Software License And Marketing And Distribution Agreement

Confidential Treatment


Confidential Portions omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.


SOFTWARE LICENSE AND MARKETING AND DISTRIBUTION AGREEMENT


This Software License and Marketing and Distribution Agreement (the "Agreement") is entered into as of August 20, 1997 (the "Effective Date") by and between BISYS, Inc. ("BISYS"), a Delaware corporation with its principal place of business at 11 Greenway Plaza, Houston, TX 77046-1102, and Open Solutions Inc. ("OSI"), a Delaware corporation with its principal place of business at 300 Winding Brook Drive, Glastonbury, CT 06033.


RECITALS


A. BISYS, through its TOTALPLUS(R) Division, is a leading provider of comprehensive data processing outsourcing solutions to financial institutions.


B. OSI is the developer and owner of The Complete Banking Solution(TM) system and is a leading supplier of client/server software and information services to financial institutions.


C. The parties wish to establish an alliance whereby (i) BISYS will be the exclusive national Outsourcing Services provider and exclusive national Facilities Manager of The Complete Banking Solution system to Financial Institutions in the United States; (ii) OSI will license to BISYS the OSI Proprietary and OSI Interface Software used in connection with such system; (iii) the parties will engage in certain marketing and selling activities; and (iv) BISYS will be a recommended preferred provider of certain related services.


Now, therefore, in consideration of the mutual obligations set forth herein, the parties agree as follows.


1. DEFINITIONS


1.0 Change of Control - shall mean with respect to a particular entity (i) the consummation of a merger or consolidation of that entity with another in which the owners of interests (shares or otherwise) of the particular entity immediately prior to the consummation of such transaction do not own at least 65% of the ownership interests of the surviving successor, acquiring or assuming entity; (ii) the sale of all or substantially all the assets of such entity; or (iii) the acquisition of beneficial ownership by any person (including a group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) of 35% or more of the outstanding ownership interests of such entity. For the purposes of this agreement an initial public offering of OSI shall not be deemed a change in control.


1.1 Conversion - shall mean the process of converting a new Customer's data to
the System.


1.2 Conversion Date - shall mean the date on which live production begins.
Live production shall mean the time when Customer uses the System or
portions thereof to execute transactions, produce reports or retrieve
information from the OSI Database Model on a regular basis in a production
non-test environment.


1.3 Customer - shall mean that Financial Institution for which BISYS
contractually provides either data processing Outsourcing Services using
the System or acts as Facilities Manager of the System. BISYS shall
provide a form copy of the BISYS Customer contract for Outsourcing or
Facilities Management to OSI prior to entering into the first Customer
contract.


1.4 Documentation - shall mean all user manuals, system guides and related
publications for the OSI Proprietary Software and OSI Interface Software.


1.5 Enhancements - shall mean all upgrades, improvements, modifications and
updates to the OSI Proprietary Software and OSI Interface Software made
available to OSI customers.


1.6 Excluded Licensees - shall mean the Named Competitors and any outsourcing
service providers shown on Schedule 1.6 hereto, which may be amended from
time to time by BISYS with the written consent of OSI, which shall not be
unreasonably withheld.


1.7 Facilities Manager; Facilities Management - shall mean the provider and
operator of the System for the benefit of a Financial Institution on site
at the Financial Institution's facilities; the activity of so providing
and operating the System.


1.8 Financial Institution - shall mean all classes of banks, including those
chartered under state or federal law, commercial banks, savings banks,
mutual savings banks, thrift institutions, savings and loan associations
and credit unions, and branches thereof.


1.9 Interface Software- shall mean that software, other than the OSI Interface
Software, used to interface between and among the various application
software included in the System and between and among peripherals for use
in connection with the System.


1.10 License - shall mean the restricted non-transferable, non-assignable right
to BISYS hereunder to use the OSI Proprietary Software and OSI Interface


Software within its own data processing facilities as an Outsourcing
Services Provider, and at the Customer's facilities as Facilities Manager,
to provide data processing services to its Customers during the term of
this Agreement. The license will be for use on the Designated Hardware and
Operating Systems as defined in Schedule 17(g), as amended from time to
time.


1.11 Named Competitors - Named competitors of BISYS shall mean Fiserv, EDS, M&I
Data Services, NCR, Jack Henry, and ALLTEL/Systematics and successors
thereto, and other competitors named in Schedule 1.6 Named competitors of
OSI shall mean Phoenix International, Prologic, DCI, M&I Eastpoint, ITI
Premier 11 and NCR Autobank and others as may be amended from time to
time.


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1.12 License Fee - shall mean the list price of the OSI Proprietary Software
and OS Interface Software based on the price lists initially shown on the
attached Schedule 1.12 for a similarly situated Financial Institution,
except where OSI routinely discounts such list price in which case License
Fee shall mean such discounted list price. OSI shall have the right to
modify such License Fees annually at the beginning of each calendar year.


1.13 Master Copy - shall mean the object code form copy of the OSI Proprietary
Software and OSI Interface Software and the data base code for the OSI
Database Model to be delivered upon execution of this Agreement and
thereafter from time to time as such code is enhanced and revised by OSI
to reflect the most current versions made available by OSI for use with
the System.


1.14 OSI Database Model - shall mean the database code and resulting database
model developed by OSI and included in the System.


1.15 OSI Proprietary Software - means collectively, the version(s) of software
as set forth in object code format, and database code format with respect
to the OSI Database Model, together with the Documentation to be provided
to BISYS by OSI, for use in connection with the System, including
Enhancements to such software, database code and Documentation that may be
provided by OSI to BISYS from time to time. As listed in Schedule 1.15.


1.16 OSI Interface Software- shall mean that software developed and owned by
OSI, or licensed to OSI, used to interface between and among various
application software and between and among peripherals for use in
connection with the


System, initially identified on Schedule 1.16 hereto, as may be amended
from time to time by OSI by written notice to BISYS.


1.17 OSI Source Code - shall mean the source code in machine readable form for
the OSI Proprietary Software and the OSI Interface Software owned by OSI.


1.18 Outsourcing Services - shall mean the outsourcing by Financial
Institutions of data processing and other information processing services
from a third party that provides such services remotely from its data
center facilities.


1.19 System - shall mean OSI's The Complete Banking Solution client server,
Oracle relational data base, Microsoft Windows NT environment system
including the applicable OSI Proprietary Software, OSI Interface Software,
OSI Database Model and required Third Party Software (TPS), as it may
exist from time to time during the term of this Agreement for use on the
Designated Hardware and Operating Systems as defined in Schedule 17(g), as
amended from time to time. OSI shall provide a new Schedule 17(g) to BISYS
to reflect the authorized Designated Hardware and Operating Systems as in
effect from time to time.


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1.20 Third Party Software (TPS) - shall mean the software developed and owned
by an entity or person other than OSI used, or available for use, in
connection with the System, as initially shown on Schedule 1.19.


2. GRANT AND ACCEPTANCE OF SOFTWARE AND TRADEMARK LICENSE.


(a) Subject to the terms and conditions of this Agreement, OSI hereby grants to BISYS and BISYS hereby accepts from OSI the License and the concurrent right to copy and market the System during the term of this Agreement as the exclusive national Outsourcing provider and exclusive national Facilities Manager of the System to Financial Institutions in the United States, unmodified from the version(s) provided by OSI from time to time, in object code form only. BISYS is prohibited from sub-licensing any of its rights under this Agreement other than to a direct or indirect wholly owned subsidiary of The BISYS Group, Inc., the ultimate parent company of BISYS Title to and ownership of the OSI Proprietary Software, the OSI Interface Software owned by OSI and the OSI Database Model and all Enhancements other than specifically provided for in Section 13, shall at all times remain with OSI.


(b) Subject to the terms and conditions of this Agreement, OSI hereby grants to BISYS and BISYS hereby accepts from OSI a non-exclusive and non-transferable right


to use the OSI trade names "OSI" or "Open Solutions Inc." and The Complete Banking Solution trademark during the term of this Agreement for the sole purpose of the promotion and marketing of the System. BISYS agrees to reproduce OSI's trademarks and proprietary rights notices as necessary and appropriate on the products and services provided by BISYS to the Customer that contain any OSI trade secrets, trademarks or copyrights. Any and all OSI trademarks and trade names which BISYS uses in connection with the rights granted hereunder are and remain the exclusive property of OSI. Nothing herein shall prohibit or otherwise limit BISYS from promoting and marketing the System as a product offered by its TOTALPLUS(R) Division.


(c) Within 90 days of the Effective Date, and subject to any confidentiality limitations, OSI shall deliver to BISYS a schedule (Schedule 2c)and copies of the documentation set forth on such Schedule 2(c) hereto. OSI represents and warrants that all agreements granting to OSI a license or other right to use and/or sub-license the TPS, a schedule of OSI Interface Software, and all other software or intellectual property included in the System shall be set forth on Schedule 2(c).


3. DELIVERY OF CODE.


Upon execution of this Agreement, OSI shall deliver to BISYS a Master Copy of the OSI Proprietary Software and OSI Interface Software in object code form, and a Master Copy of the database code for the OSI Database Model, on disk. At all times during the term of this Agreement, OSI shall deliver to BISYS within sixty (60) days of a general software release to its customers new Master Copies of the OSI Proprietary Software, OSI Interface Software and OSI Database Model as designed for use on the Designated Hardware and


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Operating Systems as defined in Schedule 17(g), so that BISYS has available to it. the most current version of the System, including any and all Enhancements, offered by OSI to its customers generally or made available by OSI to its customers generally. As part of the License granted hereunder, BISYS shall have the right to copy such Master Copy(ies) and Documentation for use in connection with its Outsourcing Services and Facilities Management services to Customers and for other purposes contemplated hereunder, including archival, testing, support backup, disaster recovery, and demonstration.


4. EXCLUSIVITY.


(a) Subject to the limitations set forth below, BISYS shall have the exclusive national (i.e., United States and its territories) License to use the System to provide Outsourcing Services, and exclusive national License to provide and operate the System as Facilities Manager, to Financial Institutions. The foregoing notwithstanding, during the term of this Agreement, OSI may grant and have outstanding licenses (A) to use the System as an Outsourcing Services provider to up to ten [10] local/regional providers (not to include BISYS) at any one time, excluding the Excluded Licensees; provided in each case that such license (i) is limited to a single local/regional provider, i.e., not a consortium or other arrangement whereby a number of providers have entered into a joint venture or partnering arrangement, (and for the first 24 months following the Effective Date for the states of California, Oregon, Washington, Nevada and Arizona a provider in existence as of the Effective Date) with (X) annual revenues from its existing data processing services at the time of such license grant equal to or less than $20 million (Y) no more than 50 clients, and (Z) the main office of each of such clients within the same state or adjacent states as such provider, (ii) limits such license during the first 36 months to use of the System for such provider's then existing clients plus up to an additional ten new clients but not more than 50 clients and after such 36-month period to such additional licenses as mutually agreed between OSI and such provider, and (iii) contains restrictions limiting the use of such license upon a Change of Control of such licensee involving a Named Competitor of BISYS to those Financial Institutions for which the licensee is providing Outsourcing Services as of the date of the Change of Control; and (B) to use the System as an Outsourcing provider solely to credit unions to up to an additional ten [10] local/regional providers (not to include BISYS) at any one time, excluding the Excluded Licensees, provided in each case that such license (i) is limited to a single local/regional provider, i.e., not a consortium or other arrangement whereby a number of providers have entered into a joint venture or partnering arrangement, with annual revenues from its existing data processing services at the time of such license grant equal to or less than $20 million, and (ii) contains restrictions limiting the use of such license upon a Change of Control of such licensee involving a Named Competitor of BISYS to those credit unions for which the licensee is providing Outsourcing Services as of the date of the Change of Control (such providers, individually, a "Permitted Licensee" and, collectively, the "Permitted Licensees"). The provisions of the immediately preceding sentences shall terminate


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in the event that BISYS fails to reaffirm the Agreement within 180 days of a Change of Control of BISYS. A breach of the terms of this subparagraph (a) by OSI shall be deemed a material breach under the Agreement, subject to provision for cure as provided in Section 21(b). OSI shall have the option to convert the rights granted herein to nonexclusive in the event BISYS is unable to achieve the following milestones for the periods indicated (or cumulatively with prior periods) by written notice within 45 days of the end of such period:


Year 1 Year 2 Year 3 Year 4 Year 5


Financial Institutions entering [**] [**] [**] [**] [**] into New Outsourcing Services or Facilities Management Agreements with BISYS


Conversions [**] [**] [**] - - Minimum Required License & [**] [**] [**] - - Maintenance Fees pursuant to Sections 8(a) and (b)


Provided BISYS has satisfied the milestones for years 1 through 3 and that OSI has satisfied its obligations pursuant to sections 7, 9, 10 and 11 hereof, then BISYS agrees that the number of conversions for Year 4 and Year 5 shall be 22 and 25, respectively, and further agrees to a Minimum Required License & Maintenance Fees pursuant to Sections 8(a) and (b) for Years 4 and 5 at amounts to be mutually agreed that represent the retail sales rates and corresponding fees of OSI in effect at such time. It is the intent of the parties to evaluate the terms of this Agreement at the end of such five-year period, including the extension thereof. The foregoing notwithstanding, OSI shall not have the right to convert such rights to nonexclusive where BISYS has (i) entered into new Outsourcing Services and/or Facilities Management agreements with Financial Institutions representing at least [**] of the number required above for the periods indicated and (ii) achieved or prepaid the above required minimum License and Maintenance Fees within 30 days of the end of each annual period. Provided OSI is not in breach of its obligations under this Agreement, BISYS shall pay the minimum required fees for the periods indicated above to OSI (i.e., a total of [**]) in consideration of the exclusivity agreement. Any amounts paid by BISYS to OSI to satisfy the foregoing minimum obligations and not otherwise due pursuant to Sections 8(a) and 8(b) hereof shall be treated as prepaid License and Maintenance Fees under such Sections and shall be applied as a credit against future amounts due and owing thereunder.


Confidential portions omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.


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(b) From the date hereof, BISYS shall be the preferred Facilities Manager for a licensed System installed at a Financial Institution's facilities (i.e., where the Financial Institution has been granted a license to use the System in-house at its facilities and elects to seek a Facilities Manager to operate the System). Notwithstanding the foregoing, no provision in this agreement shall be construed as prohibiting a Financial Institution licensed to use the System from independently retaining a Named Competitor or Excluded Licensee to serve as its Facilities Manager.


(c) OSI represents and warrants as of the Effective Date that it has not granted any license for use of the System to provide Outsourcing Services or to serve as Facilities Manager to any entity other than BISYS. Unless specifically prohibited by contract, OSI will provide written notice to BISYS upon the grant of any license permitted pursuant to the foregoing subparagraph (a). In addition, OSI agrees to provide an annual certification from its independent auditors on or before the date it files such financial statements with the Securities and Exchange Commission and otherwise the 120th day following the end of each of its fiscal years, in conjunction with issuance of its annual financial statements, identifying all license grants made pursuant to subparagraph (a) in effect as of the end of such fiscal year.


(d) MOST FAVORED CUSTOMER. OSI represents and warrants that all prices, warranties, benefits and other terms being provided hereunder are equivalent to or better than the terms being offered by OSI to other similarly situated entities under similar circumstances. If, during the term of this Agreement, OSI enters into a licensing agreement with a Permitted Licensee pursuant to and in accordance with subparagraph (a) hereof providing such entity with more favorable terms, then this Agreement will be deemed appropriately amended to provide such terms to BISYS, and OSI shall promptly provide BISYS with any refunds or credits thereby created; if applicable, calculated from the affective date of such other agreement(s).


(e) EQUITY INVESTMENT. As a condition of the grant of exclusivity and as a condition to any license grant by OSI to a Permitted Licensee hereunder, BISYS and OSI shall complete the documentation necessary for BISYS to make, and BISYS shall promptly thereupon make, the equity investment in OSI described in Schedule 4(e) to this Agreement.


(f) REASONABLE COMMERCIAL EFFORTS & NON-COMPETE. BISYS shall use reasonable commercial efforts in seeking agreements to provide Outsourcing Services and services as Facilities Manager utilizing the System. Based on OSI's efforts pursuant to Sections 7, 9, 10 and 11 hereunder, BISYS would expect to convert an existing T0TALPLUS(TM) system host based client to the System within 12 months of the Effective Date. Successful achievement of this conversion within the expected time frame is expected to facilitate the development and refinement of related conversion programs, completion of required development and the integration into the System of the BISYS provided "wrap-around" products and services identified in the following Section 5. BISYS agrees to provide an annual certification from its independent auditors, on or before such time as it files its


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annual financial statements with the Securities and Exchange Commission, certifying as to the BISYS Customers that entered into Outsourcing Services or Facilities Management agreements with BISYS during the prior fiscal year. BISYS recognizes that it is in the parties' best interest that the reputation of the System be upheld and, accordingly, it shall make commercially reasonable efforts to provide quality sales and service to its Customers. Notwithstanding the above and without limiting BISYS right to provide its host-based T0TALPLUS(R) system outsourcing solution, BISYS shall utilize OSI as the exclusive provider of client/server core data processing for BISYS during the term of this agreement. This includes development of a client/server core processing system by BISYS or the purchase of another product from an OSI Named Competitor as identified in Section 1.11. A breach of the foregoing shall be deemed a material breach under the Agreement. BISYS shall have the opportunity to cure any such breach upon notice as provided in Section 21 herein.


5. PREFERRED PROVIDER.


OSI shall include BISYS, and its affiliates, as a recommended preferred provider to deliver the following additional wrap-around services to OSI direct customers of the System and as applicable to prospective customers:


(a) ATM/debit card processing. (b) Imaging services (including check and remittance imaging) through
Document Solutions, Inc., as long as this company is owned by BISYS. (c) Tele-services (e.g. loan and mortgage information and application
processes via telecommunication [phone/internet]) through BISYS
Creative Solutions, Inc. as long as this company is owned by BISYS. (d) LAN/WAN services (e.g. design, implementation, consulting, program
services, server, workstation and network monitoring).


Unless inappropriate, OSI marketing and promotional material identifying wrap-around services shall identify BISYS as a recommended preferred provider of the foregoing services.


6. SALES AND MARKETING.


(a) TRAINING. OSI shall provide four weeks advance notice of its regularly scheduled and periodic special internal sales training programs as well as any other internal training programs for sales and product support, customer service personnel and systems and software engineers. BISYS shall have the right to include a reasonable number of its like employees in such training programs, subject to class-size limitations, on a no-fee basis. BISYS shall be responsible for the costs of all training materials and other out-of-pocket costs and expenses directly or indirectly resulting from the participation of its employees in such training programs as well as all travel and related costs.


Confidential portions omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.


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(b) TRADE SHOWS. OSI and BISYS shall provide each other with advance notice of their scheduled participation or intent to participate in a trade show so that the parties may jointly participate if so desired.


(c) DEMONSTRATION. Upon execution of this Agreement, OSI shall provide to BISYS a copy of OSI's demonstration program for sales and demonstration purposes and shall provide BISYS with the most current version of such demonstration program as it may exist from time to time. Unless inappropriate, OSI demonstration systems demonstrating "wrap-around" services, as described in Section 5 hereof, shall demonstrate the "wrap around" services offered by BISYS,


(d) MARKETING MATERIALS. BISYS and OSI shall, promptly following execution of this Agreement, develop joint marketing material and standard disclosure relating to each other, the alliance formed hereby and the products and services to be offered hereunder, that may be used by both parties on an ongoing unrestricted basis until otherwise agreed. Such material may also include a new trademark or logo to reflect the alliance. Prior to the development of such materials, neither party may publish and distribute any materials using the trade marks or trade names of the other without the prior written consent of the other, which shall not be unreasonably withheld. OSI will have final approval of all marketing materials that represent the material functional aspects of the System. The parties also expect to engage in certain joint sales and marketing efforts as mutually agreed. Notwithstanding the foregoing, each party reserves the right to continue to produce non-referencing marketing materials for their independent use.


(e) SALES SUPPORT. OSI agrees to participate directly in any sales and marketing presentations to potential Customers and to otherwise be actively involved in providing sales support to BISYS through the period until BISYS has entered into Outsourcing Services agreements or Facilities Management services agreements for its first five Customers. Thereafter, upon BISYS' reasonable request, and subject to availability OSI shall provide appropriate sales support to assist BISYS in its efforts to execute additional Outsourcing Services agreement employing the System with potential Customers. BISYS shall be responsible for the reasonable out-of-pocket costs incurred by OSI for such support.


(f) LEAD REGISTRATION AND REFERRAL. Where either BISYS or OSI determines after a customer sales presentation or other qualification process that the customer has a legitimate interest in the System being provided in the mode offered by the other (i.e., in an Outsourcing Services or Facilities Management mode by an OSI customer prospect or in an in-house mode by a BISYS customer prospect), such party ("Referring Party") shall provide a written lead registration and referral notice to the other identifying the potential customer and contact person. The party receiving the notice shall have the right to call upon that customer either separately or together with the Referring Party to close the sale. The parties recognize that they may continue in competition for such business opportunity. Where the party receiving the notice (i) has not made a sales presentation to the identified customer within the six-month period prior to receipt of such notice and (ii)


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within six months after the notice enters into an agreement with such customer to provide the System, the Referring Party shall be entitled to the Referral Fee described in Section 8 hereof.


Other than the lead registration and referral process described in the foregoing paragraph, neither party shall have an ob ...