: Chief Financial Officer With copies to: Delphi's Law Department Each of the foregoing parties shall be entitled to specify a different address by giving five days' advance written notice as aforesaid to the other parties. All such notices and communications shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery and (ii) in the case of mailing, on the third business day following the date of such mailing. 18. Investment Intent By accepting this Warrant, the Holder represents that it is acquiring this Warrant (and upon exercise hereof will acquire any Warrant Stock) for investment and not with a view to, or for sale in connection with, any distribution thereof. Furthermore, the Company reserves the right, in connection with the exercise hereof, to require the Holder hereof to make appropriate representations and warranties regarding their status as an accredited investor and their investment intent, as the Company (in consultation with its counsel) determines to be necessary or appropriate. -8- IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. DELPHI INFORMATION SERVICES, INC. By: /s/ Richard J. Baum ------------------------------------- Its: CFO ------------------------------------ ACCEPTED AND AGREED: InfoSpace.com, Inc. By: Bernee D.L. Strom -------------------------------- Its: President & CEO ------------------------------- Date: 8/31/99 ------------------------------ -9- NOTICE OF EXERCISE TO DELPHI INFORMATION SYSTEMS, INC. 1. The undersigned hereby elects to purchase __________ shares of Common Stock of Delphi Information Systems, Inc. pursuant to the terms of the attached Warrant. 2. Method of Exercise (Please initial the applicable blank): ___ The undersigned elects to exercise the attached Warrant by means of a cash payment, and tenders herewith payment in full for the purchase price of the shares being purchased, together with all applicable transfer taxes, if any. ___ The undersigned elects to exercise the attached Warrant by means of the net exercise provisions of Section 1.3 of the Warrant. 3. Please issue a certificate or certificates representing said shares of Warrant Stock in the name of the undersigned or in such other name as is specified below: ________________________________________ (Name) ________________________________________ ________________________________________ (Address) 4. The undersigned hereby agrees with and represents to the Company that said shares of common stock are acquired for investment and not with a view to, or for sale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended, and agrees that the exercise of the Warrant and the issuance and transfer of the common stock to be purchased are subject to Section 7 of the Warrant. Dated:_______________________ ________________________________________ Holder By:_____________________________________ Its:____________________________________ EX-10.28 13 ex-10_28.txt EXHIBIT 10.28 Exhibit 10.28 TATUM CFO PARTNERS, L.L.P. REVISED RETAINER AGREEMENT This Revised Agreement, entered into as of July 15, 1999 by Delphi Information Systems, Inc. (the "Company"), Tatum CFO Partners, LLP ("Tatum") and Richard J. Baum ("the CFO") (collectively, the "parties"), replaces the Agreement previously entered into between the Company, the CFO, and Tatum as of June 15, 1999. WHEREAS, the Company wishes to engage the CFO to provide certain services and Tatum wishes that the CFO provide such services in return for certain consideration; the parties after full and careful negotiation agree as follows: I. SERVICES; FEES AND PAYMENTS A. Beginning the Effective Date, the CFO will perform, with the title Acting Chief Financial Officer, CFO Services as set forth in Section II for a total monthly fee of $17,500 (the "Monthly Fee"). B. The CFO will provide CFO Services for 5 days per week. C. The Company will pay the CFO directly according the Company's normal payroll process a portion of the Monthly Fee equal to $14,593.33 (the "Salary"); and will pay Tatum the remaining portion of $2,916.67 ("Retainer Fee"). D. If this Agreement commences or concludes in the middle of a month, each portion of the Monthly Fee shall be prorated for that month. E. The Company also will pay Tatum the incentive bonus set forth in Schedule A. F. The Company will also provide Tatum stock options in accordance with the attached Schedule B. G. The Company will pay all amounts owed Tatum no later than the 15th day of the month for which amounts are invoiced. H. The Company will promptly reimburse the CFO for travel and out-of-pocket business expenses. I. In the case that the CFO provides CFO Services in excess of 5 days per week, the Company will pay an additional $1,057.95 daily fee (the "Additional Daily Fee"). J. The Company will pay the CFO directly according the Company's normal payroll process 83.33% of the Additional Daily Fee (the "Additional Salary"), and will pay Tatum the remaining 16.67% portion ("Additional Retainer Fee"). K. In the event this Agreement is canceled prior to September 15, 1999, an additional fee will be paid sufficient to adjust the aggregate prior and prospective Monthly Fees to an amount equal to $1,200 per day (the "Early Termination Fee"). L. The Company will pay the CFO directly according the Company's normal payroll process 83.33% of the Early Termination Fee, and will pay Tatum the remaining 16.67% portion. II. CFO SERVICES A. CFO Services is defined as those certain services as specified and directed by the Company from time to time and which the CFO is able to perform within the time allotted under this agreement. B. CFO Services will never exceed the traditional scope of services of the chief financial officer. III. THE RELATIONSHIP OF THE CFO AND THE COMPANY A. The Company, Tatum and the CFO agree that the CFO will be an employee of the Company. B. As an employee of the Company, the CFO will work under the exclusive management and authority of the Company. C. The CFO will serve the Company as an officer of the Company, upon election by its Board of Directors, to take effect upon receipt by the CFO and Tatum of written evidence that the CFO as an officer is covered by director and officer insurance maintained by the Company at no additional cost to the CFO or Tatum. D. The CFO may sign federal or state securities filing, and representations and warranties on behalf of the Company after such date as the CFO receives satisfactory written evidence that in signing such filings he is covered by applicable insurance (whether director and officer insurance or a special policy) maintained by the Company at no additional cost to the CFO or Tatum CFO. (Note that the election to sign securities filings can also be done by later amendment to agreement.) E. The CFO will be eligible for vacation and holidays consistent with the Company's policy as it applies to senior management, except that any initial delay period will not apply. F. The CFO elects not to participate in the Company's employment retirement plan or any other employee benefit plan, and waives any coverage that may otherwise exist. The Company will not include the CFO as participant in any such plan, unless required to do so by law for plan qualification. However, notwithstanding the foregoing, the CFO may participate (without Company matching payments) in the Company's 401(k) plan, if such a plan is provided. G. The CFO waives any past or present claim it may have against the Company for any discrimination. IV. THE RELATIONSHIP OF TATUM AND THE COMPANY A. The Company, Tatum and the CFO agree that for purposes of this Agreement, Tatum's relationship with the Company is to make the CFO available to the Company to provide CFO services. However, the Company is solely responsible for its evaluation, management and use of the CFO and the CFO Services. V. THE RELATIONSHIP OF TATUM AND THE CFO A. The Company, Tatum and the CFO agree that for purposes of this Agreement, Tatum's relationship with the CFO is to make available to the CFO certain resources of Tatum. These resources are not warranted or guaranteed in any way and the Company is solely responsible for its evaluation, management and use of these resources. VI. STANDARD DISCLAIMERS A. Neither Tatum nor the CFO will be liable for Y2K related losses, costs, damages or expenses. B. Tatum will not be liable for any non-compliance with federal, state or local laws or regulations. C. The Company agrees that reports, projections and/or forecasts can be prepared only at the Company's direction and reflect the judgment of the Company. Tatum makes no representation or warranty as to the accuracy or reliability of reports, projections and/or forecasts; and will not be held liable for any claims of reliance on such reports, projections and/or forecasts. VII. INDEMNITY; JOINT DEFENSE; LIABILITY LIMITATIONS; ARBITRATION; INSURANCE A. The Company agrees to indemnify Tatum to the full extent permitted by law for any losses, costs, damages and expenses, including attorneys' fees, as such are incurred, in connection with (1) any cause of action, suit or other proceeding arising in connection with Tatum's engagement by the Company under this Agreement, the CFO's employment with the Company or the CFO's activities while employed by the Company, and (2) any legal proceeding in which Tatum may be required or agree to participate, but in which Tatum is not a party. This indemnification does not apply to actions taken by Tatum in bad faith. B. If the Company and Tatum are defendants in any action, suit, or other proceeding, the defense of Tatum will be represented by counsel selected by Tatum. C. The Company and Tatum agree to binding arbitration under the rules of the American Arbitration Association ("AAA"), to take place in the AAA's Atlanta office, if any dispute arises between them. D. The Parties recognize and agree that any breach by Tatum of this Agreement would result in injury that would be impossible to accurately ascertain. Therefore, Tatum shall pay to the Company as liquidated damages, and not as a penalty, an amount equal to two full months of Retainer Fee. The parties agree that this amount of liquidated damages represents a reasonable approximation of the damages that would be incurred as a result of a breach by Tatum of this Agreement. E. In any event, at any time, Tatum may pay a sum equal to the total Retainer Fee paid under this Agreement for the most recent four months, which payment the Company agrees shall serve as final satisfaction and accord for any and all such liabilities of Tatum under this Agreement. F. As a precondition for recovery of any alleged liability, the Company shall give Tatum notice, in writing, the alleged basis for liability within thirty (30) days of discovering the circumstances giving rise to such alleged liability, and no legal or other action shall be taken by the Company against Tatum more than (60) days after such notice has been given or (ii) less than thirty (30) days after such notice has been given, in order that Tatum shall have the opportunity to investigate in a timely manner and, where possible, correct of rectify the alleged basis for liability. G. Tatum will not be liable in any event for incidental or consequential damages including without limitation any interruption of business or loss of business, profit, or good will. H. To the extent the Company has directors' and officers' liability insurance ("including entity coverage") and/or errors and omissions liability insurance in effect, the Company will provide such insurance coverage for the CFO. VIII. GENERAL TERMS AND CONDITIONS A. Subject to the payment of any applicable Early Termination Fee, this Agreement may be canceled by either party effective on no less than 30 days' advance written notice. However, Tatum retains the right to terminate this agreement immediately if the Company has not remained current with its obligations to Tatum under this Agreement, the Company is not in compliance with any government regulatory entity, or by death or disability of the CFO. B. The provisions on the attached Schedule A are incorporated by reference as if set forth herein, and the provisions concerning the bonus in Schedule A will survive any cancellation of this Agreement. C. Neither the Company, Tatum nor the CFO shall be deemed to have waived any rights or remedies accruing under this Agreement unless such waiver is in writing and signed by the party electing to waive the right or remedy. D. This Agreement is governed by Illinois law. E. The terms of this Agreement are severable, and they may not be amended except in writing signed by the parties. This Agreement binds and benefits the successors of the parties. F. This Agreement contains the entire agreement between the parties, superseding any prior oral or written statements or agreements. G. The persons signing below are authorized to sign on behalf of each party, and their signatures are all necessary signatures. TATUM CFO PARTNERS, LLP The COMPANY The CFO /s/ Dirk B. Landis /s/ [Illegible] /s/ Richard J. Baum - ---------------------- ------------------- -------------------- Signature Signature Signature [Illegible] Dirk B. Landis ------------------- Richard J. Baum Area Limited Partner Name and Title As of July 15, 1999 As of July 15, 1999 As of July 15, 1999 EX-10.29 14 ex-10_29.txt EXHIBIT 10.29 (SUBLEASED PREMISES: 6,116 sq. ft. of office space located at: 1900 East Gulf Road, Suite 1200, Schaumburg, Illinois 60173) SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT ("Sublease") is entered into as of this 20th day of April, 2000, by and between PHILIPS MEDICAL SYSTEMS NORTH AMERICA COMPANY, a division of Philips Electronics North America Corporation, a Delaware corporation ("Sublessor") with offices at 710 Bridgeport Avenue, Shelton, Connecticut 06484 and EBIX.COM, INC., a Delaware corporation with offices at 5 Concourse Parkway, Suite 3200, Atlanta, Georgia ("Sublessee"). INTRODUCTORY STATEMENTS A. By a certain Lease Agreement dated September 26, 1996, amended by Rider 1: Commencement Date Agreement and Rider 2: Additional Lease Provisions, (collectively the "Prime Lease") by and between Metropolitan Life Insurance Company (the "Prime Landlord"). Prime Landlord leased to Sublessor certain space in the building known as 1900 East Golf Road, Schaumburg, Illinois 60173, (hereinafter referred to as "the Building"). By Assignment of Lease ("Assignment") dated September 6, 1996, the Prime Lease was then purchased by Great Lakes REIT, L.P., a Delaware limited partnership effective December 27, 1996. By way of such purchase, Great Lakes REIT, L.P. is referred hereafter as "the Prime Landlord". B. Whereas Sublessor has agreed to sublet to Sublessee and Sublessee has agreed to sublet from the Sublessor premises consisting of approximately 6,116 square feet of office space at 1900 East Golf Road, Suite 1200, Schaumburg, Illinois ("the Subleased Premises"). C. The parties desire to enter into this Sublease defining their respective rights, duties and liabilities relating to the Subleased Premises (defined below). W I T N E S S E T H: NOW THEREFORE, Sublessor and Sublessee, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and each with intent to be legally bound, for themselves and their respective successors and assigns, agree as follows: 1. DEFINITIONS All terms not expressly defined in this Sublease Agreement shall have the meanings given to them in the Prime Lease and floor plan (attached hereto as EXHIBIT A). The Subleased Premises are the Premises set forth in the Prime Lease. 2. PRIME LANDLORD Sublessee agrees to look solely to Prime Landlord, and not to Sublessor, for the performance of all services and obligations of Prime Landlord under the Prime Lease with respect to the Subleased Premises. At Sublessee's expense and request, Sublessor will take all reasonable actions necessary to enable Sublessee to enforce the Sublessor's rights as Tenant under the Prime Lease with respect to the Subleased Premises. 3. SUBLEASE Sublessor, for and in consideration of the Sublessee's payment of rent and performance of the covenants contained in this Sublease, does hereby demise and lease the Subleased Premises to Sublessee. 4. TERM The term of this Sublease (the "Term") shall be for a period of approximately 20 months commencing on April _, 2000, (the "Sublease Commencement Date") and ending no later than December 31, 2001. A Commencement Date Letter Agreement shall be signed to represent the first effective day the Sublease begins. 5. RENT The monthly rent during the Term hereunder shall accrue at the fixed rate of Fifteen ($15.00) Dollars per rentable square foot (6,116 square feet). The monthly rent shall be payable in advance on the first day of each calendar month during the Term in monthly installments of Seven Thousand Six Hundred Forty Five ($7,645.00) Dollars. The monthly rent payable by Sublessee includes charges for operating expenses and real estate taxes and any other services being supplied to the Subleased Premises by the Prime Landlord. All Rent shall be payable at the office of the Sublessor at the following address: Philips Medical Systems North America Company 710 Bridgeport Avenue Shelton, Connecticut 06484 Attention: Mr. Don Slater, Finance Department or at such other address as directed by notice from Sublessor to Sublessee. Sublessee shall be responsible to pay any and all utility charges. 6. PRIME LEASE A true copy of the Prime Lease (with certain financial provisions deleted for reasons of confidentiality) is attached hereto as EXHIBIT A. Where not expressly inconsistent with the terms hereof and except as otherwise stated herein to the contrary, this Sublease shall be subject and subordinate to all of the terms and conditions contained in the Prime Lease as said terms and conditions affect the Subleased Premises, and all of the terms and conditions of the Prime Lease, except as otherwise set forth herein, are hereby incorporated into this Sublease and shall be binding upon Sublessee with respect to the Subleased Premises to the same extent as if Sublessee were named as Tenant and Sublessor as Landlord under the Prime Lease. For purposes of this Sublease, references in the Prime Lease to the "term" shall mean the term of this Sublease and references to the "Premises" in the Prime Lease shall mean the Subleased Premises. 2 Each party agrees that it shall not do or omit to do anything which would result in a default under the Prime Lease, and each party agrees to defend, indemnify and hold the other harmless from and against all claims, demands or liabilities resulting from such party's breach, violation or nonperformance of any of its obligations under the Prime Lease, as incorporated herein. 7. SECURITY DEPOSIT Sublessee agrees to deposit with Sublessor an amount equal to four (4) months rent ($30,580.00) upon execution of this Sublease as security for Sublessee's faithful performance of Sublessee's obligations hereunder. Interest at a commercially reasonable rate shall be paid to Sublessee on a quarterly basis by Sublessor. If Sublessee fails to pay rent or other charges when due under this Sublease, or fails to perform any of its other obligations hereunder, Sublessor may use or apply all or any portion of the Security Deposit for the payment of any rent or other amount then due hereunder and unpaid, for the payment of any other sum for which Sublessor may become obligated by reason of Sublessee's default or breach. If Sublessor so uses any portion of the Security Deposit, Sublessee shall, within ten (10) days after written demand by Sublessor, restore the Security Deposit to the full amount originally deposited, and Sublessee's failure to do so shall constitute a default under this Sublease. In the event Sublessor assigns its interest in this Sublease, Sublessor shall deliver to its assignee so much of the Security Deposit as is then held by Sublessor. Within fifteen (15) days after the Term has expired, or Sublessee has vacated the Subleased Premises, and if any final adjustment pursuant to Articles Eight and Thirteen hereof of the Prime Lease have been made, whichever shall last occur, and provided Sublessee is not then in default of any of its obligations hereunder, the Security Deposit, or so much thereof as had not theretofore been applied by Sublessor, shall be returned to Sublessee or to the last assignee, if any, of Sublessee's interest hereunder. 8. ALTERATIONS Sublessee shall not make any alterations, (structural or otherwise), improvements or installations in or to the Subleased Premises without the prior written consent of the Sublessor which shall not be unreasonably withheld or delayed. All alterations and improvements shall be subject to the terms and conditions of the Prime Lease, and in those instances, if required, shall be subject to the Prime Landlord's approval as provided in the Prime Lease. Any alterations, improvements or installations consented to by Sublessor shall be made by at the sole cost and expense of Sublessee. (SEE: EXHIBIT B DESCRIBING SUBLESSEE'S ALTERATIONS) 9. REPAIRS AND ORDINARY MAINTENANCE Any repair and maintenance obligations with respect to the Subleased Premises, which pertains to Sublessee's particular manner of use and occupancy, as Tenant under the Prime Lease, shall be performed by Sublessee at Sublessee's sole cost and expense. Sublessee agrees that it will notify Sublessor promptly of the need for any repair to the Sublease Premises, even if Sublessor is not responsible for any such repair. Notwithstanding anything contained herein to the contrary, in the event that a condition exists in the Subleased Premises that the Prime Landlord is obligated to repair under the terms of the Prime Lease, Sublessee shall so advise Sublessor, and Sublessor, in turn, shall promptly advise Prime Landlord thereof. Sublessor shall have no liability to Sublessee for Prime Landlord's failure to make any such repair. 3 10. UTILITIES AND SERVICES Sublessee shall be entitled to all those services and utilities which Prime Landlord is required to provide under the terms of the Prime Lease. Sublessee shall look solely to the Prime Landlord for the provision of such services and utilities, and Sublessor shall not be responsible for Prime Landlord's failure to provide the same nor shall any such failure constitute an abrogation of any other terms or conditions of this Sublease. 11. ASSIGNMENT AND SUBLEASING Sublessee shall not have the right to assign this Sublease or sublet the Subleased Premises, in whole or in part without the prior written consent of Sublessor and Prime Landlord in their sole discretion. 12. INSURANCE If Prime Landlord agrees to lower the combined single limit required under the CGL coverage to $2 million dollars, such reduction in the insurance requirement shall apply as Sublessee's insurance. If Prime Landlord does not agree to lower the combined single limit required under the CGL coverage, Sublessee agrees to comply with all of the insurance requirements and obligations of Sublessor as set forth in the Prime Lease in Article Sixteen and shall name both Sublessor and Prime Landlord as additional insureds on any required insurance policies. 13. ARBITRATION Any controversy or claim arising out of or relating to this Lease, or the breach thereof, shall be settled by arbitration in accordance with the Arbitration Rules for the Real Estate Industry of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof. The arbitration proceeding shall take place in the state of Illinois. Notwithstanding any other provision of this Agreement, each party shall have the right, at any time after commencement of an arbitration proceeding hereunder and prior to entry of judgment on any award rendered hereunder, to apply to any court of competent jurisdiction for preliminary relief. Any costs incurred from such arbitration shall be paid equally by both parties. 14. COMPLIANCE WITH LAWS Sublessee shall promptly comply with all statutes, ordinances, rules, orders, regulations and requirements of the Federal, State and municipal Governments and of any and all of their Departments and Bureaus applicable to the use and occupancy of the Subleased Premises by Sublessee. If Sublessee shall fail or neglect to comply with the aforesaid legal requirements, or if Sublessee shall fail or neglect to make any repairs required by the terms of this Sublease, then Sublessor or its agents may (but shall not be obligated to) with ten (10) days prior written notice to Sublessee (or less if required by law or emergency) enter the Subleased Premises and take such actions as necessary to cure the breach or condition and comply with any and all of the said legal requirements, at the cost and expense of Sublessee; and in case of Sublessee's failure to pay therefor, the said cost and expense shall be added to the next month's Rent and be due and payable as such. 15. LIMITATIONS ON SUBLESSOR'S LIABILITY Sublessee acknowledges that Sublessor has made no representations or warranties with respect to the Building or the Subleased Premises except as provided in this Sublease and Sublessee accepts the Subleased Premises in "AS IS" condition. 4 If Sublessor assigns its leasehold estate in the Building, Sublessor shall have no obligation to Sublessee that arises after that assignment. Sublessee shall then recognize Sublessor's assignee as Sublessor of this Sublease. Sublessor shall not be required to perform any of the covenants and obligations of the Prime Landlord under the Prime Lease, and insofar as any of the obligations of the Sublessor hereunder are required to be performed under the Prime Lease by the Prime Landlord thereunder, Sublessee shall rely on and look solely to the Prime Landlord for the performance thereof. Sublessor shall defend, indemnify and hold Sublessee harmless from claims by Prime Landlord arising from Sublessee's assumption of Sublessor's obligations as Tenant under the Prime Lease, to the extent that Sublessor has expressly retained with regard to Sublessee, those rights and obligations of Tenant under the Prime Lease. For any such claim, Sublessor shall defend or pay all reasonable costs, attorney's fees, expenses, and liabilities, or both. Any useable items of furniture that Sublessor leaves behind, after the start of this Sublease, are considered abandoned, and become the property of the Sublessee. All non-useable items of furniture that must be discarded become the responsibility of the Sublessee, to the extent that the Sublessee shall pay all costs associated with the removal or disposal of said items, subject to reimbursement by Sublessor. If the Prime Landlord shall default in the performance of any of its obligations under the Prime Lease or breach any provision of the Prime Lease pertaining to the Subleased Premises, Sublessee shall have the right, at Sublessee's expense and upon prior notice to Sublessor, and in the name of Sublessor to make any demand or institute any action or proceeding, in accordance with and not contrary to any provision of the Prime Lease, against the Prime Landlord under the Prime Lease for the enforcement of the Prime Landlord's obligations thereunder. Sublessee shall defend, indemnify and hold Sublessor harmless from and against any suit, action, cost, expense, damage or liability which arises out of or results from or is alleged to arise out of or result from Sublessee's exercise of its rights under this Paragraph. 16. SUBORDINATION This Sublease shall be subject and subordinate to the Prime Lease, any ground lease and to any mortgage or deed of trust thereon or on the fee simple interest in the Building or the land on which the Building is located. 17. CASUALTY AND CONDEMNATION If the Prime Lease is terminated with respect to the Subleased Premises pursuant to the provisions of the Prime Lease, this Sublease shall automatically terminate at the same time and Sublessee shall have no claim against Sublessor or Prime Landlord for the loss of its subleasehold interest or any of Sublessee's property. If Prime Lease is not terminated with respect to the Subleased Premises upon the occurrence of a casualty or condemnation, the provisions of the Prime Lease with respect to casualty or condemnation shall apply to this Sublease and the Subleased Premises. 5 18. CONSENT OR APPROVAL FROM PRIME LANDLORD If the consent or approval of Prime Landlord is required under the Prime Lease with respect to any matter relating to the Subleased Premises, Sublessee shall be required first to obtain the consent or approval of Sublessor with respect thereto and, if Sublessor grants such consent or approval, Sublessor or Sublessee may forward a request for consent or approval to the Prime Landlord, but Sublessor shall not be responsible for obtaining such consent or approval. Sublessor shall have no liability to Sublessee for the failure of Prime Landlord to give its consent. 19. NOTICES All notices given pursuant to the provisions of this Sublease shall be in writing, addressed to the party to whom notice is given and sent registered or certified mail, return receipt requested, in a postage paid envelope or by nationally recognized overnight delivery service as follows: TO SUBLESSEE: TO SUBLESSOR: ebix.com, Inc. Philips Medical Systems North America Company 1900 East Golf Road 710 Bridgeport Avenue Suite 1200 Shelton, Connecticut 06484 Schaumburg, IL 60173 Attn: Law Department & Mr. Harvey Place, VP Attn: ______________________ (with a copy to) Mr. Ken Mason Regional Vice President, Operations Philips Medical Systems North America Company 1360 West Hamilton Parkway Itasca, IL 60143 It is understood and agreed that unless specifically modified by this Sublease, Sublessor shall be entitled to the length of notice required to be given Prime Landlord under the Prime Lease plus five (5) days and shall be entitled to give Sublessee the amount of notice required to be given Tenant under the Prime Lease. All notices shall be deemed given pursuant to the terms of Article 24 herein. In no case will the five (5) additional days be used to prejudice the Sublessee's rights under the Prime Lease. Either party by notice to the other may change or add persons and places where notices are to be sent or delivered. 20. BROKERS AND COMMISSION Sublessor and Sublessee each warrant that they have dealt with no other real estate broker in connection with this transaction except: Cushman & Wakefield, (who represents Sublessor), and Julien J. Studley, Inc., (who represents Sublessee). Upon execution of this Sublease, and executed consent thereto by Prime Landlord, Sublessor shall pay broker commissions in connection with this Sublease transaction as follows: (a) Cushman & Wakefield: 4% of the first year of rent received ($3,669.60) and 1.5% of the rent for the remaining term of the Sublease ($1,032.75); and (b) Julien J. Studley, Inc.: 8% of the first year of rent received ($7,339.20) and 3% of the rent received for the remaining term of the Sublease ($2,064.15). 6 21. SUBLESSOR'S AND SUBLESSEE'S POWER TO EXECUTE Sublessor (subject to Prime Landlord's consent) and Sublessee covenant, warrant and represent that they have full power and proper authority to execute this Sublease. 22. CONSENT TO SUBLEASE BY PRIME LANDLORD This Sublease shall not become operative until and unless the Prime Landlord has given to Sublessor its consent hereto. Sublessor shall not be responsible for Prime Landlord's failure to consent to this Sublease. Should Prime Landlord not consent to this Sublease, each party shall be released from all obligations with respect hereto and neither party shall have any further rights in law or in equity with respect to this Sublease. 23. QUIET ENJOYMENT Provided Sublessee is not in material breach or default of the Sublease, Sublessee shall peaceably and quietly hold and enjoy the Subleased Premises against Sublessor and all persons claiming by, through or under Sublessor, for the Term hereof subject to the provisions and conditions of this Sublease. 24. GOVERNING LAW This Sublease shall be governed and construed in accordance with the law of the State of Illinois, without regard to the principles of choice of law. 25. ENTIRE AGREEMENT This Sublease (which includes each of the Exhibits attached hereto) contains the entire Agreement between the parties and all prior negotiations and agreements are merged into this Sublease. This Sublease may not be changed, modified, terminated or discharged, in whole or in part, nor any of its provisions waived except by a written instrument which (a) shall expressly refer to this Sublease and (b) shall be executed by the party against whom enforcement of the change, modification, termination, discharge or waiver shall be sought. IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be properly executed as of the day and year first above written. SUBLESSOR: SUBLESSEE: PHILIPS MEDICAL SYSTEMS EBIX.COM, INC. NORTH AMERICA COMPANY a division of Philips Electronics North America Corporation /s/ David J. Marlow /s/ R.J. Baum - ------------------------------ ------------------------------------ David J. Marlow Chief Financial Officer, Vice President, Finance Date Date 4/20/00 -------------------------- -------------------------------- /s/ Harvey Place - ------------------------------ Harvey Place Vice President, Operations Date 4-7-00 -------------------------- 7 CONSENT TO SUBLEASE BY PRIME LANDLORD Prime Landlord's signature (indicated below) shall serve as acceptance, consent and approval of this Sublease Agreement, waiver of issues described in Article 10 of the Prime Lease with respect to this Sublease only and approval of Sublessee's Alterations attached hereto as EXHIBIT B. PRIME LANDLORD: GREAT LAKES REIT, L.P. By: Great Lakes REIT, its general partner /s/ Kim S. Mills ---------------------------------- Kim S. Mills, RPA Title Senior V.P., Leasing ----------------------------- Date 4/20/00 ------------------------------ 8 (DESCRIPTION OF SUBLESSEE'S ALTERATIONS) (A) TELEPHONE INSTALLATION: Sublessee will be using Midwest Telecom, located in Michigan for its telephone installation. Some of the existing wiring may be useful, however, additional wire will need to be installed. (B) COMPUTER INSTALLATION: Sublessee will be using Lagare Enterprises, located in Illinois, in addition to its own technical staff for computer installation. Some existing wiring may be useful, however, additional wire may need to be installed. (C) CONSTRUCTION: Some minor work will need to be performed, and Sublessee will consider the Prime Landlord's suggestion regarding this. The following will need to be done: (1) Removal of the back receptionist desk. (2) Construction of a couple of short, divider walls to create some additional workspace. (3) Removal of the Philips sign, installation of an ebix.com, Inc. sign, and painting and patching where needed. 9 EX-10.30 15 ex-10_30.txt EXHIBIT 10.30 Exhibit 10.30 SUBLEASE AGREEMENT THIS SUBLEASE is made and entered into as of the 20th day of April, 2000 by and between Ebix.com, Inc., formerly known as Delphi Information Systems, Inc. (the "Sublandlord"), and Pepsi-Cola General Bottlers, Inc. (the "Subtenant"). WITNESSETH Sublandlord, as Tenant, has entered into a lease dated September 1998 with LaSalle National Bank, N.A. as Trustee under Trust Agreement dated August 27, 1982 and known as Trust #105272, as Landlord (the "Lease") for 20,686 square feet of rentable space designed on the plan attached as Exhibit A (the "Premises") in the building located 3501 Algonquin Road, Rolling Meadows, Illinois (the "Building") for a term ending September 30, 2003. A copy of the Lease is attached hereto as Exhibit B. Sublandlord has legally changed its corporate name from Delphi Information Systems, Inc. to Ebix.com, Inc. Sublandlord desires to sublease the Premises to Subtenant and Subtenant desires to sublease the Premises from Sublandlord upon and subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual convenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. DEMISE/PREMISES/TERM Section 1 of the Lease shall not be applicable to this Sublease. Sublandlord hereby subleases to Subtenant and Subtenant hereby subleases from Sublandlord the Premises for a term commencing on June 1, 2000, and ending at 11:59 p.m. Chicago, Illinois time on September 30, 2003 (such term shall hereinafter be referred to as the "Sublease Term'). Beginning at the time this Sublease shall become fully executed and continuing until commencement of the Sublease Term, Sublandlord shall, at no cost to Subtenant, provide Subtenant with access to the Premises for purposes of delivering furniture to the Premises, installing telephone and data systems to the Premises and the like. Prior to commencement of the Sublease term Sublandlord will permit Subtenant after hours access to the Premises from 5:00 PM to 6:00 AM to make alterations to the space, provided these alterations are approved by the Landlord and that Subtenant will use its best efforts to not to disrupt Ebix.com's business. Subtenant will indemnify Ebix.com for any repair costs necessitated by Subtenant's alterations. 2. GROSS RENT Section 2 of the Lease shall not be applicable to this Sublease. Subtenant agrees to pay Sublandlord a consideration of One Million, Two Hundred Seventy One Thousand, Two Hundred Ninety Two and 61/100 ($1,271,292.61), for the entire term hereinafter referred to as "Gross Rent", in Forty (40) monthly installments as hereinafter set forth below. Subtenant agrees to pay Sublandlord "Incentive Rent" at the rate of $1,034.60 per day, for each day prior to June 1st 2000 that the Sublandlord can completely vacate the Premises. Sublandlord must provide written notification to Subtenant that Sublandlord has completely vacated the Premises to receive the Incentive Rent. 1. For the twelve (12) month period from June 1, 2000 to May 31, 2001 the Subtenant shall pay to Sublandlord twelve (12) monthly installments of Thirty One Thousand, Twenty Nine and 00/100 Dollars ($31,029.00). (Rent is based on $18.00 psf per year). 2. For the twelve (12) month period from June 1, 2001 to May 31, 2002 the Subtenant shall pay to Sublandlord twelve (12) monthly installments of Thirty One Thousand, Six Hundred Forty Nine and 58/100 Dollars ($31,649.58) each. (Rent is based on $18.36 psf per year). 3. For the twelve (12) month period from June 1, 2002 to May 31, 2003 the Subtenant shall pay to Sublandlord twelve (12) monthly installments of Thirty Two Thousand, Two Hundred Eighty Seven and 40/100 Dollars ($32,287.40) each. (Rent is based on $18.73 psf per year). 4. For the four (4) month period from June 1, 2003 to September 30, 2003 the Subtenant shall pay to Sublandlord four (4) monthly installments of Thirty Two Thousand Nine Hundred Twenty Five and 22/100 Dollars ($32,925.22) each. (Rent is based on $19.10 psf per year). Each monthly Installment referred to above shall be referred herein as a "Monthly Installment." Each reference to such time shall be defined within its proper context as set forth herein above. Subtenant shall pay each Monthly Installment to Sublandlord at 1900 East Golf Road, Suite 1200, Schaumburg, Illinois 60173. 3. ADDITIONAL RENT Section 3 of the Lease will not be applicable to this Sublease. 4. SERVICES Section 4 of the Lease shall be applicable to this Sublease. 5. CONSTRUCTION AND ACCEPTANCE OF PREMISES Section 5 of the Lease shall not be applicable to this Sublease. 6. USE Section 6 of the Lease shall be applicable to this Sublease. 7. REPAIRS Section 7 of the Lease shall be applicable to this Sublease. 8. TENANT ALTERATIONS Section 8 of the Lease shall be applicable to this Sublease. 9. COVENANT AGAINST LIENS Section 9 of the Lease shall be applicable to this Sublease. 10. WAIVER OF CLAIMS Section 10 of the Lease shall be applicable to this Sublease. 11. PARKING AREA Section 11 of the Lease shall be applicable to this Sublease. 12. RIGHTS RESERVED BY LANDLORD Section 12 of the Lease shall be applicable to this Sublease. 13. TENANT COVENANTS Section 13 of the Lease shall be applicable to this Sublease. 14. UTILITY SERVICES AND MAINTENANCE Section 14 of the Lease shall be applicable to this Sublease. 2 15. QUITE ENJOYMENT Section 15 of the Lease will not be applicable to this Sublease, instead Paragraph 33 H, will be applicable to this Sublease. 16. INDEMNITY Section 16 of the Lease will not be applicable to this Sublease, instead Paragraph 33 C, will be applicable to this Sublease. 17. INSURANCE Section 17 of the Lease shall be applicable to this Sublease. 18. ASSIGNMENT AND SUBLETTING Section 18 of the Lease will not be applicable to this Sublease, except for Paragraphs E and G of Section 18 of the Lease. 19. FIRE AND CASUALTY Section 19 of the Lease shall be applicable to this Sublease. 20. MUTUAL WAIVER OF SUBROGATION RIGHTS Section 20 of the Lease shall be applicable to this Sublease. 21. EMINENT DOMAIN Section 21 of the Lease shall be applicable to this Sublease. 22. DEFAULTS Section 22 of the Lease shall be applicable to this Sublease except that Sublandlord shall not attempt to take possession of the Premises without due process of law. 23. SURRENDER OF POSSESSION Section 23 of the Lease shall be applicable to this Sublease 24. HOLDING OVER Section 24 of the Lease shall be applicable to this Sublease. 25. BROKERAGE The only Real Estate Broker involved in this transaction is Julien J. Studley, Inc. Sublandlord agrees to pay leasing commissions to Julien J. Studley, Inc. pursuant to a separate agreement. 26. SUBORDINATION Section 26 of the Lease shall be applicable to this Sublease. 27. ESTOPPEL CERTIFICATE Section 27 of the Lease shall be applicable to this Sublease. 28. NOTICE AND CONSENTS Section 28 of the Lease shall be applicable to this Sublease except that notice shall also be sent to the following addresses: 3 SUBLANDLORD: Ebix.com, Inc. SUBTENANT: Pepsi-Cola General Bottlers, Inc. 1900 East Golf Road 3501 Algonquin Road Suite 1200 Suite 700 Schaumburg, Illinois 60173 Rolling Meadows, Illinois 60008 Attn: Richard J. Baum Attn: Legal Department
29. AMERICANS WITH DISABILITIES ACT Section 29 of the Lease shall be applicable to this Sublease. 30. CANCELLATION OPTION Section 30 of the Lease shall be applicable to this Sublease except for A) Sublandlord will obtain Subtenant's consent which consent may be withheld for any reason to exercise either of Sublandlord's cancellation options pursuant to Section 30 of the Lease; B) Subtenant may, within its sole discretion, direct Sublandlord to exercise either of said cancellation options provided Subtenant gives Sublandlord 60 days prior written notice prior to the date Sublandlord has to exercise its termination option notice, payment of the Subtenant's portion of the Cancellation Fee is to accompany the notice from Subtenant; and; C) If the Lease is terminated by the Sublandlord at Subtenant's direction, Subtenant shall pay to Sublandlord fifty percent (50%) of the First Cancellation Fee or Second Cancellation Fee, as applicable, as such terms are defined in Section 30 the Lease. 31. MISCELLANEOUS Section 31 of the Lease shall be applicable to this Sublease, except that Subtenant shall have no liability to Landlord or Sublandlord under the "Old Lease" as such term is defined in the Lease. 32. EXCULPATORY CLAUSE Section 32 of the Lease shall be applicable to this Sublease. 33. IN GENERAL A. SUBLANDLORD PREMISES. Sublandlord's use and possession of the Sublandlord Premises shall not in anyway interfere with Subtenant's use, possession and engagement of the remainder of the Premises. Sublandlord shall surrender the Sublandlord Premises in accordance with the tenant obligations of Section 23 of the Lease. If Sublandlord does not vacate by June 1, 2000, Sublandlord will pay Subtenant a penalty equal to One Hundred Fifty percent (150%) the Subtenant's gross rental rate (set forth in Section 2(l)) for each day it occupies the premises beyond June 1, 2000. Should Sublandlord not receive Landlord approval for its new sublease, the date to vacate the Premises, the date Subtenant shall be obligated to begin paying rent and the Incentive Rent deadline shall be extended to July 1st, 2000. B. LANDLORD/TENANT OBLIGATIONS. As between Landlord and Subtenant, Subtenant agrees to assume each and every one of the obligations of Tenant under the lease except where stated in this Sublease agreement. As between Sublandlord and Subtenant, when this Sublease provides that a section of the Lease shall be applicable hereto, it shall be deemed to mean that the Sublandlord shall have the rights and obligations of the Landlord and the Subtenant shall have the rights and obligations of the Tenant under that particular section of the Lease. When this Sublease provides that a section of the Lease shall not be applicable hereto, it shall be deemed to mean that Sublandlord will retain the rights and obligations of Tenant under that particular section of the Lease, and Subtenant shall not have the rights or obligations of the Tenant under that particular section of the Lease. 4 C. INDEMNIFICATION. Sublandlord shall defend, indemnify and hold Subtenant harmless from claims by Landlord arising from Subtenant's assumption of Sublandlord's obligations as Tenant under the Lease, to the extent that Sublandlord has retained the rights and obligations of Tenant under the Lease and such rights and obligations have not been given to Subtenant by this Sublease, and from all reasonable costs, attorneys' fees, expenses and liabilities incurred as a result of any such claim. Notwithstanding the foregoing, Sublandlord shall have no obligation to defend, indemnify or hold Subtenant harmless from any claims arising from the negligence or intentional acts of Subtenant, its employees, or contractors. Subtenant shall defend, indemnify and hold Sublandlord harmless from any claims arising from any breach or default in the performance of this Sublease by Subtenant and from all reasonable costs, attorneys' fees, expenses and liabilities incurred as a result of an such claim. D. PERSONAL PROPERTY. Sublandlord warrants to Subtenant that is has proper title and claim to each item of personal property listed as Exhibit C attached hereto (all items listed thereon are collectively referred to as the "Personal Property"). Sublandlord shall leave each item of Personal Property in or upon the Premises. All such items of Personal Property remaining in or upon the Premises after the Premises is tendered to Subtenant for purposes of possession pursuant to this Sublease shall become the exclusive property of Subtenant concurrently with Sublandlord's tender of the Premises to Subtenant. Prior to the Commencement Date, Subtenant shall perform a walk-through of the Premises and identify any items of personal property it wants Sublandlord to remove. Sublandlord shall remove all items of furniture, equipment, and other personal property, which are not referenced at Exhibit C or are requested by Subtenant for removal. Sublandlord agrees to leave the Premises in a condition reasonably similar to that condition existing when Subtenant performs its walk-through, reasonable wear and tear from the move excepted. E. DEFINITIONS. Capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Lease. The terms "hereof," "herein," "hereunder," "hereby," "hereto" and similar words shall be deemed to refer to this Sublease and not to any particular provision or Section of this Sublease. The headings of sections are for convenience only and do not limit, expand, or construe the contents of the sections. Unless otherwise specifically stated, all references to "Sections" shall mean sections of this Sublease. F. WAIVER OF TRIAL BY JURY. The parties hereto hereby waive trial by jury in any action, proceeding or counterclaim brought by either party hereto against the other in connection with any dispute arising under this Sublease. G. COUNTERPARTS. This Sublease may be executed in any number of counterparts, any or all of which may contain the signature of only one of the parties, and all of which shall be construed together as a single instrument. H. RIGHT OF QUIET ENJOYMENT. If and so long as Subtenant shall pay the rent reserved under this Sublease whenever the same shall become due and shall keep all of the covenants and agreements required by it to be kept during the term of this Sublease and shall perform all of its other obligations hereunder, Sublandlord shall not voluntarily take any action (including, without limitation, granting any express right to any other subtenant of Sublandlord) that results in the deprivation of the peaceful and quiet occupation and enjoyment of the Sublease Premises by Subtenant upon, and subject to, the terms of this Sublease; provided, that nothing contained in this Section 30 shall limit Sublandlord from exercising any rights of Sublandlord reserved hereunder or under the Lease. 5 IN WITNESS WHEREOF, this Sublease was executed as of the date first above written. AGREED: SUBLANDLORD SUBTENANT By: /s/ Richard J. Baum By: /s/ Martin M. Ellen --------------------------- --------------------------- Richard J. Baum Martin M. Ellen --------------------------- Title: CFO ------------------------ Title: Senior Vice President and Chief Financial Officer Date: 4/20/00 Date: April 10, 2000 ------------------------- STATE OF ILLINOIS ) ) ss. COUNTY OF COOK ) The foregoing instrument was acknowledged before me this 10th day of April, 2000 on behalf of Pepsi-Cola General Bottlers, Inc. [NOTARIAL SEAL] /s/ Barbara Stoga ----------------------------- NORARY PUBLIC STATE OF ILLINOIS ) ) ss. COUNTY OF COOK ) The foregoing instrument was acknowledged before me this 20th day of April, 2000 on behalf of Ebix.com, Inc. [NOTARIAL SEAL] /s/ Barbara Stoga ----------------------------- NORARY PUBLIC EBIX.COM, INC. SUBLEASE EXECUTION COPY 6 Exhibit A to Sublease dated April 20th, 2000 between -Ebix.Com, Inc. (Sublandlord) & Pepsi-Cola General Bottlers, Inc. (Subtenant) FLOOR PLAN 7 EX-10.31 16 ex-10_31.txt EXHIBIT 10.31 SUBLEASE THIS SUBLEASE is made and entered into as of this 22nd day of July, 1999, by and between AIR LIQUIDE AMERICA CORPORATION, a Delaware corporation ("Sublessor"), and DELPHI INFORMATION SYSTEMS, INC., a Delaware corporation ("Sublessee"). RECITALS: This Sublease is made and entered into on the basis of the following facts, understandings and intentions of the parties: A. These Recitals utilize certain terms defined in this Sublease which the parties intend to incorporate into these Recitals in connection with their use herein. B. Master Landlord, as Landlord, and Sublessor, as Tenant, have previously entered into the Lease, pursuant to the terms and conditions of which Sublessor has leased the Leased Premises from Master Landlord. C. Sublessor desires to sublease the Sublease Premises to Sublessee, and Sublessee desires to sublease the Sublease Premises from Sublessor. In order to effectuate such sublease transaction, the parties desire to enter into this Sublease. NOW, THEREFORE, IN CONSIDERATION of the foregoing Recitals, and the mutual covenants and promises of the parties contained herein, the parties agree as follows: 1. DEFINED TERMS. 1.1. DEFINITIONS. The following terms shall have the meaning set forth below for each such term: BASE RENT: $13,000.00 per month. BROKERS: Sublessor's Broker and Sublessee's Broker. COMMENCEMENT DATE: August 1, 1999. EXPIRATION DATE: January 31, 2001. LEASE: That certain Lease, dated September 16, 1985, between Master Landlord, as Landlord, and Sublessor, as Tenant, pursuant to the terms and conditions of which Master Landlord leased to Sublessor the Leased Premises, as amended by First Addendum to Lease, dated September 16, 1985; Second 1 Addendum to Lease, dated September 16, 1985; Third Addendum to Lease, dated October 15, 1985; Fourth Addendum to Lease, dated February 12, 1987; Fifth Addendum to Lease, dated March 6, 1987; Sixth Addendum to Lease, dated October 6, 1988; Seventh Addendum to Lease, dated November 30, 1988; Eighth Addendum to Lease, dated December 20, 1989; Ninth Addendum, dated May 21, 1991; Tenth Addendum to Lease, dated September 10, 1991; Eleventh Amendment to Office Lease, dated June 20, 1995; and Twelfth Amendment to Office Lease, dated September 10, 1996 together with Memorandum of Lease, dated September 16, 1985, and recorded November 1, 1985, in Book 12596, at Page 119, of the Official Records of the County of Contra Costa, State of California. A true and correct copy of the Lease is attached hereto as Exhibit A. MASTER LANDLORD: C-C California Plaza Partnership, a California general partnership, as successor-in-interest to California Plaza Associates, a California general partnership, the original Landlord under the Lease. PERMITTED USE: General office uses. SUBLEASE PREMISES: A portion of the 3rd floor of the Leased Premises, containing approximately 11,540 square feet of Rentable Area, as shown by crosshatch on the Floor Plan attached hereto as Exhibit B. SUBLEASE TERM: The period commencing on the Commencement Date and ending on the Expiration Date. SUBLESSEE'S BROKER: Scott Ellis of Grubb & Ellis Company. SUBLESSOR'S BROKER: Jeffrey Weil of Grubb & Ellis Company. 1.2. LEASE DEFINED TERMS. Except as otherwise specified in this Sublease, all terms defined in the Lease shall have the same meaning when used in this Sublease. 1.3. OTHER DEFINED TERMS. Certain other terms shall have the meaning set forth for each such term elsewhere in this Sublease. 2. DEMISE OF SUBLEASE PREMISES. Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the Sublease Premises on the terms and conditions set forth in this Sublease. 3. TERM. The Sublease Term shall commence on the Commencement Date and shall end on the Expiration Date, unless this Sublease is sooner terminated pursuant to its terms, or the Lease is sooner terminated pursuant to its terms, in which 2 event this Sublease shall also automatically terminate. Sublessee acknowledges that Sublessee has no option to extend the Sublease Term. 4. DELIVERY OF PREMISES. Sublessor shall deliver the Sublease Premises to Sublessee in as-is condition. Sublessor has no obligation to make any improvements or alterations to the Sublease Premises. Occupancy of any portion of the Sublease Premises by Sublessee shall constitute acceptance of the Sublease Premises, unless any portion of such Sublease Premises is considered "uninhabitable" under applicable California laws, rules ordinances or regulations. No delay from any cause whatsoever in delivery of the Sublease Premises to Sublessee hereunder shall extend the Sublease Term beyond the Expiration Date, and Sublessor shall have no liability whatsoever on account of any such delay in delivery of the Sublease Premises, but if delivery of the Sublease Premises is delayed for more than fifteen (15)) days beyond the date of execution of this Sublease, except to the extent any such delay is caused by a Sublessee delay, Sublessee shall have the right-to terminate this Sublease, and the obligations of the parties hereunder, by delivering to Sublessor written notice of such termination within ten (10) days after the expiration of such 15-day period. Termination of this Sublease in accordance with the foregoing shall be Sublessee's sole remedy on account of any failure by Sublessor to deliver the Sublease Premises hereunder. In the event Sublessee fails to deliver notice of termination hereunder within such 10-day period, then this Sublease shall continue in full force and effect.Notwithstanding anything contained herein, any delay in occupancy not caused by Sublessee shall adjust the commencement date of the Sublease accordingly and Sublessee shall have no rights or liability hereunder before such Commencement Date. 5. BASE RENT AND ADDITIONAL RENT 5.1. BASE RENT. Commencing on the first day of the Sublease Term, and on the first day of each month thereafter during the Sublease Term, Sublessee shall pay to Sublessor in advance Base Rent for the Sublease Premises. If the first or last day of the Sublease Term is other than the first day of a calendar month, then the first and/or last months' payment of Base Rent shall be prorated based on the number of days elapsed in each such month. 5.2. ADDITIONAL RENT. The combined Base Rent and Basic Operating Costs for this sublease shall be $13,000.00 per month total for the entire sublease term. Sublessee shall reimburse Sublessor for its parking expenses, pursuant to Section 9.2, in addition to the $13,000.00 per month rental payment. There shall be no Basic Operating Costs passthrough to the Sublessee. 5.3. ADDITIONAL SERVICES. If Sublessee desires any services in amounts exceeding the basic services to be provided by Master Landlord pursuant to Section 4.3(b) of the Lease, and in the event that Master Landlord elects to provide such 3 additional services, then Sublessee shall reimburse Master Landlord for Master Landlord's costs of providing such additional services, including all such costs imposed by Master Landlord on Sublessor. Upon request by Sublessee to Sublessor, Sublessor shall use reasonable good faith efforts in assisting Sublessee in obtaining from Master Landlord the provision of such additional services, but without warranty, representation or liability for any failure by Sublessor to obtain from Master Landlord the provision of such additional services. 5.4. TAXES ON PERSONAL PROPERTY AND IMPROVEMENTS; LIENS. In addition to Sublessee's obligation to make payment of additional rent pursuant to Paragraph 5.2 and 5.5 herein, Sublessee shall be responsible for, and shall pay prior to delinquency, taxes or governmental service fees, capital levies or other charges imposed upon, levied with respect to, or assessed against, Sublessee's personal property, additions and improvements made to the Sublease Premises by Sublessee and reimbursement to Sublessor for any taxes on the furniture inventory as shown on Exhibit C. To the extent that any such taxes are not separately assessed or billed to Sublessee, Sublessee shall pay to Sublessor or Master Landlord, as the case may be, the amount of such taxes assessed or billed to Sublessor or Master Landlord within thirty (30) days after delivery of a copy of such assessment or bill, or ten (10) days prior to the last day such taxes may be paid without penalty, whichever is later. Sublessee shall at all times keep the Project and every part thereof free from any liens of any sort (including mechanics' liens) related in any way to the activities, responsibilities or liabilities of Sublessee. 5.5. PAYMENT OF BASE RENT AND OTHER CHARGES. All amounts and charges payable by Sublessee under this Sublease in addition to Base Rent shall constitute additional rent payable by Sublessee hereunder. Sublessee shall make payment of Base Rent and all additional rent without offset or deduction. Unless and until otherwise directed by Sublessor in writing, Sublessee shall make all payments due to Sublessor under this Sublease to Sublessor at the address specified for notices in Paragraph 17 below. 5.6. CHARGES ON DELINQUENT AMOUNTS. Sublessee acknowledges that if Sublessee fails to pay Sublessor any amount due hereunder by the due date, that Sublessor will incur costs and expenses in processing such delinquent payments, particularly with respect to its obligations to make payments of Rental to Master Landlord under the Lease, a portion of which will be comprised of amounts payable by Sublessee hereunder. Accordingly, based on the parties' assessment of the reasonable estimate of such costs and expenses which Sublessor would incur based on the facts and circumstances existing as of the date of this Sublease, if Sublessee fails to pay to Sublessor any amount due under this Sublease within five (5) days after written notice from Sublessor to Sublessee that such payment is due, Sublessee shall pay Sublessor upon demand a late charge equal to five percent (5%) of the delinquent amount. In addition, Sublessee shall pay to Sublessor per annum interest 4 on all amounts due at the Default Rate or at the maximum rate allowed by law, whichever is less, from the due date to and including the date of payment. Sublessor's acceptance of any late charge or interest hereunder shall not waive Sublessee's default in failing to pay the delinquent amount. 6. USE OF SUBLEASE PREMISES. Sublessee shall use the Sublease Premises solely for the Permitted Use and for no other use or purpose whatsoever. 7. ASSIGNMENT AND SUBLETTING. 7.1. PERMITTED TRANSFERS. Except as hereinafter provided, Sublessee shall not assign this Sublease or sublease the Sublease Premises, or any portion thereof, without Sublessor's prior written consent, which consent shall not be unreasonably withheld or delayed, and shall in any event be given or withheld within twenty (20) days after Sublessor's receipt from Sublessee of a request for such consent, together with such documents and other materials as Sublessor may reasonably require in order to render a decision on consent hereunder. Notwithstanding the foregoing, Sublessee may, without Sublessor's prior consent, but with notice to Sublessor prior to consummation, assign this Sublease, or sublet all or any portion of the Sublease Premises, to any person or entity controlled by, controlling, or under common control with Sublessee (collectively, an "affiliate"). If Sublessor declines to consent to any assignment or sublease hereunder, Sublessor shall include with any notice of declination a statement in reasonable detail of Sublessor's basis for such declination. No assignment or subletting by Sublessee hereunder shall relieve Sublessee of any obligation under this Sublease. 7.2. TERMS OF TRANSFERS. Each assignee shall, concurrently with any assignment, assume all obligations of Sublessee under this Sublease. Each sublease shall be made subject to this Sublease and all of the terms, convenants and conditions contained herein; and the surrender of this Sublease by Sublessee, or a mutual cancellation thereof, or the termination of this Sublease in accordance with its terms, shall not work a merger and shall, at the option of Sublessor, terminate all or any existing subleases or operate as an assignment to Sublessor of any or all such subleases. No sublessee shall have the right further to sublet, except to an affiliate of Sublessee. Any assignment by a sublessee of its sublease shall be subject to Sublessor's prior consent in the same manner as a sublease by Sublessee. No sublease, once consented to by Sublessor, shall be modified without Sublessor's prior consent. No assignment or sublease shall be binding on Sublessor unless the transferee delivers to Sublessor a fully executed counterpart of the assignment or sublease which contains the assumption by the assignee, or recognition by the Sublessee, of the provisions of this Paragraph 7, in form and substance satisfactory to Sublessor, but the failure or refusal of a transferee to deliver such instrument shall not release or discharge such transferee from the provisions and obligations of this 5 Paragraph 7, but such failure shall constitute a default by Sublessee under this Sublease. 7.3. EFFECT OF TRANSFER. The acceptance of rent by Sublessor from any person other than Sublessee shall not be deemed a waiver by Sublessor of any provision of this Paragraph 7. On default by any assignee of Sublessee in the performance of any of the terms, covenants or conditions of this Sublease, Sublessor may proceed directly against Sublessee without the necessity of exhausting remedies against such assignee. No consent by Sublessor to any further assignments or sublettings of this Sublease, or any modification, amendment or termination of this Sublease, or extension, waiver or modification of payment or any other obligations under this Sublease, or any other action by Sublessor with respect to any assignee or Sublessee, or the insolvency, or bankruptcy or default of any such-assignee or sublessee, shall affect the continuing liability of Sublessee for its obligations under this Sublease and Sublessee waives any defense arising out of or based thereon, including any suretyship defense of exoneration. Sublessor shall have no obligation to notify Sublessee or obtain Sublessee's consent with respect to any of the foregoing matters. 7.4. MASTER LANDLORD RIGHTS; NO ENCUMBRANCE. Sublessee's rights with respect to assignment and subletting hereunder, and Sublessor's obligations with respect thereto, shall in all events be subject to any and all rights of the Master Landlord with respect to assignment and subletting under Section 5.8 of the Lease. Notwithstanding anything to the contrary contained in this Paragraph 7, Sublessee shall have no right to encumber, pledge, hypothecate or otherwise transfer this Sublease, or any of Sublessee's interest or rights hereunder, as security for any obligation or liability of Sublessee 8. GRAPHICS AND BUILDING SIGNAGE. Sublessor shall use reasonable good faith efforts to cause Master Landlord to provide to Sublessee appropriate identification of Sublessee's name and suite numerals at the main entrance door to the Sublease Premises pursuant to the provisions of Section 4.5 of the Lease. In addition, Sublessor shall use reasonable good faith efforts to cause Master Landlord to list Sublessee and its officers and employees on any Building directory to the extent so provided by Master Landlord. Subject to Sublessee's compliance with all applicable laws, ordinances, rules and regulations, at Sublessee's sole cost and expense, and subject to obtaining the prior written consent of Master Landlord (as to which Sublessor shall use reasonable good faith efforts in cooperation with Sublessee to obtain), Sublessee may place a sign or signs on or within the Project identifying Sublessee as an occupant of the Project. The cost of installation, maintenance and operation of any such Project signs shall be borne by Sublessee, unless otherwise agreed by Master Landlord. 9. PARKING. 6 9.1. ASSIGNMENT OF PARKING RIGHTS. Subject to and in accordance with the provisions of this Paragraph 9, Sublessor hereby assigns to Sublessee as an appurtenance to the Sublease Premises the right to utilize 34 "valet" as available (or unreserved) parking stalls within the Project, pursuant to and in accordance with the terms and conditions of Section 4.6 of the Lease, except as modified by this Paragraph 9. 9.2. PAYMENT OF PARKING CHARGES. Sublessor shall pay all amounts due Master Landlord under Section 4.6 of the Lease on account of Sublessee's use of the parking stalls hereunder, except that Sublessee shall reimburse Sublessor for any increases in such parking charges effected by Master Landlord pursuant to Section 4.6 of the Lease over the parking charges prevailing as of the Commencement Date. Immediately upon receipt from Master Landlord of statements for parking charges during the Sublease Term after the Commencement Date, Sublessor shall provide such statements to Sublessee, together with Sublessor's calculation of any amounts due on account of increases in parking charges, and Sublessee shall reimburse Sublessor for the amount due within thirty (30) days after receipt of Sublessor's statement. 9.3. ADDITIONAL PARKING. In addition to the parking rights assigned to Sublessee hereunder, Sublessor shall use reasonable good faith efforts to assist Sublessee in obtaining additional parking rights from Master Landlord to the extent required by Sublessee's business operations in the Sublease Premises. 10. INTENTIONALLY OMITTED. 11. ALTERATIONS. Sublessee shall not make any alterations, improvements or additions to the Sublease Premises, except in any applicable provisions of the Lease, and then only with the prior written consent of both Master Landlord and Sublessor. Notwithstanding the above, Sublessee shall have the authority to make alterations under $5,000 that are decorating-type alterations without the prior written consent of Sublessor, provided Sublessee has obtained any consents required of the Master Landlord. 12. USE OF HAZARDOUS MATERIALS. As used herein, "environmental laws" means all present and future statutes, ordinances, orders, rules and regulations of all federal, state or local governmental agencies relating to the use, generation, manufacture, installation, release, discharge, storage or disposal of hazardous materials; and "hazardous materials" means petroleum, asbestos, polychlorinated biphenyls, radioactive materials, radon gas or any chemical, material or substance now or hereafter defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous waste", "restricted hazardous waste" or "toxic substances", or words of similar import, under any 7 environmental laws. Sublessee shall not use, or allow use of, hazardous materials in the Sublease Premises or transport the same through the Project, except in accordance with the rules and regulations of the Project. In the event of a release of any hazardous materials of which Sublessee has knowledge or receives notice, Sublessee shall immediately notify Sublessor and Master Landlord and, if such release was caused by the act or neglect of Sublessee, any person or entity holding under Sublessee, or any officer, employee, agent, representative or contractor of Sublessee, then Sublessee shall promptly take such remedial actions as Sublessor and/or Master Landlord may deem necessary or appropriate to clean up the same. Sublessee shall use, handle, store and transport any hazardous materials hereunder in accordance with the applicable requirements of environmental laws, and shall notify Sublessor and Master Landlord of any violation of environmental laws of which it receives notice from any governmental agency having jurisdiction. As used herein, Sublessee includes its employees, agents, contractors, invitees or licensees. Sublessor agrees to indemnify and save Sublessee harmless from all claims, liability, loss or damage (not due to Sublessee) with respect to the Premises for Sublessor's failure, and to the extent Sublessor receives indemnity from Master Landlord, for Master Landlord's failure to comply with all federal, state, local laws, rules, regulations or governmental reporting requirements with respect to hazardous wastes and materials. 13. INTERRUPTION OR UNAVAILABILITY OF SERVICES. Notwithstanding any failure to furnish or delay in furnishing any maintenance or services under the Lease, regardless of the cause of such failure or delay, (i) Sublessor shall not be in default hereunder or liable for any damages directly or indirectly resulting from any such failure or delay, (ii) Base Rent and other charges payable by Sublessee shall not be abated, (iii) no constructive or other eviction shall be deemed to have occurred, and (iv) Sublessee shall not be relieved from any of its obligations under this Sublease. 14. INCORPORATION OF LEASE TERMS. 14.1. INCORPORATION BY REFERENCE. The terms and conditions of this Sublease shall include the following Sections of the Lease, which are incorporated into this Sublease as if fully set forth herein, except that in such incorporated Sections (i) each reference to "Lease" shall be deemed a reference to "Sublease"; (ii) each reference to "Landlord" shall be deemed a reference to "Sublessor"; (iii) each reference to "Tenant" shall be deemed a reference to "Sublessee"; and (iv) each reference to "Leased Premises" shall be deemed a reference to "Sublease Premises". The following Sections of the Lease are hereby so incorporated into this Sublease: Section 5.5, commencing with the phrase "Tenant shall reimburse Landlord..." in the third sentence thereof; Section 5.7; Section 5.10, except that the reference to "Landlord" in the antepenultimate line thereof shall be deemed to refer to the Master 8 Landlord, and Sublessor shall have no obligation therefor other than the obligation to use reasonable good faith efforts to cause Master Landlord to perform its obligations thereunder; Section 5.11; Section 5.12; Section 5.14, except that references to the "Term Commencement Date" shall be deemed to refer to the "Commencement Date", references to the "Term Expiration Date" shall be deemed to refer to the "Expiration Date" and the period for responding to Sublessor's request for a certificate under Section 5.14 as so incorporated herein shall be twenty (20) days; Section 6.2; Section 6.3 except that Master Landlord shall also be named as an additional insured under each such policy in accordance with the provisions of Section 6.3, Master Landlord shall also have the right to inspect and/or copy Sublessee's insurance policies required to be maintained under this Sublease, and no policy required to be carried by Sublessee shall be cancelable or materially altered except after thirty (30) days written notice to Sublessor, Master Landlord and Master Landlord's lender; Section 6.5, except for clause (iii) of Section 6.5(b) ; and Section 6.6. 14.2. RELATION BETWEEN SUBLEASE AND LEASE; SUBLESSOR'S OBLIGATIONS. This Sublease is and at all times shall be subject and subordinate to the Lease. Sublessee hereby expressly assumes and agrees to comply with all the provisions of the Lease, to the extent applicable to Sublessee and/or the Sublease Premises, and to perform all the obligations on the part of Tenant to be performed under the terms of the Lease. Sublessee acknowledges that Sublessor shall have no obligation to make any repairs to the Sublease Premises or to take any other action in connection with the Sublease Premises, and Sublessee assumes responsibility therefor; provided, however, that Sublessor shall pay any sums which it is required to pay to Master Landlord under the terms of the Lease and perform its obligations under the Lease in accordance with its terms to the extent not to be performed by Sublessee under this Sublease, all so long as Sublessee is not in default in the performance of annoys its obligations under this Sublease, including payment of Base Rent or any other amounts payable by Sublessee under this Sublease. 14.3. ENFORCEMENT OF LEASE. Notwithstanding anything to the contrary contained in this Sublease, and except to the extent caused by the failure of Sublessor to perform its obligations under this Sublease, Sublessee shall look solely to Master Landlord for the performance of all obligations of Master Landlord under the Lease, and Sublessor shall have no responsibility or liability on account of any failure by Master Landlord to perform any of its obligations under the Lease, including any failure to provide basic services, or operate or maintain the Project in accordance with the standards specified in the Lease. Subject to the foregoing limitations, and except to the extent caused by the failure of Sublessor to perform its obligations under this Sublease, upon written request of Sublessee, Sublessor shall, at Sublessee's sole cost and expense, take such actions as Sublessor deems reasonable under the circumstances, acting in good faith, to enforce Master Landlord's 9 obligations under the Lease. In the event that Sublessee desires to initiate any litigation or other proceedings against Master Landlord on account of any failure by Master Landlord to perform its obligations under the Lease, Sublessor shall cooperate reasonably with Sublessee in connection therewith, including permitting Sublessee to bring such proceeding in the name of Sublessor, provided that Sublessee pays all costs and expenses incurred by Sublessor in connection with the foregoing, and Sublessee indemnifies, defends, protects and holds Sublessee, its affiliates, officers, directors, employees, agents and representatives, harmless from and against any and all liability, losses, claims, causes of action, damages, costs and expense (including reasonable attorneys' fees) arising out of or in connection with any such proceeding or other actions taken by Sublessee against Master Landlord, except that the foregoing proviso and indemnity shall not apply to the extent that Master Landlord's failure to perform its obligations under the Lease is caused by the failure of Sublessor to perform its obligations under this Sublease. 15. DEFAULT AND REMEDIES. 15.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute default by Sublessee under this Sublease: 15.1.1. NONPAYMENT OF RENT. Failure to pay any Base Rent or other amounts when due. 15.1.2. UNPERMITTED ASSIGNMENT. An assignment or sublease made in contravention of any of the provisions of Paragraph 7 above. 15.1.3. ABANDONMENT. Abandonment of the Sublease Premises for a continuous period in excess of five (5) business days. For purposes hereof, "abandonment" means cessation by Sublessee of the conduct of its business in the Sublease Premises or removal from the Sublease Premises of the personal property, equipment and furnishings used by Sublessee in its business in the Sublease Premises. 15.1.4. OTHER OBLIGATIONS. Failure to perform or fulfill any other obligation, covenant, condition or agreement under this Sublease. 15.1.5. BANKRUPTCY AND INSOLVENCY. A general assignment by Sublessee for the benefit of creditors, any action or proceeding commenced by Sublessee under any insolvency or bankruptcy act or under any other statute or regulation for protection from creditors, or any such action commenced against Sublessee and not discharged within sixty (60) days after the date of commencement; 10 the employment or appointment of a receiver or trustee to take possession of all or substantially all of Sublessee's assets or the Sublease Premises; the attachment, execution or other judicial seizure of all or substantially all of Sublessee's assets or the Sublease Premises, if such attachment or other seizure remains undismissed or undischarged for a period of twenty (20) days after the levy thereof; the admission by Sublessee in writing of its inability to pay its debts as they become due; or the filing by Sublessee of a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, the filing by Sublessee of an answer admitting or failing timely to contest a material allegation of a petition filed against Sublessee in any such proceeding or, if within sixty (60) days after the commencement of any such proceeding against Sublessee, such proceeding is not dismissed. For purposes of this Paragraph 15.1.5, "Sublessee" means Sublessee and any partner of Sublessee, if Sublessee is a partnership, or any person or entity comprising Sublessee, if Sublessee is comprised of more than one person or entity, or any guarantor of Sublessee's obligations, or any of them, under this Sublease. 15.2. NOTICE TO SUBLESSEE. Upon the occurrence of any default, Sublessor shall give Sublessee notice thereof. If a time period is specified below for cure of such default, then Sublessee may cure such default within such time period. The time periods provided below are exclusive of any other time periods provided by law with respect to cure of any such default and Sublessee hereby waives any right under law now or hereinafter enacted to any other time period. 15.2.1. NONPAYMENT OF RENT. For failure to pay Base Rent or other charges, within five (5) days after Sublessor's notice, unless Sublessee has failed more than two (2) times during the Sublease Term timely to pay any Base Rent or other charge, in which event no cure period shall apply. 15.2.2. OTHER OBLIGATIONS. For failure to perform any obligation, covenant, condition or agreement under this Sublease (other than nonpayment of Rent, an assignment or subletting in violation of Paragraph 7 or Sublessee's abandonment of the Sublease Premises) within ten (10) days after Sublessor's notice or, if the failure is of a nature requiring more than 10 days to cure, then an additional twenty (20) days after the expiration of such 10-day period, but only if Sublessee commences cure within such 10-day period and thereafter diligently pursues such cure to completion within such additional 20-day period. If Sublessee has failed to perform any such obligation, covenant, condition or agreement more than two (2) times during the Sublease Term and notice of such event of default has been given by Sublessor in each instance, then no cure period shall apply. 15.2.3. NO CURE PERIOD. No cure period shall apply for any other event of default specified in Paragraph 15.1. 11 15.3. REMEDIES UPON OCCURRENCE OF DEFAULT. On the occurrence of a default which Sublessee fails to cure after notice and expiration of the time period for cure, if any, specified in Paragraph 15.2 above, Sublessor shall have the right either (i) to terminate this Sublease and recover possession of the Sublease Premises, or (ii) to continue this Sublease in effect and enforce all Sublessor's rights and remedies under California Civil Code Section 1951.4 (by which Sublessor may recover rent as it becomes due, subject to Sublessee's right to assign pursuant to Paragraph 7). Sublessor may store any property of Sublessee located in the Sublease Premises at Sublessee's expense or otherwise dispose of such property in the manner provided by law. If Sublessor does not terminate this Sublease, Sublessee shall in addition to continuing to pay all Base Rent and other charges when due, also pay Sublessor's costs of attempting to relet the Sublease Premises, any repairs and alterations necessary to prepare the Sublease Premises for such reletting, and brokerage commissions and attorneys' fees incurred in connection therewith, less the rents, if any, actually received from such reletting. Notwithstanding Sublessor's election to continue this Sublease in effect, Sublessor may at any time thereafter terminate this Sublease pursuant to this Paragraph 15.3. 15.4. DAMAGES UPON TERMINATION. If and when Sublessor terminates this Sublease pursuant to Paragraph 15.3, Sublessor may exercise all its rights and remedies available under California civil code Section 1951.2, including the right to recover from Sublessee the worth at the time of award of the amount by which the unpaid Base Rent and other charges for the balance of the Term after the time of award exceeds the amount of such rent loss that the Sublessee proves could have been reasonably avoided. As used herein and in Civil Code Section 1951.2, "time of award" means either the date upon which Sublessee pays to Sublessor the amount recoverable by Sublessor, or the date of entry of any determination, order or judgment of any court or other legally constituted body determining the amount recoverable, whichever occurs first. 15.5. COMPUTATION OF CERTAIN RENT FOR PURPOSES OF DEFAULT. For purposes of computing unpaid rent pursuant to Paragraph 15.4 above, increases in Basic Operating Cost and real property taxes (the "Escalation Rent") for the balance of the Sublease Term shall be determined by averaging the amount paid by Sublessee as Escalation Rent for the calendar year prior to the year in which the default occurred (or, if the prior year is the Sublease Base Year or such default occurs during the Sublease Base Year, Escalation Rent shall be based on Master Landlord's Estimated Basic Operating Cost for the Sublease Base Year), increasing such average amount for each calendar year (or portion thereof) remaining in the balance of the Sublease Term at a per annum compounded rate equal to the mean average rate of increase for the preceding five (5) calendar years in the Index. 15.6. DEFAULT OF SUBLESSOR. Except as otherwise provided herein, Sublessor shall be in breach of its obligations under this Sublease if (i) in the case of a breach 12 which can be cured by payment of money, such breach continues for thirty (30) days after notice without cure, or (ii) in the case of a breach which cannot cured by payment of money, (A) such breach continues either for thirty (30) days after notice, or (B) in the case of a breach which cannot be cured within thirty (30) days, such breach continues for thirty (30) days after notice and is not thereafter cured in fact as soon as reasonably feasible under the circumstances. Sublessor shall be liable to Sublessee for all amounts necessary to compensate Sublessee for all the detriment proximately caused by Sublessor's failure to cure within the foregoing time periods any breach of its obligations under this Sublease or which in the ordinary course of things would be likely to result therefrom. Upon a breach by Sublessor under this Sublease which is not cured within the foregoing cure periods, Sublessee shall have recourse to all available legal and equitable remedies. 15.7. RIGHT TO CURE DEFAULTS. If either party fails to perform any obligation under this Sublease, and such party fails to cure such default within the applicable cure period, if any, specified in this Paragraph 15, then the other party may, without waiving or releasing the defaulting party from any of its obligations or such default, make any such payment or perform such other obligation on behalf of the defaulting party. All payments so made by a party, and all costs and expenses incurred by a party to perform such obligations, shall be due and payable by the defaulting party as additional rent immediately upon receipt of demand therefor from the other party. 15.8. REMEDIES CUMULATIVE. The rights and remedies of each party under this Sublease are cumulative and in addition to, and not in lieu of, any other rights and remedies available to each party at law or in equity. A party's pursuit of any such right or remedy shall not constitute a waiver or election of remedies with respect to any other right or remedy. 16. WAIVER. Failure of a party to declare default by the other party upon occurrence thereof, or delay in taking any action in connection therewith, shall not waive such default, but the non-defaulting party shall have the right to declare such default at any time after its occurrence. To be effective, a waiver of any provision of this Sublease, or any default, shall be in writing and signed by the waiving party. Any waiver hereunder shall not be deemed a waiver of subsequent performance of any such provision or subsequent defaults. The subsequent acceptance of Base Rent or other charges hereunder, or endorsement of any check by Sublessor, shall not be deemed to constitute an accord and satisfaction or a waiver of any preceding default by Sublessee, except as to the particular Base Rent or other charges so accepted, regardless of Sublessor's knowledge of the preceding default at the time of acceptance of the Base Rent or other charge. No course of conduct between Sublessor and Sublessee, and no acceptance of the keys to or possession of the Sublease Premises by Sublessor before the Expiration Date, shall constitute a waiver of any provision of this Sublease or of any default, or operate as a surrender of this Sublease. 13 17. NOTICES. The address of each party and Master Landlord for the purpose of all notices permitted or required by this Sublease is as follows: To Master Landlord: 2121 North California Boulevard Suite 230 Walnut Creek, California 94596 Attention: Building Management To Sublessor: 2700 Post Oak Boulevard 21st Floor Houston, Texas 77056 Attention: John N. Baird, Vice President To Sublessee: 2121 North California Boulevard, 3rd Floor Walnut Creek, CA 94596 Attention: Mr. Dick Baum, Chief Financial Officer The notice address of any party set forth above may be changed by written notice given not less than five (5) days prior to the date such change is to be effected. All notices hereunder shall be in writing, shall be properly addressed and shall be sent by personal delivery, by United States Mail (certified or Express Mail, return receipt requested and postage prepaid), or by overnight courier delivery service. All such notices shall be considered delivered: (i) if personally delivered, on the date of delivery; (ii) if sent by United States Mail in the manner prescribed above, on the date shown on the return receipt for acceptance or rejection; or (iii) if sent by overnight courier delivery service, on the date of delivery as shown by the written delivery record of such service. 18. NO JOINT VENTURE. This Sublease does not create any partnership or joint venture or similar relationship between Sublessor and Sublessee. 19. SUCCESSORS AND ASSIGNS. Subject to the provisions of Paragraph 7 regarding assignment, all of the provisions, terms, covenants and conditions contained in this Sublease shall bind, and inure to the benefit of, the parties and their respective successors and assigns. 20. CONSTRUCTION AND INTERPRETATION. References to a party or parties refers to Sublessor or Sublessee, or both, as the context may require. The 14 captions preceding the Paragraphs of this Sublease are inserted solely for convenience of reference and shall have no effect upon, and shall be disregarded in connection with, the construction and interpretation of this Sublease. Use in this Sublease of the words "including", "such as", or words of similar import when following a general matter, shall not be construed to limit such matter to the enumerated items or matters whether or not language of non limitation (such as "without limitation") is used with reference thereto. All provisions of this Sublease have been negotiated at arm's length between the parties and after advice by counsel and other representatives chosen by each party and the parties are fully informed with respect thereto. Therefore, this Sublease shall not be construed for or against either party by reason of the authorship or alleged authorship of any provision hereof, or by reason of the status of the parties as Sublessor or Sublessee, and the provisions of this Sublease and the Exhibits hereto shall be construed as a whole according to their common meaning in order to effectuate the intent of the parties under the terms of this Sublease. 21. ENTIRE AGREEMENT; AMENDMENTS. This Sublease, together with the Exhibits hereto, contain all the representations and the entire agreement between the parties with respect to the subject matter hereof and any prior negotiations, correspondence, memoranda, agreements, representations or warranties are replaced in total by this Sublease, the Exhibits hereto. Neither Sublessor nor Sublessor's agents have made any warranties or representations with respect to the Sublease Premises or any other portion of the Project, except as expressly set forth in this Sublease. This Sublease may be modified or amended only by an agreement in writing signed by both parties. 22. ATTORNEYS' FEES. If either Sublessor or Sublessee brings an action or proceeding (including any cross-complaint, counterclaim or third party claim) against the other party by reason of the breach or alleged violation of any covenant, term or obligation hereof, or for the enforcement or interpretation of any provision hereof, the prevailing party in such action or proceeding shall be entitled to its costs and expenses of suit, including reasonable attorneys' fees. 23. STANDARDS OF PERFORMANCE AND APPROVALS. Unless otherwise provided in this Sublease, (i) each party shall act in a reasonable manner in exercising or undertaking its rights, duties and obligations under this Sublease and (ii) whenever approval, consent or satisfaction (collectively, an "approval") is required of a party pursuant to this Sublease or an Exhibit hereto, such approval shall not be unreasonably withheld or delayed. Unless provision is made for a specific time period, approval (or disapproval) shall be given within thirty (30) days after receipt of the request for approval. Nothing contained in this Sublease shall limit the right of a party to act or exercise its business judgment in a subjective manner with respect to any matter as to which it has been (A) specifically granted such right, (B) granted the right to act in its sole discretion or sole judgment, or (C) granted the right to make a 15 subjective judgment hereunder, whether "objectively" reasonable under the circumstances and any such exercise shall not be deemed inconsistent with any covenant of good faith and fair dealing implied by law to be part of this Sublease. In addition to any specific provisions of this Sublease with respect thereto, whenever under this Sublease Sublessor is required to use reasonable good faith efforts, then, so long as Sublessor has so used such reasonable good faith efforts with respect to the subject matter as to which such obligation is imposed, except as otherwise provided herein, Sublessor shall have no liability of any kind or character whatsoever to Sublessee with respect to such matter or the results of Sublessor's reasonable good faith efforts. The parties have set forth in this Sublease their entire understanding with respect to the terms, covenants, conditions and standards pursuant to which their obligations are to be judged and their performance measured, including the provisions of Paragraph 7 with respect to assignments and sublettings. 24. BROKERS. Sublessor shall pay to Sublessor's Broker a commission in connection with Sublessor's Broker's negotiation of this Sublease pursuant to a separate agreement between Sublessor and Sublessor's Broker. Subject to fulfillment of the conditions precedent specified in Paragraph 28 below, Sublessor shall pay to Sublessee's Broker a commission in amount of 5% of the total consideration of this sublease, which based on a sublease value of $221,000 is $11,050.00 for the Sublessee's Broker. Other than the Brokers, Sublessor and Sublessee each represent and warrant to the other that no broker, agent, or finder has procured or was involved in the negotiation of this Sublease and no such broker, agent or finder is or may be entitled to a commission or compensation in connection with this Sublease. Sublessor and Sublessee shall each indemnify, defend, protect and hold the other harmless from and against any and all liability, loss, damages, claims, costs and expenses (including reasonable attorneys' fees) resulting from claims that may be asserted against the indemnified party in breach of the foregoing warranty and representation. 25. SURRENDER OF SUBLEASE PREMISES. Upon the Expiration Date or earlier termination of this Sublease, Sublessee shall quietly and peacefully surrender the Sublease Premises to Sublessor in the condition specified in Section 5.9 of the Lease. On or before the Expiration Date or earlier termination of this Sublease, Sublessee shall remove all of its personal property from the Sublease Premises and repair at its cost and expense all damage to the Sublease Premises or Project caused by such removal. All personal property of Sublessee not removed hereunder shall be deemed, at Sublessor's option, to be abandoned by Sublessee and Sublessor or Master Landlord may store such property in Sublessee's name at Sublessee's expense and/or dispose of the same in any manner permitted by law. 26. EXHIBITS. The following Exhibits are by this reference made a part hereof: 16 sum to the other party or a third person, shall survive the termination or expiration of this Sublease. 28. CONDITION PRECEDENT. This Sublease is expressly conditioned upon the prior written consent of Master Landlord. If Sublessor fails to obtain Master Lessor's consent within twenty (20) days after the date of execution of this Sublease by Sublessor and Sublessee, then Sublessor may terminate this Sublease by giving Sublessee written notice of such termination. 29. GOVERNING LAW. This Sublease shall be governed by and construed pursuant to the laws of the State of California. 30. TIME OF THE ESSENCE. Time is of the essence of this Sublease and of the performance of each of the provisions contained in this Sublease. IN WITNESS WHEREOF, the parties have executed this Sublease as of the day and year first above written. SUBLESSOR: AIR LIQUIDE AMERICA CORPORATION, a Delaware corporation (formerly known as LAI PROPERTIES, INC.) By: [ILLEGIBLE] Its: Vice President SUBLESSEE: DELPHI INFORMATION SYSTEMS, INC, a Delaware corporation By: [ILLEGIBLE] Its: Chief Financial Officer 17 CONSENT TO SUBLEASE (SEE ATTACHED LETTERS FROM MASTER LANDLORD] 18 MASTER LANDLORD CONSENT TO SUBLEASE The undersigned ("Master Landlord"), Landlord under the Master Lease, hereby consents to the foregoing Sublease without waiver of any restriction or any other provision of the Master Lease. MASTER LANDLORD: C-C CALIFORNIA PLAZA PARTNERSHIP, a California General Partnership BY: Cygna Development Corporation a California Corporation its general partner By: [ILLEGIBLE] Its: Project Manager 19 EX-10.32 17 ex-10_32.txt EXHIBIT 10.32 EXHIBIT 10.32 DELPHI INFORMATION SYSTEMS, INC. 1996 STOCK INCENTIVE PLAN DELPHI INFORMATION SYSTEMS, INC. 1996 STOCK INCENTIVE PLAN TABLE OF CONTENTS
PAGE ----------- 1. Purpose............................................................................................. 1 2 Definitions......................................................................................... 1 3. Shares and Performance Units Available under the Plan............................................... 2 4. Option Rights....................................................................................... 3 5. Appreciation Rights................................................................................. 4 6. Restricted Shares................................................................................... 5 7. Deferred Shares..................................................................................... 6 8. Performance Shares and Performance Units............................................................ 6 9. Transferability..................................................................................... 7 10. Adjustments......................................................................................... 7 11. Fractional Shares................................................................................... 8 12. Withholding Taxes................................................................................... 8 13. Participation by Directors, Officers and Other Key Employees of or Consultants to a Less- Than-80-Percent Subsidiary........................................................................ 8 14. Certain Terminations of Employment, Hardship and Approved Leaves of Absence......................... 8 15. Foreign Participants................................................................................ 9 16. Administration of the Plan.......................................................................... 9 17. Amendments and Other Matters........................................................................ 9
i DELPHI INFORMATION SYSTEMS, INC. 1996 STOCK INCENTIVE PLAN 1. PURPOSE. The purpose of this Plan is to attract and retain directors, officers and other key employees of and consultants to Delphi Information Systems, Inc. (the "Corporation") and its Subsidiaries and to provide such persons with incentives and rewards for superior performance. 2. DEFINITIONS. (a) As used in this Plan: "APPRECIATION RIGHT" means a right granted pursuant to Section 5 of this Plan, including a Free-Standing Appreciation Right and a Tandem Appreciation Right. "BASE PRICE" means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation Right. "BOARD" means the Board of Directors of the Corporation. "CODE" means the Internal Revenue Code of 1986, as amended from time to time. "COMMITTEE" means a committee of not less than two "Non-Employee Directors" (as defined in Rule 16b-3(b)(3)(i) under Section 16(b) of the Exchange Act) appointed by and serving at the pleasure of the Board. "COMMON SHARES" means (i) shares of the Common Stock, par value $.10 per share, of the Corporation and (ii) any security into which Common Shares may be converted by reason of any transaction or event of the type referred to in Section 10 of this Plan. "DATE OF GRANT" means the date specified by the Board on which a grant of Option Rights, Appreciation Rights or Performance Shares or Performance Units or a grant or sale of Restricted Shares or Deferred Shares shall become effective, which shall not be earlier than the date on which the Board takes action with respect thereto. "DEFERRAL PERIOD" means the period of time during which Deferred Shares are subject to deferral limitations under Section 7 of this Plan. "DEFERRED SHARES" means an award pursuant to Section 7 of this Plan of the right to receive Common Shares at the end of a specified Deferral Period. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time. "FREE-STANDING APPRECIATION RIGHT" means an Appreciation Right granted pursuant to Section 5 of this Plan that is not granted in tandem with an Option Right or similar right. "INCENTIVE STOCK OPTION" means an Option Right that is intended to qualify as an "incentive stock option" under Section 422 of the Code or any successor provision thereto. "LESS-THAN-80-PERCENT SUBSIDIARY" means a Subsidiary with respect to which the Corporation directly or indirectly owns or controls less than 80 percent of the total combined voting or other decision-making power. "MANAGEMENT OBJECTIVES" means the achievement or performance objectives established pursuant to this Plan for Participants who have received grants of Performance Shares or Performance Units or, when so determined by the Board, Restricted Shares. "MARKET VALUE PER SHARE" means the fair market value of the Common Shares as determined by the Board from time to time. "NONQUALIFIED OPTION" means an Option Right that is not intended to qualify as a Tax-Qualified Option. "OPTIONEE" means the person so designated in an agreement evidencing an outstanding Option Right. "OPTION PRICE" means the purchase price payable upon the exercise of an Option Right. "OPTION RIGHT" means the right to purchase Common Shares from the Corporation upon the exercise of a Nonqualified Option or a Tax-Qualified Option granted pursuant to Section 4, or a Replacement Option Right granted pursuant to Section 17(c), of this Plan. "PARTICIPANT" means a person who is selected by the Board to receive benefits under this Plan and (i) is at that time a director or an officer (including officers who are also directors) or other key employee of or a consultant to the Corporation or any Subsidiary or (ii) has agreed to commence serving in any such capacity. "PERFORMANCE PERIOD" means, in respect of a Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating thereto are to be achieved. "PERFORMANCE SHARE" means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Section 8 of this Plan. "PERFORMANCE UNIT" means a bookkeeping entry that records a unit equivalent to $1.00 awarded pursuant to Section of this Plan. "REPLACEMENT OPTION RIGHT" means as Option Right granted pursuant to Section 17(c) of this Plan in exchange for the surrender and cancellation of an option to purchase shares of another corporation that is acquired by the Corporation or a Subsidiary by merger or otherwise. "RESTRICTED SHARES" means Common Shares granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the restrictions on transfer referred to in Section 6 hereof has expired. "SPREAD" MEANS, in the case of a Free-Standing Appreciation Right, the amount by which the Market Value per Share on the date when the Appreciation Right is exercised exceeds the Base Price specified therein or, in the case of a Tandem Appreciation Right, the amount by which the Market Value per Share on the date when the Appreciation Right is exercised exceeds the Option Price specified in the related Option Right. "SUBSIDIARY" means a corporation, partnership, joint venture, unincorporated association or other entity in which the Corporation has a direct or indirect ownership or other equity interest; PROVIDED, HOWEVER, for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, "Subsidiary" means any corporation in which the Corporation owns or controls directly or indirectly more than 50 percent of the total combined voting power represented by all classes of stock issued by such corporation at the time of the grant. "TANDEM APPRECIATION RIGHT" means an Appreciation Right granted pursuant to Section 5 of this Plan that is granted in tandem with an Option Right or any similar right granted under any other plan of the Corporation. "TAX-QUALIFIED OPTION" means an Option Right that is intended to qualify under particular provisions of the Code, including but not limited to an Incentive Stock Option. 3. SHARES AND PERFORMANCE UNITS AVAILABLE UNDER THE PLAN. (a) Subject to adjustment as provided in Section 10 of this Plan, the aggregate number of Common Shares covered by outstanding awards, except Replacement Option Rights, granted under this Plan and issued or transferred upon the exercise 2 or payment thereof, and the aggregate number of Performance Units granted under this Plan, shall not exceed 6,000,000. Common Shares issued or transferred under this Plan may be Common Shares of original issuance or Common Shares held in treasury or a combination thereof. (b) Subject to adjustment as provided in Section 10 of this Plan, the aggregate number of Common Shares covered by Replacement Option Rights granted under this Plan during any calendar year shall not exceed five percent of the Common Shares outstanding on January 1 of that year. (c) For the purposes of this Section 3: (i) Upon payment in cash of the benefit provided by any award granted under this Plan, any Common Shares that were covered by that award shall again be available for issuance or transfer hereunder. (ii) Common Shares covered by any award granted under this Plan shall be deemed to have been issued or transferred, and shall cease to be available for future issuance or transfer in respect of any other award granted hereunder, at the earlier of the time when they are actually issued or transferred or the time when dividends or dividend equivalents are paid thereon; PROVIDED, HOWEVER, that Restricted Shares shall be deemed to have been issued or transferred at the earlier of the time when they cease to be subject to a substantial risk of forfeiture or the time when dividends are paid thereon. (iii) Performance Units that are granted under this Plan, but are not earned by the Participant at the end of the Performance Period, shall be available for future grants of Performance Units hereunder. 4. OPTION RIGHTS. The Board may from time to time authorize grants to Participants of Option Rights upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Each grant shall specify the number of Common Shares to which it pertains. (b) Each grant shall specify an Option Price per Common Share, which shall be equal to or greater than the Market Value per Share on the Date of Grant; PROVIDED, HOWEVER, that the Option Price per Common Share of a Replacement Option Right may be less that the Market Value per Share on the Date of Grant. (c) Each grant shall specify the form of consideration to be paid in satisfaction of the Option Price and the manner of payment of such consideration, which may include (i) cash in the form of currency or check or other cash equivalent acceptable to the Corporation, (ii) nonforfeitable, unrestricted Common Shares that are already owned by the optionee and have a value at the time of exercise that is equal to the Option Price, (iii) any other legal consideration that the Board may deem appropriate, including but not limited to any form of consideration authorized under Section 4(d) below, on such basis as the Board may determine in accordance with this Plan and (iv) any combination of the foregoing. (d) On or after the Date of Grant of any Nonqualified Option, the Board may determine that payment of the Option Price may also be made in whole or in part in the form of Restricted Shares or other Common Shares that are subject to risk of forfeiture or restrictions on transfer. Unless otherwise determined by the Board on or after the Date of Grant, whenever any Option Price is paid in whole or in part by means of any of the forms of consideration specified in this Section 4(d), the Common Shares received by the Optionee upon the exercise of the Nonqualified Option shall be subject to the same risks of forfeiture or restrictions on transfer as those that applied to the consideration surrendered by the optionee; PROVIDED, HOWEVER, that such risks of forfeiture and restrictions on transfer shall apply only to the same number of Common Shares 3 received by the optionee as applied to the forfeitable or restricted Common Shares surrendered by the Optionee. (e) Any grant may provide for deferred payment of the Option Price from the proceeds of sale through a broker on the date of exercise of some or all of the Common Shares to which the exercise relates. (f) Successive grants may be made to the same Participant regardless of whether any Option Rights previously granted to the Participant remain unexercised. (g) Each grant may specify a period or periods of continuous employment of the Optionee by the Corporation or any Subsidiary that are necessary before the Option Rights or installments thereof shall become exercisable, and any grant may provide for the earlier exercise of the Option Rights in the event of a change in control of the Corporation or other similar transaction or event. (h) Option Rights granted pursuant to this Section 4 may be Nonqualified Options or Tax-Qualified Options or combinations thereof. (i) On or after the Date of Grant of any Nonqualified Option, the Board may provide for the payment to the Optionee of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis, or the Board may provide that any dividend equivalents shall be credited against the Option Price. (j) No Option Right granted pursuant to this Section 4 may be exercised more than 10 years from the Date of Grant. (k) Each grant shall be evidenced by an agreement, which shall be executed on behalf of the Corporation by an officer thereof and delivered to and accepted by the Optionee and shall contain such terms and provisions as the Board may determine consistent with this Plan. 5. APPRECIATION RIGHTS. The Board may also authorize grants to Participants of Appreciation Rights. An Appreciation Right shall be a right of the Participant to receive from the Corporation an amount, which shall be determined by the Board and shall be expressed as a percentage (not exceeding 100 percent) of the Spread at the time of the exercise of an Appreciation Right. Any grant of Appreciation Rights under this Plan shall be upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Any grant may specify that the amount payable upon the exercise of an Appreciation Right may be paid by the Corporation in cash, Common Shares or any combination thereof and may (i) either grant to the Participant or reserve to the Board the right to elect among those alternatives or (ii) preclude the right of the Participant to receive and the Corporation to issue Common Shares or other equity securities in lieu of cash. (b) Any grant may specify that the amount payable upon the exercise of an Appreciation Right shall not exceed a maximum specified by the Board on the Date of Grant. (c) Any grant may specify (i) a waiting period or periods before Appreciation Rights shall become exercisable and (ii) permissible dates or periods on or during which Appreciation Rights shall be exercisable. (d) Any grant may specify that an Appreciation Right may be exercised only in the event of a change in control of the Corporation or other similar transaction or event. (e) On or after the Date of Grant of any Appreciation Rights, the Board may provide for the payment to the Participant of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis. 4 (f) Each grant shall be evidenced by an agreement, which shall be executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Optionee and shall describe the subject Appreciation Rights, identify any related Option Rights, state that the Appreciation Rights are subject to all of the terms and conditions of this Plan and contain such other terms and provisions as the Board may determine consistent with this Plan. (g) Regarding Tandem Appreciation Rights only: Each grant shall provide that a Tandem Appreciation Right may be exercised only (i) at a time when the related Option Right (or any similar right granted under any other plan of the Corporation) is also exercisable and the Spread is positive and (ii) by surrender of the related Option Right (or such other right) for cancellation. (h) Regarding Free-Standing Appreciation Rights only: (i) Each grant shall specify in respect of each Free-Standing Appreciation Right a Base Price per Common Share, which shall be equal to or greater than the Market Value per Share on the Date of Grant; (ii) Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; (iii) Each grant shall specify the period or periods of continuous employment of the Participant by the Corporation or any Subsidiary that are necessary before the Free-Standing Appreciation Rights or installments thereof shall become exercisable, and any grant may provide for the earlier exercise of the Free-Standing Appreciation Rights in the event of a change in control of the Corporation or other similar transaction or event; and (iv) No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant. 6. RESTRICTED SHARES. The Board may also authorize grants or sales to Participants of Restricted Shares upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Each grant or sale shall constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling the Participant to dividend, voting and other ownership rights, subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to. (b) Each grant or sale may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Market Value per Share on the Date of Grant. (c) Each grant or sale shall provide that the Restricted Shares covered thereby shall be subject to a "substantial risk of forfeiture" within the meaning of Section 83 of the Code for a period to be determined by the Board on the Date of Grant, and any grant or sale may provide for the earlier termination of such period in the event of a change in control of the Corporation or other similar transaction or event. (d) Each grant or sale shall provide that, during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Shares shall be prohibited or restricted in the manner and to the extent prescribed by the Board on the Date of Grant. Such restrictions may include, but are not limited to, rights of repurchase or first refusal in the Corporation or provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee. (e) Any grant or sale may require that any or all dividends or other distributions paid on the Restricted Shares during the period of such restrictions be automatically sequestered and 5 reinvested on an immediate or deferred basis in additional Common Shares, which may be subject to the same restrictions as the underlying award or such other restrictions as the Board may determine. (f) Each grant or sale shall be evidenced by an agreement, which shall be executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Participant and shall contain such terms and provisions as the Board may determine consistent with this Plan. Unless otherwise directed by the Board, all certificates representing Restricted Shares, together with a stock power that shall be endorsed in blank by the Participant with respect to the Restricted Shares, shall be held in custody by the Corporation until all restrictions thereon lapse. 7. DEFERRED SHARES. The Board may also authorize grants or sales to Participants of Deferred Shares upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Each grant or sale shall constitute the agreement by the Corporation to issue or transfer Common Shares to the Participant in the future in consideration of the performance of services, subject to the fulfillment during the Deferral Period of such conditions as the Board may specify. (b) Each grant or sale may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Market Value per Share on the Date of Grant. (c) Each grant or sale shall provide that the Deferred Shares covered thereby shall be subject to a Deferral Period, which shall be fixed by the Board on the Date of Grant, and any grant or sale may provide for the earlier termination of the Deferral Period in the event of a change in control of the Corporation or other similar transaction or event. (d) During the Deferral Period, the Participant shall not have any right to transfer any rights under the subject award, shall not have any rights of ownership in the Deferred Shares and shall not have any right to vote the Deferred Shares, but the Board may on or after the Date of Grant authorize the payment of dividend equivalents on the Deferred Shares in cash or additional Common Shares on a current, deferred or contingent basis. (e) Each grant or sale shall be evidenced by an agreement, which shall be executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Participant and shall contain such terms and provisions as the Board may determine consistent with this Plan. 8. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Board may also authorize grants of Performance Shares and Performance Units, which shall become payable to the Participant upon the achievement of specified Management Objectives, upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Each grant shall specify the number of Performance Shares or Performance Units to which it pertains, which may be subject to adjustment to reflect changes in compensation or other factors. (b) The Performance Period with respect to each Performance Share or Performance Unit shall be determined by the Board on the Date of Grant and may be subject to earlier termination in the event of a change in control of the Corporation or other similar transaction or event. (c) Each grant shall specify the Management Objectives that are to be achieved by the Participant, which may be described in terms of Corporation-wide objectives or objectives that are related to the performance of the individual Participant or the Subsidiary, division, department or function within the Corporation or Subsidiary in which the Participant is employed. 6 (d) Each grant shall specify in respect of the specified Management Objectives a minimum acceptable level of achievement below which no payment will be made and shall set forth a formula for determining the amount of any payment to be made if performance is at or above the minimum acceptable level but falls short of full achievement of the specified Management Objectives. (e) Each grant shall specify the time and manner of payment of Performance Shares or Performance Units that shall have been earned, and any grant may specify that any such amount may be paid by the Corporation in cash, Common Shares or any combination thereof and may either grant to the Participant or reserve to the Board the right to elect among those alternatives. (f) Any grant of Performance Shares may specify that the amount payable with respect thereto may not exceed a maximum specified by the Board on the Date of Grant. Any grant of Performance Units may specify that the amount payable, or the number of Common Shares issuable, with respect thereto may not exceed maximums specified by the Board on the Date of Grant. (g) On or after the Date of Grant of Performance Shares, the Board may provide for the payment to the Participant of dividend equivalents thereon in cash or additional Common Shares on a current, deferred or contingent basis. (h) The Board may adjust Management Objectives and the related minimum acceptable level of achievement if, in the sole judgment of the Board, events or transactions have occurred after the Date of Grant that are unrelated to the performance of the Participant and result in distortion of the Management Objectives or the related minimum acceptable level of achievement. (i) Each grant shall be evidenced by an agreement, which shall be executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Participant and shall contain such terms and provisions as the Board may determine consistent with this Plan. 9. TRANSFERABILITY. (a) Any grant of an Option Right or other "derivative security" (as defined in Rule 16a-1 (c) under Section 16(a) of the Exchange Act) under this Plan may permit the transfer thereof by the Participant upon such terms and conditions as the Board shall specify. (b) Any grant made under this Plan may provide that all or any part of the Common Shares that are to be issued or transferred by the Corporation upon the exercise of Option Rights or Appreciation Rights or upon the termination of the Deferral Period applicable to Deferred Shares or in payment of Performance Shares or Performance Units, or are no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, shall be subject to further restrictions upon transfer. 10. ADJUSTMENTS. The Board may make or provide for such adjustments in the number of Common Shares covered by outstanding Option Rights, Appreciation Rights, Deferred Shares and Performance Shares granted hereunder, the Option Prices per Common Share or Base Prices per Common Share applicable to any such Option Rights and Appreciation Rights, and the kind of shares (including shares of another issuer) covered thereby, as the Board may in good faith determine to be equitably required in order to prevent dilution or expansion of the rights of Participants that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Corporation or (b) any merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of warrants or other rights to purchase securities or any other corporate transaction or event having an effect similar to any of the foregoing. In the event of any such transaction or event, the Board may provide in substitution for any or all outstanding awards under this Plan such alternative consideration as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all awards so replaced. Moreover, the Board may on or after the 7 Date of Grant provide in the agreement evidencing any award under this Plan that the holder of the award may elect to receive an equivalent award in respect of securities of the surviving entity of any merger, consolidation or other transaction or event having a similar effect, or the Board may provide that the holder will automatically be entitled to receive such an equivalent award. The Board may also make or provide for such adjustments in the numbers of Common Shares specified in Sections 3(a)(i) and 3(a)(ii) of this Plan as the Board may in good faith determine to be appropriate in order to reflect any transaction or event described in this Section 10. 11. FRACTIONAL SHARES. The Corporation shall not be required to issue any fractional Common Shares pursuant to this Plan. The Board may provide for the elimination of fractions or for the settlement thereof in cash. 12. WITHHOLDING TAXES. To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Corporation for the withholding are insufficient, it shall be a condition to the receipt of any such payment or the realization of any such benefit that the Participant or such other person make arrangements satisfactory to the Corporation for payment of the balance of any taxes required to be withheld. At the discretion of the Board, any such arrangements may include relinquishment of a portion of any such payment or benefit. The Corporation and any Participant or such other person may also make similar arrangements with respect to the payment of any taxes with respect to which withholding is not required. 13. PARTICIPATION BY DIRECTORS, OFFICERS AND OTHER KEY EMPLOYEES OF OR CONSULTANTS TO A LESS-THAN-80-PERCENT SUBSIDIARY. As a condition to the effectiveness of any grant or award to be made hereunder to a Participant who is a director or an officer or other key employee of or a consultant to a Less-Than-80-Percent Subsidiary, regardless of whether the Participant is also employed by the Corporation or another Subsidiary, the Board may require the Less-Than-80-Percent Subsidiary to agree to transfer to the Participant (as, if and when provided for under this Plan and any applicable agreement entered into between the Participant and the Less-Than-80-Percent Subsidiary pursuant to this Plan) the Common Shares that would otherwise be delivered by the Corporation upon receipt by the Less-Than 80-Percent Subsidiary of any consideration then otherwise payable by the Participant to the Corporation. Any such award may be evidenced by an agreement between the Participant and the Less-Than-80-Percent Subsidiary, in lieu of the Corporation, on terms consistent with this Plan and approved by the Board and the Less-Than-80-Percent Subsidiary. All Common Shares so delivered by or to a Less-Than-80-Percent Subsidiary will be treated as if they had been delivered by or to the Corporation for purposes of Section 3 of this Plan, and all references to the Corporation in this Plan shall be deemed to refer to the Less-Than-80-Percent Subsidiary except with respect to the definitions of the Board and the Committee and in other cases where the context otherwise requires. 14. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES OF ABSENCE. Notwithstanding any other provision of this Plan to the contrary, in the event of termination of employment by reason of death, disability, normal retirement, early retirement with the consent of the Corporation, termination of employment to enter public service with the consent of the Corporation or leave of absence approved by the Corporation, or in the event of hardship or other special circumstances, of a Participant who holds an Option Right or Appreciation Right that is not immediately and fully exercisable, any Restricted Shares as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, any Deferred Shares as to which the Deferral Period is not complete, any Performance Shares or Performance Units that have not been fully earned, or any Common Shares that are subject to any transfer restriction pursuant to Section 9[(b)] of this Plan, the Board may take any action that it deems to be equitable under the circumstances or in the best interests of the Corporation, including without limitation waiving or modifying any limitation or requirement with respect to any award under this Plan. 8 15. FOREIGN PARTICIPANTS. In order to facilitate the making of any award or combination of awards under this Plan, the Board may provide for such special terms for awards to Participants who are foreign nationals, or who are employed by the Corporation or any Subsidiary outside of the United States of America, as the Board may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Board may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of this Plan as in effect for any other purpose; PROVIDED, HOWEVER that no such supplements, amendments, restatements or alternative versions shall include any provisions that are inconsistent with the terms of this Plan, as then in effect, unless this Plan could have been amended to eliminate the inconsistency without further approval by the stockholders of the Corporation. 16. ADMINISTRATION OF THE PLAN. (a) This Plan shall be administered by the Board, which may delegate any or all of its authority hereunder to the Committee. To the extent of any such delegation, references in this Plan to the Board shall be deemed to refer to the Committee, unless the context requires otherwise. A majority of the Board shall constitute a quorum, and the acts of the members of the Board who are present at any meeting thereof at which a quorum is present, or acts unanimously approved by the members of the Board in writing, shall be the acts of the Board. (b) The interpretation and construction by the Board of any provision of this Plan or any agreement, notification or document evidencing the grant of Option Rights, Appreciation Rights, Restricted Shares, Deferred Shares, Performance Shares or Performance Units, and any determination by the Board pursuant to any provision of this Plan or any such agreement, notification or document, shall be final and conclusive. No member of the Board shall be liable for any such action taken or determination made in good faith. 17. AMENDMENTS AND OTHER MATTERS. (a) This Plan may be amended from time to time by the Board; PROVIDED, HOWEVER except as expressly authorized by this Plan, no such amendment shall increase the numbers of Common Shares specified in Sections 3(a)(i) and 3(a)(ii) hereof or the number of Performance Units specified in Section 3(b) hereof without the further approval of the stockholders of the Corporation. (b) With the concurrence of the affected Participant, the Board may cancel any agreement evidencing Option Rights or any other award granted under this Plan. In the event of any such cancellation, the Board may authorize the granting of new Option Rights or other awards hereunder, which may or may not cover the same number of Common Shares as had been covered by the cancelled Option Rights or other award, at such Option Price, in such manner and subject to such other terms, conditions and discretion as would have been permitted under this Plan had the cancelled Option Rights or other award not been granted. (c) The Board may grant under this Plan any award or combination of awards authorized under this Plan, including but not limited to Replacement Option Rights, in exchange for the surrender and cancellation of an award that was not granted under this Plan, including but not limited to an award that was granted by the Corporation or a Subsidiary, or by another corporation that is acquired by the Corporation or a Subsidiary by merger or otherwise, prior to the adoption of this Plan by the Board, and any such award or combination of awards so granted under this Plan may or may not cover the same number of Common Shares as had been covered by the cancelled award and shall be subject to such other terms, conditions and discretion as would have been permitted under this Plan had the cancelled award not been granted. (d) This Plan shall not confer upon any Participant any right with respect to continuance of employment with the Corporation or any Subsidiary and shall not interfere in any way with any right that the Corporation or any Subsidiary would otherwise have to terminate any Participant's employment at any time. 9 (e) To the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as a Tax-Qualified Option from so qualifying, any such provision shall be null and void with respect to any such Option Right; PROVIDED, HOWEVER that any such provision shall remain in effect with respect to other Option Rights, and there shall be no further effect on any provision of this Plan. 10 EX-10.33 18 ex-10_33.txt EXHIBIT 10.33 EXHIBIT 10.33 DELPHI INFORMATION SYSTEMS, INC. 1999 STOCK PURCHASE PLAN TABLE OF CONTENTS I. Purpose and Effective Date....................................................... 1 II. Definitions...................................................................... 1 III. Administration................................................................... 3 IV. Number of Shares................................................................. 3 V. Eligibility Requirements......................................................... 4 VI. Enrollment....................................................................... 4 VII. Grant of Options on Enrollment................................................... 5 VIII. Payroll Deductions............................................................... 5 IX. Purchase of Shares............................................................... 6 X. Termination of Participation..................................................... 8 XI. Designation of Beneficiary....................................................... 8 XII. Miscellaneous.................................................................... 9
i DELPHI INFORMATION SYSTEMS, INC. 1999 STOCK PURCHASE PLAN I. PURPOSE AND EFFECTIVE DATE 1.1 The purpose of the Delphi Information Systems, Inc. 1999 Stock Purchase Plan (the "Plan") is to provide an opportunity for eligible employees to acquire a proprietary interest in the Delphi Information Systems, Inc. (the "Company") through the purchase of shares of common stock of the Company. By providing this opportunity, the Company intends to increase the Company's ability to attract and retain employees who have the ability to enhance the profitability of the Company. It is the intent of the Company to have the Plan qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code. Except for the definition of "Employee", the provisions of the Plan shall be construed to extend and limit participation in a manner consistent with the requirements of Section 423 of the Internal Revenue Code. 1.2 The Plan shall be effective on the Effective Date stated below, subject to the approval of the Company's stockholders within one year before or one year after the date the Plan is approved by the board of directors of the Company (the "Board"). No option shall be granted under the Plan after the earlier of (a) the day before the tenth (10th) anniversary of the Effective Date, or (b) the date on which the Plan is terminated by the Board in accordance with Section 12.6 of the Plan. II. DEFINITIONS The following words and phrases, when used in this Plan, unless their context clearly indicates otherwise, shall have the following respective meanings: 2.1 "ACCOUNT" means a recordkeeping account maintained for a Participant to which payroll deductions are credited in accordance with Article VIII of the Plan. 2.2 "ARTICLE" means an Article of this Plan. 2.3 "ACCUMULATION PERIOD" means, as to the Company or a Participating Subsidiary, a period of six months commencing with the first regular payroll check issued on or after each successive April 1 and October 1 occurring after the Effective Date; provided, however, that the first Accumulation Period shall be a period of three months commencing with the first regular payroll check issued on or after July 1, 1999. The Committee may modify (including increasing or decreasing the length of time covered) or suspend Accumulation Periods at any time and from time to time. 2.4 "BASE EARNINGS" means base salary and wages, and includes incentives, annual bonus, and pre-tax contributions to qualified employee benefit plans, dependent care plans, health care plans or other similar plans, which is received by a Participant from the Company or a Participating Subsidiary, but excluding overtime pay and commissions. The Committee may exclude, with respect to all Employees, any other form of compensation from the definition of "Base Earnings," provided such exclusion shall comply with Section 423(b)(5) of the Code. 2.5 "BOARD" means the board of directors of the Company. 2.6 "CODE" means the Internal Revenue Code of 1986, as amended. 2.7 "COMMITTEE" means the committee of the Board described in Section 3.1 of the Plan. 2.8 "COMMON STOCK" means the Company's common stock, $.10 par value. 2.9 "COMPANY" means Delphi Information Systems, Inc., a Delaware corporation. 2.10 "CUT-OFF DATE" means the date established by the Committee from time to time by which enrollment forms must be received prior to an Enrollment Date. 2.11 "EFFECTIVE DATE" means July 1, 1999. 2.12 "ELIGIBLE EMPLOYEE" means an Employee eligible to participate in the Plan in accordance with Article V. 2.13 "EMPLOYEE" means an individual who performs services for the Company or a Participating Subsidiary pursuant to an employment relationship determined by the Company to be described in Treasury Regulations Section 31.3401(c)-1 or any successor provision. 2.14 "ENROLLMENT DATE" means the first trading day of an Accumulation Period. 2.15 "EXCHANGE ACT" means the Securities Exchange Act of 1934. 2.16 "FAIR MARKET VALUE" means, as of any applicable date: (a) if the security is listed for trading on the New York Stock Exchange, the closing price of the security as reported on the New York Stock Exchange Composite Tape, or if no such reported sale of the security shall have occurred on such date, on the latest preceding date on which there was such a reported sale, or (b) if the security is not so listed, but is listed on another national securities exchange or authorized for quotation on the National Association of Securities Dealers Inc.'s NASDAQ National Market ("NASDAQ/NMS"), the closing price, regular way, of the security on such exchange or NASDAQ/NMS, as the case may be, or if no such reported sale of the security shall have occurred on such date, on the latest preceding date on which there was such a reported sale, or (c) if the security is not listed for trading on a national securities exchange or authorized for quotation on NASDAQ/NMS, the average of the closing bid and asked prices as reported by the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or, if no such prices shall have been so reported for such date, on the latest preceding date for which such prices were so reported, or (d) if the security is not listed for trading on a national securities exchange or is not authorized for quotation on NASDAQ/NMS or NASDAQ, the fair market value of the security as determined in good faith by the Board. 2.17 "PARTICIPANT" means an Eligible Employee who has enrolled in the Plan pursuant to Article VI and whose participation has not terminated. 2.18 "PARTICIPATING SUBSIDIARY" means a Subsidiary which has been designated by the Committee in accordance with Section 3.3 of the Plan as covered by the Plan. 2.19 "PLAN" means the Delphi Information Systems, Inc. 1999 Stock Purchase Plan as set forth herein and as from time to time amended. 2.20 "PURCHASE DATE" means the specific trading day with respect to an Accumulation Period on which shares of Common Stock are purchased under the Plan in accordance with Article IX. For each Accumulation Period, the Purchase Date shall be the last day of such Accumulation Period, or, if such day is not a trading date, the next day which is a trading day. 2.21 "RULE 16b-3" means Rule 16b-3 under the Exchange Act. 2.22 "SECTION" means a section of this Plan, unless indicated otherwise. 2.23 "SECURITIES ACT" means the Securities Act of 1933, as amended. 2.24 "SUBSIDIARY" means any corporation in an unbroken chain of corporations beginning with the Company if, as of the applicable Enrollment Date, each of the corporations other than the last corporation in the chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. 2 III. ADMINISTRATION 3.1 The Plan shall be administered by the a Committee of not less than three Board members appointed by the Board. Membership on the Committee shall be subject to such limitations as the Board deems appropriate. In the event that the Board does not appoint a Committee, the Board shall be the Committee. The members of the Committee shall be "non-employee directors" within the meaning of Rule 16b-3. 3.2 The Committee may select one of its members as chairman and may appoint a secretary. The Committee shall make such rules and regulations for the conduct of its business as it shall deem advisable; provided, however, that all determinations of the Committee shall be made by a majority of its members when a quorum, which is constituted by a majority of the Committee, is present. Any acts approved of in writing must be unanimously approved. 3.3 The Committee shall have the power, subject to and within the limits of the express provisions of the Plan, to construe and interpret the Plan and options granted under it; to establish, amend and revoke rules and regulations for administration of the Plan; to determine all questions of fact and of policy and expediency that may arise in the administration of the Plan; and, generally, to exercise such powers and perform such acts as the Committee deems necessary or expedient to promote the best interests of the Company, including, but not limited to, designating from time to time which Subsidiaries of the Company shall be Participating Subsidiaries. The Committee's determinations as to the interpretation and operation of this Plan shall be final and conclusive. The Committee may employ agents and delegate ministerial duties to them. In exercising the powers described in the foregoing paragraph, the Committee may adopt special or different rules for the operation of the Plan including, but not limited to, rules which allow employees of any foreign Subsidiary to participate in, and enjoy the tax benefits offered by, the Plan; provided that such rules shall not result in any grantees of options having different rights and/or privileges under the Plan nor otherwise cause the Plan to fail to satisfy the requirements of Section 423 of the Internal Revenue Code and the regulations thereunder. 3.4 This Article III relating to the administration of the Plan may be amended by the Board from time to time as may be desirable to satisfy any requirements of or under the federal securities and/or other applicable laws of the United States, or to obtain any exemption under such laws. 3.5 No member of the Board or the Committee or any other agent to which either may have delegated authority under the Plan shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. IV. NUMBER OF SHARES 4.1 Two million (2,000,000) shares of the Company's Common Stock are reserved for sales and authorized for issuance pursuant to the Plan. Shares sold under the Plan may be newly-issued shares, outstanding shares reacquired in private transactions or open market purchases, or both. If any option granted under the Plan shall for any reason terminate without having been exercised, the shares not purchased under such option shall again become available for the Plan. 4.2 In the event of any reorganization, recapitalization, stock split, reverse stock split, stock dividend, combination of shares, merger, consolidation, acquisition of property or shares, separation, asset spin-off, stock rights offering, liquidation or other similar change in the capital structure of the Company, the Committee shall make such adjustment, if any, as it deems appropriate in the number, kind and purchase price of the shares available for purchase under the Plan. In the event that, at a time when options are outstanding hereunder, there occurs a dissolution or liquidation of the Company, except pursuant to a transaction to which Section 424(a) of the Code applies, each option to 3 purchase Common Stock of the Company shall terminate, but the Participant holding such option shall have the right to exercise his option prior to such dissolution or liquidation. V. ELIGIBILITY REQUIREMENTS 5.1 Except as provided in Section 5.2, each individual who is an Employee of the Company or a Participating Subsidiary shall become eligible to participate in the Plan in accordance with Article VI on the first Enrollment Date following the individual's completion of one (1) calendar month of employment by the Company or a Subsidiary, provided that the individual is an Employee on such Enrollment Date. Participation in the Plan is entirely voluntary. 5.2 The following Employees are not Eligible Employees: (a) Employees who, immediately upon enrollment in the Plan or immediately upon an option grant would own directly or indirectly, or hold options or rights to acquire, an aggregate of 5% or more of the total combined voting power or value of all outstanding shares of all classes of stock of the Company or any Subsidiary (and for purposes of this paragraph, the rules of Code Section 424(d) shall apply, and stock which the Employee may purchase under outstanding options shall be treated as stock owned by the Employee); and (b) Employees who are customarily employed by the Company or a Participating Subsidiary for less than 20 hours per week. 5.3 Notwithstanding anything to the contrary in Section 5.1, Employees who are directors or "officers" of the Company (as defined in Rule 16a-1(f) under the Exchange Act, as such rule may be amended from time to time) may participate in the plan only in accordance with the requirements of Rule 16b-3 under the Exchange Act. The Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation Rule 16b-3. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the options shall be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and the options granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. VI. ENROLLMENT 6.1 Any Eligible Employee may enroll in the Plan for an Accumulation Period by completing and signing an enrollment form (which authorizes payroll deductions during such Accumulation Period in accordance with Section 8.1) and submitting such enrollment form to the Company on or before the Cut-Off Date immediately preceding the commencement of the Accumulation Period. Such enrollment form (and the authorization therein) shall be effective as of the Enrollment Date occurring within the first Accumulation Period to which the enrollment form relates, and shall continue in effect until the earliest of: (a) the end of the last payroll period ending in the last Accumulation Period before the Plan expires, in which case such enrollment and authorization shall automatically be deemed renewed for successive Accumulation Periods, unless the Committee adopts a different rule providing for renewal for a different period (or prohibiting such deemed renewal); (b) the date during an Accumulation Period that the Employee elects to change his enrollment in accordance with Section 8.3; (c) the date during an Accumulation Period that the Employee ceases to be an Eligible Employee; and 4 (d) the date during an Accumulation Period that the Employee withdraws from the Plan or has a termination of employment in accordance with Article X. VII. GRANT OF OPTIONS ON ENROLLMENT 7.1 Enrollment by an Eligible Employee in the Plan as of an Enrollment Date will constitute the grant by the Company to such Participant on each Enrollment Date for which the enrollment continues in effect of an option to purchase shares of Common Stock from the Company pursuant to the Plan. Such option shall be evidenced in such form and with such terms (consistent with the Plan) as the Committee shall from time to time approve and shall be subject to Section 12.9. 7.2 An option granted to a Participant pursuant to this Plan shall expire, if not terminated for any reason first, on the earliest to occur of (a) the end of the Purchase Date with respect to the Accumulation Period in which such option was granted; (b) the completion of the purchase of Common Stock under the option under Article IX; or (c) the date on which participation of such Participant in the Plan terminates for any reason. 7.3 An option granted to a Participant under the Plan shall give the Participant a right to purchase on a Purchase Date any number of whole shares (if the number of shares computed below includes a fraction, such number shall be rounded down to the next whole number) of Common Stock, and shall specify such number prior to the Enrollment Date, which is not more than whichever of the amounts described in (a) or (b) is applicable: (a) an amount equal to the lesser of (i) the percentage designated in the Participant's enrollment form of the Participant's annualized Base Earnings at the rate in effect on the applicable Enrollment Date, divided by 85% of the Fair Market Value of a share of Common Stock as of (A) the Enrollment Date on which the option is granted or (B) as of the Purchase Date for the Accumulation Period, whichever is lower, or (ii) two times the amount equal to the percentage designated in the Participant's enrollment form of the Participant's annualized Base Earnings at the rate in effect on the applicable Enrollment Date, divided by the Fair Market Value of a share of Common Stock as of the Enrollment Date; provided that, if the Committee specifies the purchase price under Section 9.4(b) applies with respect to the Accumulation Period, then such percentage of annualized Base Earnings shall be divided by 85% of the Fair Market Value of a share of Common Stock as of the Purchase Date for the Accumulation Period; or (b) a maximum number of shares as set by the Committee for an Enrollment Period subject to Section 4.1. Notwithstanding any other provision of this Plan, no Employee may be granted an option which permits his rights to purchase shares of Common Stock under the Plan and any other similar employee stock purchase plan of the Company or any of its subsidiaries to accrue at a rate which exceeds $25,000 of Fair Market Value of such Common Stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time. VIII. PAYROLL DEDUCTIONS 8.1 An Eligible Employee who files an enrollment form pursuant to Article VI shall elect and authorize in such form to have deductions made from his pay on each payday during the Accumulation Period(s) to which the enrollment form relates, and he shall designate in such form the percentage (or, if the Committee permits, the total amount) of Base Earnings to be deducted during such Accumulation Period. An Employee may elect and authorize to have deducted up to 10% of his Base Earnings for such Accumulation Period, subject to the maximum set forth in Section 7.3, (subject to such minimum dollar amount as the Committee may designate from time to time). Any designated percentage shall be a whole percentage of Base Earnings up to 10% or such smaller percentage as the 5 Committee specifies from time to time. For these purposes, the Base Earnings of an hourly-paid Employee shall be determined by multiplying such Employee's hourly rate of base pay as of the beginning of the Accumulation Period by the number of regularly scheduled hours the Employee is expected to work during the Accumulation Period, excluding overtime hours. 8.2 Payroll deductions for a Participant shall commence as soon as administratively practical after the Participant's authorization of such payroll deductions in an enrollment form becomes effective in accordance with Article VI, and shall continue until the date on which such authorization ceases to be effective in accordance with Article VI. The amount of each payroll deduction made for a Participant shall be credited to the Participant's Account as soon as administratively practical after the Participant's pay is withheld. No interest shall be paid on amounts held in Participant's Account. All payroll deductions received or held by the Company or a Participating Subsidiary may be used by the Company or Participating Subsidiary for any corporate purpose, and the Company or Participating Subsidiary shall not be obligated to segregate such payroll deductions. 8.3 During an Accumulation Period, a Participant may elect to reduce or to cease (but not to increase) payroll deductions made on his behalf for the remainder of such Accumulation Period by delivering the applicable forms to the Company in such manner and at such time as permitted by the Committee. A Participant may elect to reduce payroll deductions or cease payroll deductions at any time. A Participant who has ceased payroll deductions may voluntarily withdraw from the Plan pursuant to Section 10.1. 8.4 A Participant may not make any separate or additional contributions to his Account under the Plan, except when on leave of absence and then only as provided in Section 10.3. Neither the Company nor any Participating Subsidiary shall make separate or additional contributions to any Participant's Account under the Plan. IX. PURCHASE OF SHARES 9.1 Subject to Section 9.2, any option held by the Participant which was granted under this Plan and which remains outstanding as of a Purchase Date shall be deemed to have been exercised on such Purchase Date for the purchase of the number of whole shares (fractional shares shall be rounded down to the nearest whole number) of Common Stock which the funds accumulated in the Participant's Account as of the Purchase Date will purchase at the applicable purchase price (but not in excess of the number of shares for which options have been granted to the Participant pursuant to Section 7.3). 9.2 A Participant who holds an outstanding option as of a Purchase Date shall not be deemed to have exercised such option if, no later than the time prior to such Purchase Date required by the Committee, the Participant elected not to exercise the option by withdrawing from the Plan in accordance with Section 10.1. If the Participant withdraws as described in the preceding sentence, then all funds accumulated in his Account as of the Purchase Date on which his option would otherwise be exercisable shall be distributed to him as soon as administratively feasible after such Purchase Date. 9.3 If, after a Participant's exercise of an option under Section 9.1, an amount remains credited to the Participant's Account as of a Purchase Date, then the remaining amount shall be refunded to the Participant in cash as soon as administratively practical after such Purchase Date. No interest shall accrue on such amounts held by the Company. 9.4 (a) The purchase price for each share of Common Stock purchased under an option granted on the Enrollment Date for such Accumulation Period shall be 85% of the lower of (i) the Fair Market Value of a share of Common Stock on the Enrollment Date on which such option is granted; or (ii) the Fair Market Value of a share of Common Stock on the Purchase Date. 6 (b) Notwithstanding Section 9.4(a), if the Committee so specifies prior to the commencement of an Accumulation Period, the purchase price for each share of Common Stock purchased under any option shall be 85% of the Fair Market Value of a share of Common Stock on the Purchase Date. 9.5 If shares of Common Stock are purchased by a Participant pursuant to Section 9.1, then such shares shall be held in non-certificated form at a bank or other appropriate institution selected by the Company until the earlier of (i) such annual or other periodic date determined by the Committee, at which time the Committee shall deliver certificates representing such shares to a Participant or (ii) the time a Participant requests delivery of certificates representing such shares as may be required by the laws of the jurisdiction in which a Participant sells or otherwise disposes of the Participant's shares acquired under the Plan or for another reason approved by the Committee. If any law or applicable regulation of the Securities and Exchange Commission or other body having jurisdiction shall require that the Company or the Participant take any action in connection with the shares being purchased under the option, delivery of the certificate or certificates for such shares shall be postponed until the necessary action shall have been completed, which action shall be taken by the Company at its own expense, without unreasonable delay. Any certificates delivered pursuant to this Section 9.5 shall be registered in the name of the Participant or, if the Participant so elects, in the names of the Participant and one or more such other persons as may be designated by the Participant, as joint tenants with rights of survivorship or as tenants by the entireties, to the extent permitted by law. 9.6 In the case of Participants employed by a Participating Subsidiary, the Committee may provide for Common Stock to be sold through the Subsidiary to such Participants, to the extent consistent with Section 423 of the Code. 9.7 If the total number of shares of Common Stock for which an option is exercised on any Purchase Date in accordance with this Article IX, when aggregated with all shares of Common Stock previously granted under this Plan, exceeds the maximum number of shares reserved in Section 4.1, the Company shall make a pro rata allocation of the shares available for delivery and distribution in as nearly a uniform manner as shall be practicable and as it shall determine to be equitable, and the balance of payroll deductions credited to the Account of each Participant under the Plan shall be returned to him as promptly as practical. 9.8 If a Participant or former Participant sells, transfers, or otherwise makes a disposition of Common Stock purchased pursuant to an option granted under the Plan within two years after the date such option is granted or within one year after the Purchase Date to which such option relates, and if such Participant or former Participant is subject to U.S. federal income tax, then such Participant or former Participant shall notify the Company or Participating Subsidiary in writing of such sale, transfer or other disposition within 10 days of the consummation of such sale, transfer or other disposition, and shall remit to the Company or Participating Subsidiary or authorize the Company or Participating Subsidiary to withhold from other sources such amount as the Company may determine to be necessary to satisfy any federal, state or local tax withholding obligations of the Company or Participating Subsidiary. The Committee may from time to time establish rules and procedures (including but not limited to postponing delivery of shares until the earlier of the expiration of the two-year or one-year period or the disposition of such shares by the Participant) to cause the withholding requirements to be satisfied. 7 X. TERMINATION OF PARTICIPATION 10.1 WITHDRAWAL FROM THE PLAN. A Participant may withdraw from the Plan in full (but not in part) during any Accumulation Period by delivering a notice of withdrawal to the Company (in a manner prescribed by the Committee) at any time up to but not including the number of days prior to the Purchase Date occurring in such Accumulation Period as the Committee shall require. If notice of withdrawal is timely received, the funds then accumulated in the Participant's Account shall not be used to purchase Common Stock, but shall instead be distributed to the Participant as soon as administratively feasible after the end of the Accumulation Period. An Employee who has withdrawn during an Accumulation Period may not return funds to the Company or a Participating Subsidiary during the same Accumulation Period and require the Company or Participating Subsidiary to apply those funds to the purchase of Common Stock. Any Eligible Employee who has withdrawn from the Plan may, however, re-enroll in the Plan on the next subsequent Enrollment Date following such withdrawal in accordance with the provisions of Article VI. 10.2 TERMINATION OF EMPLOYMENT. Participation in the Plan terminates immediately when a Participant ceases to be employed by the Company or a Participating Subsidiary for any reason other than death or otherwise ceases to be an Eligible Employee, and such terminated Participant's outstanding options shall thereupon terminate. As soon as administratively practical after termination of participation, the Company or Participating Subsidiary shall pay to the Participant all amounts accumulated in the Participant's Account at the time of termination of participation. No interest shall accrue on such amount. 10.3 LEAVE OF ABSENCE. If a Participant takes a leave of absence without terminating employment, such Participant may, at the commencement of the leave of absence and in accordance with procedures prescribed by the Committee, to elect: (a) to withdraw from the Plan in accordance with Section 10.1; (b) to discontinue contributions to the Plan but remain a Participant in the Plan through the balance of the Accumulation Period in which his leave of absence begins; or (c) to remain a Participant in the Plan during such leave of absence, authorizing deductions to be made from payments by the Company or a Participating Subsidiary to the Participant during such leave of absence and undertaking to make contributions to the Plan at the end of each payroll period to the extent that amounts payable by the Company to such Participant are insufficient to meet such Participant's authorized Plan deductions. XI. DESIGNATION OF BENEFICIARY 11.1 Each Participant may designate in writing one or more beneficiaries to receive the amount in his Account in the event of death and may, in his sole discretion, change such designation in writing at any time. Any such designation shall be effective upon receipt by the Company and shall control over any disposition by will or otherwise. 11.2 As soon as administratively practical after the death of a Participant, amounts accumulated in his Account shall be paid in cash to the designated beneficiaries or, in the absence of a valid designation, to the executor, administrator or other legal representative of the Participant's estate. Such payment shall relieve the Company of further liability with respect to the Plan on Account of the deceased Participant. If more than one beneficiary is designated, each beneficiary shall receive an equal portion of the Account unless the Participant has given express contrary instructions. No interest shall be paid on such amounts. 11.3 No beneficiary shall, prior to the death of the Participant by whom he has been designated, acquire any interest in the amounts credited to the Participant's Account under the Plan. 8 XII. MISCELLANEOUS 12.1 RESTRICTIONS ON TRANSFER. The rights of a Participant under the Plan shall not be assignable or transferrable by such Participant, and an option granted under the Plan may not be exercised during a Participant's lifetime other than by the Participant. 12.2 ADMINISTRATIVE ASSISTANCE. If the Committee in its discretion so elects, it may retain a brokerage firm, bank or other financial institution to assist in the purchase of shares, delivery of reports or other administrative aspects of the Plan. If the Committee so elects, each Participant shall (unless prohibited by applicable law) be deemed upon enrollment in the Plan to have authorized the establishment of an account on his behalf at such institution. Shares purchased by a Participant under the Plan shall be held in the account in the Participant's name, or if the Participant so indicates in the enrollment form, in the Participant's name together with the name of one or more other persons, in joint tenancy with right of survivorship or spousal community property, or in certain forms of trusts approved by the Committee. 12.3 COSTS AND EXPENSES. All costs and expenses incurred in administering the Plan shall be paid by the Company, including any stamp duties, transfer taxes and any brokerage fees applicable to a Participant's acquisition of Stock under the Plan, unless otherwise determined by the Committee and announced in advance to Participants. 12.4 EQUAL RIGHTS AND PRIVILEGES. All Eligible Employees shall have equal rights and privileges with respect to the Plan so that the Plan qualifies as an "employee stock purchase plan" within the meaning of Section 423 or any successor provision of the Code and the related regulations. Notwithstanding the express terms of the Plan, any provision of the Plan which is inconsistent with Section 423 or any successor provision of the Code shall without further act or amendment by the Company or the Board be reformed to comply with the requirements of Code Section 423. This Section shall take precedence over all other provisions in the Plan. 12.5 APPLICABLE LAW. The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of Illinois. 12.6 AMENDMENT AND TERMINATION. The Board may amend, alter or terminate the Plan at any time; provided, however, that no amendment which would amend or modify the Plan in a manner requiring stockholder approval under Code Section 423, the requirements of any securities exchange on which the Common Stock is traded, or any rule or regulation promulgated by the Securities Exchange Commission shall be effective unless, within one year after it is adopted by the Board, it is approved by the holders of a majority of the voting power of the Company's outstanding shares. In addition, the Committee may amend the Plan as provided in Section 3.3, subject to the conditions set forth therein and in this Section. If the Plan is terminated, the Board may elect to terminate all outstanding options either prior to their expiration or upon completion of the purchase of shares on the next Purchase Date, or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all funds accumulated in Participants' Accounts as of the date the options are terminated shall be returned to the Participants as soon as administratively practical, without interest. 12.7 RIGHTS AS A STOCKHOLDER. A Participant shall have no rights as a stockholder with respect to any Common Stock covered by his option until the Purchase Date. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date of such exercise, except as provided in Section 4.2 of the Plan. 9 12.8 NO RIGHT OF EMPLOYMENT. Neither the grant nor the exercise of any rights to purchase shares under this Plan nor anything in this Plan shall impose upon the Company any obligation to employ or continue to employ any employee. The right of the Company or any Subsidiary to terminate any employee shall not be diminished or affected because any rights to purchase shares have been granted to such employee. 12.9 REQUIREMENTS OF LAW. The Company shall not be required to sell, issue, or deliver any shares of Common Stock under this Plan if such sale, issuance, or delivery might constitute a violation by the Company or the Participant of any provision of law. Unless a registration statement under the Securities Act is in effect with respect to the shares of Common Stock proposed to be delivered under the Plan, the Company shall not be required to issue such shares if, in the opinion of the Company or its counsel, such issuance would violate the Securities Act. Regardless of whether such shares of Common Stock have been registered under the Securities Act or registered or qualified under the securities laws of any state, the Company may impose restrictions upon the hypothecation or further sale or transfer of such shares (including the placement of appropriate legends on stock certificates) if, in the judgment of the Company or its counsel, such restrictions are necessary or desirable to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law or are otherwise in the best interests of the Company. Any determination by the Company or its counsel in connection with any of the foregoing shall be final and binding on all parties. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing shares of Common Stock issued under the Plan is no longer required in order to comply with applicable securities or other laws, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing a like number of shares lacking such legend. The Company may, but shall not be obligated to, register or qualify any securities covered by the Plan. The Company shall not be obligated to take any other affirmative action in order to cause the grant or exercise of any right or the issuance, sale, or deliver of shares pursuant to the exercise of any right to comply with any law. 12.10 GENDER. When used herein, masculine terms shall be deemed to include the feminine, except when the context indicates to the contrary. Executed this day of , 1999. DELPHI INFORMATION SYSTEMS, INC. By: ---------------------------------------- Title: ---------------------------------------- 10 EX-21.1 19 ex-211.txt EXHIBIT 21.1 Exhibit 21.1 SUBSIDIARIES Delphi Information Systems International, Inc. Canadian Insurance Computer Systems, Inc. Delphi Information Systems, (UK) Ltd. Delphi Information Systems, (NZ) Ltd. Complete Broking Systems, (Malaysia) Sdn. Bhd. Complete Broking Systems Australia PTY, Ltd. Delphi Information Systems, (Singapore) PTE, Ltd. EX-23.1 20 ex-231.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors ebix.com, Inc. We consent to the use of our report included herein dated May 26, 2000, relating to the consolidated balance sheet of ebix.com, Inc. as of December 31, 1999, and the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows, and the related supplemental consolidated financial statement schedule for the year then ended. /s/ KPMG LLP Chicago, Illinois May 31, 2000 EX-23.2 21 ex-23_2.txt EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors ebix.com, Inc. As independent public accountants, we hereby consent to the incorporation by reference of our report dated May 26, 2000, included in this Form 10-K into the Company's previously filed Registration Statements on Forms S-8 and S-3/A (File Nos. 333-23261, 333-12781, 33-62427, 33-62901). ARTHUR ANDERSEN LLP Chicago, Illinois May 26, 2000 EX-27.1 22 ex-271.txt EXHIBIT 27.1
5 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 7,055 0 3,097 (1,004) 28 10,653 10,489 8,430 13,389 9,677 0 0 49 1,076 1,858 13,389 12,511 12,511 0 0 31,531 0 290 (18,967) 93 (19,060) 0 0 0 (19,060) (2.05) (2.05)
EX-27.2 23 ex-272.txt EXHIBIT 27.2
5 0000814549 EBIX.COM, INC. 1,000 9-MOS DEC-31-1998 APR-01-1998 DEC-31-1998 1,053 0 4,740 (1,068) 29 5,008 9,595 7,754 8,063 11,858 0 0 49 740 (5,306) 8,063 13,402 13,402 0 0 18,748 699 366 (5,506) 248 (5,754) 0 0 0 (5,754) (0.78) (0.78)
EX-27.3 24 ex-273.txt EXHIBIT 27.3
5 0000814549 EBIX.COM, INC. 1,000 YEAR MAR-31-1998 APR-01-1997 MAR-31-1998 872 0 5,667 (860) 12 5,842 9,475 (7,333) 9,702 8,016 0 0 49 740 467 9,702 20,926 20,926 0 0 25,308 356 400 (3,905) (99) (3,806) 0 0 0 (3,806) (0.52) (0.52)
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