<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 19, 1996
--------------------------
FIRST USA PAYMENTECH, INC.
----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-142244 75-2634185
---------------- ----------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
1601 Elm Street, Suite 4700, Dallas, Texas 75201
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 214-849-2000
---------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 19, 1996, First USA Management Resources, Inc. ("Management
Resources"), a Delaware corporation and a wholly-owned subsidiary of First USA
Paymentech, Inc. (the "Company"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") by and among the Company, Management Resources, First
USA, Inc., a Delaware corporation, First USA Opportunity III, Inc., a Delaware
corporation and a wholly-owned subsidiary of Management Resources (the "Merger
Sub"), GENSAR Holdings Inc., a Delaware corporation ("GENSAR"), Golder Thoma
Cressey Fund III Limited Partnership ("Golder Thoma") and the other stockholders
of GENSAR (together with Golder Thoma, the "Sellers"). Pursuant to the Merger
Agreement, Merger Sub would merge with and into GENSAR (the "Merger") and each
share of GENSAR Common Stock issued and outstanding immediately prior to the
Merger would be converted into the right to receive (i) an amount in cash per
share equal to (A) $100,000,000 minus certain deductions divided by (B) the
----- ----------
number of shares of GENSAR Common Stock outstanding immediately prior to the
Merger together with (ii) a promissory note in the original principal amount
equal to (A) $100,000,000 divided by (B) the number of shares of GENSAR Common
----------
Stock outstanding immediately prior to the Merger. The aggregate consideration
paid in the transaction by Management Resources to the Sellers was approximately
$169,000,000. The acquisition consideration for the transaction was determined
by negotiations between the parties to the Merger Agreement.
The Merger Agreement was consummated on August 19, 1996.
As a result of the Merger, GENSAR became a wholly-owned subsidiary of
Management Resources. The assets of GENSAR and its subsidiaries include all the
assets and properties, real and personal, tangible and intangible, used by
GENSAR and its subsidiaries in the operation of its business as a third-party
processor of "point-of-sale" electronic funds transfers, credit card
authorizations, and retail data collections for financial institutions and
retail establishments. Management Resources intends to continue such use of
those assets.
To the best knowledge of the Company, there is no material relationship
between GENSAR and the Company, or any of its affiliates, any director or
officer of the Company, or any associate of such director or officer.
The primary sources of funds used in the transaction were funds from the
Company's initial public offering, a loan from First USA Financial, Inc. and
non-interest bearing notes payable to the previous shareholders of GENSAR due on
October 18, 1996.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired in the
Transaction./(1)/
(i) Consolidated Balance Sheet.
(ii) Consolidated Statement of Income.
(iii) Consolidated Statement of Cash Flows.
(b) Pro forma Financial Information for the Transaction./(1)/
(i) Pro forma Condensed Balance Sheet.
(ii) Pro forma Condensed Consolidated Statement of
Income.
(c) Exhibits.
The following is a list of exhibits filed as part of this Current
Report on Form 8-K:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Agreement and Plan of Merger dated July 19, 1996
by and among the Company, First USA, Inc., First
USA Management Resource, Inc., First USA
Opportunity III, Inc., GENSAR Holdings Inc.,
Golder Thoma Cressey Fund III Limited Partnership
and the other stockholders of GENSAR Holdings Inc.*
4. None
23.1 Consent of Deloitte & Touche LLP./(2)/
</TABLE>
__________________________
* Filed herewith.
/(1)/ It is impractical for Registrant to file such financial statements and
related financial data schedule at this time. Such financial
statements and related financial data schedule will be filed under
cover of Form 8-K/A as soon as practicable, but no later than 60 days
after the date by which this report on Form 8-K was required to be
filed.
/(2)/ To be filed by amendment.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST USA PAYMENTECH, INC.
Date: August 30, 1996 By: /s/ David W. Truetzel
---------------------------
David W. Truetzel
Chief Financial Officer
4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- - ---------- ----------------------
<S> <C>
2.1 Agreement and Plan of Merger dated July 19, 1996 by and among the
Company, First USA, Inc., First USA Management Resource, Inc.,
First USA Opportunity III, Inc., GENSAR Holdings Inc., Golder
Thoma Cressey Fund III Limited Partnership and the other
stockholders of GENSAR Holdings Inc.
</TABLE>
5
<PAGE>
EXHIBIT 2.1
AGREEMENT
AND
PLAN OF MERGER
BY AND AMONG
FIRST USA, INC.,
FIRST USA PAYMENTECH, INC.,
FIRST USA MANAGEMENT RESOURCES, INC.,
FIRST USA OPPORTUNITY III, INC.,
GENSAR HOLDINGS, INC., AND
GOLDER THOMA CRESSEY FUND III LIMITED PARTNERSHIP
AND THE OTHER STOCKHOLDERS OF
GENSAR HOLDINGS, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I.
THE MERGER................................................................. 2
SECTION 1.01. The Merger............................................. 2
SECTION 1.02. Closing; Closing Date; Effective Time.................. 2
SECTION 1.03. Effect of the Merger................................... 2
SECTION 1.04. Certificate of Incorporation; Bylaws................... 2
SECTION 1.05. Directors and Officers................................. 2
ARTICLE II.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES......................... 3
SECTION 2.01. Merger Consideration; Conversion and Cancellation of
Company Common Stock........................................ 3
SECTION 2.02. Exchange and Surrender of Certificates................. 4
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................. 5
SECTION 3.01. Organization and Qualification; Sellers................ 5
SECTION 3.02. Charter and Bylaws..................................... 5
SECTION 3.03. Capitalization......................................... 6
SECTION 3.04. Authority.............................................. 7
SECTION 3.05. No Conflict; Required Filings and Consents............. 7
SECTION 3.06. Permits; Compliance.................................... 8
SECTION 3.07. Financial Statements................................... 9
SECTION 3.08. Absence of Certain Changes or Events................... 9
SECTION 3.09. Absence of Litigation.................................. 10
SECTION 3.10. Employee Benefit Plans; Labor Matters.................. 11
SECTION 3.11. Taxes.................................................. 14
SECTION 3.12. Certain Business Practices............................. 16
SECTION 3.13. Vote Required.......................................... 16
SECTION 3.14. Brokers................................................ 16
SECTION 3.15. Insurance.............................................. 16
SECTION 3.16. Properties............................................. 17
SECTION 3.17. Certain Contracts, Licenses; Etc....................... 17
SECTION 3.18. Accounts Receivable.................................... 20
SECTION 3.19. Banking Relations...................................... 21
SECTION 3.20. Certain Relationships with the Company and its
Subsidiaries.......................................... 21
SECTION 3.21. Information Supplied................................... 21
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS............................. 22
SECTION 4.01. Ownership of Company Common Stock..................... 22
SECTION 4.02. Authority............................................. 22
SECTION 4.03. No Conflict; Required Filings and Consents............ 22
SECTION 4.04. Certain Relationships with the Company and its
Subsidiaries......................................... 23
SECTION 4.05. Confidential Information.............................. 23
SECTION 4.06. Investment Representations............................ 23
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF FIRST USA
AND THE PARENT COMPANIES.................................................. 24
SECTION 5.01. Organization.......................................... 24
SECTION 5.02. Authority............................................. 24
SECTION 5.03. No Conflict; Required Filings and Consents............ 24
SECTION 5.04. First USA Financial Statements........................ 25
SECTION 5.05. Paymentech Financial Statements....................... 26
SECTION 5.06. Absence of Certain Changes or Events.................. 26
SECTION 5.07. Brokers............................................... 26
SECTION 5.08. Regulatory Filings.................................... 26
SECTION 5.09. Reports............................................... 26
SECTION 5.10. Ownership of Parent Companies......................... 27
ARTICLE VI.
COVENANTS................................................................. 27
SECTION 6.01. Affirmative Covenants of First USA and Paymentech..... 27
SECTION 6.02. Affirmative Covenants of the Company.................. 27
SECTION 6.03. Negative Covenants of the Company..................... 28
SECTION 6.04. Access and Information................................ 30
SECTION 6.05. Confidential Information.............................. 31
SECTION 6.06. No Shop............................................... 31
SECTION 6.07. Performance of Company's Obligations.................. 32
SECTION 7.01. Appropriate Action; Consents; Filings................. 32
SECTION 7.02. Public Announcements.................................. 33
SECTION 7.03. Sponsor Bank Assignments.............................. 34
ARTICLE VIII.
CLOSING CONDITIONS........................................................ 34
SECTION 8.01. Conditions to Obligations of Each Party Under this
Agreement............................................ 34
SECTION 8.02. Additional Conditions to Obligations of the Parent
Companies............................................ 35
(a) Representations and Warranties............................ 35
(b) Agreements and Covenants.................................. 35
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
(c) Material Adverse Change................................... 35
(d) Opinions of Company Counsel............................... 35
(e) Noncompetition Agreements................................. 35
(f) Escrow Agreement.......................................... 36
(g) Senior Management Agreements.............................. 36
(h) FirstNet Loss Charges..................................... 36
(i) June Interim Statements................................... 36
(j) Review Opinion............................................ 36
(k) Draft 1995 Tax Returns.................................... 37
SECTION 8.03. Additional Conditions to Obligations of the Company,
and the Sellers...................................... 37
(a) Representations and Warranties............................ 37
(b) Agreements and Covenants.................................. 37
(c) Opinion of Parent Companies Counsel....................... 37
(d) Escrow Agreement.......................................... 37
(e) Guaranty.................................................. 37
ARTICLE IX.
TERMINATION, AMENDMENT, AND WAIVER........................................ 38
SECTION 9.01. Termination........................................... 38
SECTION 9.02. Effect of Termination................................. 38
SECTION 9.03. Amendment............................................. 39
SECTION 9.04. Waiver................................................ 39
SECTION 9.05. Fees, Expenses, and Other Payments.................... 39
ARTICLE X.
GENERAL PROVISIONS........................................................ 40
SECTION 10.01. Effectiveness of Representations and Warranties...... 40
SECTION 10.02. Notices.............................................. 40
SECTION 10.03. Certain Definitions.................................. 41
SECTION 10.04. Headings............................................. 46
SECTION 10.05. Severability......................................... 46
SECTION 10.06. Entire Agreement..................................... 47
SECTION 10.07. Assignment........................................... 47
SECTION 10.09. Specific Performance................................. 47
SECTION 10.10. Failure or Indulgence Not Waiver; Remedies
Cumulative.......................................... 47
SECTION 10.11. Governing Law........................................ 47
SECTION 10.12. Counterparts......................................... 48
SECTION 10.13. Stockholder Releases; Consent........................ 48
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of July 19, 1996 (this "Agreement"),
by and among First USA, Inc., a Delaware corporation ("First USA"), First USA
Paymentech, Inc., a Delaware corporation ("Paymentech"), First USA Management
Resources, Inc., a Delaware corporation ("Management Resources"), First USA
Opportunity III, Inc., a Delaware corporation and a wholly-owned subsidiary of
Management Resources (the "Merger Sub"), Gensar Holdings, Inc., a Delaware
corporation (the "Company"), Golder Thoma Cressey Fund III Limited Partnership
("Stockholder"), and the other stockholders of the Company listed on the
signature pages of this Agreement (together with Stockholder, the "Sellers").
Paymentech, Management Resources and Merger Sub are sometimes referred to in
this Agreement as the "Parent Companies".
BACKGROUND
----------
Merger Sub, upon the terms and subject to the conditions of this Agreement
and in accordance with the Delaware General Corporation Law ("Delaware Law"),
will merge with and into the Company (the "Merger") and, pursuant thereto, the
issued and outstanding shares of Common Stock, $0.01 par value per share (the
"Company Common Stock"), of the Company will be converted into the right to
receive, in the aggregate, up to $100,000,000 in cash and $100,000,000 in the
original principal amount of non-interest bearing promissory notes of Management
Resources guaranteed by First USA as set forth in this Agreement.
The Board of Directors of the Company has approved and adopted this
Agreement and the transactions contemplated by this Agreement.
The Board of Directors of Management Resources has determined that the
Merger is fair to, and in the best interests of, Management Resources and its
stockholder and has approved and adopted this Agreement and the transactions
contemplated by this Agreement.
The Board of Directors of Merger Sub has approved and adopted this
Agreement and Management Resources, as the sole stockholder of Merger Sub, will
adopt this Agreement promptly after the execution by the parties.
The Sellers executing this Agreement intend to evidence their consent to
the Merger as set forth herein.
THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which all parties mutually acknowledge, the parties, intending to be legally
bound, agree as follows:
-1-
<PAGE>
ARTICLE I.
---------
THE MERGER
----------
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
----------
forth in this Agreement, and in accordance with Delaware Law, at the Effective
Time (as defined in Section 1.02), Merger Sub will be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub will cease and the Company will continue as the surviving corporation of the
Merger (the "Surviving Corporation").
SECTION 1.02. Closing; Closing Date; Effective Time. Unless this
-------------------------------------
Agreement has been terminated pursuant to Section 9.01, and subject to the
satisfaction or waiver of the conditions set forth in Article VIII, the
consummation of the Merger and the closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Jackson &
Walker, L.L.P., 901 Main Street, Suite 6000, Dallas, Texas as soon as
practicable (but in any event within ten business days) after the receipt of HSR
Approval (as defined), or at such other date, time, and place as Management
Resources and the Company agree; provided, that the conditions set forth in
Article VIII will have been satisfied or waived at or prior to such time. The
date on which the Closing takes place is referred to as the "Closing Date." As
promptly as practicable on the Closing Date, the parties will cause the Merger
to be consummated by filing a certificate of merger (the "Certificate of
Merger") with the Secretary of State of the State of Delaware, in such form as
required by, and executed in accordance with the relevant provisions of,
Delaware Law (the date and time of such filing, or such later date or time
agreed upon by Management Resources and the Company and set forth in the
Certificate of Merger, being the "Effective Time"). For all Tax purposes, the
Closing will be effective at the end of the day on the Closing Date.
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
--------------------
the Merger will be as provided in the applicable provisions of Delaware Law.
SECTION 1.04. Certificate of Incorporation; Bylaws. At the Effective Time,
------------------------------------
the Certificate of Incorporation of the Company, as in effect immediately prior
to the Effective Time, will be the Certificate of Incorporation of the Surviving
Corporation and thereafter will continue to be its certificate of incorporation
until amended as provided in such certificate of incorporation and pursuant to
Delaware Law. The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, will be the Bylaws of the Surviving Corporation and thereafter
will continue to be its Bylaws until amended as provided in such Bylaws and
pursuant to Delaware Law.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
----------------------
immediately prior to the Effective Time will be the directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time will be the officers of the
Surviving Corporation, each to hold
-2-
<PAGE>
office in accordance with the Bylaws of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified.
ARTICLE II.
----------
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
--------------------------------------------------
SECTION 2.01. Merger Consideration; Conversion and Cancellation of Company
------------------------------------------------------------
Common Stock . At the Effective Time, by virtue of the Merger and without any
- - -------------
action on the part of the Parent Companies, the Company, or their respective
stockholders:
(a) Subject to the other provisions of this Article II, each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding any Company Common Stock described in Section
2.01(b)) (the "Converted Shares") will be converted into the right to
receive (i) an amount in cash per share equal to (A) $100,000,000 minus the
-----
Deductions divided by (B) the number of shares of Company Common Stock
----------
outstanding immediately prior to the Effective Time excluding any Company
Common Stock described in Section 2.01(b) (the "Cash Consideration")
together with (ii) a promissory note in the form attached hereto as Exhibit
-------
A (individually, a "Note" and collectively, the "Notes") in the original
-
principal amount equal to (A) $100,000,000 divided by (B) the number of
----------
shares of Company Common Stock outstanding immediately prior to the
Effective Time excluding any Company Common Stock described in Section
2.01(b) (the "Note Consideration") (collectively the Cash Consideration and
the Note Consideration are referred to herein as the "Merger
Consideration"). The term "Deductions" shall mean those items set forth on
Schedule 2.01(a) to the Disclosure Schedule (as defined below) together,
with respect to each such items, with any redemption or prepayment premiums
associated therewith.
(b) Notwithstanding any provision of this Agreement to the contrary,
each share of Company Common Stock held in the treasury of the Company
immediately prior to the Effective Time will be canceled and extinguished
without any conversion thereof and no payment will be made with respect
thereto.
(c) All Converted Shares will cease to be outstanding and will
automatically be canceled and retired, and each certificate previously
evidencing the Converted Shares will thereafter represent the right to
receive, subject to Section 2.02(c), the Merger Consideration. The holders
of certificates previously evidencing Converted Shares will cease to have
any rights with respect to such Converted Shares except as otherwise
provided in this Agreement or by applicable law. Such certificates
previously evidencing Converted Shares will be exchanged for the Merger
Consideration upon the surrender of such certificates in accordance with
the provisions of Section 2.02, without interest.
-3-
<PAGE>
(d) Each share of common stock, par value $0.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time will be
converted into one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
SECTION 2.02. Exchange and Surrender of Certificates .
--------------------------------------
(a) As soon as practicable after the Effective Time or at the Closing,
each holder of a certificate previously evidencing Converted Shares will be
entitled, upon surrender of such certificate to Management Resources or its
transfer agent (as specified in the letter of transmittal described in
Section 2.02(d)), to receive in exchange for such certificate that amount
of Merger Consideration into which the Converted Shares so surrendered has
been converted as described in Section 2.01 subject to the amount of Merger
Consideration to be placed in escrow as described in Section 2.02(c). Until
so surrendered and exchanged, each certificate previously evidencing
Converted Shares will represent solely the right to receive Merger
Consideration. Notwithstanding the foregoing, no party to this Agreement
will be liable to any former holder of Converted Shares for any cash
delivered to a public official pursuant to applicable abandoned property,
escheat, or similar law.
(b) Merger Consideration delivered upon the surrender of certificates
previously representing Converted Shares in accordance with the terms of
this Agreement together with the right, if any, to receive a portion of the
Escrowed Cash Consideration (as defined below) will be deemed to have been
delivered in full satisfaction of all rights pertaining to such Converted
Shares. At and after the Effective Time, there will be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of Company Common Stock that was outstanding immediately prior
to the Effective Time. If, after the Effective Time, certificates that
previously evidenced Converted Shares are presented to the Surviving
Corporation for any reason, they will be canceled and exchanged as provided
in this Article II.
(c) Notwithstanding anything to the contrary in this Article II,
Management Resources will deliver $1,000,000 out of the Cash Consideration
otherwise payable to the holders of Converted Shares upon consummation of
the Merger (the "Escrowed Cash Consideration") to the Escrow Agent to be
held pursuant to the terms of the Escrow Agreement in the form attached
hereto as Exhibit B, such cash to be held in an interest-bearing account,
---------
with the interest to accrue for the benefit of the holders of the Converted
Shares. As set forth in the Escrow Agreement, the Escrowed Cash
Consideration shall be held as security, only with respect to credit,
collection and fraud losses and charge-offs incurred by the Company or any
of its Subsidiaries and relating to transactions effected on behalf of
customers at or before the Effective Time (collectively, the "Credit
Losses").
-4-
<PAGE>
(d) Prior to Closing, Management Resources will make available to, and
as promptly as practicable after the Effective Time, Management Resources
will send or cause to be sent to each record holder of Company Common Stock
as of immediately prior to the Effective Time a letter of transmittal and
other appropriate materials for use in surrendering certificates as
contemplated by this Agreement. Management Resources will provide to each
Seller at Closing the Merger Consideration allocable to such Seller, upon
receipt from such Seller of a duly completed and executed letter of
transmittal containing a duly completed Form W-9 and a representation that
Management Resources is not required to withhold from the Merger
Consideration any amounts under any state, local, or foreign tax law, all
in a form reasonably acceptable to the Company.
ARTICLE III.
-----------
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to First USA and the Parent
Companies except as set forth in the Disclosure Schedule delivered upon the
execution of this Agreement (the "Disclosure Schedule") that:
SECTION 3.01. Organization and Qualification; Sellers. Except as set
---------------------------------------
forth in Schedule 3.01 to the Disclosure Schedule, the Company and each of its
-------------
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of the state of its incorporation, has all requisite
power and authority to own, lease, and operate its properties and to carry on
its business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties makes such
qualification necessary, other than where the failure to be so duly qualified
and in good standing would not have a Company Material Adverse Effect. The term
"Company Material Adverse Effect" as used in this Agreement means any change,
effect, or condition that, individually or when taken together with all other
such changes, effects, or conditions, would be materially adverse to the
business, operations, assets, financial condition, results of operations of the
Company and its Subsidiaries, taken as a whole; provided; however, that Company
Material Adverse Effect shall exclude any change, effect or condition resulting
from (a) any of the Parent Companies terminating or modifying its customer
relationship with the Company or any of its Subsidiaries or (b) a third party
terminating or modifying its relationship with the Company or its Subsidiaries
if the reason for such termination or modification is the acquisition of the
Company by the Parent Companies.
SECTION 3.02. Charter and Bylaws. The Company has heretofore furnished to
------------------
the Parent Companies true, complete, and correct copies of the Certificate of
Incorporation and Bylaws of the Company and each of its Subsidiaries in each
case as amended or restated through the date hereof. True, correct and complete
copies of the minute books of the Company and each of its Subsidiaries, have
been made available to
-5-
<PAGE>
the Parent Companies, each of which contains accurate minutes of all meetings
of, and accurate consents of all actions taken without meetings by, the Boards
of Directors and stockholders of the Company and each of its Subsidiaries.
Neither the Company nor any of its Subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or Bylaws and such Certificates
of Incorporation and Bylaws remain in full force and effect.
SECTION 3.03. Capitalization .
---------------
(a) As of the date hereof, the authorized capital stock of the
Company consists of (i) 800,000 shares of Company Common Stock, of which
529,939 shares are issued and outstanding and (ii) 40,000 shares of
preferred stock, par value $0.01 per share (the "Company Preferred Stock"),
of which 4,500 shares are issued and outstanding. Except as described in
this Section 3.03 or set forth in Schedule 3.03(a) to the Disclosure
----------------
Schedule, no shares of capital stock of the Company are reserved for any
purpose. Each of the outstanding shares of capital stock of the Company is
duly authorized, validly issued, fully paid and nonassessable, and has not
been issued in violation of (nor, except as set forth in Schedule 3.03(a),
----------------
are any of the authorized shares of capital stock of the Company subject
to) any preemptive or similar rights under the Certificate of Incorporation
or Bylaws of the Company, federal or state securities laws, or any
agreement to which the Company is a party or by which it is bound. The
Company Preferred Stock may be redeemed by the Company at any time, and
from time to time, at the stated liquidation value without premium or
penalty.
(b) The authorized and issued and outstanding capital stock of each
Subsidiary of the Company is set forth in Schedule 3.03(b) to the
----------------
Disclosure Schedule. Except as described in Schedule 3.03(b) to the
----------------
Disclosure Schedule no shares of capital stock of any Subsidiary are
reserved for any purpose. Each of the outstanding shares of capital stock
of each Subsidiary of the Company, is duly authorized, validly issued,
fully paid and nonassessable, and has not been issued in violation of (nor
are any of the authorized shares of capital stock of any Subsidiary subject
to) any preemptive or similar rights under the Certificate of Incorporation
or Bylaws of such Subsidiary, federal or state securities laws, or any
agreement to which such Subsidiary is a party or by which it is bound.
Except as set forth in Schedule 3.03(b) to the Disclosure Schedule, all the
----------------
outstanding shares of capital stock of each Subsidiary of the Company are
owned by the Company free and clear of all security interests, liens,
claims, pledges, agreements, limitations on the Company's voting rights,
charges or other adverse claims of any nature whatsoever.
(c) (i) Except as set forth in Schedule 3.03(c)(i) to the Disclosure
-------------------
Schedule, there are no options, warrants, or other rights, agreements,
arrangements, or commitments of any character to which either the Company
or any of its Subsidiaries is a party or by which it is bound relating to
the issued or unissued capital stock or other securities of the Company or
its Subsidiaries or
-6-
<PAGE>
obligating the Company or any of its Subsidiaries to grant, issue, or sell
any shares of the capital stock or other securities of the Company or its
Subsidiaries, as the case may be. (ii) Except as set forth in Schedule
--------
3.03(c)(ii) to the Disclosure Schedule, there are no obligations,
-----------
contingent or otherwise, of the Company or its Subsidiaries to (A)
repurchase, redeem, or otherwise acquire any shares of its capital stock or
other securities; or (B) provide material funds to, or make any material
investment in (in the form of a loan, capital contribution, or otherwise),
or provide any guarantee with respect to the obligations of any person.
(iii) Except as described in Schedule 3.03(c)(iii) to the Disclosure
---------------------
Schedule and except for the capital stock of the Subsidiaries, the Company
does not (A) directly or indirectly own, (B) have any agreement to purchase
or otherwise acquire, or (C) hold any interest convertible into or
exchangeable or exercisable for the capital stock or other security of any
corporation, partnership, joint venture, limited liability company, trust
or other business association or entity. (iv) Except as set forth in
Schedule 3.03(c)(iv) to the Disclosure Schedule, there are no agreements,
--------------------
arrangements, or commitments of any character (contingent or otherwise)
relating to the acquisition by the Company or any of its Subsidiaries of a
business or assets pursuant to which any person is or may be entitled to
receive any payment based on the revenues or earnings, or calculated in
accordance therewith, of the Company or its Subsidiaries. Except as set
forth in Schedule 3.03(c)(iv), there are no voting trusts, proxies, or
--------------------
other agreements or understandings to which the Company or any of its
Subsidiaries is a party or, to the knowledge of the Company or any of its
Subsidiaries, by which the stockholders of the capital stock of the Company
or any of its Subsidiaries is bound with respect to the voting of any
shares of capital stock of the Company or any of its Subsidiaries.
SECTION 3.05. Authority. The Company has all requisite corporate power and
---------
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action and no other
corporate or other proceedings on the part of the Company will be necessary to
authorize this Agreement or to consummate the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by the Company
and, assuming the due authorization, execution and delivery of this Agreement by
the Sellers, First USA and the Parent Companies, constitutes the legal, valid
and binding obligation of the Company, enforceable in accordance with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by the Company does
not, and the consummation of the transactions contemplated by this
Agreement by the Company will not (i) conflict with or violate its
Certificate of Incorporation or Bylaws, in each case as amended or restated
to the date of this
-7-
<PAGE>
Agreement; (ii) conflict with or violate any federal, state, foreign or
local law, statute, ordinance, rule, regulation, order, judgment, or decree
(collectively, "Laws") applicable to the Company or its Subsidiaries or by
which any of their respective properties is bound or subject; (iii) result
in any material breach of or constitute a material default (or an event
that with notice or lapse of time or both would become a default) under, or
give to any other person any rights of termination, amendment,
acceleration, or cancellation of, or require payment under, or result in
the creation of a lien or encumbrance on any of the Company Common Stock,
the capital stock of its Subsidiaries, or properties or assets of the
Company or its Subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which the Company or any of its Subsidiaries is
a party or by or to which the Company or its Subsidiaries or any of their
respective properties is bound or subject; or (iv) result in any breach of
or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to any other person any rights
of termination, amendment acceleration, or cancellation of, or require
payment under, or result in the creation of a lien or encumbrance on any of
the Company Common Stock, the capital stock of its Subsidiaries or
properties or assets of the Company or its Subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, or other instrument or other obligation to which the
Company or any of its Subsidiaries is a party or by or to which the Company
or its Subsidiaries or any of their respective properties is bound or
subject which individually or in the aggregate reasonably could result in a
Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does
not, and consummation of the transactions contemplated by this Agreement by
the Company will not, require the Company or its Subsidiaries to obtain any
consent, license, permit, approval, waiver, authorization, or order of, or
to make any filing with or notification to, any governmental or regulatory
authority, domestic or foreign (collectively, "Governmental Entities"),
except for applicable requirements, if any, of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
filing and recordation of appropriate merger documents as required by
Delaware Law and any other applicable state corporate law.
SECTION 3.06. Permits; Compliance. Each of the Company and its
-------------------
Subsidiaries is in possession of all material franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals, and orders necessary to own, lease, and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "Permits"), and there is no action or proceeding, pending or,
to the knowledge of the Company or any of its Subsidiaries, threatened or is any
investigation pending regarding suspension or cancellation of any of the
Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or
in default or violation of (a) any Law applicable to the Company or its
Subsidiaries or by or to which
-8-
<PAGE>
any of their properties are bound or to which they may be subject or (b) any of
the Permits which, in the case of (a) or (b) above reasonably could result in a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any written notification with respect to possible conflicts,
defaults, or violations of Laws from any Governmental Entity which reasonably
could result in a Company Material Adverse Effect.
SECTION 3.07. Financial Statements. The Company has delivered to Parent
---------------------
Companies true, correct, and complete copies of the following financial
statements (the "Company Financial Statements"):
(a) the audited consolidated financial statements of the Company as
of and for the periods ended December 31, 1995, December 31, 1994 and
December 31, 1993, including balance sheets and statements of operations,
cash flow and changes in stockholders' equity, as certified by Deloitte &
Touche LLP, independent certified public accountants; and
(b) the unaudited interim consolidated financial statements of the
Company as of and for the three-month period ended March 31, 1996,
including balance sheet, statements of operations, cash flow and
stockholders' equity (the "March Interim Statements").
The Company Financial Statements present fairly, in all material respects,
the financial position of the Company and its Subsidiaries at the dates shown
and the results of operations and cash flows for the periods covered in
accordance with generally accepted accounting principles applied on a consistent
basis except that the March Interim Statements do not contain notes and are
subject to customary year end adjustments, which adjustments, to the knowledge
of the Company and its Subsidiaries, in the aggregate are not material. Except
for liabilities set forth on the Company Financial Statements or on Schedule
--------
3.07(a) or (b) to the Disclosure Schedule, and except for liabilities incurred
- - --------------
since the date of the latest Company Financial Statements in the ordinary course
of business, neither the Company nor any of its Subsidiaries has any material
liabilities of any sort, absolute or contingent, accrued or unaccrued, asserted
or unasserted and neither the Company nor any of its Subsidiaries know of any
other material claims or liabilities. Except as set forth in Schedule 3.07(a)
----------------
or (b) to the Disclosure Schedule, all indebtedness set forth on Schedule
- - ------ --------
2.01(a) may be prepaid by the obligor thereon at any time, and from time to
- - -------
time, without premium or penalty. Schedule 3.07(a) to the Disclosure Schedule
----------------
sets forth a breakdown of the components of all reserves contained in the
Company Financial Statements (including merchant reserves), and all reserves
shown in the Company Financial Statements are appropriate and reasonable to
provide for losses contemplated thereby.
SECTION 3.08. Absence of Certain Changes or Events. Except as
------------------------------------
contemplated by this Agreement or as set forth in Schedule 3.08 to the
-------------
Disclosure Schedule, since December 31, 1995 each of the Company and its
Subsidiaries has conducted in all material respects its business only in the
ordinary course and in a manner consistent with
-9-
<PAGE>
past practice, and there has not been (a) any material damage, destruction, or
loss (whether or not covered by insurance) with respect to any material assets
of the Company or any of its Subsidiaries; (b) any change by the Company or its
Subsidiaries in accounting or tax reporting methods, principles, or practices;
(c) any declaration, setting aside, or payment of any dividends or distributions
in respect of shares of the Company Common Stock or the capital stock of any of
the Subsidiaries, or any redemption, purchase, or other acquisition by the
Company of any of the Company's securities or by any of the Subsidiaries of
their respective securities; (d) any increase in the benefits under, or the
establishment or amendment of, any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase, or other
employee benefit plan, or any increase in the compensation payable or to become
payable to directors, officers, or employees of the Company or its Subsidiaries,
except for increase in salaries or wages payable or to become payable in the
ordinary course of business and consistent with past practice; (e) except in the
ordinary course of business any revaluation by the Company or any of its
Subsidiaries of any of their respective assets, including the writing down of
the value of inventory or the writing down or off of notes or accounts
receivable; (f) any entry by the Company or any of its Subsidiaries into any
commitment or transaction materially adverse to the Company or its Subsidiaries
(other than this Agreement and the transactions contemplated by this Agreement);
(g) any increase in indebtedness for borrowed money in excess of $100,000; (h)
any termination or loss of Customer Agreements (as defined below) representing
in excess of 10% of the total number transactions or 10% of total revenue from
the Customer Agreements; or (i) any Company Material Adverse Effect.
SECTION 3.09. Absence of Litigation. Except as set forth in Schedule 3.09
--------------------- -------------
of the Disclosure Schedule, there is no claim, action, suit, litigation,
proceeding or arbitration, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or, to the knowledge of the Company or any
of its Subsidiaries, threatened against or investigation of any kind pending
with respect to the Company or any of its Subsidiaries or any properties or
rights of the Company or any of its Subsidiaries (except for claims, actions,
suits, litigation, proceedings, arbitrations, or investigations that could not
reasonably be expected to have a Company Material Adverse Effect), or relating
to this Agreement and the transactions contemplated by this Agreement, and
neither the Company nor any of its Subsidiaries is (i) subject to any continuing
order of, consent decree, settlement agreement, or other similar written
agreement with, or, to the knowledge of the Company or any of its Subsidiaries,
continuing investigation by, any Governmental Entity, or any judgment, order,
writ, injunction, decree, or award of any Government Entity or arbitrator,
specifically naming the Company or its Subsidiaries including, without
limitation, cease-and-desist or other orders or (ii) in default with respect to
any such judgment, order, writ, injunction, decree or award.
-10-
<PAGE>
SECTION 3.10. Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) Set forth in Schedule 3.10(a) to the Disclosure Schedule is a
----------------
complete and correct list of all "employee benefit plans" (as defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
all plans or policies providing for "fringe benefits" (including but not
limited to vacation, paid holidays, personal leave, employee discount,
educational benefit or similar programs), and each other bonus, incentive,
compensation, deferred compensation, profit sharing, stock, severance,
retirement, health, life, disability, group insurance, employment, stock
option, stock purchase, stock appreciation right, supplemental
unemployment, layoff, consulting, or any other similar plan, agreement,
policy, or understanding (whether written or oral, qualified or
nonqualified, currently effective or terminated), and any trust, escrow, or
other agreement related thereto that (a) is or has been established,
maintained, or contributed to by the Company or its Subsidiaries or with
respect to which the Company or its Subsidiaries has any liability, or (b)
provides benefits, or describes policies or procedures applicable, to any
officer, employee, director, former officer, former employee, or former
director of the Company or its Subsidiaries, or any dependent thereof,
regardless of whether funded (each, an "Employee Plan," and collectively,
the "Employee Plans"). The Company has heretofore furnished to the Parent
Companies complete and accurate copies of all employee manuals, policies,
procedures and work-related rules that apply to employees of each of the
Company and its Subsidiaries (the "Employee Policies"). The Employee
Policies can be terminated at will by the Company or its Subsidiaries.
(b) Except as set forth in Schedule 3.10(b) to the Disclosure
----------------
Schedule no written or oral representations have been made to any employee
or officer or former employee or officer of the Company or any of its
Subsidiaries promising or guaranteeing any coverage under any Employee Plan
that is an employee welfare benefit plan (within the meaning of Section
3(1) of ERISA) for any period of time beyond the end of the current plan
year (except to the extent of coverage required under Code section 4980B),
and no Employee Plan provides benefits to any employee of the Company or
its Subsidiaries or any employee's dependents after the employee terminates
employment other than as required by the plan document for each such plan.
Except as set forth in Schedule 3.10(b) to the Disclosure Schedule, the
----------------
consummation of the transactions contemplated by this Agreement will not
accelerate the time of payment or vesting, or increase the amount of
compensation (including amounts due under Employee Plans) due to any
employee, officer, former employee, or former officer of the Company or any
of its Subsidiaries.
(c) All employees of the Company and its Subsidiaries are terminable
at will, and neither the Company, any of its Subsidiaries nor to the
knowledge of the Company or any of its Subsidiaries any present or former
director, officer, employee, or agent of either the Company or any of its
Subsidiaries has made
-11-
<PAGE>
any binding commitments of the Company or any of its Subsidiaries, written
or oral, to any present or former director, officer, agent, or employee
concerning his or her term, condition or benefits of employment by the
Company or its Subsidiaries other than as set forth in Schedule 3.10(c) to
----------------
the Disclosure Schedule. Schedule 3.10(c) contains a complete and accurate
----------------
list of the names, titles and cash compensation, including, without
limitation, wages, salaries, bonuses and other cash compensation of all
employees of the Company and its Subsidiaries. Schedule 3.10(c) sets forth
----------------
all increases in cash compensation of the employees during the current and
immediately preceding fiscal year and any promised increases that have not
yet been effected.
(d) With respect to each Employee Plan, the Company or its
Subsidiaries has furnished to the Parent Companies true, correct and
complete copies of (i) the plan documents and summary plan description;
(ii) the most recent determination letter received from the Internal
Revenue Service; (iii) the two most recently filed annual reports required
to be filed with the Internal Revenue Service and/or the United States
Department of Labor for each such Employee Plan; and (iv) all related trust
agreements, insurance contracts, or other funding agreements that implement
such Employee Plan.
(e) The Code section 401(k) plan (the "401(k) Plan") maintained by
Gensar Technologies, Inc., a Delaware corporation, (a) is the only employee
pension benefit plan (within the meaning of Section 3(2) of ERISA)
maintained by the Company or any of its Subsidiaries or with respect to
which the Company or any of its Subsidiaries contributes or has or is
reasonably expected to incur any liability; and (b) meets the qualification
requirements of section 401(a) of the Code in form and operation, and such
plan, and each trust (if any) forming a part thereof, has received a
favorable determination letter from the Internal Revenue Service as to the
qualification under the Code of such plan and the tax-exempt status of such
related trust, and nothing has occurred since the date of such
determination letter that could be expected to adversely affect the
qualification of such plan or the tax-exempt status of such related trust.
All Employee Plans purporting to qualify for special tax treatment under
any provision of the Code, including, without limitation, Code sections 79,
105, 106, 125, 127, 129, 132, 421, or 501(c)(9), meet the requirements of
such sections in form and in operation in all material respects. All
reports, returns, or filings required by any government agency with respect
to the Employee Plans have been timely filed in accordance with all
applicable requirements in all material respects.
(f) None of the Company or any of its Subsidiaries, nor any plan
fiduciary of any Employee Plan has engaged in any transaction in violation
of section 406(a) or (b) of ERISA or any "prohibited transaction" (as
defined in section 4975(c)(1) of the Code), that could subject the Company,
its Subsidiaries, or the Parent Companies to any taxes, penalties, or other
liabilities resulting from such prohibited transaction.
-12-
<PAGE>
(g) No Employee Plan is or was subject to Part 3 of Title I of ERISA
or Title IV of ERISA; each Employee Plan has been operated in all material
respects in compliance with ERISA, the Code, and all other applicable laws;
none of the Employee Plans is or was a "multiple employer plan" or
"multiemployer plan" (as described or defined in ERISA or the Code); there
are no material unfunded liabilities existing under any Employee Plans, and
each Employee Plan that has not been terminated could be terminated as of
the Closing Date without any material liability to the Parent Companies,
the Company or any of its Subsidiaries.
(h) There are no actions, suits, claims or audits pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
investigations pending, or with respect to, any of the Employee Plans or
their assets; and all contributions required to be made to the Employee
Plans have been made timely.
(i) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining or other labor union contract. No collective
bargaining agreement is being negotiated by the Company or any of its
Subsidiaries. Each of the Company and its Subsidiaries is in compliance in
all material respects with all applicable laws respecting employment,
employment practices, and wages and hours. To the knowledge of the Company
or its Subsidiaries there is no pending or threatened labor dispute, strike
or work stoppages against the Company or any of its Subsidiaries that is
reasonably likely to interfere with the business activities of the Company
or its Subsidiaries. None of the Company, its Subsidiaries, or to the
knowledge of the Company, any of their respective representatives has
committed any unfair labor practices in connection with the operation of
the business of the Company or its Subsidiaries, and there is no pending or
to the knowledge of the Company or its Subsidiaries threatened charge or
complaint against the Company or any of its Subsidiaries by the National
Labor Relations Board or any comparable Governmental Entity.
(j) Except as set forth on Schedule 3.10(j) to the Disclosure
----------------
Schedule, neither the Company nor any of its Subsidiaries is a party to or
bound by any severance agreements, programs, policies, plans, or
arrangements, whether or not written. Schedule 3.10(j) to the Disclosure
----------------
Schedule sets forth, and each of the Company and its Subsidiaries has
provided to the Parent Companies true and correct copies of, (i) all
employment agreements with officers or employees of the Company and its
Subsidiaries; (ii) all material agreements with consultants of the Company
or its Subsidiaries; (iii) all noncompetition agreements with the Company
or any of its Subsidiaries; and (iv) all agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which
any person is or may be entitled to receive any payment based on revenues
or earnings, or calculated in accordance therewith, of the Company or its
Subsidiaries.
-13-
<PAGE>
(k) Except as set forth on Schedule 3.10(k) to the Disclosure
----------------
Schedule, neither the Company nor any of its Subsidiaries has amended or
terminated any of the Employee Plans or any of the plans, programs,
agreements, policies or other arrangements described in Section 3.10(j)
since December 31, 1995.
SECTION 3.11. Taxes.
-----
(a) Except as set forth on Schedule 3.11(a) to the Disclosure
----------------
Schedule, (i) All returns and reports (the "Tax Returns") of or with
respect to any Tax that is required to be filed on or before the Closing
Date by or with respect to the Company or any of its Subsidiaries have been
or will be duly and timely filed; (ii) each such Tax Return is true,
correct, and complete; (iii) all Taxes that have become or will become due
with respect to the period covered by each such Tax Return have been or
will be timely paid in full; (iv) no claim has ever been made by an
authority in a jurisdiction where the Company or any of its Subsidiaries
does not file Tax Returns that either is or may be subject to taxation by
that jurisdiction; (v) all withholding Tax requirements imposed on or with
respect to the Company or any of its Subsidiaries have been or will be
satisfied in full in all respects; (vi) no addition to tax, penalty,
interest, or other charge is or will become due with respect to the late
filing of any such Tax Return or late payment of any such Tax; and (vii)
the Company has no knowledge of any position taken or any Tax Return for
which there was not "substantial authority" within the meaning of Code
section 6662(d)(2)(B)(i) and the regulations promulgated thereunder.
(b) All Tax Returns of or with respect to the Company or any of its
Subsidiaries with unexpired or extended statutes of limitations that have
not been audited by the applicable Governmental Entity are set forth in
Schedule 3.11(b) to the Disclosure Schedule.
----------------
(c) Except as set forth on Schedule 3.11(c) to the Disclosure
----------------
Schedule, there is not in force any extension of time with respect to the
due date for the filing of any Tax Return of or with respect to the Company
or any of its Subsidiaries or any waiver or agreement for any extension of
time for the assessment, collection, or payment of any Tax of or with
respect to the Company or any of its Subsidiaries.
(d) There are no audits, actions, proceedings or disputes pending, or
to the knowledge of the Company or any of its Subsidiaries, investigations
pending or threatened, with respect to or against the Company or any of its
Subsidiaries for or with respect to any Taxes except as set forth in
Schedule 3.11(a) to the Disclosure Schedule; no assessment, deficiency, or
----------------
adjustment has been assessed or proposed with respect to any Tax Return of
or with respect to the Company or any of its Subsidiaries. Schedule 3.11(d)
----------------
to the Disclosure Schedule indicates all Tax Returns that have been audited
by any taxing authority. Each of the Company and its Subsidiaries has
delivered to the Parent Companies
-14-
<PAGE>
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of any deficiencies assessed against or agreed to
by the Company or its Subsidiaries since December 31, 1992.
(e) The provision for accrual of current Taxes in the Company
Financial Statements is sufficient to cover in all material respects the
amount of all Taxes, of the Company or any of its Subsidiaries as of the
date of each such statement.
(f) Neither the Company nor any of its Subsidiaries is a party to any
Tax allocation or sharing agreement affecting the Company or its
Subsidiaries or to which either the Company or any of its Subsidiaries has
been a party. Neither the Company nor any of its Subsidiaries is liable for
the Taxes of any other Person under any federal, state, foreign, or local
law as a transferee, successor, by contract, or otherwise.
(g) Except for statutory liens for current Taxes not yet due or for
Taxes being contested in good faith and set forth on Schedule 3.11(g) to
----------------
the Disclosure Schedule, no liens for Taxes exist upon the assets of the
Company or any of its Subsidiaries.
(h) Neither the Company nor any of its Subsidiaries will be required
to include any amount in income for any taxable period beginning after the
last day of the taxable year for which the most recent federal income tax
return of the Company was filed as a result of a change in accounting
method for any taxable period ending on or before the last day of the
taxable year for which most recent federal income tax return of the Company
was filed or pursuant to any agreement with any Tax authority with respect
to any such taxable period.
(i) None of the property of the Company or any of its Subsidiaries is
held in an arrangement for which partnership Tax Returns are being filed,
and neither the Company nor any of its Subsidiaries owns any interest in
any controlled foreign corporation (as defined in section 957 of the Code),
passive foreign investment company (as defined in section 1296 of the
Code), or other entity the income of which is required to be included in
the income of the Company or such Subsidiaries.
(j) None of the property of the Company or any of its Subsidiaries is
subject to a safe-harbor lease (pursuant to section 168(f)(8) of the
Internal Revenue Code of 1954 as in effect after the Economic Recovery Tax
Act of 1981 and before the Tax Reform Act of 1986) or is "tax-exempt use
property" (within the meaning of section 168(h) of the Code) or "tax-exempt
bond financed property" (within the meaning of section 168(g)(5) of the
Code).
(k) The Merger will not result in any income Tax liability to the
Company or any of its Subsidiaries based on any action taken by them.
-15-
<PAGE>
(l) Neither the Company nor any of its Subsidiaries has made an
election under section 341(f) of the Code. Neither the Company nor any
of its Subsidiaries has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under
Code section 280G. Neither the Company nor any of its Subsidiaries is a
United States real property holding corporation within the meaning of
Code section 897(c)(2) during the applicable period specified in Code
section 897(c)(1)(A)(ii).
(m) Schedule 3.11(m) to the Disclosure Schedule sets forth the tax
----------------
and accounting basis in the assets of the Company and its Subsidiaries on
an estimated basis as of December 31, 1994 and 1995.
SECTION 3.12. Certain Business Practices . None of the Company, its
---------------------------
Subsidiaries, or, to the knowledge of the Company, any directors, officers,
agents, or employees of the Company or its Subsidiaries has (a) used any funds
on behalf of the Company or any of its Subsidiaries for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
(b) made any unlawful payment on behalf of the Company or any of its
Subsidiaries to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or (c) made any other
unlawful payment on behalf of the Company or any of its Subsidiaries in each
case, that resulted in, or could reasonably result in, a Company Material
Adverse Effect.
SECTION 3.13. Vote Required. The only vote of the holders of any class or
-------------
series of the capital stock of the Company necessary to approve the Merger and
adopt this Agreement is the affirmative vote of the holders of a majority of the
outstanding shares of the Company Common Stock.
SECTION 3.14. Brokers. Except as set forth in Schedule 3.14 to the
------- -------------
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Subsidiaries. Prior to the date of this
Agreement, each of the Company and its Subsidiaries has delivered to the Parent
Companies a complete and correct copy of all agreements referenced in Schedule
--------
3.14 to the Disclosure Schedule pursuant to which such person will be entitled
- - ----
to any payment relating to the transactions contemplated by this Agreement.
SECTION 3.15. Insurance. Schedule 3.15 to the Disclosure Statement lists
--------- ------------
all insurance policies currently in effect under which the Company or any of its
Subsidiaries is a beneficiary or an insured. As of the date of this Agreement,
neither the Company nor any of its Subsidiaries has received any notice that any
of the policies listed on Schedule 3.15 to the Disclosure Statement has been or
-------------
will be canceled prior to its scheduled termination date, or would not be
renewed substantially on the same terms now in effect if the insured party
requested renewal or has received notice from any of its
-16-
<PAGE>
insurance carriers that any insurance premiums will be subject to increase in an
amount materially disproportionate to the amount of the increases with respect
thereto (or with respect to similar insurance) in prior years. Neither the
Company nor any of its Subsidiaries is in default under any such policy which
would permit cancellation thereof and all premiums due and payable with respect
to such coverage have been paid or accrued.
SECTION 3.16. Properties. Except for liens arising in the ordinary
----------
course of business after the date of this Agreement and properties and assets
disposed of in the ordinary course of business after December 31, 1995 and
except as set forth in Schedule 3.16 to the Disclosure Schedule, each of the
-------------
Company and its Subsidiaries has good and marketable title, free and clear of
all liens and adverse claims, to all their material properties and assets,
whether tangible or intangible, real, personal, or mixed, reflected in the
December 31, 1995 consolidated balance sheet referred to in Section 3.07(a) as
being owned by the Company or its Subsidiaries as of such date or purported to
be owned on the date of this Agreement. All buildings, and all fixtures,
equipment, and other property and assets that are material to the business of
the Company or any of its Subsidiaries and held under leases by the Company or
its Subsidiaries are held under valid instruments enforceable by the Company or
its Subsidiaries, as the case may be, in accordance with their respective terms.
Each of the Company's and its Subsidiaries' properties and equipment, including
without limitation their information systems, have been maintained in the
ordinary course of business and are in good working order and serviceable
condition, reasonable wear and tear excepted.
SECTION 3.17. Certain Contracts, Licenses; Etc.
---------------------------------
(a) Schedule 3.17(a) sets forth a complete and correct list of each
----------------
patent application, trademark (whether or not registered), trademark
application, trade name, service mark, copyright and other proprietary
intellectual property (including, without limitation, proprietary computer
software, whether in object or source form) (collectively, "Intellectual
Property") owned or used by the Company or any of its Subsidiaries. No
claim by any third party contesting the validity or enforceability of any
Intellectual Property is pending or, to the knowledge of the Company or its
Subsidiaries, threatened. No registration relating to the Intellectual
Property has lapsed, expired, or been abandoned or canceled or is the
subject of a cancellation proceeding. Each of the Company and its
Subsidiaries has all right, title and interest in, or has a valid and
enforceable license to use such Intellectual Property and, to the knowledge
of the Company and its Subsidiaries, the current use by the Company or any
of its Subsidiaries of such Intellectual Property does not infringe the
rights of any other person. To the knowledge of the Company or any of its
Subsidiaries no other person is infringing upon the rights of the Company
or any of its Subsidiaries in any such Intellectual Property. With respect
to the Intellectual Property which constitutes computer software programs
("software"), Schedule 3.17(a) to the Disclosure Schedule sets forth all
----------------
versions or releases of software owned or licensed by the Company or its
Subsidiaries or used by any of them in marketing, developing or supporting
-17-
<PAGE>
the products and services marketed by them and neither the Company nor any
of its Subsidiaries is in default with respect to any software license
agreement. Except as set forth in Schedule 3.17(a) to the Disclosure
----------------
Schedule, the Company or its Subsidiaries has a valid license or ownership
interest in and to all versions or releases of that software, free and
clear of any liens, charges and encumbrances or rights of any third party
(other than as set forth in any such license). Except with respect to
programs licensed to the Company or one of its Subsidiaries and set forth
in Schedule 3.17(a) to the Disclosure Schedule, the Company or one of its
----------------
Subsidiaries is in actual possession of the source code of each software
program set forth therein and the Company or one of its Subsidiaries is in
possession of all other documentation necessary for the effective use of
each such software as currently used by the Company or its Subsidiaries.
Schedule 3.17(a) to the Disclosure Schedule lists, by program, all third
----------------
parties which have been provided by the Company with the source code to any
of the software listed therein. To the knowledge of the Company or its
Subsidiaries, there are no defects in any of the software which is part of
any of the products or services offered by the Company or any of its
Subsidiaries which reasonably could, in any material and adverse respect,
affect the customers of the Company or any of its Subsidiaries or the
products and services marketed and provided by each of the Company and its
Subsidiaries. To the knowledge of the Company and its Subsidiaries neither
the existence nor use in the business of the Company or any of its
Subsidiaries of any version or release of any software program set forth in
the Disclosure Schedule infringes on any patent, trademark or copyright,
violates any trade secret, know how, process or proprietary information of
any third party or entitles any third party to any interest in or right to
compensation from the Company or any Subsidiaries by reason of the use,
exploitation or sale of any such software programs. Except as set forth in
the Disclosure Schedule, there are no restrictions on the ability of the
Company or any of its Subsidiaries or any of its or their successors or
assigns to use or otherwise exploit any such software in any material
respect in accordance with the terms of any license thereof. Except as set
forth in Schedule 3.17(a) to the Disclosure Schedule, the use by the
----------------
Company or any of its Subsidiaries or any of its or their successors or
assigns of any version or release of any software listed in the Disclosure
Schedule in accordance with the terms of any license agreement applicable
thereto does not and will not obligate the Company or any of its
Subsidiaries or any of its successors or assigns to pay any royalty, fee or
other compensation to any person except in accordance with the terms of any
license agreement applicable thereto.
(b) Each of the Company and its Subsidiaries possesses all permits,
licenses, and authorizations of, and has made all such registrations,
completed all material qualifications and filed all statements, reports,
information, and forms with, Governmental Entities and self-regulatory
organizations necessary to permit it to operate its business in the manner
in which it is currently conducted except where the failure to do so
reasonably could not be expected to result in a Company Material Adverse
Effect.
-18-
<PAGE>
(c) Each Merchant Agreement (as defined below) is valid, and, to the
knowledge of each of the Company and its Subsidiaries, there exists or is
threatened thereunder no material default, breach, or other event or
condition that, with the passage of time or notice or both, would
constitute a material default or breach thereunder other than defaults,
breaches or other events with respect to Merchant Agreements, individually
or in the aggregate, representing annual revenue of not more than
$2,500,000. Each Merchant Agreement accurately reflects in all material
respects the pricing and billing information with respect to the respective
Merchant (as defined below), as written. As used in this Agreement,
"Merchant" means the seller of goods or services that is party to a
Merchant Agreement with the Company or its Subsidiaries, and "Merchant
Agreement" means any agreement between the Company or its Subsidiaries and
a Merchant pursuant to which the Merchant undertakes to honor credit,
debit, or other payment cards and to use the Company or its Subsidiaries
for processing settlement and authorization of card transactions and other
related services as set forth in such agreement.
(d) Each EDC Services Agreement (as defined below) is valid, and, to
the knowledge of each of the Company and its Subsidiaries, there exists or
is threatened thereunder no material default, breach, or other event or
condition that, with the passage of time or notice or both, would
constitute a material default or breach thereunder. Each EDC Services
Agreement accurately reflects in all material respects the pricing and
billing information with respect to the respective EDC customer (as defined
below), as written. As used in this Agreement, "EDC customer" means an
electric data capture customer that is party to an EDC Services Agreement
with the Company or its Subsidiaries, and "EDC Services Agreement" means
any agreement between the Company or its Subsidiaries and an EDC customer
pursuant to which the Company or any of its Subsidiaries provides, through
an electric data capture network, authorization, capture and settlement of
credit and debit and transactions at the point of sale. Collectively, the
Merchant Agreements and EDC Services Agreements are sometimes referred to
as the "Customer Agreements".
(e) Except as set forth on Schedule 3.17(e) to the Disclosure
----------------
Schedule, no consent, authorization or approval from any lendor or lessor
or any other person with respect to any material agreement, instrument or
arrangement involving the Company or any of its Subsidiaries is required in
connection with the consummation of the transactions contemplated by this
Agreement, and no material agreement, instrument or arrangement is
terminable as the result of, has increased rights or obligations as a
result of, or becomes vested or accelerated by, the transactions
contemplated by this Agreement. Each of the Company and its Subsidiaries is
in compliance in all respects under all leases, licenses, agreements,
contracts, permits, plans, and commitments by which any of the properties
or assets of the Company or any of its Subsidiaries is bound except for
such noncompliance which reasonably could not be expected to result in a
Company Material Adverse Effect and to the knowledge of each of the Company
and any
-19-
<PAGE>
of its Subsidiaries no event has occurred that constitutes a violation or
breach of or a default (with the passage of time or the giving of notice or
both) in respect of any thereof, and each of the other parties thereto or
bound thereby has performed all the obligations required to be performed by
it to date and is not in default thereunder except for such violations,
breaches or defaults which reasonably could not be expected to result in a
Company Material Adverse Effect.
(f) Neither the Company nor any of its Subsidiaries is, nor, to the
knowledge of the Company or any of its Subsidiaries, is any third party
affiliated with the Company or any of its Subsidiaries in default under or
in violation of any credit or debit network bylaws, operating regulations
or rules.
(g) Each Agent Bank Agreement (as defined below) is valid, and, to
the knowledge of each of the Company and its Subsidiaries, there exists or
is threatened thereunder no material default, breach, or other event or
condition that, with the passage of time or notice or both, would
constitute a material default or breach thereunder. As used in this
Agreement, "Agent Bank" means a financial institution that has entered into
an Agent Bank Agreement with the Company or any of its Subsidiaries, and
"Agent Bank Agreement" means any agreement between the Company or any of
its Subsidiaries and an Agent Bank pursuant to which the Agent Bank
provides transaction processing services to customers of the Company or any
of its Subsidiaries on such terms as are set forth in the Agreement.
(h) Each Independent Sales Organization Agreement (as defined below)
is valid, and, to the knowledge of each of the Company and its
Subsidiaries, there exists or is threatened thereunder no material default,
breach, or other event or condition that, with the passage of time or
notice or both, would constitute a material default or breach thereunder.
As used in this Agreement, "Independent Sales Organization" has the meaning
attributed to such term by VISA and MasterCard, and "Independent Sales
Organization Agreement" means any agreement between the Company or any of
its Subsidiaries and an Independent Sales Organization pursuant to which
the Independent Sales Organization provides transaction processing services
to customers of the Company or any of its Subsidiaries on such terms as are
set forth in the Agreement.
(i) Except as set forth in Schedule 3.17(i) to the Disclosure
----------------
Schedule, there are no third party vendors providing material services in
connection with the processing by the Company or any of its Subsidiaries of
any credit or debit card transactions for their customers.
SECTION 3.18. Accounts Receivable. Schedule 3.18 to the Disclosure
------------------- -------------
Schedule sets forth the accounts receivable of each of the Company and its
Subsidiaries broken out by Subsidiaries generated by them from sales made as of
May 31, 1996. A true, correct and complete aging of the accounts receivable from
sales made as of May 31, 1996 has been delivered to the Parent Companies except
for amounts disputed by customers in the
-20-
<PAGE>
ordinary course of business which amounts do not exceed $50,000 in the
aggregate. All such accounts receivable have arisen from bona fide transactions
in the ordinary course of business of the Company or its Subsidiaries.
SECTION 3.19. Banking Relations. Set forth in Schedule 3.19 to the
----------------- -------------
Disclosure Schedule is a complete and accurate list of all arrangements that the
Company or any of its Subsidiaries has with any bank or financial institution,
indicating with respect to each relationship the type of arrangement maintained
with respect to such financial institution including any financial institutions
which sponsor the Company or any of its Subsidiaries in any credit or debit card
network (collectively such sponsoring financial institutions are referred to
herein as "Sponsor Banks"). The Sponsor Banks provide no services to either the
Company or any of its Subsidiaries in connection with the processing of
transactions other than simply acting as a sponsor with respect to the credit or
debit card network. A list of all bank identification numbers ("BINs"),
interbank card association identification numbers ("ICAs") or similar
identification information used by the Sponsor Banks with respect to the Company
or any of its Subsidiaries is set forth in Schedule 3.19 to the Disclosure
-------------
Schedule.
SECTION 3.20. Certain Relationships with the Company and its Subsidiaries.
-----------------------------------------------------------
Except as set forth in Schedule 3.20 to the Disclosure Schedule, to the
-------------
knowledge of the Company, since January 1, 1996, none of the Sellers and their
affiliates has been involved in any material business arrangement or
relationship with any of the Company or any of its Subsidiaries except on terms
no more or less favorable than could be obtained from unaffiliated third parties
and, except as set forth in Schedule 3.20 to the Disclosure Schedule, to the
-------------
knowledge of the Company, none of the Sellers and their affiliates owns any
material asset which is used in the business of the Company or any of its
Subsidiaries or has any control over or economic interest in any material
customers of the Company or any of its Subsidiaries which results in such
customer purchasing products or services from the Company or its Subsidiaries.
SECTION 3.21. Information Supplied. Without limiting any of the
--------------------
representations and warranties contained in this Agreement, no representation or
warranty of the Company or the Sellers and no statement by the Company or the
Sellers or other information contained in the Disclosure Schedule, taken as a
whole, as of the date of such representation, warranty, or statement, contains
any untrue statement of material fact, or omits to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which such statements were made, not misleading. The
Company is not aware of any material information necessary to enable a
prospective purchaser generally knowledgeable about the industry in which the
Company operates (without regard to the facts and circumstances relating to or
impacting such purchaser) to make an informed investment decision with respect
to the Company Common Stock in either such case, or the ability of the Company
or its Subsidiaries to consummate the transactions contemplated by this
Agreement that has not been set forth or described in this Agreement or in a
schedule, certificate, or other written statement furnished to the Parent
Companies or otherwise disclosed to the Parent Companies by members of senior
management of the Company or its Subsidiaries.
-21-
<PAGE>
ARTICLE IV.
-----------
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
---------------------------------------------
Each Seller hereby severally represents and warrants to First USA and the
Parent Companies as to itself or himself that:
SECTION 4.01. Ownership of Company Common Stock. Such Seller owns of
---------------------------------
record good and marketable title to the number of shares of Company Common Stock
set forth opposite its or his name on Schedule 4.01 to the Disclosure Schedule
-------------
and, except as set forth in Schedule 4.01 to the Disclosure Schedule, such
-------------
shares are owned free and clear of all adverse claims, security interests,
liens, encumbrances, equities, proxys, options, shareholders' agreements or
restrictions.
SECTION 4.02. Authority. Such Seller has full legal (or in the case of
---------
the Stockholder, partnership) authority to execute and deliver this Agreement
and the Escrow Agreement, to perform its or his obligations under this Agreement
and to consummate the transactions contemplated by this Agreement and the Escrow
Agreement. The execution and delivery of this Agreement and the Escrow Agreement
by Stockholder and the consummation by the Stockholder of the transactions
contemplated by this Agreement and the Escrow Agreement have been duly
authorized by all necessary partnership action and no other partnership
proceedings on the part of the Stockholder are necessary to authorize this
Agreement and the Escrow Agreement or to consummate the transactions
contemplated by this Agreement and the Escrow Agreement. This Agreement has been
duly executed and delivered by each of the Sellers and, assuming the due
authorization, execution, and delivery of this Agreement by each of the Company,
the other Sellers, First USA and the Parent Companies, constitutes the legal,
valid, and binding obligation of such Seller, enforceable in accordance with its
terms.
SECTION 4.03. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement and the Escrow
Agreement by such Seller does not, and the consummation of the transactions
contemplated by this Agreement and the Escrow Agreement will not (i) in the
case of the Stockholder, conflict with or violate the Constituent
Documents, in each case as amended or restated as of the date of this
Agreement, or (ii) conflict with or violate any Laws applicable to such
Seller or by which any of his or its properties is bound or subject. As
used herein "Constituent Documents" with respect to a corporation means its
articles of certificate of incorporation and bylaws, with respect to a
limited partnership, means its certificate of limited partnership and
agreement of limited partnership, and with respect to other entities,
documents of similar importance.
(b) The execution and delivery of this Agreement and the Escrow
Agreement by such Seller does not, and the consummation of the transactions
-22-
<PAGE>
contemplated by this Agreement and the Escrow Agreement will not, require
such Seller to obtain any consent, license, permit, approval, waiver,
authorization, or order of, or to make any filing with or notification to,
any Governmental Entity, except for applicable requirements of the HSR Act
and the filing and recordation of appropriate merger documents as required
by Delaware Law and other applicable state laws.
SECTION 4.04. Certain Relationships with the Company and its Subsidiaries.
-----------------------------------------------------------
Except as set forth in Schedule 4.04 to the Disclosure Schedule, since January
-------------
1, 1996, neither such Seller nor his or its affiliates has been involved in any
material business arrangement or relationship with any of the Company or any of
its Subsidiaries except on terms nor more or less favorable than could be
obtained from unaffiliated third parties and, except as set forth in Schedule
--------
4.04 to the Disclosure Schedule, neither such Seller nor his or its affiliates
- - ----
owns any material asset which is used in the business of the Company or any of
its Subsidiaries or has any relationship with any material customers of the
Company or any of its Subsidiaries.
SECTION 4.05. Confidential Information. The Stockholder is not in
------------------------
possession of Confidential Information (as hereinafter defined) of the Company
or any of its Subsidiaries other than financial reports and other related
financial information.
SECTION 4.06. Investment Representations. In connection with the receipt
---------------------------
of the Note Consideration, such Seller has been advised that the issuance of the
Notes has not been registered with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "Securities Act") and, to the extent
that the Notes are securities, the Notes are being issued to the Sellers in
reliance upon an exemption from such registration. In that regard, such Seller
is sophisticated in financial matters and is able to evaluate the risks and
benefits relating to the acquisition of the Note Consideration. The Note
Consideration is to be acquired for such Seller's own account and not with a
view to, or intention of, distribution thereof in violation of the Securities
Act, or any applicable state securities laws, and the Note Consideration will
not be disposed of by such Seller in contravention of the Securities Act or any
applicable state securities laws. Such Seller understands that Management
Resources is under no obligation to register the sale, transfer or other
disposition of the Note Consideration by such Seller or on such Seller's behalf
under the Securities Act or any state securities law, and such Seller is able to
bear the economic risk of his or her investment in the Note Consideration for an
indefinite period of time because the Note Consideration has not been registered
under the Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available. Such Seller has received from the Company the Reports (as
hereinafter defined) concerning First USA and Paymentech.
-23-
<PAGE>
ARTICLE V.
----------
REPRESENTATIONS AND WARRANTIES OF FIRST USA
-------------------------------------------
AND THE PARENT COMPANIES
------------------------
First USA and the Parent Companies hereby jointly and severally represent
and warrant to the Company and the Sellers that:
SECTION 5.01. Organization. Each of First USA and the Parent Companies
------------
is a corporation duly organized, validly existing, and in good standing under
the laws of its state of incorporation. Each of First USA and the Parent
Companies is in good standing to do business in each jurisdiction in which the
execution of this Agreement, the Notes, the Guaranty and the other agreements
contemplated hereby makes such qualification necessary except where the failure
to be duly qualified and in good standing would not have a material adverse
effect on the ability of First USA or the Parent Companies to consummate the
transactions contemplated hereby.
SECTION 5.02. Authority. Each of First USA and the Parent Companies has
----------
all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations under this Agreement and to consummate the
transactions contemplated by this Agreement. Management Resources has all
requisite corporate power and authority to execute and deliver the Notes and
perform its obligations thereunder. First USA has all requisite corporate power
and authority to execute and deliver the Guaranty and perform its obligations
thereunder. The execution and delivery of this Agreement by each of First USA
and the Parent Companies and the consummation by each of First USA and the
Parent Companies of the transactions contemplated by this Agreement (including
the execution of the Escrow Agreement by Management Resources) have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of any of First USA or the Parent Companies are necessary to
authorize this Agreement or the Escrow Agreement or to consummate the
transactions contemplated by this Agreement. The execution and delivery of the
Notes by Management Resources and the Guaranty by First USA have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Management Resources or First USA are necessary to authorize the
Notes or the Guaranty, as the case may be. This Agreement, the Notes and the
Guaranty have been duly executed and delivered by each of First USA and the
Parent Companies as appropriate and, assuming the due authorization, execution,
and delivery of this Agreement by the Company and the Sellers, each of the
Agreement, the Notes and the Guaranty constitutes the legal, valid, and binding
obligation of each of First USA and the Parent Companies or Management
Resources, as the case may be, enforceable in accordance with its terms.
SECTION 5.03. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by each of First USA
and the Parent Companies and the execution of the Notes by Management
-24-
<PAGE>
Resources and the Guaranty by First USA does not, and the consummation of
the transactions contemplated by this Agreement and the Notes will not (i)
conflict with or violate the Certificate of Incorporation or Bylaws, in
each case as amended or restated as of the date of this Agreement, of any
of First USA or the Parent Companies; (ii) conflict with or violate any
Laws applicable to any of First USA or the Parent Companies or by which any
of their properties is bound or subject; or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, accelerations or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of any
of First USA or the Parent Companies pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which any of First USA or the Parent Companies
is a party or by or to which any of First USA or the Parent Companies or
any of their respective properties is bound or subject.
(b) The execution and delivery of this Agreement by each of First USA
and the Parent Companies, the execution and delivery of the Notes by
Management Resources and the execution and delivery of the Guaranty by
First USA does not, and the consummation of the transactions contemplated
hereby and thereby will not, require any of First USA or the Parent
Companies to obtain any consent, license, permit, approval, waiver,
authorization, or order of, or to make any filing with or notification to,
any Governmental Entity, except for applicable requirements of the HSR Act
and the filing and recordation of appropriate merger documents as required
by Delaware Law.
SECTION 5.04. First USA Financial Statements. First USA has delivered to
-------------------------------
the Company (for the benefit of the Stockholders and Sellers) true, correct and
complete copies of the following financial statements of First USA (the "First
USA Financial Statements"):
(a) the audited consolidated financial statements of First USA as of
and for the periods ended June 30, 1995 and June 30, 1994 and for the three
year period ended June 30, 1995, including balance sheets and statements of
income, cash flow and changes in stockholders' equity, as certified by
Ernst & Young LLP, independent certified public accountants;
(b) the unaudited interim consolidated financial statements of First
USA as of and for the nine-month period ended March 31, 1996, including
balance sheet, statements of income, cash flow and stockholders' equity.
The First USA Financial Statements present fairly, in all material respects, the
financial position of First USA at the dates shown and the results of operations
and cash flows for the periods covered in accordance with generally accepted
accounting principles applied on a consistent basis.
-25-
<PAGE>
SECTION 5.05. Paymentech Financial Statements. Paymentech has delivered
-------------------------------
to the Stockholder (for the benefit of the Stockholder and Sellers) true,
correct and complete copies of the following financial statements of Paymentech
(the "Paymentech Financial Statements"):
(a) the audited consolidated financial statements of Paymentech as of
and for the periods ended June 30, 1995 and June 30, 1994 and for the three
year period ended June 30, 1995, including balance sheets and statements of
income, cash flow and changes in stockholders' equity, as certified by
Ernst & Young LLP, independent certified public accountants;
(b) the unaudited interim consolidated financial statements of
Paymentech as of and for the none-month period ended March 31, 1996,
including balance sheet, statements of operations, cash flow and
stockholders' equity.
The Paymentech Financial Statements present fairly, in all material respects,
the financial position of Paymentech at the dates shown and the results of
operations and cash flows for the periods covered in accordance with generally
accepted accounting principles applied on a consistent basis.
SECTION 5.06. Absence of Certain Changes or Events. Except as
------------------------------------
contemplated by this Agreement or as set forth in the Reports (as hereinafter
defined), since June 30, 1995 each of First USA and the Parent Companies has
conducted its business only in the ordinary course and in a manner consistent
with past practice, and there has not been any event, change or condition of
First USA or the Parent Companies which reasonably could limit the performance
of First USA, the Parent Companies or Management Resources of their obligations
under this Agreement, the Notes or the Guaranty.
SECTION 5.07. Brokers. Except as set forth in Schedule 5.07 to the
------- -------------
Disclosure Schedule, no broker, finder, or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of First USA or the Parent Companies. Any amounts owed to any broker,
finder or investment banker set forth in Schedule 5.07 shall be paid by First
-------------
USA or the Parent Companies.
SECTION 5.08. Regulatory Filings. Each of First USA and Paymentech has
------------------
filed and will continue to file through the Closing Date in a timely manner all
required filings with the Securities and Exchange Commission, including, without
limitation, all reports on Form 10-K, Form 10-Q and Form 8-K.
SECTION 5.09. Reports. Each of First USA and Paymentech has delivered to
-------
the Company each report prepared by it since June 30, 1995 (collectively, the
"Reports"), including, without limitation (i) its Annual Report on Form 10-K for
the year ended June 30, 1995, (ii) its Quarterly Reports on Form 10-Q for the
periods ended September 30, 1995, December 31, 1995 and March 31, 1996, and
(iii) its current
-26-
<PAGE>
Reports on Form 8-K filed since June 30, 1995, each in the form (excluding
exhibits) filed with the Securities and Exchange Commission.
SECTION 5.10. Ownership of Parent Companies. All of the outstanding
-----------------------------
shares of capital stock of Merger Sub are owned of record by Management
Resources. All of the outstanding shares of capital stock of Management
Resources are owned of record by Paymentech. Of the outstanding shares of common
stock of Paymentech, approximately seventy-seven percent (77%) are owned of
record by First USA Financial, Inc. ("FFI"). All of the outstanding shares of
capital stock of FFI are owned of record by First USA.
ARTICLE VI.
-----------
COVENANTS
---------
SECTION 6.01. Affirmative Covenants of First USA and Paymentech.
-------------------------------------------------
(a) First USA agrees to, and will, guaranty the performance by
Management Resources of its obligations pursuant to the Notes pursuant to
the terms of that certain Guaranty Agreement in the form attached hereto as
Exhibit C;
---------
(b) Each of First USA and Paymentech shall cause each of its direct
or indirect Subsidiaries to perform all of their respective obligations
under this Agreement and the other Agreements contemplated hereby, and to
consummate the transactions contemplated hereby and thereby; and
(c) First USA and Paymentech will use commercially reasonable efforts
to assist the Company to obtain the release of the guaranties made by
Stockholder guaranteeing certain obligations of the Company payable to
Harris Bank.
SECTION 6.02. Affirmative Covenants of the Company. The Company hereby
------------------------------------
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by the
Parent Companies, the Company will, and the Company will cause each of its
Subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use commercially reasonable efforts to preserve substantially
intact its business organization, maintain its material rights and
franchises, retain the services of its respective officers and employees
and maintain its relationships with its customers and suppliers;
-27-
<PAGE>
(c) continue to actively solicit and sign up new Merchants and EDC
customers in accordance with past practices;
(d) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted; maintain supplies
and inventories in quantities consistent with its customary business
practice; and maintain in full force and effect all of its intangible
property rights (including rights with respect to Intellectual Property);
(e) use commercially reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage to
that currently maintained;
(f) promptly notify the Parent Companies of the occurrence of any
event which reasonably could be expected to cause a Company Material
Adverse Effect; and
(g) promptly after preparation thereof, deliver to the Parent
Companies financial reports and statements and internally prepared
financial information of the Company and its Subsidiaries prepared after
the date of this Agreement until the Closing Date, including without
limitation, the monthly reports and statements for April, May, June and
July 1996.
SECTION 6.03. Negative Covenants of the Company. Except as expressly
----------------------------------
contemplated by this Agreement, set forth in Schedule 6.03 to the Disclosure
-------------
Schedule or otherwise consented to in writing by the Parent Companies, from the
date of this Agreement until the Effective Time, the Company will not, and the
Company will not permit any of its Subsidiaries to, do any of the following:
(a) (i) increase the compensation payable to or to become payable to
any director or executive officers, unless such increase results from the
operation of compensation arrangements in effect prior to the date of this
Agreement; (ii) grant any severance or termination pay (other than pursuant
to the severance policy of the Company or its Subsidiaries (or pursuant to
an agreement to which the Company or any of its Subsidiaries is a party and
which provides for severance or termination pay) as in effect on the date
of this Agreement and otherwise disclosed herein to, or enter into or amend
any employment or severance agreement with, any director, officer, or
employee; (iii) establish, adopt, or enter into any employee benefit plan
or arrangement; or (iv) except in the ordinary course of business, amend in
any material respect, or take any other actions with respect to, any of the
Employee Plans;
(b) except as set forth in Schedule 2.01(a) to the Disclosure
----------------
Schedule, declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of capital stock or subdivide or reclassify
its capital stock or otherwise recapitalize the Company;
-28-
<PAGE>
(c) (i) except as described in Schedule 3.03(c)(ii) to the Disclosure
--------------------
Schedule, redeem, purchase, or otherwise acquire any shares of its capital
stock or any securities or obligations convertible into or exchangeable for
any shares of its capital stock, or any options, warrants, or conversion or
other rights to acquire any shares of its capital stock or any such
securities or obligations (ii) effect any reorganization or
recapitalization; or (iii) split, combine, or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for, shares of its capital
stock;
(d) except as described in Schedule 3.03(c)(i) of the Disclosure
-------------------
Schedule, issue, deliver, award, grant, or sell, or authorize or offer the
issuance, delivery, award, grant, or sale (including the grant of any
security interests, liens, claims, pledges, limitations in voting rights,
charges, or other encumbrances) of, any shares of any class of its capital
stock (including shares held in treasury), any securities convertible into
or exercisable or exchangeable for any such shares, or any rights,
warrants, or options to acquire any such shares;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any person or division thereof, or otherwise
acquire or agree to acquire any assets of any other person (other than the
purchase of assets from suppliers or vendors in the ordinary course of
business and consistent with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer, or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer,
or otherwise dispose of, any of its material assets or any interest
therein, except for dispositions of inventories and of assets in the
ordinary course of business and consistent with past practice;
(g) purchase, lease or otherwise acquire any capital assets or make
any capital expenditures with a purchase price in excess of $100,000;
(h) release any third party from its obligations, or grant any
consent, under any existing standstill provision relating to a Competing
Transaction (as defined below) or otherwise under any confidentiality or
other similar agreement, or fail to fully enforce any such agreement or
settle any material litigation;
(i) repay or satisfy any indebtedness for borrowed money other than
in the ordinary course of business and only as required by the express
terms of the agreement or other instrument under which the indebtedness was
incurred;
(j) adopt any amendments to its Certificate of Incorporation or
Bylaws;
-29-
<PAGE>
(k) (a) change any of its methods of accounting in effect at December
31, 1995, or (b) make or rescind any express or deemed election relating to
Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit, or controversy relating to
Taxes (except where the amount of such settlements or controversies,
individually or in the aggregate, does not exceed $100,000), or change any
of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for the taxable year ending December 31, 1994, except, in each
case, as may be required by Law or generally accepted accounting
principles;
(l) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture, or
similar instrument, except in the ordinary course of business consistent
with past practice and in no event in excess of $100,000 in the aggregate;
(m) enter into any arrangement, agreement, or contract with any third
party (other than customers in the ordinary course of business) that
provides for an exclusive arrangement with that third party or is
substantially more restrictive on the Company or any of its Subsidiaries or
substantially less advantageous to the Company or any of its Subsidiaries
than arrangements, agreements or contracts existing on the date of this
Agreement;
(n) amend, modify or change any material agreements other than in the
ordinary course of business (including, without limitation any of the
Merchant Agreements or EDC Agreements);
(o) enter into any transaction with any affiliate not permitted under
Section 3.20; or
(p) agree in writing or otherwise to do any of the foregoing.
SECTION 6.04. Access and Information.
----------------------
(a) The Company will, and will cause each of its Subsidiaries to (i)
afford to the Parent Companies and their officers, directors, employees,
accountants, consultants, legal counsel, agents, and other representatives
(collectively, the "Parent Representatives") access, upon reasonable prior
notice and during normal business hours, to the officers, employees,
agents, properties, offices, and other facilities of the Company and its
Subsidiaries and to the books and records (excluding any customer lists) of
the Company and its Subsidiaries as the Parent Companies may from time to
time request and (ii) furnish promptly to the Parent Companies and the
Parent Representatives such other information concerning the business,
properties, contracts, records, and personnel of the Company and its
Subsidiaries (including, without limitation, financial, operating,
-30-
<PAGE>
and other data and information but excluding any customer lists) as the
Parent Companies may from time to time reasonably request.
(b) Notwithstanding the foregoing provisions of this Section 6.04,
neither the Company nor any of its Subsidiaries will be required to grant
access or furnish information to the Parent Representatives to the extent
that such access or the furnishing of such information is prohibited by
Law. No investigation by the parties made heretofore or hereafter will
affect the representations and warranties of the parties in this Agreement.
SECTION 6.05. Confidential Information. Each Seller (other than the
------------------------
Stockholder, Bipin C. Shah and Gregory C. Dillett) acknowledges that he or it
has had access to the confidential information of the Company and its
Subsidiaries (including, but not limited to, records regarding sales, price and
cost information, marketing plans, customer names, customer lists, sales
techniques, distribution plans or procedures, and other material relating to the
business of the Company and its Subsidiaries but excluding information that is
in the public domain or becomes available to the public other than through an
act of a Seller or his or her affiliates in violation of this Agreement),
proprietary, or trade secret information (the "Confidential Information"), and
for itself and for each person that such Seller controls during the term of this
Section 6.05 agrees never to use the Confidential Information other than for the
sole benefit of the Parent Companies or to disclose such Confidential
Information to any person, without the prior written consent of the Company.
Each Seller (other than the Stockholder, Bipin C. Shah and Gregory C. Dillett)
further acknowledges that this covenant to maintain Confidential Information is
necessary to protect the goodwill and proprietary interests of the Company and
its Subsidiaries, and that the restriction against the disclosure of
Confidential Information is reasonable in light of the consideration and other
value such Seller has accepted pursuant to this Agreement. Each Seller (other
than the Stockholder, Bipin C. Shah and Gregory C. Dillett) agrees on request of
the Parent Companies after the Closing Date immediately to surrender to the
Parent Companies all Confidential Information and all copies thereof in such
Seller's possession or control.
SECTION 6.06. No Shop. Each Seller, severally but not jointly, agrees
-------
that such Seller will not, and the Company agrees that it will not and will not
permit any of its Subsidiaries, directly or indirectly, through agents,
attorneys, investment bankers, officers, employees, or otherwise, to initiate,
solicit, or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the making
of any proposal relating to, or that may reasonably be expected to lead to, any
Competing Transaction (as defined below), or enter into discussions or negotiate
with any person in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize or
permit any of the officers, directors, or employees of the Company, any of its
Subsidiaries or any investment banker, financial advisor, attorney, accountant,
or other representative retained by the Company or any of its Subsidiaries to
take any such action, and each of the Company and its Subsidiaries will promptly
notify the Parent Companies of all relevant terms of any such inquiries and
proposals received by the Company or any of
-31-
<PAGE>
its Subsidiaries or by any such officer, director, investment banker, financial
advisor, attorney, accountant, or other representative relating to any of such
matters (whether received orally or in writing) and if such inquiry or proposal
is in writing, the Company or the Subsidiary receiving the inquiry or proposal
will promptly deliver or cause to be delivered to the Parent Companies a copy
thereof. For purposes of this Agreement, "Competing Transaction" means any of
the following (other than the transactions contemplated by this Agreement)
involving the Company or any of its Subsidiaries: (i) any merger, consolidation,
share exchange, business combination, or similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 20% or more
of the assets of the Company and any of its Subsidiaries taken as a whole, (iii)
any offer for 10% or more of the outstanding shares of capital stock of the
Company or any of its Subsidiaries; or (iv) except for its existing
stockholders, any person having acquired beneficial ownership of, or any group
(as such term is used in Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) having been formed that beneficially owns or
has the right to acquire beneficial ownership of, 10% or more of the outstanding
shares of capital stock of the Company or any of its Subsidiaries.
SECTION 6.07. Performance of Company's Obligations. Each of First USA
------------------------------------
and the Parent Companies agrees, upon Closing, to cause the Company to perform
its obligations contemplated by this Agreement (including, but not limited to,
the obligation to prepay the Company's indebtedness to Harris Bank, the
obligation to redeem the Company's preferred stock held by the Stockholder, the
obligation to timely pay the bonuses set forth on Schedule 6.03 to the
-------------
Disclosure Schedule and the obligation to pay the Company's and the Sellers'
expenses up to an aggregate amount of $1,350,000).
ARTICLE VII.
------------
ADDITIONAL AGREEMENTS
---------------------
SECTION 7.01. Appropriate Action; Consents; Filings.
-------------------------------------
(a) Each of the Parent Companies and the Company will, and the
Company will cause its Subsidiaries to, use all commercially reasonable
efforts to (i) take, or cause to be taken, all appropriate action, and do,
or cause to be done, all things necessary, proper or advisable under
applicable law or otherwise to consummate and make effective the
transactions contemplated by this Agreement; (ii) obtain from any
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations, or orders required to be obtained or made by the Parent
Companies, First USA, the Company or any of their respective Subsidiaries
in connection with the authorization, execution, and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement, including, without limitation, the Merger, the issuance of the
Notes and the delivery of the Guaranty; (iii) as soon as practicable after
the date hereof make all necessary filings, and as soon as practicable
-32-
<PAGE>
thereafter make any other required submissions, with respect to this
Agreement and the Merger required under the HSR Act; and (iv) make all
necessary filings with respect to any other applicable Law; provided that
the Parent Companies and the Company will cooperate with each other in
connection with the making of all such filings including providing copies
of all such documents to the nonfiling party and its advisors prior to
filing and, if reasonably requested, will accept all reasonable additions,
deletions, or changes suggested in connection therewith. Each of the Parent
Companies and the Company will, and the Company will cause its Subsidiaries
to, furnish all information required for any application or other filing to
be made pursuant to the rules and regulations of any applicable Law in
connection with the transactions contemplated by this Agreement.
(b) The Parent Companies and the Company agree to, and the Company
will cause its Subsidiaries to, cooperate with respect to and agree to use
all commercially reasonable efforts vigorously to contest and resist, any
action, including legislative, administrative, or judicial action, and to
have vacated, lifted, reversed, or overturned any decree, judgment,
injunction, or other order (whether temporary, preliminary, or permanent)
(an "Order") of any Governmental Entity that is in effect and that
restricts, prevents, or prohibits the consummation of the Merger or any
other transactions contemplated by this Agreement, including, without
limitation, by vigorously pursuing all available avenues of administrative
and judicial appeal and all available legislative action.
(c) (i) Each of the Parent Companies and the Company will, and the
Company will cause its Subsidiaries to, give any notices to third parties,
and use all commercially reasonable efforts to obtain any third party
consents (A) necessary, proper, or advisable to consummate the transactions
contemplated by this Agreement; (B) otherwise required under any contracts,
licenses, leases, or other agreements in connection with the consummation
of the transactions contemplated by this Agreement; or (C) required to
prevent a Company Material Adverse Effect from occurring prior to the
Effective Time.
(ii) In the event that any party fails to obtain any third-party
consent described in subsection (c)(i) above, such party will use all
reasonable efforts, and will take any such actions reasonably requested by
the other parties, to limit the adverse effect upon the Company, its
Subsidiaries and the Parent Companies, and their respective businesses, as
the case may be, resulting, or that could reasonably be expected to result
after the Effective Time, from the failure to obtain such consent.
(d) Each of the Parent Companies and the Company will, upon learning
thereof, promptly notify the other of any circumstances which reasonably
could cause the conditions to Closing contained in Article VIII not to be
satisfied.
SECTION 7.02. Public Announcements. The Parent Companies and First USA on
--------------------
the one hand, and the Sellers and the Company, on the other hand, will consult
with
-33-
<PAGE>
each other before issuing any press release or otherwise making any public
statements with respect to the Merger and will not issue any such press release
or make any such public statement prior to such consultation. The press release
announcing the execution and delivery of this Agreement will be a joint press
release of Paymentech and the Company.
SECTION 7.03. Sponsor Bank Assignments. Each of the Company and its
------------------------
Subsidiaries shall use commercially reasonable efforts to cause any Sponsor Bank
or similar third party to assign the sponsor relationship with the Company or
any of its Subsidiaries from the Sponsor Bank to Management Resources and assign
to Management Resources all BINs, ICAs and similar identification information
necessary to process credit and debit card transactions through the appropriate
networks (the "Sponsor Bank Assignments").
ARTICLE VIII.
-------------
CLOSING CONDITIONS
------------------
SECTION 8.01. Conditions to Obligations of Each Party Under this
--------------------------------------------------
Agreement. The respective obligations of each party to effect the Merger and
- - ---------
the other transactions contemplated by this Agreement will be subject to the
satisfaction at or prior to the Closing Date of the following conditions, any or
all of which may be waived in writing by the parties, in whole or in part, to
the extent permitted by applicable Law:
(a) No Order. No Governmental Entity or federal or state court of
--------
competent jurisdiction shall have enacted, issued, promulgated, enforced,
or entered any statute, rule, regulation, executive order, decree,
injunction, or other order (whether temporary, preliminary, or permanent)
that is in effect and that has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger; and no such Governmental
Entity shall have initiated any proceeding seeking any of the foregoing.
(b) HSR Act. The applicable waiting period under the HSR Act with
-------
respect to the transactions contemplated by this Agreement shall have
expired or been terminated (such expiration or termination referred to
herein as "HSR Approval").
(c) Stockholder Approval. The Agreement and the transactions
--------------------
contemplated hereby including, without limitation, the Merger, shall have
been approved by the requisite vote of the stockholders of the Company in
accordance with applicable law and the Certificate of Incorporation and
Bylaws of the Company.
-34-
<PAGE>
SECTION 8.02. Additional Conditions to Obligations of the Parent
--------------------------------------------------
Companies. The obligations of the Parent Companies to effect the Merger and the
- - ---------
other transactions contemplated by this Agreement are also subject to the
satisfaction at or prior to the Closing Date of the following conditions, any or
all of which may be waived in writing in the absolute discretion of the Parent
Companies, in whole or in part:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of the Company and the Sellers contained in this Agreement shall
be true and correct in all material respects as of the Closing Date (except
for those representations and warranties already qualified by materiality,
which representations and warranties shall be true and correct in all
respects as of the Closing Date). The Parent Companies shall have received
a certificate of the President and the Chief Financial Officer of the
Company dated the Closing Date, to such effect.
(b) Agreements and Covenants. The Company and the Sellers shall have
------------------------
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Closing Date. The Parent Companies shall have
received a certificate of the President and the Chief Financial Officer of
the Company, dated the Closing Date, to such effect.
(c) Material Adverse Change. Since the date of this Agreement, there
-----------------------
shall have been no change, occurrence, or circumstance in the current or
future business, financial condition, or results of operations of the
Company or its Subsidiaries having or reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect. The
Parent Companies shall have received a certificate of the President and the
Chief Financial Officer of the Company dated the Closing Date, to such
effect.
(d) Opinions of Company Counsel. The Parent Companies shall have
---------------------------
received the opinions of counsel to the Company and its Subsidiaries, dated
the Effective Date, addressed to the Parent Companies, substantially in the
form of Exhibit D-1 and D-2.
-------------------
(e) Noncompetition Agreements. The Noncompetition and
-------------------------
Confidentiality Agreements executed simultaneously with this Agreement by
Bipin C. Shah in the form of Exhibit E-1, and executed simultaneously with
-----------
this Agreement by each of Gregory C. Dillett, Gary T. Staub, Thomas J.
McHugh and Jeffrey C. Connelly in the form of Exhibit E-2 shall not have
-----------
been modified or amended in any respect and shall constitute the legal,
valid, and binding obligation of each such individual.
-35-
<PAGE>
(f) Escrow Agreement. Management Resources, the Sellers and the
----------------
Escrow Agent shall have executed and delivered the Escrow Agreement in the
form attached as Exhibit B, and such agreement shall constitute the legal,
---------
valid and binding obligation of the parties thereto.
(g) Senior Management Agreements. The Senior Management Agreement
----------------------------
executed simultaneously herewith by each of Gary T. Staub, Thomas J. McHugh
and Jeffrey C. Connelly in the forms attached as Exhibits G-1, G-2, and G-
------------ --- --
3, respectively, shall not have been modified or amended in any respect and
-
shall constitute the legal, valid, and binding obligation of each such
individual.
(h) FirstNet Loss Charges. The Company shall have completed the
---------------------
final accounting and either reduced the "Subsequent Payments" or paid the
FirstNet shareholders, as appropriate, with respect to the "Loss Charges"
incurred by the Company with respect to the merchant processing portfolio
acquired from FirstNet, all as set forth in the FirstNet Purchase
Agreement.
(i) June Interim Statements. The Company shall have delivered to the
-----------------------
Parent Companies at least three business days prior to the Closing Date,
the unaudited interim consolidated financial statements of the Company as
of and for the six-month period ended June 30, 1996, including balance
sheet, statement of operations, cash flow and stockholders' equity as
reviewed by Deloitte & Touche, LLP (the "June Interim Statements"). The
June Interim Statements shall present fairly, in all material respects, the
financial position of the Company and its Subsidiaries at the date shown
and the results of operations and cash flows for the period covered in
accordance with generally accepted accounting principals applied on a
consistent basis except that the June Interim Statements will not include
customary year end adjustments which adjustments, to the knowledge of the
Company and its Subsidiaries, in the aggregate are not material. Except for
liabilities set forth on the June Interim Statements or on Schedule 3.07(a)
----------------
or (b) to the Disclosure Schedule, and except for liabilities incurred
------
since June 30, 1996 in the ordinary course of business, neither the Company
nor any of its Subsidiaries will have any material liabilities of any sort,
absolute or contingent, accrued or unaccrued, asserted or unasserted and
neither the Company nor any of its Subsidiaries know of any other material
claims or liabilities. Except as set forth on Schedule 3.07(a) or (b) to
-----------------------
the Disclosure Schedule, all reserves contained in the June Interim
Statements (including Merchant reserves) will be appropriate and reasonable
provide for the losses contemplated thereby).
(j) Review Opinion. The Parent Company shall have been furnished, at
--------------
least three business days prior to the Closing Date, with a review opinion
of Deloitte & Touche, LLP, independent certified public accountants of the
Company, with respect to the June Interim Statements indicating that such
accountants have reviewed the June Interim Statements in accordance with
Statements on Standards for Accounts and Review Services issued by the
-36-
<PAGE>
American Institute of Certified Public Accountants and that, based on such
review, they are not aware of any material modification that should be made
to the June Interim Statements in order for them to be in conformity with
generally accepted accounting principles.
(k) Draft 1995 Tax Returns. The Parent Company shall have been
----------------------
furnished with a draft of the Company's 1995 federal and state income tax
returns at least three business days prior to the Closing Date.
SECTION 8.03. Additional Conditions to Obligations of the Company, and the
------------------------------------------------------------
Sellers. The obligations of the Company and the Sellers to effect the Merger
- - -------
and the other transactions contemplated by this Agreement are also subject to
the satisfaction at or prior to the Closing Date of the following conditions,
any or all of which may be waived in writing in the absolute discretion of the
Company in whole or in part:
(a) Representations and Warranties. Each of the representations and
-------------------------------
warranties of First USA and the Parent Companies contained in this
Agreement shall be true and correct in all respects as of the date of this
Agreement. The Company shall have received a certificate of the President
and the Chief Financial Officer of each of First USA and the Parent
Companies, dated the Closing Date, to such effect.
(b) Agreements and Covenants. The Parent Companies and First USA
------------------------
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Closing Date. The Company shall
have received a certificate of the President and the Chief Financial
Officer of each of the Parent Companies and First USA, dated the Closing
Date, to that effect.
(c) Opinion of Parent Companies Counsel. The Company and the Sellers
-----------------------------------
shall have received the opinion of counsel to First USA and the Parent
Companies, dated the Effective Date, addressed to the Company and the
Sellers, substantially in the form of Exhibit F.
---------
(d) Escrow Agreement. Management Resources, the Sellers and the
----------------
Escrow Agent shall have executed and delivered the Escrow Agreement in the
form attached as Exhibit B , and such agreement shall constitute the legal,
---------
valid and binding obligation of the parties thereto.
(e) Guaranty. First USA shall have executed and delivered the
--------
Guaranty in the form attached as Exhibit C and such agreement shall
---------
constitute the legal, valid and binding obligation of First USA.
-37-
<PAGE>
ARTICLE IX.
-----------
TERMINATION, AMENDMENT, AND WAIVER
----------------------------------
SECTION 9.01. Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after approval of this Agreement
and the Merger by the stockholders of the Company:
(a) by mutual consent of Management Resources and the Company;
(b) by Management Resources, upon a breach of any representation,
warranty, covenant, or agreement on the part of the Company or the Sellers
set forth in this Agreement, or if any representation or warranty of the
Company has become untrue, in either case such that the conditions set
forth in Section 8.02(a) or Section 8.02(b) of this Agreement, as the case
may be, would be incapable of being satisfied by October 31, 1996;
provided, that in any case, a willful breach will be deemed to cause such
conditions to be incapable of being satisfied for purposes of this Section
9.01(b);
(c) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of the Parent Companies set forth in this
Agreement, or if any representation or warranty of the Parent Companies has
become untrue, in either case such that the conditions set forth in Section
8.03(a) or Section 8.03(b), as the case may be, would be incapable of being
satisfied by October 31, 1996; provided, that in any case, a willful breach
will be deemed to cause such conditions to be incapable of being satisfied
for purposes of this Section 9.01(c);
(d) by either Management Resources or the Company, if there exists
any Order that is final and nonappealable preventing the consummation of
the Merger; or
(e) by either Management Resources or the Company, if the Merger has
not been consummated before October 31, 1996.
The right of any party to terminate this Agreement pursuant to this Section 9.01
will remain operative and in full force and effect regardless of any
investigation made by or on behalf of any party, any person controlling any such
party, or any of their respective officers, directors, representatives, or
agents, whether prior to or after the execution of this Agreement.
SECTION 9.02. Effect of Termination. Except as set forth in Section
---------------------
10.06, in the event of the termination of this Agreement pursuant to Section
9.01, this Agreement will forthwith become void, there will be no liability on
the part of First USA and the Parent Companies on the one hand, or the Company
and the Sellers, on the other hand, to the other and all rights and obligations
of each party to this Agreement will cease,
-38-
<PAGE>
except that nothing in this Agreement will relieve any party of any liability
for (a) any breach of such party's covenants or agreements contained in this
Agreement, or (b) any willful breach of such party's representations or
warranties contained in this Agreement. In the event of the termination of this
Agreement pursuant to Section 9.01 neither First USA nor the Parent Companies
shall be responsible for the expenses of the Company or the Sellers incurred in
connection with the negotiation and execution of this Agreement and neither the
Company nor the Sellers shall be responsible for the expenses of First USA or
the Parent Companies incurred in connection with the negotiation and execution
of this Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by the parties
----------
at any time prior to the Effective Time; provided, however, that no amendment
that, under applicable Law, requires the approval of the stockholders of the
Company may be made without such approval. This Agreement may not be amended
except by an instrument in writing signed by all parties.
SECTION 9.04. Waiver. At any time prior to the Effective Time, any party
------
may (a) extend the time for the performance of any of the obligations or other
acts of the other party to this Agreement; (b) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
in any document delivered pursuant to this Agreement; or (c) waive compliance by
the other party with any of the agreements or conditions contained in this
Agreement. Any such extension or waiver will be valid only if set forth in an
instrument in writing signed by the party or parties to be bound thereby. For
purposes of this Section 9.04, the Parent Companies and First USA, on the one
hand, and the Company and the Sellers on the other, as a group will be deemed to
be one party.
SECTION 9.05. Fees, Expenses, and Other Payments. All Expenses (as
----------------------------------
defined below) incurred by the Parent Companies and First USA will be borne
solely and entirely by the Parent Companies and First USA and all expenses
incurred by the Company, its Subsidiaries and the Sellers (including one-half of
the HSR fee which shall be paid by the Company), will be borne by the Company up
to a maximum of $1,350,000 (which shall be paid at Closing) and all amounts in
excess of $1,350,000 shall be a reduction from the aggregate Merger
Consideration. "Expenses" as used in this Agreement will include all out-of-
pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts, and consultants to a party
and its affiliates and HSR fees) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution, and performance of this Agreement, the solicitation of stockholder
approvals and all other matters related to the consummation of the transactions
contemplated by this Agreement.
-39-
<PAGE>
ARTICLE X.
----------
GENERAL PROVISIONS
------------------
SECTION 10.01. Effectiveness of Representations and Warranties. The
-----------------------------------------------
representations and warranties of each party (whether herein or in any document
delivered pursuant hereto) will expire as of the Effective Time and no party
will have any liability with respect thereto.
SECTION 10.02. Notices. All notices and other communications given or
-------
made pursuant to this Agreement will be in writing and shall be given by
personal delivery, mailed by registered or certified mail (postage prepaid,
return receipt requested), sent by a nationally recognized and reputable
overnight courier service or sent by electronic transmission to the parties at
the following addresses (or at such other address for a party as is specified by
like changes of address).
(a) If to any of First USA or the Parent Companies, to:
First USA Paymentech, Inc.
1601 Elm Street, 47th Floor
Dallas, Texas 75201
Attention: Philip E. Taken
Telecopier No.: (214) 849-2067
with a copy to:
Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
Attention: Charles D. Maguire, Jr.
Telecopier No.: (214) 953-5822
(b) If to the Company, to:
Gensar Holdings, Inc.
550 Pinetown Road
Suite 306
Fort Washington, Pennsylvania
Attn: Bipin C. Shah
Telecopier No.: (215) 619-0175
-40-
<PAGE>
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Jill L. Sugar
Telecopier No.: (312) 861-2200
(c) If to the Sellers, to:
The addresses for
notice set forth on
Schedule 4.01
to the Disclosure Schedule
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Jill L. Sugar
Telecopier No.: (312) 861-2200
Notice shall be deemed received (a) on the business day following the date
on which it is deposited with a nationally recognized and reputable overnight
courier service, (b) on the date on which it is delivered personally, (c) when
sent by facsimile with confirmation of receipt received by sender, or (d) on the
third business day following the date on which it is deposited in the U.S. mail.
SECTION 10.03. Certain Definitions. For the purposes of this Agreement,
-------------------
the terms set forth below, whether or not capitalized, shall have the following
meanings:
(a) "401(k) Plan" has the meaning set forth in Section 3.10(e);
-----------
(b) "affiliate" means a person that directly or indirectly, through
---------
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(c) "Agent Bank" has the meaning set forth in Section 3.17(g);
----------
(d) "Agent Bank Agreement" has the meaning set forth in Section
--------------------
3.17(g);
(e) "Agreement" has the meaning set forth in the recitals hereto;
---------
-41-
<PAGE>
(f) a person will be deemed a "beneficial owner" of or to have
----------------
"beneficial ownership" of the Company Common Stock in accordance with the
interpretation of the term "beneficial ownership" as defined in Rule 13d-3
--------------------
under the Exchange Act, as in effect on the date of this Agreement;
provided that a person will be deemed to be the beneficial owner of, and to
have beneficial ownership of, the Company Common Stock that such person or
any affiliate of such person has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement, or understanding or upon the exercise of
conversion rights, exchange rights, warrants, or options, or otherwise;
(g) "BINs" has the meaning set forth in Section 3.19;
----
(h) "business day" means any day other than a day on which national
------------
banks in the States of Texas and Illinois are authorized or obligated to be
closed;
(i) "Certificate of Merger" has the meaning set forth in Section
---------------------
1.02;
(j) "Closing" has the meaning set forth in Section 1.02;
-------
(k) "Closing Date"
------------
(l) "Company" has the meaning set forth in the recitals hereto;
-------
(m) "Company Common Stock" has the meaning set forth in the recitals
--------------------
hereto;
(n) "Company Financial Statements" has the meaning set forth in
----------------------------
Section 3.07;
(o) "Company Preferred Stock" has the meaning set forth in Section
-----------------------
3.03(a);
(p) "Competing Transaction" has the meaning set forth in Section
---------------------
6.06;
(q) "Confidential Information" has the meaning set forth in Section
------------------------
6.05;
(r) "Constituent Documents" has the meaning set forth in Section
---------------------
4.03(a);
(s) "control" (including the terms "controlling," "controlled,"
------- ----------- ----------
"controlled by," and "under common control with") means the possession,
------------- -------------------------
directly or indirectly, or as trustee or executor, of the power to direct
or cause the direction of the management or policies of a person, whether
through the
-42-
<PAGE>
ownership of securities, or as trustee or executor, by contract
or credit arrangement or otherwise;
(t) "Converted Shares" has the meaning set forth in Section 2.01(a);
----------------
(u) "Credit Losses" has the meaning set forth in Section 2.02(c);
-------------
(v) "Customer Agreements" has the meaning set forth in Section
-------------------
3.17(d);
(w) "Deductions" has the meaning set forth in Section 2.01(a);
----------
(x) "Delaware Law" has the meaning set forth in the recitals hereto;
------------
(y) "Disclosure Schedule" has the meaning set forth the first
-------------------
paragraph of Article III;
(z) "EDC customer" has the meaning set forth in Section 3.17(d);
------------
(aa) "EDC Services Agreement" has the meaning set forth in Section
----------------------
3.17(d);
(ab) "Effective Time" has the meaning set forth in Section 1.02;
--------------
(ac) "Employee Plans" has the meaning set forth in Section 3.10(a);
--------------
(ad) "Employee Policies" has the meaning set forth in Section
-----------------
3.10(a);
(ae) "Equity Purchase Agreement" means that certain Equity Purchase
-------------------------
Agreement, dated July 27, 1992, by and between the Company and the
Stockholder, as amended and supplemented including that First Supplement to
Equity Purchase Agreement, dated October 26, 1992 by and between the
Company and the Stockholder;
(af) "ERISA" has the meaning set forth in Section 3.10(a);
-----
(ag) "ERISA Affiliate" means the Company and each person or other
---------------
trade or business, whether or not incorporated that is or has been treated
as a single employer or controlled group member with the Company pursuant
to Code section 414 or ERISA section 4001;
(ah) "Escrow Agent" means NationsBank of Texas, N.A.;
------------
(ai) "Escrow Agreement" means that certain Escrow Agreement in the
----------------
form attached hereto as Exhibit B to be entered into by and among
---------
Management Resources, Sellers and Escrow Agent;
-43-
<PAGE>
(aj) "Escrowed Cash Consideration" has the meaning set forth in
---------------------------
Section 2.02(c);
(ak) "First Net" means FirstNet Corporation, a Texas corporation.
---------
(al) "Expenses" has the meaning set forth in Section 9.05;
--------
(am) "FirstNet Purchase Agreement" means that certain Asset Purchase
---------------------------
Agreement, dated July 26, 1995, by and among the Company, FirstNet
Corporation and the shareholders of FirstNet.
(an) "First USA" has the meaning set forth in the recitals hereto;
---------
(ao) "First USA Financial Statements" has the meaning set forth in
------------------------------
Section 5.04;
(ap) "Governmental Entities" has the meaning set forth in Section
---------------------
3.05(b);
(aq) "HSR Act" has the meaning set forth in Section 3.05(b);
-------
(ar) "HSR Approval" has the meaning set forth in Section 8.01(b);
------------
(as) "ICAs" has the meaning set forth in Section 3.19;
----
(at) "Independent Sales Organization" has the meaning set forth in
------------------------------
Section 3.17(h);
(au) "Independent Sales Organization Agreement" has the meaning set
----------------------------------------
forth in Section 3.17(h);
(av) "Intellectual Property" has the meaning set forth in Section
---------------------
3.17(a);
(aw) "June Interim Statements" has the meaning set forth in Section
-----------------------
8.02(i);
(ax) "knowledge" or "to the knowledge of" and other phrases of like
--------- -------------------
substance are to be construed (i) with respect to the Company and its
Subsidiaries, to be the knowledge of the Sellers (other than the
Stockholder); otherwise of the person making the representation and (ii) to
represent that the person making the representations has made or caused
reasonable inquiry and investigation to be made into the matter represented
to be true;
(ay) "Laws" has the meaning set forth in Section 3.05(a);
----
-44-
<PAGE>
(az) "March Interim Statements" has the meaning set forth in Section
------------------------
3.07(b);
(ba) "Merchant" has the meaning set forth in Section 3.17(c);
--------
(bb) "Merchant Agreement" has the meaning set forth in Section
------------------
3.17(c);
(bc) "Management Resources" has the meaning set forth in the recitals
--------------------
hereto;
(bd) "Merger Consideration" has the meaning set forth in Section
--------------------
2.01(a);
(be) "Merger Sub" has the meaning set forth in the recitals hereto;
----------
(bf) "Note Consideration" has the meaning set forth in Section
------------------
2.01(a);
(bg) "Order" has the meaning set forth in Section 7.01(b);
-----
(bh) "Parent Companies" has the meaning set forth in the recitals
----------------
hereto;
(bi) "Parent Representatives" has the meaning set forth in Section
----------------------
6.04(a);
(bj) "Paymentech" has the meaning set forth in the recitals hereto;
----------
(bk) "Paymentech Financial Statements" has the meaning set forth in
-------------------------------
Section 5.05;
(bl) "Permits" has the meaning set forth in Section 3.06;
-------
(bm) "person" will be broadly construed to include to mean an
------
individual, corporation, partnership, association, trust, unincorporated
organization, Governmental Entity, other entity or group (as used in
Section 13(d) of the Exchange Act);
(bn) "Registration Rights Agreements" means that certain Registration
------------------------------
Rights Agreement dated December 31, 1992 by and between Stockholder and the
Company;
(bo) "Securities Act" has the meaning set forth in Section 4.06;
--------------
(bp) "Sellers" has the meaning set forth in the recitals hereto;
-------
(bq) "Sponsor Banks" has the meaning set forth in Section 3.19;
-------------
-45-
<PAGE>
(br) "Sponsor Bank Assignments" has the meaning set forth in Section
------------------------
7.03;
(bs) "Stockholder" has the meaning set forth in the recitals hereto;
-----------
(bt) "Stockholder Agreement" means that certain Shareholder
---------------------
Agreement dated July 27, 1992 by and among the Company, the Stockholder,
Bipin C. Shah and certain other stockholders of the Company.
(bu) "Subsidiary" or "Subsidiaries" of the Parent Companies, the
---------- ------------
Surviving Corporation, the Company, any of its Subsidiaries or any other
person, means any corporation, partnership, joint venture, limited
liability company, trust, or other legal entity of which any of the Parent
Companies, the Surviving Corporation, the Company, its Subsidiaries or any
such other person, as the case may be (either alone or through or together
with any other Subsidiary), owns, directly or indirectly, 50% or more of
the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity; and
(bv) "Surviving Corporation" has the meaning set forth in Section
---------------------
1.01;
(bw) "Tax" or "Taxes" means any and all taxes, charges, fees, levies,
--- -----
assessments, duties, or other amounts payable to any federal, state, local,
or foreign taxing authority or agency, including, without limitation, (A)
income, franchise, profits, gross receipts, minimum, alternative minimum,
estimated, ad valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding, disability,
employment, social security, workers compensation, unemployment
compensation, utility, severance, excise, stamp, windfall profits,
transfer, and gains taxes; (B) customs, duties, imposts, charges, levies,
or other similar assessments of any kind; and (C) interest, penalties, and
additions to tax imposed with respect thereto.
(bx) "Tax Returns" has the meaning set forth in Section 3.11(a)(i);
-----------
SECTION 10.04. Headings. The headings contained in this Agreement are for
--------
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Section, Article, and Exhibit references in
this Agreement are, unless the context otherwise requires, references to
sections, articles, and exhibits of this Agreement.
SECTION 10.05. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated by this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal, or incapable of
-46-
<PAGE>
being enforced, this Agreement will be modified so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated by this Agreement are fulfilled to the fullest
extent possible.
SECTION 10.06. Entire Agreement. This Agreement (together with the
----------------
Exhibits and the Disclosure Schedule and the other instruments executed
contemporaneously with this Agreement and the Confidentiality Agreement dated
May 20, 1996 by and between Paymentech and the Company which Confidentiality
Agreement shall be binding upon First USA and the Parent Companies and First USA
agrees to be bound as a party to such Confidentiality Agreement) constitute the
entire agreement of the parties, and supersede all prior written, and prior or
contemporaneous oral, agreements and undertakings among the parties or between
any of them, with respect to the subject matter of this Agreement. First USA and
the Parent Companies agree to be bound by the Confidentiality Agreement
notwithstanding the termination of this Agreement.
SECTION 10.07. Assignment. This Agreement will not be assigned or any
----------
duties under this Agreement delegated by operation of law or otherwise.
SECTION 10.08. Parties in Interest. This Agreement will be binding upon
-------------------
and inure solely to the benefit of each party, and nothing in this Agreement,
express or implied, is intended to or will confer upon any other person any
right, benefit, or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 10.09. Specific Performance. The parties hereby acknowledge and
--------------------
agree that the failure of any party to perform its agreements and covenants
under this Agreement, including its failure to take all actions as are necessary
on its part to the consummation of the Merger, will cause irreparable injury to
the other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations under this Agreement.
SECTION 10.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party to this Agreement in the exercise of
any right under this Agreement will impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty, or
agreement in this Agreement, nor will any single or partial exercise of any such
right preclude other or further exercise thereof or of any other right. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 10.11. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND
--------------
CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW.
-47-
<PAGE>
SECTION 10.12. Counterparts. This Agreement may be executed in multiple
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed will be deemed to be an original but all of which taken
together will constitute one and the same agreement.
SECTION 10.13. Stockholder Releases; Consent. Effective as of the
-----------------------------
Effective Date, each Seller (i) hereby irrevocably waives, releases, and
discharges the Company and each affiliate of the Company and its Subsidiaries
from any and all liabilities and obligations to such Seller of any kind or
nature whatsoever, whether as a stockholder, officer, director or employee of
the Company, any of its Subsidiaries or otherwise, existing as of the Effective
Time (except for those set forth in continuing employment agreements, salary and
benefits, and other ordinary course of business items such as expense
reimbursements) including without limitation liabilities or obligations relating
to rights of contribution or indemnification, in each case whether absolute or
contingent, liquidated or unliquidated, and whether arising at law or in equity,
and each Seller hereby agrees that it will not seek to recover any amounts in
connection therewith or thereunder from the Company, or any of its subsidiaries;
provided that nothing in this Section 10.13 will constitute a waiver of any
claims the Sellers may have against the Parent Companies or First USA arising
under this Agreement or the agreements contemplated hereby, and (ii) hereby
agrees that any and all agreements to which such Seller is a party and which
relate to Seller's ownership or voting of Company Common Stock or options to
acquire Company Common Stock (other than this Agreement) or the right to
designate directors (including, without limitation, the Shareholder Agreement,
the Equity Purchase Agreement, the Registration Rights Agreements, and any
rights related to the Company Common Stock contained in employment agreements)
are terminated and of no further force or effect. By executing and delivering
this Agreement the Sellers irrevocably consent pursuant to Section 228 of
Delaware Law to this Agreement, the Merger, and all of the transactions
contemplated by this Agreement, such consent to have the same effect as a vote
by the Sellers at a meeting duly called and held for the purpose of acting on
proposals to approve this Agreement, the Merger, and the other transactions
contemplated by this Agreement.
-48-
<PAGE>
IN WITNESS WHEREOF, each of the parties to this Agreement has caused this
Agreement to be executed as of the date first written above.
FIRST USA, INC.
By: /s/ Philip Taken
--------------------------------
Name:
------------------------------
Title: Senior VP
-----------------------------
FIRST USA PAYMENTECH, INC.
By: /s/ Pamela Patsley
--------------------------------
Name: Pamela Patsley
------------------------------
Title: Pres. and CEO
-----------------------------
FIRST USA MANAGEMENT
RESOURCES, INC.
By: /s/ Pamela Patsley
--------------------------------
Name: Pamela Patsley
------------------------------
Title: Pres. and CEO
-----------------------------
FIRST USA OPPORTUNITY III, INC.
By: /s/ PHILIP TAKEN
--------------------------------
Name: Philip Taken
------------------------------
Title: Senior VP
-----------------------------
-49-
<PAGE>
GENSAR HOLDINGS, INC.
By: /s/ Bipin C. Shah
--------------------------------
Name: Bipin C. Shah
------------------------------
Title: President and CEO
-----------------------------
GOLDER THOMA CRESSEY FUND III
LIMITED PARTNERSHIP
By: Golder, Thoma, Cressey & Rauner, L.P.
Its: General Partner
By: /s/ Bruce V. Rauner
--------------------------------
Name: Bruce V. Rauner
------------------------------
Title: General Partner
<PAGE>
SELLERS
/s/ Jeffrey C. Connelly
----------------------------------------
Jeffrey C. Connelly
/s/ David D. Crockett
----------------------------------------
David D. Crockett
/s/ Gregory C. Dillett
----------------------------------------
Gregory C. Dillett
/s/ William J. Kouser
----------------------------------------
William J. Kouser
/s/ A. Donald Maurer
----------------------------------------
A. Donald Maurer
/s/ Michael J. McGovern
----------------------------------------
Michael J. McGovern
/s/ Thomas J. McHugh
----------------------------------------
Thomas J. McHugh
/s/ Michael H. Murray
----------------------------------------
Michael H. Murray
/s/ Lynne A. Olsson
----------------------------------------
Lynne A. Olsson
/s/ Bipin C. Shah
----------------------------------------
Bipin C. Shah
/s/ Gary T. Staub
----------------------------------------
Gary T. Staub
