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): March 23, 1999
(March 22, 1999)
PAYMENTECH, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-14224 75-2634185
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1601 Elm Street, 9th Floor, Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (214) 849-2149
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On March 22, 1999, Paymentech, Inc. (the "Company") issued a
press release announcing that it had entered into a Merger Agreement with
First Data Corporation ("FDC") providing for the acquisition by FDC of all
of the outstanding shares of the Company's common stock (the "Shares"),
other than Shares owned by Bank One Corporation ("Bank One") and its
subsidiaries, at a price of $25.50 per Share in cash.
Pursuant to the Merger Agreement, among other things, a
newly-formed subsidiary of FDC will be merged with and into the Company
(the "Merger"), with the Company continuing as the surviving corporation.
As a result of the Merger, all of the issued and outstanding Shares (other
than Shares owned by the Company, FDC, Bank One or any of their respective
subsidiaries) will be converted into the right to receive $25.50 in cash
per Share. Consummation of the Merger is conditioned upon, among other
things, approval of the Merger by holders of a majority of the outstanding
Shares, including at least 66 2/3% of the outstanding Shares not owned by
Bank One or its affiliates, antitrust and other regulatory approvals and
certain other conditions. Merrill Lynch, Pierce, Fenner & Smith
Incorporated is acting as financial advisor to the Company and has rendered
a fairness opinion to the Company in connection with the Merger. It is
anticipated that the transaction could be completed during the third
calendar quarter, although no assurance can be given that the Merger
Agreement will result in a transaction.
Concurrently with the execution of the Merger Agreement, FDC,
Bank One and certain of their subsidiaries entered into a Stockholder
Agreement, pursuant to which, among other things, Bank One and FDC have
agreed to combine their ownership interest in the Company following the
Merger and Bank One has agreed to vote its Shares in favor of the Merger.
Following completion of the Merger, pursuant to a Contribution
Agreement entered into between FDC and Bank One, the Company will
contribute substantially all of its assets, liabilities and businesses to
Banc One Payment Services LLC, the existing merchant bank alliance between
Bank One and FDC.
In addition, on March 22, 1999, the Company and First Data
Merchant Services Corporation, a wholly owned subsidiary of FDC ("FDMS"),
announced the execution of a definitive Processing Agreement pursuant to
which the Company will outsource to FDMS certain processing functions for
the Company's general merchant acquiring business.
The foregoing description of the Merger Agreement, the
Stockholder Agreement, the Contribution Agreement and the Company's March
22, 1999 press release is qualified in its entirety to the copies of such
agreements and the press release which are filed as exhibits hereto and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
Exhibit No. Exhibit
- ----------- -------
2.1 Agreement and Plan of Merger among the Company, FDC and FB
Merging Corporation, dated as of March 22, 1999
10.1 Stockholder Agreement among FDC, FDC Offer Corporation,
FB Merging Corporation, Bank One and First USA
Financial, Inc., dated as of March 22, 1999
10.2 Contribution Agreement between FDC and Bank One, dated
as of March 22, 1999 (without Exhibits)
99.1 Press Release issued by the Company on March 22, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PAYMENTECH, INC.
By: /s/ Philip E. Taken
------------------------------
Name: Philip E. Taken
Title: Chief Administrative
Officer and General Counsel
Date: March 23, 1999
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- --------
2.1 Agreement and Plan of Merger among the Company, FDC and FB
Merging Corporation, dated as of March 22, 1999
10.1 Stockholder Agreement among FDC, FDC Offer
Corporation, FB Merging Corporation, Bank One and First USA
Financial, Inc., dated as of March 22, 1999
10.2 Contribution Agreement between FDC and Bank One, dated
as of March 22, 1999 (without Exhibits)
99.1 Press Release issued by the Company on March 22, 1999
EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
FIRST DATA CORPORATION
FB MERGING CORPORATION
AND
PAYMENTECH, INC.
DATED AS OF MARCH 22, 1999
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I
Page
----
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Contributions of Cash and Shares to Holdco . . . . . . . . . 2
Section 1.2 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . 3
Section 1.5 Charter and By-laws; Directors and Officers. . . . . . . . . 3
Section 1.6 Conversion of Securities . . . . . . . . . . . . . . . . . . 3
Section 1.7 Exchange of Certificates . . . . . . . . . . . . . . . . . . 4
Section 1.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . 6
Section 1.9 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB . . . . . . . . . 7
Section 2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.3 Consents and Approvals; No Violations . . . . . . . . . . . 7
Section 2.4 Information Supplied . . . . . . . . . . . . . . . . . . . . 9
Section 2.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.6 Ownership of the Company's Capital Stock . . . . . . . . . . 9
Section 2.7 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . 9
Section 3.1 Organization, Standing and Power . . . . . . . . . . . . . . 9
Section 3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.3 Capital Structure . . . . . . . . . . . . . . . . . . . . 10
Section 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.5 Consents and Approvals; No Violation . . . . . . . . . . . 11
Section 3.6 SEC Documents and Other Reports . . . . . . . . . . . . . 12
Section 3.7 Information Supplied. . . . . . . . . . . . . . . . . . . 13
Section 3.8 Absence of Certain Changes or Events . . . . . . . . . . . 13
Section 3.9 Permits and Compliance . . . . . . . . . . . . . . . . . . 14
Section 3.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.11 Actions and Proceedings. . . . . . . . . . . . . . . . . 15
Section 3.12 Certain Agreements. . . . . . . . . . . . . . . . . . . . 16
Section 3.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.14 Liabilities; Services . . . . . . . . . . . . . . . . . . 18
Section 3.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.16 Intellectual Property; Software; Year 2000 . . . . . . . 19
Section 3.17 Title to and Sufficiency of Assets. . . . . . . . . . . . 20
Section 3.18 Required Vote of Company Stockholders . . . . . . . . . . 20
Section 3.19 Environmental Matters . . . . . . . . . . . . . . . . . . 20
Section 3.20 Customers and Employees . . . . . . . . . . . . . . . . . 21
Section 3.21 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.22 Transactions with Affiliates . . . . . . . . . . . . . . . 22
Section 3.23 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.24 State Takeover Statute . . . . . . . . . . . . . . . . . 23
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . . . 23
Section 4.1 Conduct of Business Pending the Merger . . . . . . . . . . 23
Section 4.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . 26
Section 4.3 Third Party Standstill Agreements . . . . . . . . . . . . 28
ARTICLE V
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.1 Stockholder Meeting . . . . . . . . . . . . . . . . . . . 28
Section 5.2 Access to Information . . . . . . . . . . . . . . . . . . 29
Section 5.3 Costs and Expenses; Termination Fee . . . . . . . . . . . 29
Section 5.4 Stock Options . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.5 Reasonable Best Efforts . . . . . . . . . . . . . . . . . 31
Section 5.6 Public Announcements . . . . . . . . . . . . . . . . . . . 32
Section 5.7 State Takeover Laws . . . . . . . . . . . . . . . . . . . 32
Section 5.8 Indemnification; Directors and Officers Insurance . . . . 32
Section 5.9 Notification of Certain Matters . . . . . . . . . . . . . 33
Section 5.10 Certain Litigation . . . . . . . . . . . . . . . . . . . 33
Section 5.11 Revolving Credit Agreement . . . . . . . . . . . . . . . 33
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER . . . . . . . . . . . . . . . . . . 34
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.2 Additional Conditions to Obligations of Parent and
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.3 Additional Conditions to Obligation of the Company . . . 35
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . 36
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . 37
Section 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.1 Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.3 Interpretation; Definitions . . . . . . . . . . . . . . . 39
Section 8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.5 Entire Agreement; No Third-Party Beneficiaries . . . . . . 42
Section 8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.9 Enforcement of this Agreement . . . . . . . . . . . . . . 43
EXHIBITS
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Exhibit A Stockholder Agreement
Exhibit B Contribution Agreement
Exhibit C Amendments to Certificate of Incorporation of the Company
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 22, 1999 (this
"Agreement"), among First Data Corporation, a Delaware corporation
("Parent"), FB Merging Corporation, a Delaware corporation ("Merger Sub")
and a wholly-owned subsidiary of FDC Offer Corporation, which in turn is a
Delaware corporation ("Holdco") and a wholly-owned subsidiary of Parent,
and Paymentech, Inc., a Delaware corporation (the "Company") (Merger Sub
and the Company being hereinafter collectively referred to as the
"Constituent Corporations").
W I T N E S S E T H:
WHEREAS, BANK ONE CORPORATION, a Delaware corporation ("Bank
One"), through its wholly-owned subsidiary First USA Financial, Inc., a
Delaware corporation ("First USA"), owns an aggregate of 19,979,081 shares
of Common Stock, par value $.01 per share, of the Company (the "Company
Common Stock"; shares of Company Common Stock being hereinafter referred to
as the "Shares");
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have approved and declared advisable this Agreement and the
transactions contemplated hereby, including the merger of Merger Sub into
the Company (the "Merger"), upon the terms and subject to the conditions
set forth herein, whereby each issued and outstanding Share not owned
directly or indirectly by Parent, Bank One, the Company or any of their
Subsidiaries (including, without limitation, Merger Sub) (other than such
Shares held by Parent, Bank One, the Company or any of their Subsidiaries
in a fiduciary, collateral, custodial or similar capacity which will be
converted) will be converted into the right to receive from the Surviving
Corporation (as hereinafter defined) in cash, without interest $25.50 per
Share (the "Merger Consideration") and the respective Boards of Directors
of Merger Sub and the Company have approved and declared advisable this
Agreement;
WHEREAS, in order to induce Parent and Merger Sub to enter into
this Agreement, concurrently herewith Parent, Holdco, Merger Sub, Bank One
and First USA are entering into a Stockholder Agreement dated as of the
date hereof (the "Stockholder Agreement") in the form of the attached
Exhibit A whereby, among other things, First USA has agreed to contribute
to Holdco the Shares it owns in exchange for shares of capital stock of
Holdco and to vote in favor of the adoption of this Agreement;
WHEREAS, pursuant to the Stockholder Agreement, Parent has agreed
to contribute to Holdco sufficient cash to pay the aggregate Merger
Consideration in accordance with Section 1.6 in exchange for shares of
capital stock of Holdco, and each of Parent and First USA has agreed to
cause Holdco to contribute to Merger Sub all of the Shares it receives from
First USA and all of the cash it receives from Parent pursuant to the
Stockholder Agreement; and
WHEREAS, Parent has entered into a Contribution Agreement dated
as of the date hereof (the "Contribution Agreement") with Bank One in the
form of the attached Exhibit B which provides, among other things, that
following the Merger Parent and Bank One, through Holdco, will cause
substantially all of the assets and liabilities and business of the
Company, as the Surviving Corporation (as hereinafter defined), to be
contributed to Bank One Payment Services, L.L.C., a Delaware limited
liability company and an alliance between wholly-owned subsidiaries of
Parent and Bank One (the "Alliance"), in exchange for the issuance to the
Surviving Corporation of a membership interest in the Alliance.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Contributions of Cash and Shares to Holdco.
Pursuant to the Stockholder Agreement, immediately prior to the transfers
referred to in the last sentence of this Section 1.1, Parent will
contribute to Holdco cash in the amount necessary for the payment of the
aggregate Merger Consideration pursuant to Section 1.6, and simultaneously
therewith First USA will contribute to Holdco all of the Shares it owns
(other than such Shares held in a fiduciary, collateral, custodial or
similar capacity), in each case in exchange for shares of common stock of
Holdco. At that time each of Parent, Bank One and First USA will execute
that certain stockholder agreement relating to the governance of Holdco and
the Company. Immediately following such transfers and immediately prior to
the Effective Time each of Parent and First USA will cause Holdco to
contribute to Merger Sub all of the Shares it receives from First USA and
all of the cash it receives from Parent in exchange for shares of capital
stock of Merger Sub (in an amount to be agreed upon between Parent and
First USA).
Section 1.2 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the General Corporation Law of
the State of Delaware, as amended (the "DGCL"), Merger Sub shall be merged
into the Company at the Effective Time (as hereinafter defined). Following
the Merger, the separate corporate existence of Merger Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Merger Sub and the Company in accordance with the DGCL.
Notwithstanding anything to the contrary herein, at the joint election of
Parent and Bank One, any direct or indirect jointly-owned Subsidiary (as
hereinafter defined) of Parent and Bank One may be substituted for Merger
Sub as a constituent corporation in the Merger. In such event, the parties
agree to execute an appropriate amendment to this Agreement, in form and
substance reasonably satisfactory to Parent, Bank One and the Company, in
order to reflect such substitution; provided, however, that no such
substitution shall (i) alter or change the amount or kind of consideration
to be received by the holders of Shares in the Merger or (ii) materially
delay receipt of any approval referred to in this Agreement or the
consummation of the transactions contemplated hereby.
Section 1.3 Effective Time. The Merger shall become effective
when a certificate of merger (the "Certificate of Merger"), executed in
accordance with the relevant provisions of the DGCL, is filed with the
Secretary of State of the State of Delaware, or at such other time as
Merger Sub and the Company shall agree and as specified in the Certificate
of Merger. When used in this Agreement, the term "Effective Time" shall
mean the later of the date and time at which the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware or such
later time established by the Certificate of Merger. The filing of the
Certificate of Merger shall be made prior to or on the date of the Closing
(as hereinafter defined).
Section 1.4 Effects of the Merger. The Merger shall have the
effects set forth in the applicable provisions of the DGCL.
Section 1.5 Charter and By-laws; Directors and Officers. (a) At
the Effective Time, the Certificate of Incorporation of the Company, as
amended (the "Company Charter"), as further amended to read in its
entirety as indicated on the attached Exhibit C, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law. At the Effective Time,
the By-laws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the By-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by the Company Charter.
(b) The directors of Merger Sub at the Effective Time of the
Merger shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be. The
officers of the Company at the Effective Time of the Merger shall be the
officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 1.6 Conversion of Securities. As of the Effective Time,
by virtue of the Merger and without any action on the part of Merger Sub,
the Company or the holders of any securities of the Constituent
Corporations:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of common stock of Merger Sub shall be converted into one
validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
(b) Treasury Shares, Parent Owned Shares, Bank One Shares. All
Shares that are held in the treasury of the Company or by any wholly-
owned Subsidiary of the Company and any Shares owned by Parent, Bank
One or Merger Sub or by any wholly-owned Subsidiary of Parent or Bank
One (other than such Shares held in a fiduciary, collateral, custodial
or similar capacity) shall be canceled and no capital stock of Parent
or other consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each Share issued and outstanding
immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 1.6(b) and other than Dissenting
Shares (as hereinafter defined)) shall be converted into the right to
receive from the Surviving Corporation the Merger Consideration. All
such Shares, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired and each holder of a
certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration, less any applicable withholding taxes, upon surrender
of the Certificate (as hereinafter defined) that formerly evidenced
such Shares in the manner provided in Section 1.7.
(d) Shares of Dissenting Stockholders. Notwithstanding anything
in this Agreement to the contrary, any issued and outstanding Shares
held by a person (a "Dissenting Stockholder") who has not voted in
favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance
with Section 262 of the DGCL and otherwise complies with all of the
provisions of the DGCL concerning the right of holders of Shares to
require appraisal of their Shares ("Dissenting Shares") shall not be
converted into or represent the right to receive the Merger
Consideration, unless such stockholder fails to perfect or withdraws
or loses its right to appraisal. Such stockholders shall be entitled
to receive payment of the appraised value of such Shares held by them
in accordance with the provisions of such Section 262, except that all
Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights
to appraisal of such Shares under such Section 262 shall thereupon be
deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest or dividends thereon, upon
surrender of the Certificate or Certificates that formerly evidenced
such Shares in the manner provided in Section 1.7. The Company shall
give Parent and Bank One (i) prompt notice of any demands for payment
received by the Company, withdrawals of such demands and any other
instruments served pursuant to the DGCL and received by the Company
and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to any such demand for appraisal under
the DGCL. The Company shall not, without the prior written consent of
Parent and Bank One, voluntarily make any payment with respect to, or
settle, offer to settle or otherwise negotiate, any such demands.
Section 1.7 Exchange of Certificates. (a) Paying Agent. Prior
to the Effective Time, Parent shall designate First Chicago Trust Company
of New York (or such other person or persons as shall be reasonably
acceptable to Parent, Bank One and the Company) to act as paying agent in
the Merger (the "Paying Agent"), and at the Effective Time, Merger Sub
shall make available to the Paying Agent cash in the amount necessary for
the payment of the Merger Consideration upon surrender of certificates
representing Shares as part of the Merger pursuant to this Section 1.7.
Any and all interest earned on funds made available to the Paying Agent
pursuant to this Agreement shall be paid over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable after
the Effective Time, the Paying Agent shall mail to each holder of record of
a certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to
the Paying Agent and shall be in a form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Paying Agent or to
such other agent or agents as may be appointed by Parent, together with
such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the amount of cash into
which the Shares theretofore represented by such Certificate shall have
been converted pursuant to Section 1.6, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of
Shares that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 1.7, each Certificate
(other than Certificates representing Dissenting Shares) shall be deemed at
any time after the Effective Time to represent only the right to receive
upon such surrender the amount of cash, without interest, into which the
Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 1.6. No interest will be paid or will accrue
on the cash payable upon the surrender of any Certificate. Parent or the
Paying Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement such amounts as
Parent or the Paying Agent is required to deduct and withhold with respect
to the making of such payment under the Code (as hereinafter defined) or
under any provisions of state, local or foreign tax law. To the extent
that amounts are so withheld by Parent or the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the person in respect of which such deduction or withholding was
made by the Parent or the Paying Agent and any such amounts deducted or
withheld shall be promptly and timely paid by Parent or the Paying Agent to
the appropriate taxing authority.
(c) No Further Ownership Rights in Shares. All cash paid upon
the surrender of Certificates in accordance with the terms of this
Article I shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares theretofore represented by such
Certificates. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
Shares that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article I.
(d) Termination of Payment Fund. Any portion of the funds made
available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares for six months after the Effective
Time shall be delivered to Parent, upon demand, and any holders of Shares
who have not theretofore complied with this Article I and the instructions
set forth in the letter of transmittal mailed to such holders after the
Effective Time shall thereafter look only to Parent for payment of the
Merger Consideration to which they are entitled, without interest or
dividends.
(e) No Liability. None of Parent, Holdco, Merger Sub, the
Company or the Paying Agent shall be liable to any person in respect of any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall not have been
surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any payment pursuant to this Article I
would otherwise escheat to or become the property of any Governmental
Entity (as hereinafter defined)), the cash payment in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or
interests of any person previously entitled thereto.
(f) Lost, Stolen or Destroyed Certificates. If any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent or the Paying Agent, the posting by
such person of a bond, in such reasonable amount as Parent or the Paying
Agent may direct as indemnity against any claim that may be made against
them with respect to such Certificate, the Paying Agent will pay in
exchange for such lost, stolen or destroyed Certificate the amount of cash
to which the holders thereof are entitled pursuant to Section 1.6.
Section 1.8 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments or assurances or any other acts or
things are necessary, desirable or proper (a) to vest, perfect or confirm,
of record or otherwise, in the Surviving Corporation its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of either of the Constituent Corporations, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees shall
be authorized to execute and deliver, in the name and on behalf of either
of the Constituent Corporations, all such deeds, bills of sale, assignments
and assurances and to do, in the name and on behalf of either Constituent
Corporation, all such other acts and things as may be necessary, desirable
or proper to vest, perfect or confirm the Surviving Corporation's right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and
otherwise to carry out the purposes of this Agreement.
Section 1.9 Closing. The closing of the Merger (the "Closing")
and all actions specified in this Agreement to occur at the Closing shall
take place at the offices of Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603, at 10:00 a.m., local time, no later than the
second business day following the day on which the last of the conditions
set forth in Article VI shall have been fulfilled or waived (if
permissible) or at such other time and place as Parent and the Company
shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as
follows:
Section 2.1 Organization. Each of Parent, Holdco and Merger Sub
is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
being conducted except where the failure to be so organized, existing or in
good standing or to have such power or authority would not, individually or
in the aggregate, have a Material Adverse Effect on Parent.
Section 2.2 Authority. On or prior to the date of this
Agreement, the Boards of Directors of Parent and Merger Sub have declared
the Merger advisable and the Board of Directors of Merger Sub has approved
this Agreement in accordance with the DGCL. Each of Parent and Merger Sub
has all requisite power and authority to execute and deliver this
Agreement, the Stockholder Agreement and the Contribution Agreement, and
each of Parent and Merger Sub has all requisite corporate power and
authority to consummate the transactions contemplated hereby and thereby,
as applicable. The execution, delivery and performance by Parent and
Merger Sub of this Agreement, the Stockholder Agreement and the
Contribution Agreement, as applicable, and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action (including Board action) on the part of
Parent and Merger Sub and no other corporate proceedings on the part of
Parent or Merger Sub or their respective Boards of Directors are necessary
to authorize and approve this Agreement (or the Stockholder Agreement or
Contribution Agreement, as applicable) or to consummate the transactions
contemplated hereby and thereby, as applicable, other than, in the case of
this Agreement, the filing of the Certificate of Merger as required by the
DGCL. Each of the Agreement, the Stockholder Agreement and the
Contribution Agreement has been duly executed and delivered by Parent,
Holdco and Merger Sub, as applicable, and (assuming the valid
authorization, execution and delivery of this Agreement by the Company, the
valid authorization, execution and delivery of the Stockholder Agreement by
Bank One and First USA, the valid authorization, execution and delivery of
the Contribution Agreement by Bank One and the validity and binding effect
hereof and thereof on the Company and Bank One and First USA, as
applicable) this Agreement, the Stockholder Agreement and the Contribution
Agreement constitute the valid and binding obligation of each of Parent,
Holdco and Merger Sub that is a party thereto, enforceable against them in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally, and by general
equitable principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law).
Section 2.3 Consents and Approvals; No Violations. Assuming
that all consents, approvals, authorizations and other actions described in
this Section 2.3 have been obtained and all filings and obligations
described in this Section 2.3 have been made, the execution and delivery of
this Agreement, the Stockholder Agreement and the Contribution Agreement do
not, and the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof will not,
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give to others a right of termination,
cancellation or acceleration of any obligation or result in the loss of a
material benefit under, or result in the creation of any Lien (as
hereinafter defined) upon any of the properties or assets of Parent or any
of its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or the By-Laws of Parent, each as amended to date, (ii) any
provision of the comparable charter or organization documents of any of
Parent's Subsidiaries, (iii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or any of its
Subsidiaries or (iv) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent or any of its Subsidiaries or any
of their respective properties or assets, other than, in the case of
clauses (iii) or (iv), any such violations, defaults, rights or Liens that,
individually or in the aggregate, would not have a Material Adverse Effect
on Parent, materially impair the ability of Parent, Holdco or Merger Sub to
perform their respective obligations hereunder or under the Stockholder
Agreement or prevent or materially delay the consummation of any of the
transactions contemplated hereby or thereby. No filing or registration
with, or authorization, consent or approval of, any domestic (federal and
state), foreign or supranational court, commission, governmental body,
regulatory agency, authority or tribunal (each, a "Governmental Entity"),
Card Association or other Person is required by or with respect to Parent
or any of its Subsidiaries in connection with the execution and delivery of
this Agreement or the Stockholder Agreement by Parent, Holdco or Merger Sub
or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement or the Stockholder Agreement,
except (i) in connection, or in compliance, with the provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the Exchange Act, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the
Company or any of its Subsidiaries is qualified to do business, (iii) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Merger or by the transactions
contemplated by this Agreement, the Stockholder Agreement or the
Contribution Agreement, (iv) such filings, authorizations, orders and
approvals as may be required by state takeover laws (the "State Takeover
Approvals"), (v) applicable requirements, if any, of state securities or
"blue sky" laws ("Blue Sky Laws"), (vi) as may be required under foreign
laws, (vii) such filings, authorizations and approvals under the Change in
Bank Control Act, (viii) such filings, authorizations and approvals under
Sections 7-1-701 through 7-1-716 and 7-8-3 through 7-8-20 of the Utah code
(collectively, the "Utah Statute"), (ix) such filings, authorizations and
approvals under Section 4 of the Bank Holding Company Act, and (x) such
other consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually
or in the aggregate, have a Material Adverse Effect on Parent, materially
impair the ability of Parent, Holdco or Merger Sub to perform its
obligations hereunder or under the Stockholder Agreement or the
Contribution Agreement or prevent or materially delay the consummation of
any of the transactions contemplated hereby or thereby.
Section 2.4 Information Supplied. None of the information
supplied or to be supplied by Parent, Holdco, or Merger Sub specifically
for inclusion or incorporation by reference in (i) a Rule 13e-3 Transaction
Statement pursuant to Rule 13e-3 (the "Schedule 13e-3") under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"), or (ii) the proxy
statement (together with any amendments or supplements thereto, the "Proxy
Statement") relating to the adoption of this Agreement and approval of the
Merger by the holders of a majority of the outstanding Shares, which
majority shall, unless otherwise agreed by the Company, Parent and Bank
One, include not less than 662/3% of the outstanding Shares not owned
directly or indirectly by Bank One, Parent or their respective Affiliated
Persons or associates including, without limitation, Holdco and Merger Sub
(the "Company Stockholder Approval"), will (a) in the case of the Schedule
13e-3, at the time the Schedule 13e-3 is filed with the Securities and
Exchange Commission ("SEC") or (b) in the case of the Proxy Statement, at
the time the Proxy Statement is first mailed to the Company's stockholders
or at the time of the Stockholder Meeting (as hereinafter defined), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 2.5 Financing. Parent has sufficient funds available
for it to pay the aggregate Merger Consideration.
Section 2.6 Ownership of the Company's Capital Stock. Except
for Shares held in a fiduciary or similar capacity, as of the date hereof,
none of Parent, Holdco, Merger Sub or any Subsidiary of Parent (i)
beneficially owns (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, in each case, shares of the capital stock of the Company.
Section 2.7 Brokers. No broker, investment banker, financial
advisor or other person, other than Morgan Stanley Dean Witter & Co., the
fees and expenses of which will be paid by Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent, Holdco or Merger Sub.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company and
each of its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority to carry
on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company. The Company and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each jurisdiction
where the character of their properties owned or held under lease or the
nature of their activities makes such qualification necessary, except where
the failure to be so qualified would not, individually or in the aggregate,
have a Material Adverse Effect on the Company or materially delay the
consummation of the Merger.
Section 3.2 Subsidiaries. Section 3.2 of the letter dated the
date hereof and delivered on the date hereof by the Company to Parent,
which relates to this Agreement and is designated therein as the Company
Letter (the "Company Letter") lists each Subsidiary of the Company. All of
the outstanding shares of capital stock of each such Subsidiary that is a
corporation have been validly issued and are fully paid and nonassessable.
Except as set forth in Section 3.2 of the Company Letter, all of the
outstanding shares of capital stock of each Subsidiary of the Company are
owned by the Company, by another Subsidiary of the Company or by the
Company and another Subsidiary of the Company, free and clear of any and
all mortgages, liens, encumbrances, charges, claims, restrictions, pledges,
security interest or impositions (collectively, "Liens") and free and clear
of all options, rights of first refusal, agreements or limitations on
voting rights of any nature whatsoever. Except as set forth in Section 3.2
of the Company Letter and except for the capital stock of its Subsidiaries,
the Company does not own, directly or indirectly, any capital stock or
other ownership interest in any corporation, partnership, joint venture,
limited liability company or other entity which is material to the business
or financial position of the Company.
Section 3.3 Capital Structure. The authorized capital stock of
the Company consists of 200,000,000 Shares and 10,000,000 shares of
Preferred Stock, par value $.01 per share ("Company Preferred Stock"). At
the close of business on January 30, 1999:
(i) 36,360,377 Shares were issued and outstanding, all of which
were validly issued, fully paid and nonassessable and free of
preemptive rights;
(ii) No shares of Company Preferred Stock were issued and
outstanding;
(iii) No Shares were held in the treasury of the Company or by
Subsidiaries of the Company;
(iv) 6,500,000 Shares were reserved for issuance in the aggregate
upon the exercise of outstanding stock options issued under the
Company's 1996 Amended and Restated Stock Option Plan, (the "Company
Stock Option Plan");
(v) 400,000 Shares were reserved for issuance in the aggregate
pursuant to the Company's Employee Stock Purchase Plan (the "Company
Stock Purchase Plan"); and
(vi) 500,000 Shares were reserved for issuance in the aggregate
pursuant to the Company's 1996 Restricted Stock Plan (the "Company
Restricted Stock Plan").
Section 3.3 of the Company Letter contains a correct and complete list
as of the date of this Agreement of each outstanding option to purchase
shares of Company Common Stock issued under the Company Stock Option Plan
(collectively, the "Company Stock Options"), including the holder, date of
grant, exercise price and number of shares of Company Common Stock subject
thereto and whether the option is vested and exercisable. Except for the
Company Stock Options, the Company Stock Option Plan, the Company Stock
Purchase Plan and the Company Restricted Stock Plan, there are no options,
warrants, calls, rights or agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock of the
Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right or agreement. Except as set forth in Section 3.3 of the Company
Letter, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of Company Common Stock or any capital stock of or any equity
interests in any of the Company's Subsidiaries. The Company does not have
any outstanding bonds, debentures, notes or other obligations the holders
of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company
on any matter.
Section 3.4 Authority. On or prior to the date of this
Agreement, the Board of Directors of the Company has unanimously approved
and declared the Merger Agreement advisable, approved this Agreement and
the transactions contemplated hereby, including the Merger, in accordance
with the DGCL, resolved to recommend the acceptance of the approval of this
Agreement and the Merger by the Company's stockholders and directed that
this Agreement be submitted to the Company's stockholders for approval.
The Company has all requisite corporate power and authority to enter into
this Agreement and, subject to approval by the stockholders of the Company
of this Agreement and the Merger, to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the Merger
and of the other transactions contemplated hereby have been duly authorized
by all necessary corporate action (including Board action) on the part of
the Company, and no other corporate proceedings on the part of the Company
or its Board of Directors are necessary to authorize and approve this
Agreement or to consummate the transactions contemplated hereby, other than
(x) approval and adoption of this Agreement by the stockholders of the
Company and (y) the filing of the Certificate of Merger as required by the
DGCL. This Agreement has been duly executed and delivered by the Company
and (assuming the valid authorization, execution and delivery of this
Agreement by Parent and Merger Sub and the validity and binding effect of
this Agreement on Parent and Merger Sub) constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally, and by general equitable
principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
Section 3.5 Consents and Approvals; No Violation. Assuming that
all consents, approvals, authorizations and other actions described in this
Section 3.5 have been obtained and all filings and obligations described in
this Section 3.5 have been made, the execution, delivery or performance of
this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give to others a right of termination,
cancellation or acceleration of any obligation or result in the loss of a
material benefit under, or result in the creation of any Lien, upon any of
the properties or assets of the Company or any of its Subsidiaries under,
any provision of (i) the Company Charter or the By-laws of the Company,
(ii) any provision of the comparable charter or organization documents of
any of the Company's Subsidiaries, (iii) except as set forth in Section 3.5
of the Company Letter, any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license (including any of the Company Merchant Contracts)
applicable to the Company or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or any of their respective
properties or assets (including any of the Company Merchant Contracts),
other than, in the case of clauses (iii) or (iv), any such violations,
defaults, rights, or Liens that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company, materially impair the
ability of the Company to perform its obligations hereunder or prevent or
materially delay the consummation of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or
approval of, any Governmental Entity, Card Association or any other Person
is required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company
or is necessary for the consummation of the Merger, except (i) in
connection, or in compliance, with the provisions of the HSR Act and the
Exchange Act, (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with
the relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) such filings and consents
as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this
Agreement, (iv) such filings, authorizations, orders and approvals as may
be required to obtain the State Takeover Approvals, (v) applicable
requirements, if any, of Blue Sky Laws or the New York Stock Exchange, (vi)
as may be required under foreign laws, (vii) such filings, authorizations
and approvals under the Change in Bank Control Act, (viii) such filings,
authorizations and approvals under the Utah Statute, (ix) such filings,
authorizations and approvals under Section 4 of the Bank Holding Company
Act, and (x) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would
not, individually or in the aggregate, have a Material Adverse Effect on
the Company, materially impair the ability of the Company to perform its
obligations hereunder or prevent or materially delay the consummation of
any of the transactions contemplated hereby.
Section 3.6 SEC Documents and Other Reports. The Company has
filed all required documents (including proxy statements) with the SEC
since June 29, 1997 (as such documents have been amended since the time of
their filing and prior to the date hereof, the "Company SEC Documents").
As of their respective dates or, if amended, as of the date of the last
such amendment, the Company SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and, at the
respective times they were filed or, if amended, as of the date of the last
such amendment, none of the Company SEC Documents, including the financial
statements of the Company and the notes thereto, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
consolidated financial statements (including, in each case, any notes
thereto) of the Company included in the Company SEC Documents complied as
to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto,
were prepared in accordance with United States GAAP (except, in the case of
the unaudited statements, as permitted by Form 10-Q of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented the consolidated
financial position of the Company and its consolidated Subsidiaries as at
the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein none of which
were or will be material in amount or effect). Except as disclosed in the
Company SEC Documents or as required by GAAP, the Company has not, since
June 29, 1997, made any change in the accounting practices or policies
applied in the preparation of financial statements.
Section 3.7 Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Proxy Statement or (ii) the Schedule
13e-3 will (a) in the case of the Schedule 13e-3, at the time the
Schedule 13e-3 is filed with the SEC, or (b) in the case of the Proxy
Statement, at the time the Proxy Statement is first mailed to the Company's
stockholders or at the time of the Stockholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act, except that no representation or warranty
is made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Merger Sub
specifically for inclusion or incorporation by reference therein.
Section 3.8 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed with the SEC prior to the date
of this Agreement or as set forth in Section 3.8 of the Company Letter,
since June 30, 1998, the Company and its Subsidiaries have conducted their
respective business in all material respects only in the ordinary course
and (A) the Company and its Subsidiaries have not incurred any liability or
obligation (indirect, direct or contingent) that would result in a Material
Adverse Effect on the Company, or entered into any material oral or written
agreement or other transaction that is not in the ordinary course of
business or that would result in a Material Adverse Effect on the Company,
(B) the Company and its Subsidiaries have not sustained any loss or
interference with their business or properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance) that has
had a Material Adverse Effect on the Company, (C) there has been no change
in the capital stock of the Company except for the issuance of shares of
the Company Common Stock pursuant to Company Stock Options, the Company
Stock Purchase Plan or the Company Restricted Stock Plan and no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its stock, (D) there has not been (v) any adoption of a new Company Plan
(as hereinafter defined), (w) any amendment to a Company Plan materially
increasing benefits thereunder, (x) any granting by the Company or any of
its Subsidiaries to any executive officer or other key employee of the
Company or any of its Subsidiaries of any increase in compensation, except
in the ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Company SEC Documents,
(y) any granting by the Company or any of its Subsidiaries to any such
executive officer or other key employee of any increase in severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Company SEC Documents or (z) any entry
by the Company or any of its Subsidiaries into any employment, severance or
termination agreement with any such executive officer or other key
employee, (E) there has not been any material changes in the amount or
terms of the indebtedness of the Company and its Subsidiaries from that
described in the Company SEC Documents filed prior to the date hereof, (F)
any revaluation by the Company of any of material assets and (G) no
Material Adverse Effect on the Company has occurred.
Section 3.9 Permits and Compliance. Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity or Card
Association necessary for the Company or any of its Subsidiaries to own,
lease and operate its properties or to carry on its business as it is now
being conducted (the "Company Permits"), except where the failure to have
any of the Company Permits would not, individually or in the aggregate,
have a Material Adverse Effect on the Company or prevent or materially
delay the consummation of the Merger, and no suspension or cancellation of
any of the Company Permits is pending or, to the knowledge of the Company,
threatened, except where the suspension or cancellation of any of the
Company Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger. Neither the Company nor any of its
Subsidiaries nor, for purposes of clause (D), any of the Company's or any
of its Subsidiary's independent sales organizations, is in violation of (A)
its charter, by-laws or other organizational documents, (B) any law,
ordinance, administrative or governmental rule or regulation, (C) any
order, decree or judgment of any Governmental Entity having jurisdiction
over the Company or any of its Subsidiaries or (D) any applicable Card
Association rules, by-laws or regulations, except in the case of clauses
(A), (B), (C) and (D), for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the Merger. Except as
disclosed in the Company SEC Documents filed prior to the date of this
Agreement or in Section 3.9 of the Company Letter, there are no contracts
or agreements of the Company or its Subsidiaries (including the Company
Merchant Contracts) having terms or conditions which would have a Material
Adverse Effect on the Company or having covenants that purport to bind any
stockholder or any Affiliated Person (as hereinafter defined) of any
stockholder of the Company after the Effective Time. Except as set forth
in the Company SEC Documents filed prior to the date of this Agreement or
in Section 3.9 of the Company Letter, no event of default or event that,
but for the giving of notice or the lapse of time or both, would constitute
an event of default exists or, upon the consummation by the Company of the
transactions contemplated by this Agreement, will exist under any
indenture, mortgage, loan agreement, note or other agreement or instrument
for borrowed money, any guarantee of any agreement or instrument for
borrowed money or any lease, contractual license or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any such Subsidiary is bound or to which any of the
properties, assets or operations of the Company or any such Subsidiary is
subject, other than any defaults that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
Section 3.10 Tax Matters. Except as set forth in Section 3.10
of the Company Letter, (i) the Company and each of its Subsidiaries have
timely filed all federal, and all material state, local, foreign and
provincial, Tax Returns (as hereinafter defined) required to have been
filed (giving effect to all applicable extensions), and such Tax Returns
are correct and complete, except to the extent that any failure to so file
or any failure to be correct and complete would not, individually or in the
aggregate, have a Material Adverse Effect on the Company; (ii) all material
Taxes (as hereinafter defined) shown to be due on such Tax Returns and all
material Taxes for which no return was filed (x) have been timely paid or
extensions for payment have been properly obtained, (y) are being timely
and properly contested or (z) have been reserved for in the financial
statements of the Company (in accordance with GAAP); (iii) neither the
Company nor any of its Subsidiaries has waived any statute of limitations
in respect of its Taxes; and (iv) all deficiencies asserted or assessments
made as a result of any examination of such Tax Returns by any taxing
authority have been paid in full. For purposes of this Agreement: (i)
"Taxes" means any federal, state, local, foreign or provincial income,
gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or added minimum, ad valorem,
value-added, transfer or excise tax, or other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty imposed by any Governmental Entity,
and (ii) "Tax Return" means any return, report or similar statement
(including the attached schedules) required to be filed with respect to any
Tax, including any information return, claim for refund, amended return or
declaration of estimated Tax.
Section 3.11 Actions and Proceedings. Except as set forth in
Section 3.11 of the Company Letter, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity
against or involving the Company or any of its Subsidiaries, or, to the
knowledge of the Company, against or involving any of the present or former
directors, officers, employees, consultants or agents of the Company or any
of its Subsidiaries with respect to the Company or any of its Subsidiaries,
any of the properties, assets or business of the Company or any of its
Subsidiaries or any Company Plan that, individually or in the aggregate,
would have a Material Adverse Effect on the Company, materially impair the
ability of the Company to perform its obligations hereunder or prevent or
materially delay the consummation of the Merger. Except as disclosed in
the Company SEC Documents filed with the SEC prior to the date hereof or in
Section 3.11 of the Company Letter, there are no actions, suits or claims
or legal, administrative or arbitrative proceedings or investigations
(including claims for workers' compensation) pending or, to the knowledge
of the Company, threatened against or involving the Company or any of its
Subsidiaries or, to the Company's knowledge, any of its or their present or
former directors, officers, employees, consultants or agents with respect
to the Company or any of its Subsidiaries, or any of the properties, assets
or business of the Company or any of its Subsidiaries or any Company Plan
that, individually or in the aggregate, would have a Material Adverse
Effect on the Company, materially impair the ability of the Company to
perform its obligations hereunder or prevent or materially delay the
consummation of the Merger. The Company's expenses, losses and liabilities
in connection with, including any adverse outcome of, that class action
lawsuit filed in the United States District Court for the Northern District
of Texas against the Company by certain stockholders of the Company,
entitled Raffaele Branca, Carl C. Conrad and Michael P. Fuchs v. Paymentech
Inc. Pamela H. Patsley and David W. Truetzel, will, to the best of the
Company's knowledge, be covered by insurance maintained by the Company
other than for the applicable deductibles under the Company's insurance
policies (which deductibles do not exceed, in the aggregate, $1,000,000).
There are no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending or, to
the knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries or, to the Company's knowledge, any of its or
their present or former officers, directors, employees, consultants or
agents with respect to the Company or its Subsidiaries, or any of the
properties, assets or business of the Company or any of its Subsidiaries,
in each case relating to the transactions contemplated by this Agreement.
Section 3.12 Certain Agreements. Except as set forth in Section
3.12 of the Company Letter, neither the Company nor any of its Subsidiaries
is a party to any oral or written agreement or plan, including any
employment agreement, severance agreement, stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan
(collectively, the "Compensation Agreements"), pension plan (as defined in
Section 3(2) of ERISA) or welfare plan (as defined in Section 3(1) of
ERISA) any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement. Except as set forth in
Section 5.4, no holder of any option to purchase Shares, or Shares granted
in connection with the performance of services for the Company or its
Subsidiaries, is or will be entitled to receive cash from the Company or
any of its Subsidiaries in lieu of or in exchange for such option or shares
as a result of the transactions contemplated by this Agreement. Section
3.12 of the Company Letter sets forth (i) for each officer, director or
employee who is a party to, or will receive benefits under, any
Compensation Agreement as a result of the transactions contemplated herein,
the total amount that each such person may receive, or is eligible to
receive, assuming that the transactions contemplated by this Agreement are
consummated on the date hereof, and (ii) the total amount of indebtedness
for borrowed money owed to the Company or its Subsidiaries from each
officer, director or employee of the Company and its Subsidiaries.
Section 3.13 ERISA. (a) As used herein, (i) "Company Plan"
means a "pension plan" (as defined in section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (other than a
Company Multiemployer Plan)), a "welfare plan" (as defined in section 3(1)
of ERISA), or any other written or oral bonus, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, restricted stock, stock appreciation right,
holiday pay, vacation, severance, medical, dental, vision, disability,
death benefit, sick leave, fringe benefit, personnel policy, insurance or
other plan, arrangement or understanding, in each case established or
maintained by the Company or any of its Subsidiaries or ERISA Affiliates or
as to which the Company or any of its Subsidiaries or ERISA Affiliates has
contributed or otherwise may have any liability, (ii) "Company
Multiemployer Plan" means a "multiemployer plan" (as defined in section
4001(a)(3) of ERISA) to which the Company or any of its Subsidiaries or
ERISA Affiliates is or has been obligated to contribute or otherwise may
have any liability, and (iii) "ERISA Affiliate" means any trade or business
(whether or not incorporated) which would be considered a single employer
with the Company pursuant to section 414(b), (c), (m) or (o) of the Code
and the regulations promulgated under those sections or pursuant to section
4001(b) of ERISA and the regulations promulgated thereunder.
(b) Each material Company Plan is listed in Section 3.13(b) of
the Company Letter. With respect to each Company Plan listed therein, the
Company has made available to Parent a true and correct copy of (i) the
three most recent annual reports (Form 5500) filed with the IRS if
applicable, (ii) each such Company Plan that has been reduced to writing
and all amendments thereto, (iii) each trust agreement, insurance contract
or administration agreement relating to each such Company Plan, (iv) a
written summary of each unwritten Company Plan, (v) the most recent summary
plan description or other written explanation of each Company Plan provided
to participants, (vi) the most recent determination letter and request
therefore, if any, issued by the IRS with respect to any Company Plan
intended to be qualified under section 401(a) of the Code, (vii) any
request for a determination currently pending before the IRS and (viii) all
material correspondence with the IRS, the Department of Labor, the SEC or
Pension Benefit Guaranty Corporation relating to any potential
investigation or outstanding controversy. Except as would not have a
Material Adverse Effect on the Company, each Company Plan complies in all
respects with the ERISA, the Code and all other applicable statutes and
governmental rules and regulations. Except for Company Plans listed in
Section 3.13(b) of the Company Letter, neither the Company nor any ERISA
Affiliate currently maintains, contributes to or has any liability or, at
any time during the past six years has maintained or contributed to any
pension plan which is subject to section 412 of the Code or section 302 of
ERISA or Title IV of ERISA. Except for Company Multiemployer Plans listed
in Section 3.13(b) of the Company Letter, neither the Company nor any ERISA
Affiliate currently maintains, contributes to or has any liability or, at
any time during the past six years has maintained or contributed to any
Company Multiemployer Plan.
(c) Except as listed in Section 3.13(c) of the Company Letter,
with respect to the Company Plans, no event has occurred and, to the
knowledge of the Company, there exists no condition or set of circumstances
in connection with which the Company or any Subsidiary of the Company or
ERISA Affiliate or Company Plan fiduciary could reasonably be expected to
be subject to any liability under the terms of such Company Plans, ERISA,
the Code or any other applicable law which would have a Material Adverse
Effect on the Company. All Company Plans that are intended to be qualified
under section 401(a) of the Code have been determined by the IRS to be so
qualified, or a timely application for such determination is now pending
and the Company is not aware of any reason why any such Company Plan is not
so qualified in operation. Except as disclosed in Section 3.13(c) of the
Company Letter, neither the Company nor any of its Subsidiaries or ERISA
Affiliates has any liability or obligation under any welfare plan to
provide benefits after termination of employment to any employee or
dependent other than as required by section 4980B of the Code. Neither the
Company nor any Subsidiary of the Company nor any ERISA Affiliate has any
liability whether direct, indirect, contingent or otherwise, under (i)
Section 302 of ERISA or section 412 of the Code or (ii) Title IV of ERISA.
(d) Section 3.13(d) of the Company Letter contains a list of all
(i) severance and employment agreements with employees of the Company and
each of its Subsidiaries with respect to any employee whose annual rate of
base salary exceeds $100,000, and (ii) severance programs and policies of
the Company and each of its Subsidiaries with or relating to its employees
and (iii) plans, programs, agreements and other arrangements of the Company
and each of its Subsidiaries with or relating to its employees containing
change of control or similar provisions.
(e) Except as set forth in Section 3.13(e) of the Company
Letter, neither the Company nor any of its Subsidiaries is a party to any
agreement, contract or arrangement that could result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the
meaning of section 280G of the Code or that provides for payments that
would be nondeductible under section 162(m) of the Code.
(f) Except as set forth in Section 3.13(f) of the Company
Letter, with respect to each Company Plan not subject to United States law
(a "Company Foreign Benefit Plan"), except as would not have a Material
Adverse Effect on the Company, (i) the fair market value of the assets of
each funded Company Foreign Benefit Plan, the liability of each insurer for
any Company Foreign Benefit Plan funded through insurance or the reserve
shown on the Company's consolidated financial statements for any unfunded
Company Foreign Benefit Plan, together with any accrued contributions, is
sufficient to procure or provide for the benefit obligations, as of the
Effective Time, with respect to all current and former participants in such
plan according to reasonable, country specific actuarial assumptions and
valuations and no transaction contemplated by this Agreement shall cause
such assets or insurance obligations or book reserve to be less than such
benefit obligations; and (ii) each Company Foreign Benefit Plan required to
be registered has been registered and has been maintained in good standing
with the appropriate regulatory authorities.
Section 3.14 Liabilities; Services. (a) Except (i) as fully
reflected or reserved against in the financial statements included in the
Company SEC Documents filed with the SEC prior to the date hereof, or
disclosed in the footnotes thereto, (ii) for liabilities incurred in the
ordinary course of business since December 31, 1998, or (iii) as set forth
in Section 3.14(a) of the Company Letter, neither the Company nor any of
its Subsidiaries has any liabilities (including Tax liabilities) or
obligations of any nature, whether accrued, absolute, contingent or
otherwise required by generally accepted accounting principles ("GAAP") to
be set forth on a consolidated balance sheet of the Company and its
Subsidiaries or in the notes thereto, other than liabilities or obligations
that would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. As of the date hereof, the indebtedness for
borrowed money of the Company and its Subsidiaries does not exceed $85
million.
(b) Except as set forth in Section 3.14(b) of the Company
Letter, to the knowledge of the Company, no product or service sold or
delivered or service rendered by the Company or any of its Subsidiaries is
subject to any guaranty, warranty or other indemnity.
Section 3.15 Labor Matters. Except as set forth in Section 3.15
of the Company Letter, neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or labor contract with any
union. Neither the Company nor any of its Subsidiaries has engaged in any
unfair labor practice with respect to any persons employed by or otherwise
performing services primarily for the Company or any of its Subsidiaries
(the "Company Business Personnel"), and there is no unfair labor practice
complaint or grievance against the Company or any of its Subsidiaries by
any person pursuant to the National Labor Relations Act or any comparable
state or foreign law pending or threatened in writing with respect to the
Company Business Personnel, except where such unfair labor practice,
complaint or grievance would not have a Material Adverse Effect on the
Company. There is no labor strike, dispute, slowdown or stoppage pending
or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries which may interfere with the respective
business activities of the Company or any of its Subsidiaries, except where
such dispute, strike or work stoppage would not have a Material Adverse
Effect on the Company.
Section 3.16 Intellectual Property; Software; Year 2000. (a)
For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Computerized Assets" means all software,
hardware, firmware, embedded systems and other systems, components and/or
services that are owned or leased by the Company or any of its Subsidiaries
and used in the conduct of its business; (ii) "Intellectual Property
Rights" means all patents, trademarks, trade names, service marks, trade
secrets, copyrights and other proprietary intellectual property rights; and
(iii) "Software" means computer software programs and software systems,
including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, related documentation
and materials, whether in source code, object code or human readable form.
(b) Except as would not, individually or in the aggregate, have
a Material Adverse Effect on the Company, (i) the Company and its
Subsidiaries have all Intellectual Property Rights as are necessary in
connection with the business of the Company and its Subsidiaries, taken as
a whole, (ii) neither the Company nor any of its Subsidiaries is in breach
of any agreement affecting the Company's and/or its Subsidiaries' rights to
use any of the licensed Intellectual Property Rights or Software, and (iii)
none of the owned Intellectual Property Rights or Software infringes any
Intellectual Property Rights of any other Person.
(c) Except as would not have a Material Adverse Effect on the
Company or where a failure is attributable to the licensors or other third-
party providers of the Company or any of its Subsidiaries, all of the
Company's and each of its Subsidiary's Computerized Assets will be on or
prior to January 1, 2000 capable of providing and will provide
uninterrupted millennium functionality to record, store, process and
present calendar dates falling on or after January 1, 2000 and date
dependent data in such a manner and with such functionality as is necessary
for the operations of the Company and its Subsidiaries, and will not cause
an interruption in the ongoing operations or business of the Company or any
of its Subsidiaries on or after January 1, 2000.
Section 3.17 Title to and Sufficiency of Assets. (a) As of the
date hereof, the Company and its Subsidiaries own, and as of the Effective
Time the Company and its Subsidiaries will own, good and marketable title
to all of their assets (excluding, for purposes of this sentence, assets
held under leases), free and clear of any and all Liens, except as set
forth in the Company SEC Documents filed with the SEC prior to the date
hereof or in Section 3.17 of the Company Letter and except where the
failure to own such title would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. Such assets, together with all
assets held by the Company and its Subsidiaries under leases, include all
tangible and intangible personal property, contracts and rights necessary
or required for the operation of the businesses of the Company as presently
conducted, except for such assets the failure to have would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(b) Neither the Company nor any of its Subsidiaries owns any
Real Estate. All Real Estate assets held by the Company and its
Subsidiaries under leases or subleases are adequate for the operation of
the businesses of the Company as presently conducted, except for such
assets the failure to have would not, individually or in the aggregate,
have a Material Adverse Effect. The leases and subleases to all Real
Estate occupied by the Company and its Subsidiaries which are material to
the operation of the businesses of the Company are in full force and effect
and no event has occurred which with the passage of time, the giving of
notice, or both, would constitute a default or event of default by the
Company or any of its Subsidiaries or, to the knowledge of the Company, any
other person who is a party signatory thereto, other than such defaults or
events of default which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. For purposes of this Agreement,
"Real Estate" means, with respect to the Company or any of its
Subsidiaries, as applicable, all of the fee or leasehold ownership right,
title and interest of such person, in and to all real estate and
improvements owned or leased by any such person and which is used by any
such person in connection with the operation of its business.
Section 3.18 Required Vote of Company Stockholders. The Company
Stockholder Approval is required to adopt this Agreement and to consummate
the Merger. No other vote of the security holders of the Company is
required by law, the Company Charter or the By-laws of the Company or
otherwise in order for the Company to consummate the Merger and the
transactions contemplated hereby.
Section 3.19 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall
have the following meanings: (i) "Hazardous Substances" means (A)
petroleum and petroleum products, by-products or breakdown products,
radioactive materials, asbestos-containing materials and polychlorinated
biphenyls, and (B) any other chemicals, materials or substances regulated
as toxic or hazardous or as a pollutant, contaminant or waste or for which
liability or standards of care are imposed under any applicable
Environmental Law; (ii) "Environmental Law" means any foreign, federal,
state or local law, past, present or future and as amended, and any
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, or common law,
relating to pollution or protection of the environment, health or safety or
natural resources, including those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of
Hazardous Substances; and (iii) "Environmental Permit" means any permit,
approval, identification number, license or other authorization required
under any applicable Environmental Law.
(b) Except as disclosed in Section 3.19 of the Company Letter,
the Company and its Subsidiaries are and have been in compliance with all
applicable Environmental Laws, have obtained all Environmental Permits and
are in compliance with their requirements, and have resolved all past non-
compliance with Environmental Laws and Environmental Permits without any
pending, on-going or future obligation, cost or liability, except in each
case for the notices set forth in Section 3.19 of the Company Letter or
where such non-compliance would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. To the knowledge of the Company,
there are no circumstances that are reasonably likely to prevent or
interfere with such compliance in the future. Except as disclosed in
Section 3.19 of the Company Letter, to the knowledge of the Company, there
are no past or present actions or activities, including, without
limitation, the release, emission, discharge or disposal of any Hazardous
Substances at any site presently or previously owned by the Company or its
Subsidiaries in the conduct of their business that could form the basis of
any claim against the Company or its Subsidiaries under Environmental Laws,
except for such claims as would not, individually or in the aggregate, have
a Material Adverse Effect on the Company.
Section 3.20 Customers and Employees. (a) Except as set forth in
Section 3.20(a) of the Company Letter, neither the Company nor any of its
Subsidiaries has received any notice prior to the date of this Agreement
that (i) any of the top 25 customers of the Company and its Subsidiaries,
as determined with respect to the revenues generated in 1997 and 1998 from
such customers (the "Top 25 Customers"), intends to terminate or limit or
alter its business relationship with the Company or any of its
Subsidiaries, or (ii) any key employee intends to terminate or has
terminated his or her employment with the Company or any of its
Subsidiaries.
(b) Except as set forth in Section 3.20(b) of the Company
Letter, (i) each contract between the Company and/or any of its
Subsidiaries, on the one hand, and any provider of goods and/or services
that accepts Transaction Cards as a payment vehicle which provider is one
of the Top 25 Customers, on the other hand (the "Company Merchant
Contracts"), constitutes a valid and binding obligation of the parties
thereto and is in full force and effect, (ii) the Company and/or its
Subsidiary, as applicable, has fulfilled and performed in all material
respects its obligations under each of the Company Merchant Contacts, (iii)
the Company is not in, or alleged to be in, any material breach or default
under, nor is there or is there alleged to be any reasonable basis for
termination of, any of the Company Merchant Contracts and (iv) to the
knowledge of the Company, no other party to any of the Company Merchant
Contracts has materially breached or defaulted thereunder.
Section 3.21 Insurance. The Company and its Subsidiaries carry
or are entitled to the benefits of insurance as the Company believes are in
such character and amount at least equivalent to that carried by persons
engaged in similar businesses and subject to the same or similar perils or
hazards, except for any such failures to maintain insurance policies as set
forth in Section 3.21 of the Company Letter or that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. The
Company and each of its Subsidiaries have made any and all payments
required to maintain such policies in full force and effect, except where
the failure to make any such payments, in the aggregate, would not have a
Material Adverse Effect on the Company.
Section 3.22 Transactions with Affiliates. (a) For purposes of
this Section 3.22 and Section 3.9 hereof, the term "Affiliated Person"
means (i) any direct or indirect holder of 5% or more of the Company Common
Stock, (ii) any director or officer of the Company, any of its Subsidiaries
or any Person described in clause (i), (iii) any Person that directly or
indirectly controls, is controlled by, or is under common control with, any
of the Company, any of its Subsidiaries or any Person described in clause
(i), or (iv) any member of the immediate family or any of such persons.
(b) Except as set forth in Section 3.22 of the Company Letter or
in the Company SEC Reports filed with the SEC prior to the date hereof,
since June 30, 1998, the Company and its Subsidiaries have not, in the
ordinary course of business or otherwise, (i) purchased, leased or
otherwise acquired any material property or assets or obtained any material
services from, (ii) sold, leased or otherwise disposed of any material
property or assets or provided any material services to (except with
respect to remuneration for services rendered in the ordinary course of
business as director, officer or employee of the Company or any of its
Subsidiaries), (iii) entered into, renewed or modified in any manner any
contract with, or (iv) borrowed any money from, or made or forgiven any
loan or other advance (other than expenses or similar advances made in the
ordinary course of business) to, any Affiliated Person.
(c) Except as set forth in Section 3.22 of the Company Letter or
in the Company SEC Reports filed with the SEC prior to the date hereof, (i)
the contracts of the Company and its Subsidiaries do not include any
material obligation or commitment between the Company or any of its
Subsidiaries and any Affiliated Person, (ii) the assets of the Company or
any of its Subsidiaries do not include any receivable or other obligation
or commitment from an Affiliated Person to the Company or any of its
Subsidiaries and (iii) the liabilities of the Company and its Subsidiaries
do not include any payable or other obligation or commitment from the
Company or any of its Subsidiaries to any Affiliated Person.
(d) To the knowledge of the Company and except as set forth in
Section 3.22 of the Company Letter or in the Company SEC Reports filed with
the SEC prior to the date hereof, no Affiliated Person of any of the
Company or any of its Subsidiaries is a party to any contract with any
customer or supplier of the Company or any of its Subsidiaries that affects
in any material manner the business, financial condition or results of
operation of the Company or any of its Subsidiaries.
Section 3.23 Brokers. No broker, investment banker or other
person, other than Merrill Lynch & Co. ("Merrill Lynch"), the fees and
expenses of which will be paid by the Company is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The maximum amount of
such fees of Merrill Lynch has been disclosed by the Company to Parent.
Section 3.24 State Takeover Statute. If the Merger is
consummated as provided in this Agreement following receipt of the Company
Stockholder Approval, Section 203 of the DGCL will be inapplicable to the
Merger.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. (a) Except
as expressly permitted by clauses (i) through (xvi) of this Section 4.1,
during the period from the date of this Agreement through the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, in
all material respects, carry on its business in the ordinary course of its
business as currently conducted and, to the extent consistent therewith,
use commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and
others having business dealings with it. Without limiting the generality
of the foregoing, and except as otherwise expressly contemplated by this
Agreement or as set forth in the Company Letter (with specific reference to
the applicable subsection below), the Company shall not, and shall not
permit any of its Subsidiaries to, without the prior written consent of
Parent (provided that with respect to clauses (v), (vi), (viii), (xi),
(xiii) and (xiv) below, such consent shall not be unreasonably withheld or
delayed):
(i) (A) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any
of the Company's or any of its Subsidiaries' capital stock, or
otherwise make any payments or other distributions (whether in cash or
property) to its stockholders in their capacity as such, other than
dividends, distributions or other such payments by the Company's
Subsidiaries in the ordinary course of business consistent with past
practice, (B) split, combine or reclassify any of the Company's or
any of its Subsidiaries' capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of the Company's or any of its Subsidiaries'
capital stock or (C) purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its Subsidiaries or any
other securities thereof or any rights, warrants or options to acquire
any such shares or other securities, other than in connection with
cashless exercises of Company Stock Options;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of the Company's or any of its Subsidiaries'
capital stock, any other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants or options
(including options under the Company Stock Option Plan) to acquire any
such shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of shares of Company Common
Stock upon the exercise of Company Stock Options outstanding on the
date of this Agreement in accordance with their current terms, (B)
pursuant to the Company Stock Purchase Plan or (C) as set forth in
Section 4.1(ii) of the Company Letter;
(iii) amend the Company Charter or By-laws or other similar
organizational documents of any of the Company's Subsidiaries;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any corporation,
limited liability company, partnership, association or other business
organization or division thereof, except for acquisitions in the
ordinary course of business consistent with past practice and
involving aggregate consideration of up to $25 million (if the
Effective Time is on or prior to the 90th day following the date
hereof) or $50 million (if the Effective Time is thereafter);
(v) except as provided in the Contribution Agreement, sell,
lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets, other than sales
of inventory that are in the ordinary course of business consistent
with past practice and sales of assets having an aggregate fair market
value of up to $10 million;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (A) in the
ordinary course of business consistent with past practice and, in the
case of indebtedness and guarantees, in an amount not to exceed $50
million in the aggregate in excess of amounts outstanding on the date
hereof and (B) indebtedness, loans, advances, capital contributions
and investments between the Company and any of its Subsidiaries or
between any of such Subsidiaries, in each case in the ordinary course
of business consistent with past practice;
(vii) except as provided in Section 4.1(vii) of the Company
Letter, alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company or any of its Subsidiaries;
(viii) except as provided in Section 4.1(viii) of the Company
Letter and Section 5.4 hereof, increase the compensation payable or to
become payable to the Company's or any of its Subsidiaries' directors,
officers or employees or grant any severance or termination pay to, or
enter into any employment or severance agreement with, any director,
officer or employee of the Company or any of its Subsidiaries, or
establish, adopt, enter into, or, except as may be required to comply
with applicable law, amend in any material respect or take action to
enhance in any material respect or accelerate any rights or benefits
under, any labor, collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, officer or employee, except in any such case
in the ordinary course of business or where the aggregate annual
expense to the Company and its Subsidiaries, taken as a whole,
associated with such actions is not in excess of $5 million;
(ix) knowingly violate or knowingly fail to perform, in any
material respect, any obligation or duty imposed upon the Company or
any of its Subsidiaries by any applicable federal, state or local law,
rule, regulation, guideline or ordinance;
(x) make any change to accounting policies, practices or
procedures (other than actions required to be taken as a result of a
change in law or GAAP);
(xi) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods;
(xii) settle or compromise any federal, state, local or foreign
income tax dispute in excess of $10 million;
(xiii) settle or compromise any claims or litigation where (i)
the consideration paid by the Company and its Subsidiaries, in the
aggregate, has a fair market value in excess of $6 million or (ii)
there are potential criminal liabilities;
(xiv) other than in the ordinary course of business consistent
with past practice and other than the Processing Agreement, dated as
of the date hereof, between the Company and First Data Merchant
Services Corporation, enter into, amend or terminate any agreement or
contract to which the Company or any of its Subsidiaries is a party,
(i) having a remaining term in excess of 12 months or (ii) which
involves or is expected to involve future receipt or payment of $10
million or more during the term thereof, or waive, release or assign
any material rights or claims under any such agreement or contract; or
purchase any Real Estate, or make or agree to make any new capital
expenditure or expenditures (other than the purchase of real property)
which in the aggregate are in excess of 15% higher than expenditures
contemplated by the Company's capital budget for fiscal 1999 or fiscal
2000 as previously provided to Parent in writing;
(xv) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $6 million, other than the payment, discharge
or satisfaction, in the ordinary course of business consistent with
past practice and in accordance with their terms, of any such claims,
liabilities or obligations (in each case not related to pending
litigation) reflected or disclosed in the most recent consolidated
financial statements (or the notes thereto) of the Company included in
the Company SEC Documents or incurred since the date of such financial
statements in the ordinary course of business consistent with past
practice;
(xvi) except as required by applicable law or by order of a
Governmental Entity, do any other act which would cause any
representation or warranty of the Company in this Agreement to be or
become untrue; or
(xvii) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(b) Except as permitted herein, during the period from the date
of this Agreement through the Effective Time, Parent shall not, and shall
cause each of its Subsidiaries not to, consummate or enter into any
agreement to consummate any transaction which would reasonably be expected
to delay or impede the consummation of the Merger or which relates to the
merchant acquiring business and would require filings to be made under the
HSR Act; provided, however, that this Section 4.1(b) shall be inapplicable
with respect to the exercise or enforcement by Parent or any of its
Subsidiaries of any of their current rights (including, without limitation,
options to acquire assets or perform services) or the performance by Parent
or any of its Subsidiaries of any current obligations (including, without
limitation, in connection with rights of third parties to require Parent or
any of its Subsidiaries to acquire assets or perform services).
Section 4.2 No Solicitation. (a) The Company shall, and shall
cause its Subsidiaries and its and their respective officers, directors,
employees, financial advisors, attorneys and other advisors and
representatives (collectively, "Company Representatives") to immediately
cease any discussions or negotiations with any Person that may be ongoing
with respect to any possibility or consideration of making a Takeover
Proposal (as hereinafter defined). The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any
Company Representative to, directly or indirectly, (i) solicit, initiate or
encourage any inquiries or the making or implementation of any Takeover
Proposal, (ii) make or implement or participate in the making or
implementation of any Takeover Proposal, (iii) approve or recommend (except
with respect to a Superior Proposal in respect of which the Company is
entitled to discuss or negotiate in accordance with this Section 4.2), or
enter into any agreement with respect to, any Takeover Proposal or (iv)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to the Company or any of its
Subsidiaries in connection with, or take any other action that may
reasonably be expected to lead to any Takeover Proposal; provided, however,
that nothing contained in this Section 4.2(a) shall prohibit the Company or
its directors from complying with Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to a tender or exchange offer; and provided,
further, that prior to the Effective Time, if (A) the Company receives a
request for non-public information that was not solicited in violation of
this Section 4.2(a) from a party who proposes a written bona fide Takeover
Proposal and if the Board of Directors of the Company determines in good
faith that the failure to provide the information requested would be
inconsistent with such Board's fiduciary duties to the Company and its
stockholders or otherwise breach or violate applicable law (based on the
advice of outside legal counsel to the Company to such effect, which advice
shall specifically take into account the Stockholder Agreement and all the
terms thereof, including the obligations and agreements therein of Bank One
and First USA with respect to the Shares owned by First USA and voting for
the Merger and against any Takeover Proposal other than the Merger (the
"Legal Advice")), then the Company and the Company Representatives may, in
response to an unsolicited request therefor, and subject to compliance with
Section 4.2(b), furnish information with respect to the Company and its
Subsidiaries to the Person making such Takeover Proposal pursuant to a
customary confidentiality agreement (as determined by the Company's outside
legal counsel) on terms not in the aggregate materially more favorable to
such Person than the terms contained in the Confidentiality Agreement, and
(B) (i) a Takeover Proposal constitutes a Superior Proposal (as hereinafter
defined), and (ii) the Board of Directors of the Company reasonably
determines in good faith that the failure to provide the information
requested or to engage in discussions or negotiations would be inconsistent
with such Board's fiduciary duties to the Company and its stockholders or
otherwise breach or violate applicable law (based on Legal Advice), then to
the extent such failure is inconsistent with such Board's fiduciary duties
(determined as aforesaid), the Company and the Company Representatives may,
in response to an unsolicited request therefor, and subject to compliance
with Section 4.2(b), participate in discussions or negotiations with such
Person. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
Company Representative, whether or not such person is purporting to act on
behalf of the Company or any of its Subsidiaries or otherwise, shall be
deemed to be a breach of this Section 4.2(a) by the Company. For purposes
of this Agreement, "Takeover Proposal" means (i) any written proposal or
offer for a tender offer, recapitalization, merger, consolidation or other
business combination involving the Company or any of its Subsidiaries or
any proposal or offer to acquire in any manner, directly or indirectly, an
equity interest in, any voting securities of, or a substantial portion of
the assets of the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement, the Stockholder Agreement and
the Contribution Agreement or (ii) any other transaction the consummation
of which could reasonably be expected to impede, interfere with, prevent or
materially delay the Merger or which could reasonably be expected to dilute
or adversely affect materially the benefits to Parent of the transactions
contemplated by this Agreement, the Stockholder Agreement and the
Contribution Agreement, and "Superior Proposal" means a bona fide Takeover
Proposal made by a third party on terms which the Board of Directors of the
Company reasonably determines in good faith to be more favorable to the
Company's stockholders than the Merger (based on a written opinion, with
only customary qualifications, from a nationally recognized investment
banking firm serving as financial advisor to the Company (a "Banker
Opinion") that the value of the consideration provided for in such proposal
exceeds the Merger Consideration) and for which financing, to the extent
required, is then committed or which the Board of Directors reasonably
determines in good faith (based on a Banker Opinion) is highly likely to be
obtained by such third party. In making its determination whether a
Takeover Proposal constitutes a Superior Proposal pursuant to the preceding
sentence, the Board of Directors shall take into account whether such
Takeover Proposal has a reasonable prospect of being consummated prior to
October 1, 1999. Notwithstanding the foregoing, unless this Agreement
shall have been terminated pursuant to the terms hereof, nothing shall
prevent Parent, in its discretion, from consummating the Merger.
(b) The Company shall advise Parent and Bank One orally and in
writing of (i) any Takeover Proposal or any inquiry with respect to or
which could lead to any Takeover Proposal received by any officer or
director of the Company or, to the knowledge of the Company, any other
Company Representative and (ii) the identity of the Person making any such
Takeover Proposal or inquiry, no later than 24 hours following receipt of
such Takeover Proposal or inquiry. If the Company intends to furnish any
Person with any information with respect to any Takeover Proposal in
accordance with Section 4.2(a), the Company shall advise Parent and Bank
One orally and in writing of such intention not less than 24 hours in
advance of providing such information and shall promptly provide to Parent
and Bank One any information concerning the Company, its Subsidiaries,
business, properties or assets furnished to any third party and which has
not previously been provided to Parent and Bank One.
Section 4.3 Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
standstill agreement to which the Company or any of its Subsidiaries is a
party (other than, to the extent mutually agreed between Parent and the
Company, any such agreement involving Parent). During such period, the
Company agrees to enforce, to the fullest extent permitted under applicable
law, the provisions of any such agreements, including, but not limited to,
obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court of the
United States or any state thereof having jurisdiction.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meeting. (a) As soon as practicable
following the execution of this Agreement, the Company will duly call, give
notice of, convene and hold a meeting of stockholders (the "Stockholder
Meeting") for the purpose of considering the adoption of this Agreement and
the approval of the Merger and at such meeting call for a vote and cause
proxies to be voted in respect of the adoption of this Agreement and the
Company will, through its Board of Directors, recommend to its stockholders
the adoption of this Agreement, and shall not withdraw or modify such
recommendation (unless it has been previously withdrawn pursuant to the
terms of Section 4.2). This Agreement shall be submitted to the Company's
stockholders at the Stockholder Meeting whether or not the Board of
Directors determines at any time that this Agreement is no longer advisable
and recommends that the stockholders reject it.
(b) As soon as practicable after the execution of this
Agreement, the Company shall prepare and file a preliminary Proxy Statement
with the SEC and shall use its reasonable best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable after
responding to all such comments to the satisfaction of the staff. The
Company shall notify Parent and Bank One promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent and Bank One with copies of
all correspondence between the Company or any of its representatives, on
the one hand, and the SEC or its staff, on the other hand, with respect to
the Proxy Statement or the Merger. If at any time prior to the Stockholder
Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its stockholders such an amendment or supplement.
Parent and its counsel and Bank One and its counsel shall be given a
reasonable opportunity to review and comment upon the Proxy Statement and
any such correspondence prior to its filing with the SEC or dissemination
to the Company's Stockholders. The Company shall not so file or
disseminate any Proxy Statement, or any amendment or supplement thereto, to
which Parent or Bank One reasonably objects. Parent and Bank One shall
cooperate with the Company in the preparation of the Proxy Statement or any
amendment or supplement thereto.
Section 5.2 Access to Information. During the period from the
date of this Agreement through the Effective Time and subject to currently
existing contractual and legal restrictions applicable to the Company or
any of its Subsidiaries, the Company shall, and shall cause each of its
Subsidiaries to, afford to the accountants, counsel, financial advisors and
other representatives of Parent reasonable access to, and permit them to
make such inspections as they may reasonably require of, all of their
respective properties, books, contracts, commitments and records and,
during such period, the Company shall, and shall cause each of its
Subsidiaries to (i) furnish promptly to Parent a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws,
(ii) furnish promptly to Parent all other information concerning its
business, properties and personnel as Parent may reasonably request and
(iii) promptly make available to Parent all personnel of the Company and
its Subsidiaries knowledgeable about matters relevant to such inspections;
provided, however, that the foregoing shall not require the Company or any
of its Subsidiaries to furnish or otherwise make available to Parent or any
of its Subsidiaries customer-specific data or competitively sensitive
information relating to areas of the company's business in which Parent
and/or any of its Subsidiaries competes against the Company. No
investigation pursuant to this Section 5.2 shall affect any representation
or warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All information obtained by Parent
pursuant to this Section 5.2 shall be kept confidential in accordance with
the Letter Agreement, dated September 4, 1997 between Parent and the
Company, as confirmed in a letter dated October 22, 1998 from Parent to the
Company (collectively, the "Confidentiality Agreement").
Section 5.3 Costs and Expenses; Termination Fee. (a) Except as
provided in this Section 5.3, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including the
Merger), including the fees and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs
and expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds
to Parent $10 million (the "Termination Fee"), under the circumstances and
at the times set forth as follows:
(i) if Parent terminates this Agreement under Section 7.1(d) the
Company shall pay the Termination Fee upon demand; and
(ii) if the Company terminates this Agreement under Section
7.1(e), the Company shall pay the Termination Fee simultaneously with
such termination.
(c) If this Agreement is terminated pursuant to Section
7.1(b)(i) and at the time of such termination the condition set forth in
Section 6.1(c) shall not have been fulfilled, then Parent shall reimburse
the Company upon demand for all documented out-of-pocket fees and expenses
incurred or paid by or on behalf of the Company in connection with this
Agreement and the transactions contemplated hereby, including all fees and
expenses of its counsel, financial advisor, accountant and other
consultants and advisors; provided, however, that Parent shall not be
obligated to make payments pursuant to this Section 5.3(c) in excess of $2
million in the aggregate.
Section 5.4 Stock Options. (a) Prior to the Effective Time,
the Board of Directors of the Company (or, if appropriate, any committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary or appropriate, if any, to (i) cause each Company Stock Option
that is outstanding as of the date hereof to vest and to be exercisable
immediately prior to the consummation of the Merger, (ii) cause all
restrictions applicable to any restricted stock award heretofore granted
under the Company Restricted Stock Plan or any other similar plan
outstanding upon the consummation of the Merger to lapse immediately prior
to the Effective Time and (iii) cause each Company Stock Option that is
outstanding upon the consummation of the Merger to be exercisable solely
for the Merger Consideration for each Share issuable upon exercise thereof
immediately prior to the Effective Time. The Company shall offer each
holder of a Company Stock Option (an "Option Holder"), in exchange for the
cancellation thereof, the right to receive from the Company an amount equal
to (A) the product of (1) the number of shares of Company Common Stock
subject to such Company Stock Option and (2) the excess, if any, of the
Merger Consideration over the exercise price per share for the purchase of
the Company Common Stock subject to such Company Stock Option, minus (B)
all applicable federal, state and local Taxes required to be withheld in
respect of such payment. The amounts payable pursuant to the immediately
preceding sentence of this 5.4 shall be paid as soon as reasonably
practicable following the Effective Time. The surrender of an Option in
exchange for the consideration contemplated by the second sentence of this
Section 5.4 shall be deemed a release of any and all rights the Option
Holder had or may have had in respect thereof. The Company shall take all
such steps as may be required to cause the transactions contemplated by
this Section 5.4 and any other dispositions of Company equity securities
(including derivative securities) in connection with this Agreement by each
individual who is a director or officer of the Company to be exempt under
Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in
accordance with the No-Action Letter dated January 12, 1999, issued by the
SEC to Skadden, Arps, Slate, Meagher & Flom LLP.
(b) The Company shall take all actions necessary to ensure that
(i) the Offering Period (as defined in the Company Stock Purchase Plan)
applicable to the options outstanding under the Company Stock Purchase Plan
(each, a "Purchase Plan Option") is shortened in accordance with Section 16
of the Company Stock Purchase Plan so as to have an Exercise Date (as
defined in the Company Stock Purchase Plan) that occurs before the
Effective Time; (ii) no new Offering Period, other than the Offering Period
scheduled to commence on April 1, 1999, shall commence on or after the date
hereof, and (iii) no holder of a Purchase Plan Option is permitted to
increase his or her rate of payroll deduction under the Company Stock
Purchase Plan from and after the date hereof.
(c) The Company shall take all actions necessary to provide
that, prior to the Effective Time, (i) the Company Stock Option Plan, the
Company Stock Purchase Plan and any similar plan or agreement of the
Company shall be terminated, (ii) any rights under any other plan, program,
agreement or arrangement to the issuance or grant of any other interest in
respect of the capital stock of the Company or any of its Subsidiaries
shall be terminated, and (iii) no Option Holder will have any right to
receive any shares of capital stock of the Company or, if applicable, the
Surviving Corporation, upon exercise of any Company Stock Option.
(d) The Company represents and warrants that it has the power
and authority under the terms of the Company Stock Purchase Plan and each
of the Company Stock Option Plan and the Company Restricted Stock Plan to
comply with subsections (a), (b) and (c) hereof without the consent of any
Option Holder or any other person.
Section 5.5 Reasonable Best Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable
to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including: (i) the obtaining of all necessary actions or non-
actions, waivers, consents and approvals from all Governmental Entities and
Card Associations and the making of all necessary registrations and filings
(including filings under the HSR Act, the Change in Bank Control Act and
the Utah Statute and other filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental
Entity (including furnishing all information required under the HSR Act,
the Change in Bank Control Act and the Utah Statute and actions in
connection with State Takeover Approvals); (ii) the obtaining of all
necessary consents, approvals or waivers from third parties; (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby and thereby, including seeking to have any
stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed; and (iv) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by this Agreement. Each party will promptly
consult with the other with respect to, provide any necessary information
with respect to and provide the other (or its counsel) and Bank One (or its
counsel) copies of, all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby. In addition, if at any time prior to the Effective Time any event
or circumstance relating to any of the Company, Parent or Merger Sub or any
of their respective Subsidiaries, or any of their respective officers or
directors, should be discovered by the Company, Parent or Merger Sub, as
the case may be, and which should be set forth in an amendment or
supplement to the Proxy Statement or the Schedule 13e-3, the discovering
party will promptly inform the other party of such event or circumstance.
No party to this Agreement shall consent to any voluntary delay of the
consummation of the Merger at the behest of any Governmental Entity without
the consent of the other parties to this Agreement, which consent shall not
be unreasonably withheld.
(b) Each party shall use all reasonable best efforts to not take
any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, in connection with any filing or submission required or action
to be taken by either Parent or the Company to effect the Merger and to
consummate the other transactions contemplated hereby, the Company shall
not, without Parent's prior written consent, commit to any divestiture
transaction other than with respect to the Excluded Assets (as defined in
the Contribution Agreement), and neither Parent nor any of its affiliates
shall be required to divest or hold separate or otherwise take or commit to
take any action that limits its freedom of action with respect to, or its
ability to retain, the Company or any of the businesses, product lines or
assets of Parent or any of its Subsidiaries or that would have a Material
Adverse Effect on Parent.
Section 5.6 Public Announcements. Parent and the Company will
not issue any press release with respect to the transactions contemplated
by this Agreement or otherwise issue any written public statements with
respect to such transactions without prior consultation with the other
party and Bank One, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange.
Section 5.7 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar
statute or regulation is or may become applicable to the transactions
contemplated hereby, in the Stockholder Agreement or in the Contribution
Agreement such that, without further approval or action by Parent, the
Company or their respective Boards of Directors, such transactions cannot
be consummated in accordance with the terms hereof and thereof and such
statute or regulations, then Parent and the Company and their respective
Boards of Directors shall use their reasonable efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby and thereby may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act
to minimize the effects of any such statute or regulation on the
transactions contemplated hereby and thereby.
Section 5.8 Indemnification; Directors and Officers Insurance.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to indemnify and hold harmless all past and present officers
and directors of the Company and of its Subsidiaries (each an "Indemnified
Party") to the same extent and in the same manner such persons are
indemnified as of the date of this Agreement by the Company pursuant to the
DGCL, the Company Charter or the Company's By-laws for acts or omissions
occurring at or prior to the Effective Time. Parent also agrees to advance
expenses as incurred to the fullest extent permitted under the DGCL upon
receipt from the applicable Indemnified Party to whom expenses are to be
advanced of an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification pursuant to
this Section 5.8(a).
(b) Parent shall cause the Surviving Corporation to provide, for
an aggregate period of not less than six years from the Effective Time, the
Company's current directors and officers an insurance and indemnification
policy that provides coverage for events occurring prior to the Effective
Time (the "D&O Insurance") that is substantially similar to the Company's
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that the
Surviving Corporation shall not be required to pay an annual premium for
the D&O Insurance in excess of 150% of the last annual premium paid prior
to the date hereof but in such case shall purchase as much coverage as
possible for such amount.
(c) The provisions of this Section 5.8(i) are intended to be for
the benefit of, and will be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives and (ii) are in addition to, and
not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
Section 5.9 Notification of Certain Matters. Parent shall use
its reasonable best efforts to give prompt notice to the Company and Bank
One, and the Company shall use its reasonable best efforts to give prompt
notice to Parent and Bank One, of: (i) the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence, of which it is aware and
which would be reasonably likely to cause (x) any representation or
warranty contained in this Agreement and made by it to be untrue or
inaccurate in any material respect or (y) any covenant, condition or
agreement contained in this Agreement and made by it not to be complied
with or satisfied in all material respects, (ii) any failure of Parent or
the Company, as the case may be, to comply in a timely manner with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder or (iii) any change or event which has had a
Material Adverse Effect on the Company; provided, however, that the
delivery of any notice pursuant to this Section 5.9 shall not limit or
otherwise affect the remedies available hereunder to the party receiving
such notice.
Section 5.10 Certain Litigation. The Company agrees that it
shall not settle any litigation commenced after the date hereof against the
Company or any of its directors by any stockholder of the Company relating
to the Merger, this Agreement or the Stockholder Agreement without the
prior written consent of Parent, which consent may not be unreasonably
withheld. In addition, the Company shall not voluntarily cooperate with
any third party that may hereafter seek to restrain or prohibit or
otherwise oppose the Merger and shall cooperate with Parent and Merger Sub
to resist any such effort to restrain or prohibit or otherwise oppose the
Merger.
Section 5.11 Revolving Credit Agreement. The Company agrees to
use reasonable efforts to obtain a waiver of the restrictions on dividends
or other distributions by the Company under its existing revolving credit
agreement and the consent to the transfer of such revolving credit
agreement to the Alliance.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval
shall have been obtained.
(b) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect
and has the effect of making illegal the Merger or any of the other
transactions contemplated by this Agreement, the Stockholder Agreement or
the Contribution Agreement.
(c) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or been
terminated.
(d) Regulatory Approvals. The parties shall have received the
approval of the Federal Deposit Insurance Corporation under the Change in
Bank Control Act and the approval of the Utah Department of Financial
Institutions under the Utah Statute, and any other governmental or
regulatory notices or approvals required with respect to the transactions
contemplated hereby shall have been either filed or received, except for
those the failure to have given or obtain would not have a Material Adverse
Effect on the Company.
Section 6.2. Additional Conditions to Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to effect the Merger
shall be subject to fulfillment of the following additional conditions, any
of which, subject to Section 7.4, may be waived exclusively by Parent:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as
to materiality shall be true and correct as of the date of the Closing and
the representations and warranties that are not so qualified shall be true
and correct in all material respects, in each case as though made on and as
of the date of the Closing (except to the extent any such representation or
warranty expressly speaks as of an earlier date); and Parent and Merger Sub
shall have received a certificate signed on behalf of the Company by an
executive officer of the Company to such effect.
(b) Performance of Obligations. The Company shall have
performed in all material respects each material obligation and agreement
and shall have complied in all material respects with each material
covenant required to be performed and complied with by it under this
Agreement at or prior to the Effective Time; and Parent and Merger Sub
shall have received a certificate signed on behalf of the Company to such
effect.
(c) Absence of Material Adverse Change. There shall not have
occurred any Material Adverse Change with respect to the Company.
(d) Absence of Pending Litigation. There shall not be pending
by any Governmental Entity any suit, action or proceeding (i) seeking to
restrain or prohibit the Merger or the performance of any of the other
transactions contemplated by this Agreement, the Stockholder Agreement or
the Contribution Agreement or seeking to obtain from the Company or Parent
any damages that would have a Material Adverse Effect on Parent or the
Company, (ii) seeking to compel the Company or Parent or any of their
Affiliates to dispose of or hold separate any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole,
or Parent and its Subsidiaries, taken as a whole, as a result of the Merger
or any of the other transactions contemplated by this Agreement, the
Stockholder Agreement or the Contribution Agreement or (iii) which
otherwise is reasonably likely to have a Material Adverse Effect on the
Company, other than such suits, actions or proceedings which, in the
reasonable opinion of both counsel to Parent and to the Company, are
unlikely to result in an adverse judgement.
(e) Stockholder Agreement and Contribution Agreement. Neither
Bank One nor First USA shall have terminated the Stockholder Agreement or
the Contribution Agreement (whether or not in accordance with the terms
thereof) and neither Bank One nor First USA shall be in material breach
thereof or shall have indicated its intention not to perform such party's
obligations thereunder.
(f) Accounting Matters Applicable to Bank One. The conditions
set forth in Section 5.9 of the Contribution Agreement shall have been
fulfilled or waived pursuant to the terms of the Contribution Agreement.
Section 6.3. Additional Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger shall be subject to
fulfillment of the following additional conditions, any of which, subject
to Section 7.4, may be waived exclusively by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement that are
qualified as to materiality shall be true and correct as of the date of the
Closing and the representations and warranties that are not so qualified
shall be true and correct in all material respects, in each case as though
made on and as of the date of the Closing (except to the extent any such
representation or warranty expressly speaks as of an earlier date); and the
Company shall have received certificates signed on behalf of each of Parent
and Merger Sub by an executive officer of each to such effect.
(b) Performance of Obligations. Parent and Merger Sub shall
have performed in all material respects each material obligation and
agreement and shall have complied in all material respects with each
material covenant required to be performed and complied with by either of
them under this Agreement at or prior to the Effective Time; and the
Company shall have received certificates signed on behalf of each of Parent
and Merger Sub to such effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of
this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated prior to
October 1, 1999; provided, however, that the right to terminate
this Agreement pursuant to this Section 7.1(b)(i) shall not be
available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of any
such condition or if the failure of such condition results from
facts or circumstances that constitute a breach of any
representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger or the other
transactions contemplated by this Agreement, the Stockholder
Agreement or the Contribution Agreement and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by Parent or the Company in the event of a breach by the
other (or Merger Sub, in the case of Parent) of any representation,
warranty, covenant or other agreement contained in this Agreement
which (i) would reasonably be expected to give rise to the failure of
a condition set forth in Sections 6.2 (a) or (b) or 6.3 (a) or (b), as
the case may be, and (ii) cannot be or has not been cured within
30 days after the giving of written notice of such breach to the
Company;
(d) by Parent if (i) the Board of Directors of the Company or
any committee thereof shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of the Merger or this
Agreement, or approved or recommended any Takeover Proposal (whether
or not in compliance with Section 4.2) or (ii) the Board of Directors
of the Company or any committee thereof shall have resolved to take
any of the foregoing actions; or
(e) by the Company prior to receipt of the Company Stockholder
Approval if (i) a Takeover Proposal constitutes a Superior Proposal,
and (ii) the Board of Directors of the Company reasonably determines
in good faith that the failure to terminate this Agreement and accept
such Superior Proposal would be inconsistent with such Board's
fiduciary duties to the Company and its stockholders or otherwise
breach or violate applicable law (based on Legal Advice); provided,
however, that this Agreement shall not terminate pursuant to this
Section 7.1(e) unless (i) the Company has complied with all provisions
of Section 4.2, including the notice provisions therein, (ii)
simultaneously with such termination the Company has complied with the
requirements of Section 5.3(b) relating to the payment (including the
timing of any payment) of the Termination Fee to the extent required
by Section 5.3(b) and (iii) simultaneously with such termination the
Company enters into a definitive acquisition, merger or similar
agreement to effect such Superior Proposal; and provided, further,
that the Company may not terminate this Agreement pursuant to this
Section 7.1(e) unless and until 120 hours have elapsed following
delivery to Parent and Bank One of a written notice of such
determination by the Board of Directors of the Company and during such
120 hours Parent has not informed the Company that it is willing to
substantially match the terms and conditions of such Superior
Proposal.
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party
hereto, any person controlling any such party or any of their respective
officers or directors, after the execution of this Agreement.
Section 7.2 Effect of Termination. In the event of termination
of this Agreement by either Parent or the Company, as provided in Section
7.1, this Agreement shall forthwith become void and there shall be no
liability hereunder on the part of the Company, Parent, Merger Sub or their
respective officers or directors (except for Section 2.5, 2.7, 3.23, the
last sentence of Section 5.2, Section 5.3, this Section 7.2 and Article
VIII, all of which shall survive the termination); provided, however, that
nothing contained in this Section 7.2 shall relieve any party hereto from
any liability for any willful breach of a representation or warranty
contained in this Agreement or the material breach of any covenant
contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto, at any time before or after Company Stockholder Approval
(if required by law); provided, that (i) if the Company Stockholder
Approval shall have been obtained, thereafter no amendment shall be made
which by law requires further approval by such stockholders without such
further approval and (ii) no amendment of this Agreement shall be made
effective without the prior written consent of Bank One which consent shall
not be unreasonably withheld. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
Section 7.4 Extension; Waiver. At any time prior to the
Effective Time and subject to in clause (ii) of Section 7.3, the parties
hereto may to the extent legally allowed (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements (except
those agreements referred to in the immediately following sentence in the
event of the Merger or those agreements and matters referred to in Section
7.2 in the event of the termination of this Agreement in accordance with
Section 7.1) in this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time or the termination of this
Agreement pursuant to Section 7.1, as the case may be. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time of the Merger.
Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to an overnight courier or when
telecopied (with a confirmatory copy sent by overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
First Data Corporation
5660 New Northside Drive
Suite 1400
Atlanta, GA 30328
Attention: General Counsel
Facsimile No.: 770-857-0414
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Frederick C. Lowinger
Sherry S. Treston
Facsimile No.: 312-853-7036
(b) if to the Company, to:
Paymentech, Inc.
1601 Elm Street, 9th Floor
Dallas, Texas 75201
Attention: General Counsel
Facsimile No.: 214-849-2068
with a copy to:
Skadden, Arps, Slate, Meagher Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Randall H. Doud, Esq.
Eric J. Friedman, Esq.
Facsimile No.: 212-735-2000
(c) if to Bank One, to:
BANK ONE CORPORATION
One First National Plaza
Law Department
Mail Suite 0287
Chicago, Illinois 60670
Attention: Daniel P. Cooney, Esq.
Facsimile No.: 312-732-3596
Section 8.3 Interpretation; Definitions. (a) When a reference
is made in this Agreement to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation."
(b) As used in this Agreement, the following terms have the
meanings specified in this Section 8.3(b) and shall be equally applicable
to both the singular and plural forms:
"Bank Card Association" means Mastercard International, Inc.,
VISA U.S.A., Inc. or VISA International, Inc.
"Bank Cards" means a credit card, charge card, debit card, stored
value card or similar instrument that is issued by a licensee of a Bank
Card Association.
"Bank Holding Company Act" means the Bank Holding Company Act of
1956, as amended.
"Card Associations" means (i) Bank Card Associations and (ii)
Other Card companies (e.g. Discover, JCB, American Express, debit card
networks or links) and any other card association or similar entity with
whom the Company and/or any of its Subsidiaries may have a contract for
processing and/or facilitating settlement of transaction media (including
direct send contracts with Bank Card issuing banks) generated by holders of
cards or similar instruments issued by licensees of such groups.
"Cards" means Bank Cards and all Other Cards.
"Change in Bank Control Act" means Section 18(c)(1)(A) of the
Federal Insurance Corporation Act.
"IRS" means the Internal Revenue Service.
"Material Adverse Change" or "Material Adverse Effect" means,
when used with respect to the Company or Parent, as the case may be, any
change or effect that is or would reasonably be expected (as far as can be
foreseen at the time) to be materially adverse to the business, results of
operations, or condition (financial or otherwise), of the Company and its
Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a
whole; provided, however, that the effects of changes that are generally
applicable to the industries in which the Company operates or to the United
States economy generally, or which result from the announcement of the
transactions contemplated by this Agreement, shall be excluded from such
determination.
"Other Cards" shall include Discover, JCB, American Express,
Diners Club, Carte Blanche and any other Card or similar instrument which
may be issued by a debit card network or any other Card Association (or
licensee thereof) other than Mastercard or Visa.
"Subsidiary" means any corporation, partnership, limited
liability company, joint venture or other legal entity of which Parent,
Bank One or the Company, as the case may be (either alone or through or
together with any other such 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, partnership, limited liability
company, joint venture or other legal entity.
"Transaction Card" means a Card issued pursuant to a license from
a Card Association for which the Company and/or any of its Subsidiaries
currently provides service support.
(c) The following terms shall have the meanings set forth for
such terms in the Sections set forth below:
TERM SECTION
---- --------
"Affiliated Person" Section 3.22
"Agreement" Preamble
"Alliance" Recitals
"Bank One" Recitals
"Banker Opinion" Section 4.2(a)
"Blue Sky Laws" Section 2.3
"Certificate of Merger" Section 1.3
"Certificates" Section 1.7(b)
"Closing" Section 1.9
"Company" Preamble
"Company Business Personnel" Section 3.15
"Company Charter" Section 1.5(a)
"Company Common Stock" Recitals
"Company Foreign Benefit Plan" Section 3.13(f)
"Company Letter" Section 3.2
"Company Merchant Contracts" Section 3.20(c)
"Company Multiemployer Plan" Section 3.13(a)
"Company Permits" Section 3.9
"Company Plan" Section 3.13(a)
"Company Preferred Stock" Section 3.3
"Company Representatives" Section 4.2(a)
"Company Restricted Stock Plan" Section 3.3
"Company SEC Documents" Section 3.6
"Company Stock Option Plan" Section 3.3
"Company Stock Options" Section 3.3
"Company Stock Purchase Plan" Section 3.3
"Company Stockholder Approval" Section 2.4
"Compensation Agreements" Section 3.12
"Computerized Assets" Section 3.16
"Confidentiality Agreement" Section 5.2
"Constituent Corporations" Preamble
"Contribution Agreement" Recitals
"D&O Insurance" Section 5.8(b)
"DGCL" Section 1.2
"Dissenting Shares" Section 1.6(d)
"Dissenting Stockholder" Section 1.6(d)
"Effective Time" Section 1.3
"Environmental Law" Section 3.19(a)
"Environmental Permit" Section 3.19(a)
"ERISA" Section 3.13(a)
"ERISA Affiliate" Section 3.13(a)
"Exchange Act" Section 2.4
"First USA" Recitals
"GAAP" Section 3.14(a)
"Governmental Entity" Section 2.3
"Hazardous Substances" Section 3.19(a)
"Holdco" Preamble
"HSR Act" Section 2.3
"Intellectual Property Rights" Section 3.16
"Legal Advice" Section 4.2(a)
"Liens" Section 3.2
"Merger" Recitals
"Merger Consideration" Recitals
"Merger Sub" Preamble
"Option Holder" Section 5.4(a)
"Parent" Preamble
"Paying Agent" Section 1.7(a)
"Proxy Statement" Section 2.4
"Purchase Plan Option" Section 5.4(b)
"Real Estate" Section 3.17(b)
"Schedule 13e-3" Section 2.4
"SEC" Section 2.4
"Securities Act" Section 3.6
"Shares" Recitals
"Software" Section 3.16
"State Takeover Approvals" Section 2.3
"Stockholder Agreement" Recitals
"Stockholder Meeting" Section 5.1(a)
"Superior Proposal" Section 4.2(a)
"Surviving Corporation" Section 1.2
"Takeover Proposal" Section 4.2(a)
"Tax Return" Section 3.10
"Taxes" Section 3.10
"Termination Fee" Section 5.3(b)
"Top 25 Customers" Section 3.20(a)
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, except as provided in the last sentence of Section 5.2,
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof. This Agreement, except for the provisions of
Sections 1.2 and 5.8 and except as expressly set forth in Sections 1.5,
1.7(a), 2.4, 4.2(b), 5.1, 5.5, 5.6, 5.9, 7.3 and 8.5 with respect to Bank
One, is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. In addition, each of the parties
hereto (i) consents to submit itself to the personal jurisdiction of any
Federal or state court located in the State of Delaware in the event any
dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (ii) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, (iii) waives any objection based on forum non
conveniens or any other objection to venue thereof, and (iv) agrees that it
will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a
Federal or state court sitting in the State of Delaware.
Section 8.7 Assignment. Subject to Section 1.2, neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. This
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and permitted
assigns.
Section 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other terms, conditions and provisions
of this Agreement shall nevertheless remain in full force and effect so
long as the economic and legal substance of the transactions contemplated
hereby are 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 being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order
that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
Section 8.9 Enforcement of this Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific wording or were otherwise breached. It is accordingly agreed that
the parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms
and provisions hereof, such remedy being in addition to any other remedy to
which any party is entitled at law or in equity. Each party hereto waives
any right to a trial by jury in connection with any such action, suit or
proceeding.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto
duly authorized all as of the date first written above.
FIRST DATA CORPORATION
By: /s/ David J. Treinen
_______________________________
Name: David J. Treinen
Title: Senior Vice President
FB MERGING CORPORATION
By: /s/ David J. Treinen
_______________________________
Name: David J. Treinen
Title: Senior Vice President
PAYMENTECH, INC.
By: /s/ Pamela H. Patsley
_______________________________
Name: Pamela H. Patsley
Title: President and Chief
Executive Officer
Exhibit C
As of the Effective Time, the Company Charter shall be amended to read
in its entirety as follows:
FIRST: The name of this corporation (hereinafter called the "Corporation")
is
Paymentech, Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The amount of the total authorized capital stock of this
Corporation is Ten Dollars ($10.00) divided into 1,000 shares, par value
$0.01 per share.
EXHIBIT 10.1
EXECUTION COPY
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is dated as of
March 22, 1999, among First Data Corporation, a Delaware corporation
("FDC"), FDC Offer Corporation, a Delaware corporation and a direct
wholly-owned subsidiary of FDC ("Holdco"), FB Merging Corporation, a
Delaware corporation and a direct wholly-owned subsidiary of Holdco
("Merger Sub"), BANK ONE CORPORATION, a Delaware corporation ("Bank One"),
and First USA Financial, Inc., a Delaware corporation and wholly-owned
subsidiary of Bank One ("First USA").
W I T N E S S E T H:
WHEREAS, concurrently herewith, FDC, Merger Sub and Paymentech,
Inc., a Delaware corporation (the "Company"), are entering into an
Agreement and Plan of Merger, a form of which is appended hereto as Exhibit
A (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"), pursuant to which Merger Sub will be merged into the
Company (the "Merger").
WHEREAS, the Merger Agreement contemplates that Merger Sub will
be merged into the Company, upon the terms and subject to the conditions
set forth therein, and pursuant to which each of the issued and outstanding
shares, par value $.01 per share, of common stock of the Company (the
"Company Common Stock") not owned directly or indirectly by Parent, Bank
One, the Company or any of their Subsidiaries (including, without
limitation, Merger Sub) (other than such shares held by Parent, Bank One,
the Company or any of their Subsidiaries in a fiduciary, collateral,
custodial or similar capacity which will be converted) will be converted
into the right to receive the Merger Consideration;
WHEREAS, First USA Beneficially Owns (as defined herein)
19,979,081 shares of the Company Common Stock (all such shares so owned and
which may hereafter be acquired by First USA prior to the termination of
this Agreement, whether by means of purchase, dividend, distribution,
split-up, recapitalization, combination, exchange of shares or otherwise,
being referred to herein as the "First USA Shares");
WHEREAS, the Merger Agreement contemplates that First USA shall,
in a tax-free exchange pursuant to Section 351 of the Internal Revenue Code
of 1986, as amended (the "Code"), contribute the Company Common Stock owned
by it to Holdco and Holdco will make a capital contribution of such Company
Common Stock to Merger Sub;
WHEREAS, contemporaneously with the First USA contribution, FDC
shall contribute sufficient cash to pay the aggregate Merger Consideration
to Holdco and Holdco will make a capital contribution of such cash to
Merger Sub;
WHEREAS, concurrently herewith, FDC and Bank One are entering
into a Contribution Agreement (the "Contribution Agreement"), which
provides that following the Merger, FDC and Bank One will, through Holdco,
cause substantially all of the assets and liabilities and business of the
Company, as the Surviving Corporation, to be contributed to Bank One
Payment Services L.L.C., a Delaware limited liability company and an
alliance between wholly-owned subsidiaries of FDC and Bank One (the
"Alliance"), in exchange for a membership interest in the Alliance;
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, FDC and Merger Sub have required that each of Bank One
and First USA agree, and each of Bank One and First USA has agreed, to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained
herein, the parties hereby agree as follows:
1. Agreement to Vote: Restriction on Transfer. Proxies and
Non-Interference.
(a) First USA hereby agrees that during the period
commencing on the date hereof and continuing until the termination of this
Agreement in accordance with its terms, at any meeting of the holders of
the Company Common Stock, however called, or in connection with any written
consent of the holders of the Company Common Stock, First USA shall vote
(or cause to be voted) the First USA Shares, (i) in favor of adoption of
the Merger Agreement and the approval of the Merger, all other transactions
contemplated thereby, and any actions required in furtherance thereof and
hereof; (ii) against any action or agreement that is intended, or could
reasonably be expected, to impede, interfere with, or prevent the Merger or
result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company or any of its
subsidiaries under the Merger Agreement or this Agreement; and (iii) except
as specifically requested in writing in advance by FDC or as permitted
pursuant to the terms of the Merger Agreement, against the following
actions (other than the Merger and the transactions contemplated by or
required to implement the Merger Agreement, this Agreement and the
Contribution Agreement): (A) any extraordinary corporate transaction, such
as a merger, consolidation or other business combination involving the
Company or any of its subsidiaries or affiliates; (B) a sale, lease,
transfer or disposition by the Company or any of its subsidiaries of any
assets outside the ordinary course of business or any assets which in the
aggregate are material to the Company and its subsidiaries taken as a
whole, or a reorganization, recapitalization, dissolution or liquidation of
the Company or any of its subsidiaries or affiliates; (C)(1) any change in
the management of the Company or any of its subsidiaries or in a majority
of the persons who constitute the board of directors of the Company or any
of its subsidiaries; (2) any change in the present capitalization of the
Company or any of its subsidiaries or any amendment of the Company's
charter or by-laws or the charter or by-laws of any of its subsidiaries;
(3) any other material change in the Company's or any of its subsidiaries'
corporate structure or business; or (4) any other action that, in the case
of each of the matters referred to in clauses (C)(1), (2) or (3), is
intended, or could reasonably be expected, to impede, interfere with,
delay, postpone or materially adversely affect the Merger or the
transactions contemplated by this Agreement, the Contribution Agreement and
the Merger Agreement. Neither Bank One nor First USA shall enter into any
agreement or understanding with any Person (as defined herein) the effect
of which would be inconsistent with or violative of the provisions and
agreements contained in this Agreement.
(b) First USA shall not, directly or indirectly: (i) tender
the First USA Shares in any tender offer for the Company Common Stock; (ii)
except as contemplated by this Agreement, the Contribution Agreement or the
Merger Agreement, otherwise offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to or consent to
the offer for sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, any or all of the First USA Shares or any interest
therein; (iii) grant any proxies or powers of attorney, deposit any First
USA Shares into a voting trust or enter into a voting agreement with
respect to any First USA Shares; or (iv) take any action that would make
any representation or warranty of First USA contained herein that is
qualified by materiality untrue or incorrect in any respect or any
representation or warranty of First USA contained herein that is not so
qualified untrue or incorrect in any material respect or have the effect of
preventing or disabling First USA from performing First USA's obligations
under this Agreement.
(c) So long as this Agreement remains in effect, each
instrument or certificate evidencing or representing First USA Shares shall
bear a legend substantially to the following effect:
"The shares of Common Stock represented by this certificate are
subject to the transfer and other restrictions stated in a Stockholder
Agreement dated as of March 22, 1999, a copy of which is on file at
the office of the Assistant Secretary of BANK ONE CORPORATION."
(d) First USA agrees with, and covenants to, FDC that First
USA shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any
of the First USA Shares, unless such transfer is made in compliance with
this Agreement.
2. Waiver of Appraisal and Dissenter's Rights. First USA
hereby irrevocably waives any rights of appraisal or rights to dissent from
the Merger that it may have.
3. Schedule 13e-3. FDC, Holdco, Merger Sub, Bank One and First
USA shall, in accordance with the rules and regulations of the SEC, file
with the SEC a Rule 13e-3 Transaction Statement (such Rule 13e-3
Transaction Statement, as amended from time to time, the "Rule 13e-3
Transaction Statement"), with respect to the Merger Agreement and the
Contribution Agreement, and such parties shall cause to be disseminated the
information contained therein to holders of the shares of the Company
Common Stock as and to the extent required by the applicable rules and
regulations of the SEC. Each of the parties hereto agrees promptly to
correct any information provided by it for use in the Rule 13e-3
Transaction Statement if and to the extent that such information shall have
become false or misleading in any material respect, and such parties
further agree to take all steps necessary to cause the Rule 13e-3
Transaction Statement as so corrected to be filed with the SEC and the
information contained in such corrected filing to be disseminated to
holders of shares of the Company Common Stock, in each case as and to the
extent required by the applicable rules and regulations of the SEC. FDC
and its counsel shall be given reasonable opportunity to review and comment
on the Rule 13e-3 Transaction Statement prior to its filing with the SEC or
dissemination to the stockholders of the Company. Bank One and First USA
agree to provide FDC and its counsel any comments Bank One, First USA or
their counsel may receive from the SEC or its staff with respect to the
Rule 13e-3 Transaction Statement promptly after the receipt of such
comments and to cooperate with FDC and its counsel in responding to any
such comments. The parties hereto jointly agree to cause the Rule 13e-3
Transaction Statement to comply as to form in all material respects with
the requirements of the Exchange Act and to allow the Company to rely upon
such agreement to do so.
4. No Solicitation. (a) Other than with respect to the
Excluded Assets, Bank One and its affiliates shall immediately cease
existing discussions or negotiations, if any, with any parties conducted
heretofore with respect to any acquisition of all or any material portion
of the assets of, or any equity interest in, the Company or any of its
subsidiaries or any business combination with the Company or any of its
subsidiaries.
(b) Bank One and First USA shall not, nor shall they
authorize or permit any of their affiliates or any director, officer,
employee, financial advisor, attorney or other advisor or representative of
any of the foregoing to, directly or indirectly: (i) solicit, initiate or
encourage any inquiries or the making or implementation of any Takeover
Proposal; (ii) make or implement or participate in the making or
implementation of any Takeover Proposal; (other than an agreement
conditioned upon the concurrent exercise by the Company, provided that
concurrently with the effectiveness of such agreement, the Company
exercises the termination right set forth in Section 7.1(e) of the Merger
Assignment) (iii) enter into any agreement with respect to or approve or
recommend any Takeover Proposal; or (iv) participate in any discussions or
negotiations regarding, or furnish to any Person any information with
respect to the Company or any of its Subsidiaries in connection with, or
take any other action that may reasonably be expected to lead to any
Takeover Proposal. Notwithstanding the foregoing, nothing in this Section
4(b) shall prohibit any affiliate of Bank One or First USA (i) from
providing shareholder or proxy services in the ordinary course of business
of such affiliate or (ii) to the extent such affiliate is acting in a
fiduciary capacity, from taking actions directed by one or more of the
beneficiaries or other legal representatives involved in the fiduciary
relationship or as is otherwise required by reason of the fiduciary
relationship. Any action taken by the Company or any member of the Board
of Directors of the Company in accordance with Section 4.2 of the Merger
Agreement shall be deemed not to violate this Section 4.
(c) If at any time Bank One or any of its affiliates (other
than the Company and its Subsidiaries) is approached (without any joint or
related approach to the Company or any of its Subsidiaries) by any Person
concerning its participation in a transaction involving any of the assets,
businesses or securities of the Company or any subsidiary thereof (other
than with respect to the Excluded Assets), Bank One will promptly inform
FDC of the nature of such contact and the parties thereto and provide a
copy of any such written proposal and a summary of any oral proposal
(including the material terms and conditions of such proposal) to FDC
immediately after receipt thereof. Notwithstanding the foregoing, nothing
in this Section 4(c) shall require any affiliate of Bank One to provide any
notification referred to in the preceding sentence if (i) such affiliate's
participation in such transaction is limited to the provision of
shareholder or proxy services in the ordinary course of business of such
affiliate or (ii) if such affiliate is acting in a fiduciary capacity and
such participation in such transaction is directed by one or more of the
beneficiaries or other legal representatives involved in the fiduciary
relationship or as is otherwise required by reason of the fiduciary
relationship.
5. Representations and Warranties by Bank One and First USA.
Each of Bank One and First USA hereby represents and warrants to FDC,
Holdco and Merger Sub as of the date hereof and as of the Closing as
follows:
(a) Ownership of Shares. First USA is the record and
Beneficial Owner of the First USA Shares and the First USA Shares
constitute all of the shares of the Company Common Stock owned of record by
First USA other than Shares Beneficially Owned by First USA or Bank One in
a fiduciary, custodial, collateral or similar capacity. First USA owns the
First USA Shares free and clear of all liens, claims, charges, security
interests, mortgages or other encumbrances, and the First USA Shares are
subject to no rights of first refusal, put rights, other rights to purchase
or encumber the First USA Shares, or to any agreements other than this
Agreement as to the encumbrance or disposition of the First USA Shares.
First USA has sole voting power and sole power to issue instruction with
respect to the matters set forth in Section 1 hereof, sole power of
disposition, sole power of conversion, sole power to demand appraisal
rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the First USA Shares, with
no limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Each of Bank One and First
USA is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to execute, deliver and perform all
of its obligations under this Agreement and to consummate the transactions
contemplated by this Agreement. The execution, delivery and performance of
this Agreement by each of Bank One and First USA, and the consummation of
the transactions contemplated hereby, has been or will be duly authorized
by all necessary corporate action on the part of Bank One and First USA and
no other corporate proceedings on the part of Bank One or First USA or
their respective Board of Directors are or will be necessary to consummate
the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of Bank One and First USA and constitutes a
valid and binding agreement of each of Bank One and First USA, enforceable
against each of Bank One and First USA in accordance with its terms, except
as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, and except as the availability
of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity).
(c) No Conflicts. Except for filings, permits,
authorizations, consents and approvals as may be required under the HSR Act
and the SEC with respect to the Rule 13E-3 Transaction Statement, no filing
with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by Bank One or First USA and the consummation by Bank One and
First USA of the transactions agreed to in this Agreement and none of the
execution or delivery of this Agreement by Bank One and First USA, the
consummation by Bank One and First USA of the transactions agreed to in
this Agreement or compliance by Bank One and First USA with any of the
provisions hereof shall (i) conflict with, violate, result in a breach of,
or constitute a default under the charter or by-laws of Bank One or First
USA, (ii) conflict with (A) any Court Order to which Bank One or First USA
is a party or by which Bank One or First USA is bound or (B) any
Requirements of Law affecting Bank One or First USA, other than for any
such conflicts, violations, breaches or defaults that individually or in
the aggregate would not have a material adverse effect on Bank One, or
(iii) conflict with or violate in any material manner or result in any
material breach of, or constitute a material default under any material
voting agreement, shareholder agreement or voting trust or any material
note, instrument, agreement, mortgage, lease, license, franchise, permit or
other authorization, right, restriction or obligation to which Bank One or
First USA is a party or by which Bank One or First USA or, to the best of
Bank One's or First USA's knowledge, any of Bank One's or First USA's
properties or assets may be bound. This Agreement hereby supersedes all
prior agreements to which Bank One or First USA is a party with respect to
Bank One's or First USA's Shares.
(d) No Finder's Fees. No broker, investment banker,
financial adviser or other Person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission from First USA or
Bank One in connection with the transactions contemplated by the Merger
Agreement, this Agreement or the Contribution Agreement based upon
arrangements made by or on behalf of Bank One or First USA.
6. Representations and Warranties by FDC, Holdco and Merger
Sub.
(a) Power; Binding Agreement. Each of FDC, Holdco and
Merger Sub is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance
of this Agreement by each of FDC, Holdco and Merger Sub, and the
consummation of the transactions contemplated hereby, has been duly
authorized by all necessary corporate action on the part of FDC, Holdco and
Merger Sub. This Agreement has been duly and validly executed and
delivered by each of FDC, Holdco and Merger Sub and constitutes a valid and
binding agreement of each of FDC, Holdco and Merger Sub, enforceable
against each of FDC, Holdco and Merger Sub in accordance with its terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, and except as the availability
of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity).
(b) No Conflicts. Except for filings, permits,
authorizations, consents and approvals as may be required under the HSR Act
and with the SEC with respect to the Rule 13e-3 Transaction Statement, no
filing with, and no permit, authorization, consent or approval of, any
state or federal public body or authority is necessary for the execution of
this Agreement by FDC, Holdco or Merger Sub and the consummation by FDC,
Holdco and Merger Sub of the transactions contemplated hereby and none of
the execution or delivery of this Agreement by FDC, Holdco or Merger Sub,
the consummation by FDC, Holdco and Merger Sub of the transactions
contemplated hereby or compliance by FDC, Holdco and Merger Sub with any of
the provisions hereof shall (i) conflict with, violate, result in a breach
of, or constitute a default under the charter or by-laws of FDC, Holdco or
Merger Sub, (ii) conflict with (A) any Court Order to which FDC, Holdco or
Merger Sub is a party or by which FDC, Holdco or Merger Sub is bound or (B)
any Requirements of Law affecting FDC, Holdco or Merger Sub, other than for
any such conflicts, violations, breaches or defaults that individually or
in the aggregate would not have a material adverse effect on FDC, or (iii)
conflict with or violate in any material manner or result in any material
breach of, or constitute a material default under any material voting
agreement, shareholder agreement, voting trust, note, instrument,
agreement, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which FDC, Holdco or
Merger Sub is a party or by which FDC, Holdco or Merger Sub or, to the best
of FDC's, Holdco's or Merger Sub's knowledge, any of FDC's, Holdco's or
Merger Sub's properties or assets may be bound.
(c) No Finder's Fees. No broker, investment banker,
financial adviser or other Person, other than Morgan Stanley Dean Witter &
Co., the fees and expenses of which will be paid by FDC, is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission
in connection with the transactions contemplated by the Merger Agreement
based upon arrangements made by or on behalf of FDC, Holdco or Merger Sub.
7. Further Assurances. From time to time, at FDC's request and
without further consideration, First USA agrees to execute and deliver such
additional documents and take such further lawful action as may be
necessary or desirable to consummate and make effective, and to cause the
Company to consummate and make effective the transactions provided for in
this Agreement, it being understood and agreed that First USA shall not be
required hereunder to make any payment (other than customary administrative
and processing fees and reasonable legal expenses), commence litigation or
agree to any material agreements in connection with the foregoing.
8. Actions Taken Prior to Consummation of the Merger. (a) Each
of the parties hereto shall take, or cause to be taken, the actions when
and as contemplated by Section 1.1 of the Merger Agreement to be taken by
such party; provided, however that the obligation of First USA to
contribute shares of Company Common Stock owned by it to Holdco shall be
subject to the receipt by First USA of a written opinion of Wachtell,
Lipton, Rosen & Katz to the effect that such contribution and the receipt
of ownership interests in Holdco by First USA shall constitute a
transaction qualifying under Section 351 of the Code. The stockholder
agreement relating to the governance of Holdco and the Company described
therein will be in the form attached hereto as Exhibit B. The total number
of shares of common stock to be issued to FDC and First USA in exchange for
their respective contributions to Holdco as contemplated by such Section
1.1 will be in an amount to be agreed upon between First USA and FDC and
will be allocated in the following percentages: (A) to First USA, the
percentage (the "First USA Percentage") obtained by dividing (i) the total
number of shares of Company Common Stock which are contributed by First USA
to Holdco in accordance with Section 1.1 of the Merger Agreement and
Section 8 of this Agreement by (ii) the total number of shares of Company
Common Stock outstanding immediately prior to the Effective Time; and (B)
to FDC, the percentage obtained by subtracting the First USA percentage
from 100%. The parties hereto agree to cause Merger Sub to cause all shares
of the Company Common Stock owned by it to be voted in approval of the
Merger.
(b) Bank One, as lender under that certain Credit
Agreement, dated February 18, 1999, between Bank One and the Company,
hereby grants all consents required to be obtained by the Company pursuant
to such Credit Agreement in connection with the transactions contemplated
by this Agreement, the Merger Agreement and the Contribution Agreement.
9. Actions Taken After Consummation of the Merger.
(a) Each of the parties hereto will take all steps
reasonably necessary to cause the consummation of the transactions
contemplated by the Contribution Agreement.
(b) Each of the parties hereto agree to cause the Surviving
Corporation to comply with the covenants set forth in Section 5.8 of the
Merger Agreement.
(c) FDC, Bank One and First USA shall take actions
necessary to cause the Board of Directors of the Surviving Corporation,
immediately after the Effective Time and until the closing of the
transactions contemplated by the Contribution Agreement occurs, to consist
of nine members, five of whom will be designated by Bank One and four of
whom will be designated by FDC. After the Closing ( as defined in the
Contribution Agreement) Bank One and First USA shall take actions necessary
to cause the Board of Directors of the Surviving Corporation to consist of
four members, two of whom will be designated by Bank One and two of whom
will be designated by FDC.
(d) Following any payment by the Surviving Corporation in
respect of Dissenting Shares pursuant to Section 262 of the DGCL (excluding
any Dissenting Shares held by stockholders who shall have failed to perfect
or who effectively shall have withdrawn or lost their rights to appraisal
of such Shares under Section 262 of the DGCL), FDC shall pay to the
Surviving Corporation, as a capital contribution (but without the issuance
of any additional shares of capital stock), an amount, in respect of each
such Dissenting Share, equal to the amount paid by the Surviving
Corporation in respect of such Dissenting Share; provided, however, that at
such time as the aggregate amount paid to the Surviving Corporation
pursuant to this sentence is equal to the sum of (i) the product obtained
by multiplying the number of Dissenting Shares in respect of which payment
is made multiplied by the Merger Consideration and (ii) $2 million, then
any payments thereafter made by FDC pursuant to this sentence shall be
limited to an amount per Share equal to the Merger Consideration.
Following any payment by the Surviving Corporation in respect of Dissenting
Shares that are held by stockholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of
such Shares under Section 262 of the DGCL but as to which Shares a
contribution of cash to Holdco by Parent was not made pursuant to Section
1.1 of the Merger Agreement, FDC shall pay to the Surviving Corporation, as
a capital contribution (but without the issuance of any additional shares
of capital stock), an amount, in respect of each such Share, equal to the
Merger Consideration.
(e) The parties acknowledge and agree that the Surviving
Corporation shall bear the financial responsibility for amounts required to
be paid in respect of the Company Stock Options pursuant to Section 5.4 of
the Merger Agreement.
10. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein shall terminate and have no
further force or effect upon the earliest of (i) the written consent of the
parties hereto, (ii) termination of the Merger Agreement in accordance with
its terms (including, without limitation, termination of the Merger
Agreement by the Company pursuant to Section 7.1(e) of the Merger
Agreement), (iii) failure to receive the opinion required under Section 8
hereof, (iv) the consummation of the transactions contemplated by the
Contribution Agreement, and (v) the termination of the Contribution
Agreement in accordance with its terms. No termination of this Agreement
shall relieve any party hereto from any liability for any breach of this
Agreement.
11. Miscellaneous.
(a) Certain Definitions. Capitalized terms used herein and
not defined herein shall have the respective meanings assigned to them in
the Merger Agreement. As used in this Agreement, the following capitalized
terms shall have the following meanings:
(i) "Beneficially Own" or "Beneficial Ownership" with
respect to any securities shall mean having "beneficial
ownership" of such securities (as determined pursuant to Rule
13d-3 under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in
writing, but excluding securities held in a fiduciary, custodial,
collateral or similar capacity. Without duplicative counting of
the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a
"group" as within the meanings of Section 13(d)(3) of the
Exchange Act.
(ii) "Court Order" has the meaning assigned to it in the
Contribution Agreement.
(iii) "Excluded Assets" has the meaning assigned to it
in the Contribution Agreement.
(iv) "Person" means any general partnership, limited
partnership, corporation, limited liability company, joint
venture, trust, business trust, governmental agency, cooperative,
association, individual or other entity, and the heirs,
executors, administrators, legal representatives, successors and
assigns of such Person as the context may require.
(v) "Requirements of Law" has the meaning assigned to it in
the Contribution Agreement.
(vi) "Subsidiary" or "subsidiaries" of FDC, Holdco, Merger
Sub, Bank One, First USA or any other Person means any
corporation, partnership, limited liability company, association,
trust, unincorporated association or other legal entity of which
FDC, Holdco, Merger Sub, Bank One, First USA 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 capital stock 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.
(b) Entire Agreement. This Agreement, the Contribution
Agreement and the Merger Agreement constitute the entire agreement between
the parties with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.
(c) Certain Events. Bank One and First USA agree that this
Agreement, the Contribution Agreement and the obligations hereunder shall
attach to the First USA Shares and shall be binding upon any Person or
entity to which legal or beneficial ownership of the First USA Shares shall
pass, whether by operation of law or otherwise. Notwithstanding any
transfer of the First USA Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(d) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the
other parties, provided that FDC may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly-owned
subsidiary of FDC, but no such assignment shall relieve FDC of its
obligations hereunder if such assignee does not perform such obligations.
(e) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by
the relevant parties hereto.
(f) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by hand delivery,
telegram, telex or telecopy, or by mail (registered or certified mail,
postage prepaid, return receipt requested) or by any courier service, such
as Federal Express, providing proof of delivery. All communications
hereunder shall be addressed to the respective parties at the following
addresses:
If to Bank One or First USA:
BANK ONE CORPORATION
One First National Plaza
Law Department
Mail Suite 0287
Chicago, Illinois 60670
Attention: Daniel P. Cooney
Facsimile No.: (312) 732-3596
with a copy to:
First USA Financial, Inc.
3 Christiana Centre
201 Walnut Street
10th Floor
Wilmington, Delaware 19801
Attention: Phillip L. Weaver
Facsimile No.: (302) 985-8433
If to FDC, Holdco or Merger Sub:
First Data Corporation
5660 New Northside Dr.
Suite 1400
Atlanta, GA 30328
Attention: General Counsel
Facsimile No.: (770) 857-0414
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Attention: Frederick C. Lowinger
Sherry S. Treston
Facsimile No.: (312) 853-7036
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
(g) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law, but if any
provision or portion of any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any
provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been
contained herein.
(h) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or
agreements contained in this Agreement will cause the other party to
sustain damages for which it would not have an adequate remedy at law for
money damages, and therefore each of the parties hereto agrees that in the
event of any such breach the aggrieved party shall be entitled to the
remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to
which it may be entitled, at law or in equity.
(i) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at
law or in equity shall be cumulative and not alternative, and the exercise
of any thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
(j) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder, and
any custom or practice of the parties at variance with the terms hereof,
shall not constitute a waiver by such party of its right to exercise any
such or other right, power or remedy or to demand such compliance.
(k) No Third Party Beneficiaries. This Agreement, except
as expressly set forth in Section 3 with respect to the Company, is not
intended to be for the benefit of, and shall not be enforceable by, any
Person who is not a party hereto.
(l) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts and laws thereof.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.
(o) Expenses. All costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be
for the account of the party incurring such costs and expenses.
IN WITNESS WHEREOF, FDC, Holdco, Merger Sub, Bank One and First
USA have caused this Agreement to be duly executed as of the day and year
first above written.
FIRST DATA CORPORATION
By /s/ David J. Treinen
_____________________________________
Name: David J. Treinen
Title: Senior Vice President
FDC OFFER CORPORATION
By /s/ David J. Treinen
_____________________________________
Name: David J. Treinen
Title: Senior Vice President
FB MERGING CORPORATION
By /s/ David J. Treinen
_____________________________________
Name: David J. Treinen
Title: Senior Vice President
BANK ONE CORPORATION
By /s/ Richard J. Lehmann
_____________________________________
Name: Richard J. Lehmann
Title: President and Chief Operating
Officer
FIRST USA FINANCIAL, INC.
By /s/ Phillip L. Weaver
_____________________________________
Name: Phillip L. Weaver
Title: Executive Vice President
Strategic Planning
EXHIBIT 10.2
EXECUTION COPY
CONTRIBUTION AGREEMENT
DATED AS OF MARCH 22, 1999
BETWEEN
FIRST DATA CORPORATION
AND
BANK ONE CORPORATION
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Interpretation . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
PRELIMINARY TRANSACTIONS
2.1. Divestiture of Excluded Assets. . . . . . . . . . . . . . 2
2.2. Subsidiaries of Alpha. . . . . . . . . . . . . . . . . . . 3
ARTICLE III
CLOSING
3.1. Time and Place of Closing . . . . . . . . . . . . . . . . 3
3.2. Execution and/or Amendment of Agreements . . . . . . . . . 4
3.3. Contribution of Specified Assets and
Liabilities . . . . . . . . . . . . . . . . . . . . . . 4
3.4. Alpha Deliveries. . . . . . . . . . . . . . . . . . . . . 4
3.5. Alliance Deliveries . . . . . . . . . . . . . . . . . . . 4
3.6. Other Deliveries. . . . . . . . . . . . . . . . . . . . . 5
3.7. Consents to Assignment . . . . . . . . . . . . . . . . . . 5
3.8. Closing Costs; Transfer Fees . . . . . . . . . . . . . . . 6
ARTICLE IV
CONTRIBUTION OF ASSETS
AND LIABILITIES OF ALPHA
4.1. Contribution Assets . . . . . . . . . . . . . . . . . . . 6
4.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . 7
4.3. Assumed Liabilities . . . . . . . . . . . . . . . . . . . 7
4.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . 8
ARTICLE V
CONDITIONS TO CLOSING
5.1. Illegality, Etc . . . . . . . . . . . . . . . . . . . . . 8
5.2. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3. Consents and Approvals . . . . . . . . . . . . . . . . . . 9
5.4. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.5. Other Agreements . . . . . . . . . . . . . . . . . . . . . 9
5.6. Divestiture of Unrelated Assets . . . . . . . . . . . . . 9
5.7. Resolutions, Certificates, Etc. . . . . . . . . . . . . 10
5.8. Opinions of Counsel . . . . . . . . . . . . . . . . . . 10
5.9. Accounting . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of Bank One and
Bank One Affiliates . . . . . . . . . . . . . . . . . 11
6.2. Representations and Warranties of FDC and FDC
Affiliates . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
SCHEDULES OF ALPHA ASSETS AND LIABILITIES . . . . . . . . . . . . 16
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. Reasonable Access. . . . . . . . . . . . . . . . . . . . 16
8.2. Accuracy of Representations and Warranties . . . . . . . 16
8.3. Efforts to Consummate. . . . . . . . . . . . . . . . . . 17
8.4. No Public Announcement. . . . . . . . . . . . . . . . . 17
8.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . 17
8.6 Notification of Certain Matters . . . . . . . . . . . . 19
8.7. Card Association Approvals. . . . . . . . . . . . . . . 19
8.8. Related Party Transactions . . . . . . . . . . . . . . . 19
8.9. Operations Prior to Closing Date . . . . . . . . . . . . 19
8.10. Intercompany Agreements . . . . . . . . . . . . . . . . 19
8.11. Cooperation on Debt . . . . . . . . . . . . . . . . . . 20
8.12. Certain Fees . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX
EMPLOYEE MATTERS
9.1. Employment of Alpha Employees . . . . . . . . . . . . . 20
9.2. Maintenance of Employee Benefits Plans . . . . . . . . . 21
9.3. Bonuses . . . . . . . . . . . . . . . . . . . . . . . . 21
9.4. Vacation and Sick Leave . . . . . . . . . . . . . . . . 21
9.5. Workers' Compensation . . . . . . . . . . . . . . . . . 21
9.6. Employees of Alliance Members . . . . . . . . . . . . . 21
ARTICLE X
INDEMNIFICATION; PAYMENT OF CERTAIN COSTS
10.1. Indemnification by FDC . . . . . . . . . . . . . . . . . 21
10.2. Indemnification by Bank One . . . . . . . . . . . . . . 22
10.3. Notice of Claims . . . . . . . . . . . . . . . . . . . . 22
10.4. Third Person Claims . . . . . . . . . . . . . . . . . . 23
10.5. Limitation . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XI
TERMINATION
11.1. Termination . . . . . . . . . . . . . . . . . . . . . . 24
11.2. Notice of Termination . . . . . . . . . . . . . . . . . 24
11.3. Effect of Termination . . . . . . . . . . . . . . . . . 25
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Counterparts. . . . . . . . . . . . . . . . . . . . . . 25
12.2. Entire Agreement. . . . . . . . . . . . . . . . . . . . 25
12.3. Partial Invalidity. . . . . . . . . . . . . . . . . . . 25
12.4. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 25
12.5. Governing Law. . . . . . . . . . . . . . . . . . . . . . 25
12.6. Waiver. . . . . . . . . . . . . . . . . . . . . . . . 25
12.7. Further Assurances. . . . . . . . . . . . . . . . . . . 26
12.8. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 26
12.9. Survival of Obligations . . . . . . . . . . . . . . . . 26
12.10. Successors and Assigns . . . . . . . . . . . . . . . . . 27
12.11. Confidential Nature of Information . . . . . . . . . . . 27
12.12. Informal Dispute Resolution . . . . . . . . . . . . . . 27
12.13. Arbitration . . . . . . . . . . . . . . . . . . . . . . 28
12.14. Judicial Procedure . . . . . . . . . . . . . . . . . . . 31
12.15. Amendment of Alliance Agreement . . . . . . . . . . . . 31
ANNEXES
ANNEX I - Definitions
EXHIBITS
EXHIBIT A - Form of Operating Agreement
EXHIBIT B - Related Party Transactions
EXHIBIT C - List of Schedules
EXHIBIT D - Knowledge of Bank One
EXHIBIT E - Other Alliances
EXHIBIT F - Intentionally Omitted
EXHIBIT G - Form of Revised Processing Agreement - Additional Terms
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT, dated as of March 22, 1999 (this
"Agreement"), between First Data Corporation, a Delaware corporation
("FDC"), and BANK ONE CORPORATION, a Delaware corporation ("Bank One").
W I T N E S E T H:
WHEREAS, First Data Merchant Services Corporation, a Florida
corporation ("FDMS") and wholly owned subsidiary of FDC (successor to Card
Establishment Services, Inc.), First Data Resources Inc., a Delaware
corporation ("FDR") and wholly owned subsidiary of FDC, and Banc One POS
Services Corporation, an Ohio corporation ("Banc One POS") and wholly owned
subsidiary of Bank One, entered into an Alliance Agreement dated June 15,
1995, as amended on January 10, 1996 (the "Alliance Agreement");
WHEREAS, FDMS, Banc One POS, and Banc One Payment Services
L.L.C., a Delaware limited liability company (the "Alliance") have entered
into a Limited Liability Company Agreement dated January 10, 1996, as
amended on December 31, 1996 (the "Formation Agreement");
WHEREAS, Bank One, through its wholly-owned subsidiary, First USA
Financial, Inc., a Delaware corporation ("FUSA"), holds approximately 55%
of the issued and outstanding common stock of Paymentech, Inc., a Delaware
corporation ("Alpha");
WHEREAS, FDC proposes to negotiate and enter into, or cause an
Affiliate to enter into, an agreement of merger (the "Merger Agreement")
with Alpha pursuant to which all the issued and outstanding common stock of
Alpha not owned, directly or indirectly, by Bank One will be acquired by
such Affiliate (the "Merger"), and FDC and Bank One propose to negotiate
and enter into, or cause an Affiliate to enter into a stockholders
agreement (the "Stockholders Agreement") governing certain actions of FDC,
Bank One and/or certain of their Affiliates relative to Alpha and certain
Affiliates of Alpha;
WHEREAS, following the Merger, FDC and Bank One desire to cause
the assets and liabilities and business operations of Alpha to be
contributed to the Alliance in exchange for a Membership Interest, as
defined in the Operating Agreement (as defined herein), in the Alliance;
WHEREAS, upon the Closing, as hereinafter defined, FDC and Bank
One shall cause the members of the Alliance, including Alpha, to enter into
an amended and restated limited liability company agreement (the "Operating
Agreement") in the form attached hereto as Exhibit A;
WHEREAS, in recognition of the additional capabilities that the
Alliance will have upon the contribution to the Alliance of the assets and
business of Alpha, upon the Closing, FDC and Bank One shall cause the
Alliance and FDMS to execute an amended and restated processing agreement
(the "Revised Processing Agreement") in the form of the agreement dated as
of March 22, 1999 between FDMS and Paymentech Merchant Services, Inc.,
except for such changes necessary to reflect the appropriate parties
thereto and except as described on Exhibit G attached hereto;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. In this Agreement, unless the context shall
otherwise require, the capitalized terms used herein shall have the
respective meanings specified or referred to in Annex I hereto, which is
incorporated by reference herein. Each agreement referred to in Annex I
shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and
hereof.
1.2. INTERPRETATION. Each definition contained or referred to
in this Agreement includes the singular and the plural, and reference to
the neuter gender includes the masculine and feminine where appropriate.
References to any statute or regulation means such statute or regulations
as amended at the time and includes any successor legislation or
regulations. The headings to the Articles and Sections are for convenience
of reference and shall not affect the meaning or interpretation of this
Agreement. Except as otherwise stated, reference to Articles, Sections,
Exhibits and Schedules means the Articles, Sections, Exhibits and Schedules
of this Agreement. The Exhibits and Schedules are hereby incorporated by
reference into and shall be deemed a part of this Agreement.
ARTICLE II
PRELIMINARY TRANSACTIONS
2.1. DIVESTITURE OF EXCLUDED ASSETS. Upon the terms and subject
to the conditions of this Agreement, Bank One and FDC shall cause the spin-
off, sale or other disposition of the capital stock or, at the election of
Bank One, the assets and liabilities of First USA Financial Services, Inc.,
a Utah industrial loan company ("FUFSI"), and the capital stock of Message
Media, Inc., a Delaware corporation ("Message Media"). With respect to
FUFSI, such spin-off, sale or divestiture shall occur promptly following
the consummation of the Merger and in any event prior to the Closing Date
unless such spin-off, sale or other disposition shall have been previously
effected with the consent of FDC. With respect to Message Media, such
spin-off, sale or divestiture shall occur as soon as practical after the
date hereof and in any event prior to the Closing Date. Such spin-off,
sale or other disposition of FUFSI shall be for a net aggregate
consideration to Alpha as shall be mutually agreed upon by FDC and Bank One
or, if FDC and Bank One are not able to agree, for such net aggregate
consideration as shall be determined pursuant to the Appraisal Procedure.
Such spin-off, sale or other disposition of Message Media shall be for a
net aggregate consideration to Alpha realized from the sale of such stock
in the open market.
2.2. SUBSIDIARIES OF ALPHA. Upon the terms and subject to the
conditions of this Agreement, unless Bank One and FDC shall mutually agree
to the contrary, Bank One and FDC shall make appropriate mutually agreeable
arrangements to retain the Subsidiaries of Alpha in existence as
Subsidiaries of Alpha after the Closing or, if mutually agreed, to merge or
otherwise combine one or more such Subsidiaries into or with one or more
other such Subsidiaries, and in each case thereafter cause the assets,
liabilities and business of each surviving Subsidiary to be contributed
(directly or indirectly) to the Alliance in exchange for a Membership
Interest, as defined in the Operating Agreement, in the Alliance.
References herein to Alpha shall, where appropriate, be deemed to be
references to Alpha and each surviving Subsidiary of Alpha.
ARTICLE III
CLOSING
3.1. TIME AND PLACE OF CLOSING. Subject to the terms and
conditions set forth herein, the closing of the transactions contemplated
hereby (the "Closing") shall take place at 10:00 a.m. central time on the
third Banking Day following the satisfaction of the closing conditions
specified in Article V or such later date as may be agreed upon by the
parties hereto after the conditions set forth in Article V have been
satisfied or waived,(the "Closing Date"), at the offices of Sidley &
Austin, Chicago, Illinois, or at such other time and place as the parties
hereto shall agree. All of the actions scheduled in this Agreement for the
Closing Date taken or occurring on the Closing Date shall be deemed to
occur simultaneously thereon.
3.2. EXECUTION AND/OR AMENDMENT OF AGREEMENTS. Upon the terms
and subject to the conditions of this Agreement, on the Closing Date, Bank
One and FDC, respectively, shall cause each of the agreements listed in
Section 5.5 to be executed and delivered by the appropriate parties
thereto.
3.3. CONTRIBUTION OF SPECIFIED ASSETS AND LIABILITIES. Upon the
terms and subject to the conditions of this Agreement, on the Closing Date,
FDC and Bank One, respectively, shall cause the Contributed Assets and the
Assumed Liabilities to be transferred to the Alliance as set forth in
Article IV and shall cause the Alliance to assume all such Assumed
Liabilities.
3.4. ALPHA DELIVERIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Bank One and FDC,
respectively, shall cause Alpha to deliver to the Alliance all of the
following:
(a) Certified copies of resolutions of the stockholders and the
Board of Directors of Alpha authorizing the transactions contemplated
hereby;
(b) An instrument of assignment and assumption in form and
substance reasonably satisfactory to Bank One and FDC (the "Instrument
of Assignment and Assumption" );
(c) Certificates of title or origin (or like documents) with
respect to any of the Contributed Assets for which a certificate of
title or origin is required in order to transfer title;
(d) Any consents, waivers or approvals obtained by Alpha with
respect to the Contributed Assets or the consummation of the
transactions contemplated by this Agreement; and
(e) Such other bills of sale, assignments and other instruments
of transfer or conveyance as either Bank One or FDC may reasonably
request or as may otherwise be necessary to evidence and effect the
assignment, transfer, conveyance and delivery of the Contributed
Assets by Alpha to the Alliance.
3.5. ALLIANCE DELIVERIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Bank One and FDC,
respectively, shall cause the Alliance to deliver to Alpha all of the
following:
(a) The Instrument of Assignment and Assumption;
(b) Such other instruments as either Bank One or FDC may
reasonably request or as may be otherwise necessary to evidence or
effect the assumption by the Alliance of the Assumed Liabilities
In addition to the foregoing, on the Closing Date, Alpha will receive a
Membership Interest (as such term is defined in the Operating Agreement) in
the Alliance as described in Section 4.2 of the Operating Agreement. Bank
One and FDC agree that Alpha will be acquiring its Membership Interest for
its own account for investment and with no present intention of
distributing or reselling such Membership Interest or any part thereof.
Alpha will be fully informed as to the applicable limitations upon any
distribution or resale of the Membership Interest, which will not be
registered pursuant to the Securities Act. Bank One and FDC will cause
Alpha to agree not to distribute or resell all or any portion of the
Membership Interest if such distribution or resale would constitute a
violation of the Securities Act by either Alpha or the Alliance.
3.6. OTHER DELIVERIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Bank One and FDC shall
cause their respective Affiliates to deliver to the other party such
additional documents and instruments, including certified copies of
corporate charters or comparable documents, by-laws, resolutions or other
items, as either party may reasonably request.
3.7. CONSENTS TO ASSIGNMENT. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any contract or agreement, or any claim or right or any benefit
arising thereunder or resulting therefrom, if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a
breach thereof or would in any way adversely affect the rights of the
Alliance thereunder. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect the rights
thereunder so that the Alliance would not receive all such rights, Bank One
and FDC will cause Alpha and the Alliance to cooperate, in all reasonable
respects, to obtain such consent as soon as practicable and, until such
consent is obtained, to provide to the Alliance the benefits under any of
the foregoing to which such consent relates (with the Alliance responsible
for all the liabilities and obligations thereunder). In particular, in the
event that any such consent is not obtained prior to the Closing Date, then
Bank One and FDC will cause Alpha and the Alliance to enter into such
arrangements (including subleasing or subcontracting if permitted) to
provide to all parties the economic and operational equivalent of obtaining
such consents and assigning such contract or agreement, including the
enforcement for the benefit of the Alliance of all claims or rights arising
thereunder, and the performance by the Alliance of the obligations
thereunder.
3.8. CLOSING COSTS; TRANSFER FEES. The cost of any surveys,
title reports or title searches, and the recording or filing of all
applicable conveyancing instruments incurred by reason of the transfer of
Contributed Assets to the Alliance will be paid by Alpha upon the Closing.
ARTICLE IV
CONTRIBUTION OF ASSETS
AND LIABILITIES OF ALPHA
4.1. CONTRIBUTION ASSETS. On the Closing Date and upon the
terms and subject to the conditions of this Agreement including Section
3.7, FDC and Bank One shall cause Alpha, and each surviving Subsidiary
under Section 2.2, to (and on or prior to the Closing Date FDC and Bank One
shall cause Alpha, and each surviving Subsidiary under Section 2.2, on its
own behalf, to agree in writing with the Alliance upon such terms and
subject to such conditions, to) assign, transfer, convey and deliver unto
the Alliance, on a going concern basis, all of the business and operations
of Alpha, and each such Subsidiary, and all of the assets and properties of
Alpha, and each such Subsidiary, of every kind and description, wherever
located, real, personal and mixed, tangible and intangible (other than
Excluded Assets) as the same shall exist on the Closing Date (the
"Contributed Assets"), including, without limitation, all right, title and
interest of Alpha, and each such Subsidiary, under, to and in:
(a) cash and cash equivalents;
(b) assets reflected on the balance sheet of Alpha, and
each such Subsidiary, as of December 31, 1998, except for those
assets disposed of subsequent to such date;
(c) Personal Property;
(d) Accounts Receivable and Inventory;
(e) any Owned Real Property;
(f) Leased Real Property and leasehold improvements;
(g) Capital Stock of Subsidiaries of Alpha, if mutually
agreed by Bank One and FDC;
(h) any Investments;
(i) Contracts including without limitation Merchant
Agreements;
(j) goodwill together with all customer lists, processes,
manuals, know how and other proprietary information;
(k) owned Intellectual Property and Software, and the contracts,
licenses, sublicenses, assignments, indemnities and other agreements
with third parties related thereto;
(l) licensed Intellectual Property and Software, and the
contracts, licenses, sublicenses, assignments, indemnities and other
agreements with third parties related thereto;
(m) telephone, telex, telephone facsimile numbers and other
directory listings, web sites and Internet domain names;
(n) any rights, claims or causes of action against third
Persons;
(o) any Governmental Permits;
(p) Insurance Policies;
(q) books, files, reports, records, correspondence, documents
and other material including, without limitation, supplier lists and
customer files, payroll and personnel records and financial, sales and
purchasing records; and
(r) all other assets owned by Alpha on the Closing Date except
for the Excluded Assets.
4.2. EXCLUDED ASSETS. Notwithstanding the provisions of
Section 4.1, the Contributed Assets shall not include the capital stock of
FUFSI or the capital stock of Message Media (herein referred to as the
"Excluded Assets").
4.3. ASSUMED LIABILITIES. On the Closing Date and upon the
terms and subject to the conditions of this Agreement, FDC and Bank One
shall cause the Alliance to (and on or prior to the Closing Date FDC and
Bank One shall cause Alpha, and each surviving Subsidiary under Section
2.2, on its own behalf, to enter into an agreement with the Alliance
causing the Alliance, upon such terms and subject to such conditions, to)
assume and be obligated to pay, perform and otherwise discharge all
liabilities and obligations of Alpha, and each such Subsidiary, direct or
indirect, known or unknown, absolute or contingent (other than the Excluded
Liabilities) (the "Assumed Liabilities"), including, without limitation:
(a) accounts payable and other accrued liabilities and
obligations that are reflected on the balance sheet of Alpha, and each
such Subsidiary, as of December 31, 1998 and similar liabilities and
obligations incurred subsequent to such date;
(b) all liabilities in respect of any pending or threatened
action, suit, or proceeding against Alpha or any such Subsidiary;
(c) Chargebacks and credit losses;
(d) liabilities in respect of Taxes;
(e) contingent liabilities; and
(f) liabilities and obligations under the Contracts.
4.4. EXCLUDED LIABILITIES. Notwithstanding the provisions of
Section 4.3, the Alliance shall not assume or be obligated to pay, perform
or otherwise discharge liabilities or obligations of Alpha or any such
Subsidiary in respect of the Excluded Assets (all such liabilities and
obligations not being assumed by the Alliance being herein referred to as
the "Excluded Liabilities").
ARTICLE V
CONDITIONS TO CLOSING
The obligations of the parties hereto to consummate the
transactions contemplated by this Agreement to occur at the Closing shall
be subject to the satisfaction, or waiver by the appropriate party or
parties, on or prior to the Closing Date of the following conditions
precedent (except that the obligation of any party shall not be subject to
such party's own performance or compliance):
5.1. ILLEGALITY, ETC. No change shall have occurred as of the
Closing Date in applicable Requirements of Laws that in the reasonable
opinion of any party would make it illegal for it to participate in any of
the transactions contemplated to occur at the Closing.
5.2. LITIGATION. No action, proceeding or investigation shall
have been instituted, nor shall action before any court or Governmental
Body be threatened, which in the opinion of counsel for FDC or Bank One is
not frivolous, nor shall any order, judgment or decree have been issued or
proposed to be issued by any court or Governmental Body, at the time of the
Closing Date to modify, set aside, invalidate, restrain, enjoin or prevent
the consummation of this Agreement, the Operating Agreement, the Revenue
Sharing Agreement, the Revised Processing Agreement or the transactions
contemplated herein or therein.
5.3. CONSENTS AND APPROVALS. (a) All actions, approvals,
consents, waivers, exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses (other than any thereof that are
routine in nature and that cannot be obtained, or that are not normally
applied for, prior to the time they are required and that FDC or Bank One,
as the case may be, does not have any reason to believe any difficulty will
be encountered in obtaining) required to be taken, given or obtained, as
the case may be, by or from any Governmental Body, that are necessary in
connection with the consummation of the transactions contemplated by this
Agreement, the Operating Agreement, the Revenue Sharing Agreement and the
Revised Processing Agreement shall have been duly taken, given or obtained,
as the case may be, and shall be in full force and effect on the Closing
Date.
(b) Notwithstanding the foregoing, the waiting period under the
HSR Act, if applicable, shall have expired or been terminated.
5.4. MERGER. The Merger shall have been consummated.
5.5. OTHER AGREEMENTS. The following agreements shall have been
duly authorized, executed and delivered by the respective party or parties
thereto, or shall have been received by a party hereto, shall each be
satisfactory in form and substance to each such party and shall be in full
force and effect, and executed counterparts shall have been delivered to
each such party and its respective counsel:
(a) this Agreement;
(b) the Operating Agreement;
(c) the Revised Processing Agreement;
(d) the Revenue Sharing Agreement; and
(e) a guaranty of Bank One, N.A., Columbus, Ohio and a guaranty
of FDC in form and substance mutually agreeable to Bank One
and FDC, it being understood that such guaranties will cover
only the obligations of the members under the Operating
Agreement and that the enforcement of such guaranties shall
not require as a pre-condition obtaining a judgment against
the primary obligor.
5.6. DIVESTITURE OF UNRELATED ASSETS. The transactions
contemplated by Section 2.1 hereof shall have occurred.
5.7 RESOLUTIONS, CERTIFICATES, ETC. Each party hereto shall
have received, in form and substance reasonably satisfactory to it,
(a) a copy of resolutions of the Board of Directors of each
party (other than FDC and Bank One) to any of the agreements referred to in
Section 5.5, certified as of the Closing Date by the Secretary or an
Assistant Secretary thereof, duly authorizing the execution, delivery and
performance by such party, respectively, of each such agreement to which it
is a party, together with an incumbency certificate as to the person or
persons authorized to execute and deliver such documents on its behalf; and
(b) such other documents and evidence with respect to FDC or
Bank One and each other party to any of the agreements referred to in
Section 5.5 as FDC or Bank One or their respective counsel may reasonably
request in order to consummate the transactions contemplated hereby, the
taking of all corporate proceedings in connection therewith and compliance
with the conditions herein.
5.8. OPINIONS OF COUNSEL. The following opinions of legal
counsel, dated the Closing Date, shall have been delivered:
(a) Opinion of Counsel for FDC. Opinion from Michael T. Whealy,
general counsel of FDC, addressed to Bank One in form and substance
reasonably satisfactory to Bank One.
(b) Opinion of Counsel for Bank One. Opinion from Sherman I.
Goldberg, General Counsel for Bank One, addressed to FDC in form and
substance reasonably satisfactory to FDC.
5.9. ACCOUNTING. (a) On or prior to the Closing Date, Bank One
shall request a formal written opinion of Arthur Andersen LLP to the effect
that the transactions contemplated by this Agreement, the Operating
Agreement and the Merger Agreement (and identified in such opinion) will
not adversely affect "pooling of interests" accounting treatment for any
then publicly announced or completed transaction by Bank One or any
Affiliate assuming any changes to the Operating Agreement that would be
reasonably acceptable to Bank One. In the event that Arthur Andersen LLP
will not issue the formal written opinion described in the preceding
sentence, Bank One will request Arthur Andersen LLP provide to Bank One and
FDC the basis for its inability to deliver such opinion, such basis to be
given orally or in writing in reasonable detail. If Bank One fails to
receive a written opinion as described in the first sentence of this
Section 5.9(a), Bank One shall not be obligated to close the transaction
contemplated by this Agreement, it being understood that the condition set
forth in such first sentence shall be subsequently deemed satisfied if Bank
One shall receive a subsequent formal written opinion of Arthur Andersen
LLP in form and substance satisfactory to Bank One that the transactions
contemplated by this Agreement, the Operating Agreement and the Merger
Agreement will not adversely affect "pooling of interests" accounting
treatment for any then publicly announced or completed transaction by Bank
One or any Affiliate.
(b) On or prior to the Closing Date, FDC shall request a formal
written opinion of Ernst & Young LLP to the effect that the transactions
contemplated by this Agreement, the Operating Agreement and the Merger
Agreement (and identified in such opinion) will not adversely affect
"pooling of interests" accounting treatment for any then publicly announced
or completed transaction by FDC or any Affiliate assuming any changes to
the Operating Agreement that would be reasonably acceptable to FDC. In the
event that Ernst & Young LLP will not issue the formal written opinion
described in the preceding sentence, FDC will request Ernst & Young LLP
provide to Bank One and FDC the basis for its inability to deliver such
opinion, such basis to be given orally or in writing in reasonable detail.
If FDC fails to receive a written opinion as described in the first
sentence of this Section 5.9(b), FDC shall not be obligated to close the
transaction contemplated by this Agreement, it being understood that the
condition set forth in such first sentence shall be subsequently deemed
satisfied if FDC shall receive a subsequent formal written opinion of Ernst
& Young LLP in form and substance satisfactory to FDC that the transactions
contemplated by this Agreement, the Operating Agreement and the Merger
Agreement will not adversely affect "pooling of interests" accounting
treatment for any then publicly announced or completed transaction by FDC
or any Affiliate.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. REPRESENTATIONS AND WARRANTIES OF BANK ONE AND BANK ONE
AFFILIATES. As an inducement to FDC to enter into this Agreement, and to
cause one of its Affiliates to enter into the Operating Agreement, the
Revenue Sharing Agreement and the Revised Processing Agreement, and to
consummate the transactions contemplated hereby and thereby, Bank One
represents and warrants to FDC and agrees as follows except as may be
otherwise provided in the Confidential Disclosure letter of Bank One
attached hereto:
(a) Organization, Corporate Power, Etc. Bank One is a bank
holding company duly organized and validly existing as a corporation under
the laws of the State of Delaware. Each Bank One Affiliate (other than
Alpha and its Subsidiaries) that will be a party to any of the agreements
contemplated by this Agreement is a corporation or other entity duly
organized and validly existing under the laws of its respective
jurisdiction of organization. Bank One is duly licensed or qualified to do
business as a foreign corporation in all of the jurisdictions in which Bank
One is required to be so licensed or qualified with respect to the
Alliance, except where the failure to be so licensed or qualified would not
have a material adverse effect on the operations or financial condition of
the Alliance. Bank One and each of its Affiliates (other than Alpha and
its Subsidiaries) that will be performing obligations under any other
agreement contemplated by this Agreement, has all requisite corporate power
and authority to own, operate and lease its assets and to carry on its
business as it is now being conducted except where the failure to have such
power and authority would not have a material adverse effect on the
operations or financial condition of Bank One or the applicable Affiliate,
and Bank One and each such Affiliate has all requisite corporate power and
authority to perform its respective obligations hereunder and thereunder.
(b) Authority of Bank One. Bank One and each of its applicable
Affiliates (other than Alpha and its Subsidiaries) has full power and
authority to execute, deliver and perform this Agreement, the Operating
Agreement, the Revenue Sharing Agreement, the Revised Processing Agreement
and any other agreement contemplated hereby to which Bank One or such
applicable Affiliate is a party. The execution, delivery and performance
of this Agreement, the Operating Agreement, the Revenue Sharing Agreement,
the Revised Processing Agreement and any other agreement contemplated
hereby by Bank One or such Affiliate have been duly authorized and approved
by Bank One or such Affiliate, as the case may be, and do not require any
further authorization or consent of Bank One, any such Affiliate or their
respective boards of directors or stockholders. This Agreement has been,
and the Operating Agreement, the Revenue Sharing Agreement and the Revised
Processing Agreement will be, duly authorized, executed and delivered by
Bank One or such Affiliate and are or will be upon execution, the legal,
valid and binding obligations of Bank One or such Affiliate enforceable in
accordance with its terms.
Neither the execution and delivery of this Agreement, the
Operating Agreement, the Revenue Sharing Agreement, the Revised Processing
Agreement or any other agreement contemplated hereby, or the consummation
of any of the transactions contemplated hereby or thereby nor compliance
with or fulfillment of the terms, conditions and provisions hereof or
thereof will (i) conflict with, violate, result in a breach of, or
constitute a default under the charter or By-laws of Bank One or any such
Affiliate, (ii) conflict with (A) any Court Order to which Bank One or any
such Affiliate is a party or by which Bank One or any such Affiliate is
bound, or (B) any Requirements of Laws affecting Bank One or any such
Affiliate, or (iii) conflict with or violate in any material manner or
result in a material breach of, or constitute a material default under any
material note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to which
Bank One or any such Affiliate is a party or by which Bank One or any such
Affiliate is bound.
(c) Consents and Approvals. Except for such consents, approvals
or authorizations to be applied for under the HSR Act or as may be required
under licenses or other agreements relating to the Alliance, if any, no
consent, approval or authorization of, or declaration, filing or
registration with, or notice to, or order or action of, any court,
administrative agency or other Governmental Body or any other Person
(including, without limitation, any financial institution or Card
Association) is required to be made or obtained by Bank One or any of its
Affiliates (excluding Alpha and its Subsidiaries) in connection with the
execution and delivery by Bank One or any such Affiliate of this Agreement,
the Operating Agreement, the Revenue Sharing Agreement, the Revised
Processing Agreement or any other agreement contemplated hereby, the
consummation by Bank One of the transactions contemplated hereby or thereby
and the performance by Bank One or any such Affiliate of its obligations
contained herein or therein.
(d) Card Association Rules. To the best of Bank One's
knowledge, Bank One or its applicable clearing affiliate is, and, since
January 1, 1998 has been, in substantial compliance with all applicable
Card Association rules, by-laws and regulations and has received no notice
of any material violations thereof.
(e) Financial Statements of Alpha. Bank One has no knowledge
that (i) the audited balance sheets of Alpha as of June 30, 1998 and 1997
and the related statements of income and cash flows for the years then
ended, together with the appropriate notes to such financial statements, or
(ii) the unaudited balance sheet of Alpha as of September 30, 1998 and 1997
and the related statements of income and cash flows for the three months
then ended have not been prepared in conformity with generally accepted
accounting principles consistently applied, or do not fairly present the
financial position and results of operations of Alpha as of their
respective dates and for the respective periods covered thereby, except as
set forth therein or in the notes thereto.
(f) Changes Since September 30, 1998. Bank One has no knowledge
that since September 30, 1998, (i) there has been any material adverse
change in the Contributed Assets or the business or operations,
liabilities, profits, prospects or condition (financial or otherwise) of
Alpha or (ii) Alpha has not generally conducted its business in the
ordinary course and in conformity with past practice.
(g) No Broker or Finder. No broker, finder or investment banker
is entitled to any fee or commission from Bank One or any of its Affiliates
in connection with the transactions contemplated by this Agreement, the
Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement, but not including the transactions contemplated by
the Merger Agreement.
(h) Knowledge of Bank One. As used in this Agreement, knowledge
of Bank One when used in phrases such as "Bank One has no knowledge", "to
the best of Bank One's knowledge" or similar phrases shall be limited to
actual knowledge of the officers and employees of Bank One identified on
Exhibit D hereto.
6.2. REPRESENTATIONS AND WARRANTIES OF FDC AND FDC AFFILIATES.
As an inducement to Bank One to enter into this Agreement, and to cause one
of its Affiliates to enter into the Operating Agreement, the Revenue
Sharing Agreement and the Revised Processing Agreement and to consummate
the transactions contemplated hereby and thereby, FDC represents and
warrants to Bank One and agrees as follows:
(a) Organization, Corporate Power, Etc. FDC and each of its
Affiliates that will be a party to any of the agreements contemplated
hereby is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and
is duly licensed or qualified to do business as a foreign corporation in
all of the jurisdictions in which such entity is required to be so licensed
or qualified, except where the failure to be so licensed or qualified would
not have a material adverse effect on the operations or financial condition
of the Alliance. FDC has all requisite corporate power and authority to
own, operate and lease its assets and to carry on its business as it is now
being conducted except where failure to have such power and authority would
not have a material adverse effect on the operations or financial condition
of FDC or the applicable Affiliate, and FDC and each of its Affiliates that
will be performing obligations under this Agreement, the Operating
Agreement, the Revenue Sharing Agreement, the Revised Processing Agreement
or any other agreement contemplated hereby has all requisite corporate
power and authority to perform its obligations hereunder and thereunder.
(b) Authority of FDC. FDC and each of its applicable Affiliates
has full power and authority to execute, deliver and perform this
Agreement, the Operating Agreement, the Revenue Sharing Agreement, the
Revised Processing Agreement and any other agreement contemplated hereby to
which FDC or such applicable Affiliate is a party. The execution, delivery
and performance of this Agreement, the Operating Agreement, the Revenue
Sharing Agreement, the Revised Processing Agreement and any other
agreements contemplated hereby by FDC or such Affiliate have been duly
authorized and approved by the Board of Directors of FDC or such Affiliate,
as the case may be, and do not require any further authorization or consent
of FDC, any of its Affiliates or their respective stockholders. This
Agreement has been, and the Operating Agreement, the Revenue Sharing
Agreement and the Revised Processing Agreement will be, duly authorized,
executed and delivered by FDC or such Affiliate and are or will be upon
execution, the legal, valid and binding obligations of FDC or such
Affiliate enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement, the
Operating Agreement, the Revenue Sharing Agreement, the Revised Processing
Agreement or any other agreement contemplated hereby, or the consummation
of any of the transactions contemplated hereby or thereby nor compliance
with or fulfillment of the terms, conditions and provisions hereof or
thereof will (i) conflict with, violate, result in a breach of, or
constitute a default under (1) the charter or By-laws of FDC or any such
Affiliate,(2) any Court Order to which FDC or any such Affiliate is a party
or by which FDC or any such Affiliate is bound, or (3) any Requirements of
Laws affecting FDC or any such Affiliate, or (ii) conflict with or violate
in any material manner, or result in a material breach of, or constitute a
material default under any material note, instrument, agreement, mortgage,
lease, license, franchise, permit or other authorization, right,
restriction or obligation to which FDC or any such Affiliate is a party or
by which FDC or any such Affiliate is bound.
(c) Consents and Approvals. Except for such consents, approvals
or authorizations to be applied for under the HSR Act or as may be required
under licenses or other agreements relating to the Alliances, if any, no
consent, approval or authorization of, or declaration, filing or
registration with, or notice to, or order or action of, any court,
administrative agency or other Governmental Body or any other Person
(including, without limitation, any financial institution or Card
Association) is required to be made or obtained by FDC or any of its
Affiliates in connection with the execution and delivery by FDC or any of
its Affiliates of this Agreement, the Operating Agreement, the Revenue
Sharing Agreement, Revised Processing Agreement or any other agreement
contemplated hereby, the consummation by FDC or any of its Affiliates of
the transactions contemplated hereby or thereby and the performance by FDC
or any of its Affiliates of its obligations contained herein or therein.
(d) Card Association Rules. To the best of FDC's knowledge, FDC
or any of its applicable Affiliates is, and, since January 1, 1998 has
been, in substantial compliance with all applicable Card Association rules,
by-laws and regulations and has received no notice of any material
violations thereof.
(e) Other Alliances. Attached hereto as Exhibit E is a brief
description of the material terms and provisions of all existing
restrictions binding on FDMS or any of its Affiliates that would prohibit,
restrict or limit the right of FDMS or any such Affiliate to transfer
Merchant Agreements to the UMS portfolio as contemplated by Section 4.8 of
the Operating Agreement.
(f) No Broker or Finder. No broker, finder or investment banker
is entitled to any fee or commission from FDC or any of its Affiliates in
connection with the transactions contemplated by this Agreement, the
Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement, but not including the transactions contemplated by
the Merger Agreement.
ARTICLE VII
SCHEDULES OF ALPHA ASSETS AND LIABILITIES
Prior to the Closing Date, FDC and Bank One shall cooperate in
the preparation of Schedules referred to in Exhibit C, which Schedules are
intended to be complete lists of the assets, properties, contracts and
other data of Alpha and its Subsidiaries to the best knowledge of FDC and
Bank One, respectively, identified in such Schedules.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. REASONABLE ACCESS. Between the date hereof and the Closing
Date, Bank One shall use reasonable efforts to cause Alpha and its
Subsidiaries to make available to the employees, agents and representatives
of FDC or its Affiliates, at reasonably acceptable times and at locations
reasonably acceptable and accessible, the books and records of Alpha and
its Subsidiaries and allow employees, agents and representatives of FDC to
discuss the business of Alpha with certain key employees of Alpha and its
Subsidiaries to facilitate the Merger and transfer of the Contributed
Assets and to determine whether the conditions set forth in Article V or in
the Merger Agreement have been satisfied.
8.2. ACCURACY OF REPRESENTATIONS AND WARRANTIES. Between the
date hereof and the Closing Date, each of FDC and Bank One will use
reasonable efforts not to take any action or omit to take any action, and
to cause its Affiliates (excluding Alpha and its Subsidiaries) not to take
any action or omit to take any action, that would result in its respective
representations or warranties contained in Article VI of this Agreement,
the Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement not being true and correct as of the Closing Date.
Each party shall promptly notify the other of the receipt of any written
notice regarding any action, suit or proceeding that shall be instituted or
threatened against such party to restrain, prohibit or otherwise challenge
the legality of any transactions contemplated by this Agreement.
8.3. EFFORTS TO CONSUMMATE. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to negotiate in good
faith with respect to the terms of the Merger Agreement and the Stockholder
Agreement, and upon the execution of the Merger Agreement and the
Stockholder Agreement agrees to use reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable to consummate, as promptly as practicable, the
transactions contemplated hereby, in the Operating Agreement, in the
Revenue Sharing Agreement and in the Revised Processing Agreement
including, but not limited to, the obtaining of all necessary consents,
waivers, authorizations, orders and approvals of third parties, whether
private or governmental, required of it by this Agreement, the Operating
Agreement, the Revenue Sharing Agreement or the Revised Processing
Agreement; provided, however, that Bank One and FDC shall each have
complete discretion with respect to determining the amount and type of
consideration to be offered for the outstanding Common Stock of Alpha in
the Merger not owned by FDC or an Affiliate of Bank One; provided, further,
that neither FDC nor Bank One shall be required to make any payments (other
than customary administrative and processing fees and reasonable legal
expenses), commence litigation or agree to any material modifications to
the terms of any Contracts, Real Property Leases or Permits in connection
with the foregoing. Each of FDC and Bank One agrees to cooperate fully
with the other in assisting it to comply with the provisions of this
Section 8.3.
8.4. NO PUBLIC ANNOUNCEMENT. Neither FDC nor Bank One shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement,
the Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement, except as and to the extent that any such party shall
be so obligated by law or the rules of any stock exchange, in which case
the other party shall be advised and the parties shall use their best
efforts to cause a mutually agreeable release or announcement to be issued;
provided that the foregoing shall not preclude communications or
disclosures necessary to implement the provisions of this Agreement, the
Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement or to comply with the accounting and Securities and
Exchange Commission disclosure obligations.
8.5. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally, by courier or facsimile transmission
or mailed (first class postage prepaid) to the parties at the addresses or
facsimile numbers set forth below:
If to Bank One, to:
BANK ONE CORPORATION
Law Department
Mail Suite 0287
Chicago, Illinois 60670
Attention: Daniel P. Cooney
Telecopy Number: 312-732-3596 or
312-732-9753
If to FDC, to:
First Data Corporation
5660 New Northside Dr.
Suite 1400
Atlanta, GA 30328
Attention: General Counsel
Telecopy Number: 770-857-0414
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: John M. O'Hare
Telecopy Number: 312-853-7036
The parties hereto agree that delivery of any copy shall not, by
itself, be considered notice pursuant to this Section 8.5.
All such notices and other communications will (x) if delivered
personally or by courier to the address provided in this Section 8.5, be
deemed given upon delivery, (y) if delivered by facsimile transmission to
the facsimile number provided in this Section 8.5, be deemed given when
receipt of transmission has been electronically confirmed by the sending
party, and (z) if delivered by first class or registered mail in the manner
described above to the address as provided in this Section 8.5, be deemed
given three (3) Banking Days after deposit in the United States mail (in
each case regardless of whether such notice, request or other communication
is received by any other Person to whom a copy of such notice is to be
delivered pursuant to this Section 8.5). Any party from time to time may
change its address, facsimile number or other information for the purpose
of notices to that party by giving notice specifying such change to the
other party.
8.6 NOTIFICATION OF CERTAIN MATTERS. From the date hereof
through the Closing Date, Bank One and FDC shall give prompt notice to the
other of (a) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any of such party's
representations or warranties contained in this Agreement, the Operating
Agreement, the Revenue Sharing Agreement, or the Revised Processing
Agreement to be untrue or inaccurate in any material respect, and (b) any
failure of such party to comply with or satisfy in any material respect any
of its respective covenants, conditions or agreements to be complied with
or satisfied by it under this Agreement, the Operating Agreement, the
Revenue Sharing Agreement, or the Revised Processing Agreement; provided,
however, that such disclosure shall not be deemed to cure any breach of a
representation, warranty, covenant or agreement, or to satisfy any
condition.
8.7. CARD ASSOCIATION APPROVALS. Bank One and FDC shall give or
cause to be given to each applicable Card Association all notices required
in connection with the transaction contemplated hereby.
8.8. RELATED PARTY TRANSACTIONS. Prior to the Closing Date, Bank
One shall and shall cause Alpha to prepare the information required by
Exhibit B.
8.9. OPERATIONS PRIOR TO CLOSING DATE. Except as set forth on
Schedule 8.9 and subject to the matters contemplated by this Agreement, the
Merger Agreement, the Revised Processing Agreement and the Stockholders
Agreement, between the date hereof and the Closing Date, Bank One and FDC
shall use reasonable efforts to cause Alpha to conduct its business only in
the ordinary course and in conformity with past practice.
8.10. INTERCOMPANY AGREEMENTS. Bank One agrees to, or to cause
its appropriate Affiliates to, (i) terminate the tax sharing agreement
between FUSA and Alpha to the extent the parties reasonably agree portions
thereof should be terminated, (ii) terminate the registration rights
agreement between Bank One and Alpha, (iii) enter into agreements with
respect to the provision to Alpha of office space in Dallas, Texas, certain
insurance coverage and a license to use the name "First USA" and certain
other trademarks and such other services as Bank One or one of its
Affiliates are providing to Alpha or its Affiliates on economic terms
consistent with arrangements in effect prior to the Closing (said economic
terms to be in effect for 12 months from and after the Closing Date and
thereafter to be subject to good faith negotiation among the parties), and
(iv) perform the unwritten agreements between Alpha and First USA Bank
described in Section 4.23 of the Company Letter referred to in the Merger
Agreement, in each case on or before the Closing to the extent practicable.
8.11. COOPERATION ON DEBT. If, upon the transfer of the
Contributed Assets by Alpha to the Alliance, or the assumption by Alpha of
the Assumed Liabilities, as contemplated by this Agreement, Alpha would
recognize income or gain for federal income tax purposes as a result of the
amount or nature of its indebtedness (including, without limitation, by
reason of all or a portion of its indebtedness being treated as Member
Nonrecourse Debt), then prior to such contribution and assumption, the
parties hereby agree to (and to cause their respective Affiliates to) take
reasonable steps to avoid such income or gain.
8.12. CERTAIN FEES. Bank One shall cause the Alliance to pay to
FDMS, in lieu of the amounts that would otherwise have been payable to FDMS
under Section 8.24 of the Alliance Agreement, (i) $666,667 on the last day
of each month or portion thereof remaining in calendar year 1999 after the
Closing Date, (ii) $666,667 on the last day of each month in calendar year
2000, and (iii) $750,000 on the last day of each month in calendar year
2001.
ARTICLE IX
EMPLOYEE MATTERS
9.1. EMPLOYMENT OF ALPHA EMPLOYEES. The employment of each
employee of Alpha who is actively employed (including such employees who
are on vacation) as of the Closing shall be transferred to the Alliance
effective as of the Closing at the same base compensation and wage levels
as in effect immediately preceding the Closing. Notwithstanding anything
herein to the contrary, nothing in this Agreement shall create any
obligation on the part of the Alliance or any of its Affiliates to continue
the employment of any employee for any definite period following the
Closing. The Alliance shall offer employment (or severance benefits if
such individual's position is no longer available as allowed by applicable
law) to any individual who was an employee of Alpha who is on sick or
disability leave or who is on an approved leave of absence as of the
Closing as of the date such individual returns to work. The persons who
become employed by the Alliance pursuant to this paragraph shall be
referred to herein as "Transferred Employees."
9.2. MAINTENANCE OF EMPLOYEE BENEFITS PLANS. Effective as of the
Closing Date and until such time as the Alliance implements its own benefit
plans,, FDC, Bank One and the Alliance shall take any reasonable actions
necessary (including but not limited to plan amendment, governmental
notices, etc.) to maintain the participation of the Transferred Employees
in the plans, programs, agreements or arrangements which covered the
Transferred Employees as of the Closing Date.
9.3. BONUSES. The Alliance shall assume all obligations and
liabilities for bonuses and incentive payments in connection with the
relevant bonus programs of Alpha in effect immediately prior to the Closing
Date and shall cause the payment of such bonuses or incentive payments, if
any, to be made in accordance with the terms of such plans consistent with
past practice.
9.4. VACATION AND SICK LEAVE. The Alliance shall credit each
Transferred Employee with the number of unused vacation days and sick leave
credited to such individual through the Closing Date under the applicable
vacation and sick leave policies of Alpha and shall permit or cause
Transferred Employees to be permitted to use such vacation days and sick
leave.
9.5. WORKERS' COMPENSATION. The Alliance shall assume the
obligation and liability for any workers' compensation or similar workers'
protection claims with respect to any person who was an Alpha employee.
9.6. EMPLOYEES OF ALLIANCE MEMBERS. At the present time both
Bank One, POS and FDMS have employees that provide services in connection
with the Alliance business, although none of such employees are employees
of the Alliance. Bank One and FDC acknowledge that subsequent to the
Closing, the Alliance management will decide whether or not they wish to
offer employment to any of these employees of Bank One, POS or FDMS. In
the event that such a decision to offer employment is made, the Alliance
shall be under no restrictions regarding offering employment to individuals
who are dedicated full-time to the Alliance, and Bank One and FDC shall
cooperate, and shall cause their respective Affiliates, to cooperate, in
facilitating the transfer of such employees to the Alliance.
ARTICLE X
INDEMNIFICATION; PAYMENT OF CERTAIN COSTS
10.1. INDEMNIFICATION BY FDC. FDC shall indemnify and hold
harmless Bank One and any of its Affiliates from and against any and all
Losses and Expenses, whether or not litigation is commenced, imposed upon,
incurred by or asserted against Bank One or any of its Affiliates in
connection with or arising from the breach by FDC of any representation,
warranty, covenant or agreement of FDC in this Agreement, provided,
however, that FDC shall not be required to indemnify or hold Bank One or
any of its Affiliates harmless from or against any such Losses or Expenses
to the extent that such Losses or Expenses arise as a result of Bank One's
or any of its Affiliates' own negligence, willful misconduct or breach of
any of its representations, warranties or obligations pursuant to this
Agreement.
10.2. INDEMNIFICATION BY BANK ONE. Bank One shall indemnify and
hold harmless FDC and its Affiliates from and against any and all Losses
and Expenses, whether or not litigation is commenced, imposed upon,
incurred by or asserted against FDC or its Affiliates in connection with or
arising from the breach by Bank One of any representation, warranty,
covenant or agreement of Bank One in this Agreement, provided, however,
that Bank One shall not be required to indemnify or hold FDC or any of its
Affiliates harmless from or against any such Losses or Expenses to the
extent that such Losses or Expenses arise as a result of FDC's or one of
its Affiliates' own negligence, willful misconduct or breach of any of its
representations, warranties or obligations pursuant to this Agreement.
10.3. NOTICE OF CLAIMS. (a) If either Bank One, FDC or an
Affiliate of either party (each an "Indemnified Party")shall seek
indemnification hereunder, such Indemnified Party shall give promptly to
the party obligated to provide indemnification to such Indemnified Party
(the "Indemnitor") a notice (a "Claim Notice") describing in reasonable
detail the facts giving rise to any claim for indemnification hereunder and
shall include in such Claim Notice (if then known) the amount or the method
of computation of the amount of such claim, and a reference to the
provision of this Agreement or any other agreement, document or instrument
executed hereunder or in connection herewith upon which such claim is
based; provided, however, that a Claim Notice in respect of any action at
law or suit in equity by or against a third Person as to which
indemnification will be sought shall be given promptly after the action or
suit is commenced.
(b) In calculating any Loss or Expense there shall be deducted
(i) any insurance recovery in respect thereof (and no right of subrogation
shall accrue hereunder to any insurer) and (ii) the amount of any tax
benefit to the Indemnified Party (or any of its Affiliates) with respect to
such Loss or Expense (after giving effect to the tax effect of receipt of
the indemnification payments).
(c) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which an Indemnified Party shall be entitled
under this Article X shall be determined: (i) by the written agreement
between the Indemnified Party and the Indemnitor; (ii) by a final judgment
or decree of any court of competent jurisdiction; or (iii) by any other
means to which the Indemnified Party and the Indemnitor shall agree. The
judgment or decree of a court shall be deemed final when the time for
appeal, if any, shall have expired and no appeal shall have been taken or
when all appeals taken shall have been finally determined. The Indemnified
Party shall have the burden of proof in establishing the amount of Loss and
Expense suffered by it.
10.4. THIRD PERSON CLAIMS. (a) In order for an Indemnified
Party to be entitled to any indemnification provided for under this
Agreement in respect of, arising out of or involving a claim or demand made
by any third Person against an Indemnified Party, such Indemnified Party
must notify the Indemnitor in writing, and in reasonable detail, of the
third Person claim within 10 Banking Days after receipt by such Indemnified
Party of written notice of the third Person claim. Thereafter, the
Indemnified Party shall deliver to the Indemnitor, within 10 Banking Days
after the Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party
relating to the third Person claim. Notwithstanding the foregoing, should
an Indemnified Party be physically served with a complaint with regard to a
third Person claim, the Indemnified Party must notify the Indemnitor and
deliver a copy of the complaint within 10 Banking Days after receipt
thereof and shall deliver to the Indemnitor within 10 Banking Days after
the receipt of such complaint copies of notices and documents (including
court papers) received by the Indemnified Party relating to the third
Person claim.
(b) In the event of the initiation of any legal proceeding,
claim or demand against the Indemnified Party by a third Person, the
Indemnitor shall have the sole and absolute right after the receipt of
notice, at its option and at its own expense, to be represented by counsel
reasonably acceptable to the Indemnified Party and to control, defend
against, negotiate, settle or otherwise deal with any proceeding, claim, or
demand which relates to any Loss or Expense indemnified against hereunder;
provided, however, that the Indemnified Party may participate in any such
proceeding with counsel of its choice and at its expense. The parties
hereto agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such legal proceeding, claim or
demand. To the extent the Indemnitor elects not to defend such proceeding,
claim or demand, and the Indemnified Party defends against or otherwise
deals with any such proceeding, claim or demand, the Indemnified Party may
retain counsel, at the expense of the Indemnitor, and control the defense
of such proceeding. Neither the Indemnitor nor the Indemnified Party may
settle any such proceeding which settlement obligates the other party to
pay money, to perform obligations or to admit liability without the consent
of the other party, such consent not to be unreasonably withheld. After
any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and
the time in which to appeal therefrom has expired, or a settlement shall
have been consummated, or the Indemnified Party and the Indemnitor shall
arrive at a mutually binding agreement with respect to each separate matter
alleged to be indemnified by the Indemnitor hereunder, the Indemnified
Party shall forward to the Indemnitor notice of any sums due and owing by
it with respect to such matter and the Indemnitor shall pay all of the sums
so owning to the Indemnified Party by wire transfer, certified or bank
cashier's check within 30 days after the date of such notice.
10.5. LIMITATION. No failure of the Indemnified Party to give
the Indemnitor timely notice as required by Section 10.3 or 10.4 above
shall affect such Indemnified Party's right to indemnification hereunder
unless, and then only to the extent that the rights of the Indemnitor to
defend against such claim have been prejudiced thereby.
ARTICLE XI
TERMINATION
11.1. TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time
prior to the Closing Date:
(a) by the mutual written consent of Bank One and FDC;
(b) by Bank One or FDC if the Merger Agreement shall be
terminated pursuant to its terms;
(c) by Bank One or FDC if the transactions contemplated by the
Merger Agreement shall not have been consummated on or before October
1, 1999; and
(d) by Bank One or FDC if the Closing shall not have occurred on
or before October 1, 1999.
11.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to Section 11.1 shall give written notice of such
termination to the other party to this Agreement.
11.3. EFFECT OF TERMINATION. In the event that this Agreement
shall be terminated pursuant to this Article XI, all further obligations of
the parties under this Agreement (other than Sections 12.8 and 12.11) shall
be terminated without further liability of any party to the other, provided
that nothing herein shall relieve any party from liability for its willful
breach of this Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
12.2. ENTIRE AGREEMENT. This Agreement, the Operating
Agreement, the Revenue Sharing Agreement and the Revised Processing
Agreement and the Exhibits, Annexes and Schedules hereto and thereto
constitute the entire agreement among the parties hereto and contain all of
the agreements among such parties with respect to the subject matter hereof
and thereof. This Agreement, the Operating Agreement, the Revenue Sharing
Agreement and the Revised Processing Agreement and the Exhibits, Annexes
and Schedules hereto and thereto supersede any and all other agreements,
either oral or written, between such parties with respect to the subject
matter hereof and thereof.
12.3. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid
under applicable law, but in case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision shall be ineffective to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid,
illegal or unenforceable provision or provisions or any other provisions
hereof, unless such a construction would be unreasonable.
12.4. AMENDMENT. Except as expressly provided herein, this
Agreement may be amended only by a written agreement executed by each of
FDC and Bank One.
12.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO ITS CONFLICTS OF LAW DOCTRINE, EXCEPT TO THE EXTENT THE
DELAWARE LIMITED LIABILITY COMPANY ACT IS CONTROLLING.
12.6. WAIVER. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be validly
and sufficiently authorized for the purposes of this Agreement if, as to
any party, it is authorized in writing by an authorized representative of
such party. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
12.7. FURTHER ASSURANCES. In connection with this Agreement,
the Operating Agreement, the Revenue Sharing Agreement and the Revised
Processing Agreement and the transactions contemplated hereby and thereby,
after the Closing each of FDC and Bank One shall execute and deliver, or
use reasonable best efforts to cause to be executed and delivered (whether
by Alpha or by any of its other Affiliates), any additional documents and
instruments, and each will perform, or use reasonable best efforts to cause
to be performed (whether by Alpha or by any of its other Affiliates), any
additional acts that may be necessary or appropriate to effectuate and
perform the provisions of this Agreement, the Operating Agreement, the
Revenue Sharing Agreement, the Revised Processing Agreement and any other
agreement contemplated hereby to which it or any of its Affiliates is a
party and the transactions contemplated hereby and thereby.
12.8. EXPENSES. Each of FDC and Bank One shall pay its own
legal, accounting and other expenses incident to its negotiation and
preparation of this Agreement, the Operating Agreement, the Revenue
Sharing Agreement and the Revised Processing Agreement and (except as
expressly set forth herein or therein) the consummation of the transactions
contemplated hereby and thereby.
12.9. SURVIVAL OF OBLIGATIONS. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement; provided,
however, that the representations and warranties contained in Section
6.1(e), (f) and (g) shall terminate on the Closing Date and the other
representations and warranties contained in Section 6.1 and Section 6.2
shall terminate on the third anniversary of the Closing Date.
12.10. SUCCESSORS AND ASSIGNS. (a) The rights of either party
under this Agreement shall not be assignable by such party hereto without
the written consent of the other.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
The successors and permitted assigns hereunder shall include without
limitation, any permitted assignee as well as the successors in interest to
such permitted assignee (whether by merger, liquidation (including
successive mergers or liquidations) or otherwise). Nothing in this
Agreement, expressed or implied, is intended or shall be construed to
confer upon any Person other than the parties and successors and assigns
permitted by this Section 12.10 any right, remedy or claim under or by
reason of this Agreement.
12.11. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence during the period prior to the Closing
Date all documents, materials and other information which it shall have
obtained regarding the other party and its Affiliates during the course of
the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein and the preparation of
this Agreement and other related documents, and, in the event the
transactions contemplated hereby shall not be consummated, each party will
return to the other party all copies of nonpublic documents and materials
which have been furnished in connection therewith. Such documents,
materials and information shall not be communicated to any third Person
(other than counsel, accountants or financial advisors of FDC and Bank
One). No other party shall use any confidential information in any manner
whatsoever except solely for the purpose of evaluating the transactions.
The obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information which (i) is
or becomes available to such party from a source other than such party
provided such source is not known by the recipient to be subject to an
obligation of confidentiality with respect to such information, (ii) is or
becomes available to the public other than as a result of disclosure by
such party or its agents, (iii) is required to be disclosed under
applicable law or judicial process, but only to the extent it must be
disclosed, or (iv) following prior written notice to the other party
disclosing the nature of the proposed disclosure and the reasons such
disclosure is required, such party reasonably deems necessary to disclose
to obtain any of the consents or approvals contemplated hereby.
12.12. INFORMAL DISPUTE RESOLUTION. Any dispute, controversy or
claim between FDC and Bank One, including any dispute, controversy or claim
involving their respective Affiliates, arising from or in connection with
this Agreement or the relationship of the parties under this Agreement,
whether based on contract, tort, common law, equity, statute, regulation,
order or otherwise ("Dispute") shall be resolved as follows:
(a) Upon written request of either party, each party will
appoint a designated representative whose task it will be to meet for
the purpose of endeavoring to resolve such Dispute.
(b) The designated representatives shall meet as often as the
parties reasonably deem necessary to discuss the problem in an effort
to resolve the Dispute without the necessity of any formal proceeding.
During the discussions, all reasonable requests by a party to another
party for non-privileged information reasonably related to the Dispute
shall be honored in order that each party may be fully advised of the
other party's position.
(c) Formal proceedings for the resolution of a Dispute may not
be commenced until the earlier of:
(i) the designated representatives concluding in good faith
that amicable resolution through continued negotiation of the
matter does not appear likely; or
(ii) the expiration of the fifteen (15) day period
immediately following the initial request to negotiate the
Dispute;
provided, however, that this Section 12.12 will not be construed to prevent
a party from instituting formal proceedings earlier to avoid the expiration
of any applicable limitations period, to preserve a superior position with
respect to other creditors, or to seek temporary or preliminary injunctive
relief pursuant to Section 12.14.
12.13. ARBITRATION.
(a) If the parties are unable to resolve any Dispute as
contemplated by Section 12.12, such Dispute shall be submitted to
mandatory and binding arbitration at the election of any disputing
party (the "Disputing Party"). It is the intent of the parties that
the arbitration be structured in such a way as to minimize costs.
Except as otherwise provided in this Section 12.13, the arbitration
shall be pursuant to the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA").
(b) To initiate the arbitration, the Disputing Party shall
notify the other party in writing (the "Arbitration Demand"), which
shall (i) describe in reasonable detail the nature of the Dispute,
(ii) state the amount of the claim, (iii) specify the requested relief
and (iv) name an arbitrator who (A) has been licensed to practice law
in the U.S. for at least ten years, (B) is not then an employee of
Bank One or FDC or an employee of an Affiliate of Bank One or FDC, and
(C) is experienced in representing clients in connection with mergers
and acquisitions and the subject matter of the Dispute (the "Basic
Qualifications"). Within fifteen (15) days after the other party's
receipt of the Arbitration Demand, such other party shall file and
serve on the Disputing Party, a written statement (i) answering the
claims set forth in the Arbitration Demand, including any affirmative
defenses of such party; (ii) asserting any counterclaim, which shall
(A) describe in reasonable detail the nature of the Dispute relating
to the counterclaim, (B) state the amount of the counterclaim, and (C)
specify the requested relief; and (iii) either accepting the
arbitrator proposed by the Disputing Party as the sole arbitrator for
the proceedings or naming a second arbitrator satisfying the Basic
Qualifications. The Disputing Party shall notify the other party
within two (2) days whether the Disputing Party accepts the arbitrator
proposed by the other party as the sole arbitrator for the proceedings
or rejects such arbitrator and proposes an alternate arbitrator, in
which event within fifteen (15) days thereafter, the two arbitrators
so named by each party will select a third neutral arbitrator from a
list provided by the AAA of potential arbitrators who satisfy the
Basic Qualifications and who have no past or present relationships
with the parties or their counsel, except as otherwise disclosed in
writing to and approved by the parties. The arbitration will be heard
by a panel consisting of either one arbitrator or three arbitrators,
as determined in accordance with this paragraph (b) (the "Arbitration
Panel") with, in the case of three arbitrators, the third arbitrator
so chosen serving as the chairperson of the Arbitration Panel.
Decisions of a majority of the members of the Arbitration Panel shall
be determinative.
(c) The arbitration hearing shall be held in Chicago, Illinois.
The Arbitration Panel is specifically authorized to render partial or
full summary judgment as provided for in the Federal Rules of Civil
Procedure. In the event summary judgment or partial summary judgment
is granted, the non-prevailing party may not raise as a basis for a
motion to vacate an award that the Arbitration Panel failed or refused
to consider evidence bearing on the dismissed claim(s) or issue(s).
The Federal Rules of Evidence shall apply to the arbitration hearing.
The party bringing a particular claim or asserting an affirmative
defense will have the burden of proof with respect thereto. The
arbitration proceedings and all testimony, filings, documents and
information relating to or presented during the arbitration
proceedings shall be deemed to be information subject to the
confidentiality provisions of this Agreement. The Arbitration Panel
will have no power or authority, under the Commercial Arbitration
Rules of the AAA or otherwise, to relieve the parties from their
agreement hereunder to arbitrate or otherwise to amend or disregard
any provision of this Agreement, including the provisions of this
Section 12.13.
(d) Should an arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section 12.13, the
arbitrator shall be replaced by the party who selected such arbitrator
(and approved by the other party if in a sole arbitrator proceeding),
or if such arbitrator was selected by the two party-appointed
arbitrators, by such two party-appointed arbitrators selecting a new
third arbitrator in accordance with Section 12.13(b). Each such
replacement arbitrator shall satisfy the Basic Qualifications. If an
arbitrator is replaced pursuant to this Section 12.13(d) after the
arbitration hearing has commenced, then a rehearing shall take place
in accordance with the provisions of this Section 12.13 and the
Commercial Arbitration Rules of the AAA.
(e) At the time of granting or denying a motion for summary
judgment as provided for in paragraph (c) of this Section 12.13 and
within fifteen (15) days after the closing of the arbitration hearing,
the Arbitration Panel shall prepare and distribute to the parties a
writing setting forth the Arbitration Panel's finding of facts and
conclusions of law relating to the Dispute, including the reasons for
the giving or denial of any award. The findings and conclusions and
the award, if any, shall be deemed to be information subject to the
confidentiality provisions of this Agreement.
(f) The Arbitration Panel is instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case
management initiative and control to effect an efficient and
expeditious resolution of the Dispute. Each party's presentation at
the arbitration hearing shall be limited to fourteen (14) hours, and
the hearing shall be completed within ten (10) Banking Days.
Summaries of any expert testimony, along with copies of all documents
to be submitted as Exhibits shall be exchanged as soon as possible and
in all events at least ten (10) Banking Days before the arbitration
hearing under procedures set up by the Arbitration Panel. Except as
otherwise specified herein, there shall be no discovery or dispositive
motion practice except as may be permitted by the Arbitration Panel,
who may authorize only such discovery as is shown to be necessary to
insure a fair hearing. No discovery or motions permitted by the
Arbitration Panel shall in any way alter the time limits specified
herein. Both parties shall continue to perform their respective
obligations in accordance with the terms of this Agreement and any
agreements contemplated hereby during any arbitration proceeding. The
fact that arbitration has commenced shall not impair the exercise of
any termination rights set forth in this Agreement. The Arbitration
Panel is authorized to issue monetary sanctions against either party
if, upon a showing of good cause, such party is unreasonably delaying
the proceeding.
(g) Any award rendered by the Arbitration Panel will be final,
conclusive and binding upon the parties and any judgment thereon may
be entered and enforced in any court of competent jurisdiction. The
Arbitration Panel may not award punitive damages or any other relief
not contemplated by this Agreement. In particular, the Arbitration
Panel may not order the dissolution, liquidation or other termination
of the Company except as specifically contemplated by the Formation
Agreement.
(h) Each party will bear a pro rata share of all fees, costs and
expenses of the arbitrators, and notwithstanding any law to the
contrary, each party will bear all the fees, costs and expenses of its
own attorneys, experts and witnesses; provided, however, that in
connection with any judicial proceeding to compel arbitration pursuant
to this Agreement or to confirm, vacate or enforce any award rendered
by the Arbitration Panel, the prevailing party in such a proceeding
will be entitled to recover reasonable attorneys' fees and expenses
incurred in connection with such proceeding, in addition to any other
relief to which it may be entitled.
12.14. JUDICIAL PROCEDURE. Nothing in Sections 12.12 or 12.13
shall be construed to prevent any party from seeking from a court a
temporary restraining order or other temporary or preliminary relief
pending final resolution of a Dispute pursuant to such Sections 12.12 or
12.13.
12.15. TERMINATION OF ALLIANCE AGREEMENT. Except with respect
to the provisions of Sections 3.1(d), 3.1(e), 3.2(d) and 3.2(e) of the
Alliance Agreement and the obligations of the parties under Article V of
the Alliance Agreement with respect to such sections, the Alliance
Agreement shall be terminated in all respects as of the Closing Date.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the
date first above written.
FIRST DATA CORPORATION
By: /s/ David J. Treinen
______________________________
Name: David J. Treinen
Title: Senior Vice President
BANK ONE CORPORATION
By: /s/ Richard J. Lehmann
______________________________
Name: Richard J. Lehmann
Title: President and Chief
Operating Officer
EXHIBIT 99.1
PAYMENTECH
Contacts:
Investors/Analysts: Jean Krone Bono, CFA
(214) 849-3750
Media: Rodney D Bell
(214) 849-3776
FOR IMMEDIATE RELEASE
PAYMENTECH IN AGREEMENT FOR ACQUISITION OF OUTSTANDING SHARES
DALLAS - March 22, 1999 Paymentech, Inc. (NYSE: PTI) today announced
it has signed a definitive merger agreement for the acquisition by First
Data Corporation (NYSE: FDC) of Paymentech's outstanding shares of common
stock, other than shares owned by BANK ONE CORPORATION (NYSE: ONE), at a
price of $25.50 per share. Public ownership (approximately 16 million
shares) represents approximately 45% of the outstanding shares. Bank One
owns the remaining 55%.
In connection with the merger agreement, First Data and Bank One have
separately agreed that following the merger they will combine Paymentech's
operations with Banc One Payment Services LLC, the existing merchant bank
alliance between First Data and BANK ONE CORPORATION. Pamela H. Patsley,
currently president and chief executive officer of Paymentech, Inc., will
direct the operations of the combined organization.
The transaction is subject to approval by Paymentech, Inc.
shareholders, including approval by the holders of at least two-thirds of
the shares not owned by Bank One. It is also subject to anti-trust and
other regulatory approvals, as well as other conditions. It is anticipated
the transaction could be completed during the third calendar quarter. No
assurance can be given that this agreement will result in a transaction.
Additionally, Paymentech has completed a processing agreement that was
previously announced between First Data Merchant Services Corporation, a
wholly owned subsidiary of First Data Corporation, and Paymentech, Inc.
"This is an exciting transaction for our organizations," said Pamela
H. Patsley, president and chief executive officer of Paymentech. "First
Data, Paymentech and Banc One Payment Services have cultures that are
focused on driving top line growth, improving operational efficiency and
capitalizing on the opportunities to provide merchants with electronic
commerce solutions. We believe our clients, shareholders and employees will
benefit greatly from this strong combination."
"Obviously we are pleased to be able to deepen our already strong
relationship with Bank One. We believe this merger significantly
strengthens Banc One Payment Services' ability to offer customers a broad
array of competitive services," said Ric Duques, chairman and chief
executive officer of First Data Corporation.
"Combining Paymentech, Inc. with our First Data alliance simplifies,
streamlines and strengthens our participation in this very important
market," said Richard W. Vague, chairman and chief executive officer of
First USA, a unit of Bank One, and chairman of Paymentech, Inc. "Retail
clients need full service processing solutions that allow them to cost
effectively accept any form of payment at the point-of-sale. The
combination of Paymentech with Banc One Payment Services will allow us to
bring our customers the processing scale and efficiency to do that even
more effectively."
Paymentech, Inc., founded in 1985, provides full-service electronic
payment solutions for merchants, third-party transaction processing, and
total commercial card payment programs. Paymentech is a leading acquirer of
bankcard transactions in the United States and a leading commercial card
issuer.
www.paymentech.com
