<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 9, 1996
REGISTRATION NO. 333-13985
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
BA MERCHANT SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 7374 94-3252840
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
ONE SOUTH VAN NESS AVENUE
SAN FRANCISCO, CALIFORNIA 94103
(415) 241-3390
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
CHERYL SOROKIN, ESQ.
CORPORATE SECRETARY
BA MERCHANT SERVICES, INC.
555 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 622-2091
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
JEFFREY R. LAPIC, ESQ. RODNEY R. PECK, ESQ. ALISON S. RESSLER, ESQ.
ASSISTANT GENERAL NATHANIEL M. CARTMELL III, SULLIVAN & CROMWELL
COUNSEL ESQ. 444 SOUTH FLOWER STREET
BANK OF AMERICA NT&SA JAMES C. OLSON, ESQ. LOS ANGELES, CALIFORNIA
555 CALIFORNIA STREET, PILLSBURY MADISON & SUTRO 90071-2901
8TH FLOOR LLP (213) 955-8000
SAN FRANCISCO, 235 MONTGOMERY STREET
CALIFORNIA 94104 SAN FRANCISCO, CALIFORNIA
(415) 622-2189 94104
(415) 983-1000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the issuance and distribution of the Class A
Common Stock being registered hereby, other than underwriting discounts and
commissions.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........... $ 98,182
National Association of Securities Dealers, Inc. filing fee... 30,500
New York Stock Exchange application fee....................... *
Transfer Agent's and Registrar's fees......................... *
Printing costs................................................ *
Accounting fees and expenses.................................. *
Legal fees and expenses (not including Blue Sky).............. *
Blue Sky fees and expenses.................................... 11,000
Miscellaneous expenses........................................ *
----------
Total....................................................... $2,300,000
==========
</TABLE>
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*To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a Delaware
corporation may indemnify any person against expenses, judgments, fines and
settlements actually and reasonably incurred by any such person in connection
with a threatened, pending or completed action, suit or proceeding to which
such person is a party or is threatened to be made a party by reason of the
fact that he is or was a director, officer, employee or agent of such
corporation, provided, that (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful. If the action or suit
is by or in the right of the corporation, the corporation may indemnify any
such person against expenses actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification may
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation for negligence or
misconduct in the performance of his duty to the corporation, unless and only
to the extent that the Delaware Court of Chancery or the court in which the
action or suit is brought determines upon application that, despite the
adjudication of liability but in view of all of the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
as the court deems proper.
As permitted under the Delaware General Corporation Law, the Registrant's
Certificate of Incorporation and Bylaws limit the personal liability of its
directors for violations of their fiduciary duty.
Under certain circumstances provided in Article VIII of the Registrant's
Bylaws, the Registrant will indemnify any director or officer or any former
director or officer of the Registrant or any other corporation or enterprise
(if serving at the request of the Registrant) against expenses, liability and
loss (including attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts to be paid in settlement) actually incurred or suffered
by such person by reason of the fact that he is or was such director or
officer in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative. A
copy of the Registrant's Bylaws is included herein as Exhibit 3.1(ii).
II-1
<PAGE>
Reference is made to the Form of Underwriting Agreement filed as Exhibit 1.1
hereto with respect to the indemnification provisions contained therein.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS. The following Exhibits are filed herewith and made a part
hereof:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1(i) Amended and Restated Certificate of Incorporation of the Registrant.
**3.1(ii) Bylaws of the Registrant.
4.1 Specimen Certificate for the Class A Common Stock, par value $.01
per share, of the Registrant.
4.2 Form of Registration Rights Agreement among the Registrant, Bank of
America NT&SA and Bank of America NW, National Association.
*5.1 Form of Opinion of Pillsbury Madison & Sutro LLP as to the validity
of the securities being offered.
10.1 Form of Lease Agreement among the Registrant, Bank of America NT&SA
and Bank of America NW, National Association.
10.2 Sponsorship and Processing Agreement dated as of December 3, 1996
between the Registrant and Bank of America NT&SA.
10.3 Trademark License Agreement dated as of December 3, 1996 between the
Registrant and BankAmerica Corporation.
10.4 Administrative and Support Services Agreement dated December 3, 1996
among the Registrant, Bank of America NT&SA and Bank of America NW,
National Association.
10.5(i) Form of Marketing Agreement among the Registrant, Bank of America
NT&SA and Bank of America NW, National Association.
10.5(ii) Form of Marketing Agreement among Bank of America NA, Bank of
America NW, National Association and the Registrant.
10.6 Form of Tax Allocation Agreement between the Registrant and
BankAmerica Corporation.
*10.7 Merchant Card Services Agreement dated June 29, 1994 between the
Registrant and Total System Services, Inc.
10.8 Asset Transfer Agreement dated as of December 3, 1996 among the
Registrant, Bank of America NT&SA and Bank of America NW, National
Association.
10.9 BA Merchant Services, Inc. Nonemployee Director Stock Plan.
10.10 BA Merchant Services, Inc. Short-Term Incentive Plan.
10.11 BA Merchant Services, Inc. Long-Term Incentive Plan.
10.12 Form of Asian Acquisition Agreement between the Registrant and Bank
of America NT&SA relating to Asian businesses.
10.13 Non-Competition and Corporate Opportunities Allocation Agreement
dated as of December 3, 1996 between the Registrant and BankAmerica
Corporation.
10.14 Stockholders Agreement dated as of December 3, 1996 among the
Registrant, Bank of America NT&SA and Bank of America NW, National
Association.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.15(i) Processing Services Agreement dated December 3, 1996 between the
Registrant and Bank of America Texas, N.A.
10.15(ii) Processing Services Agreement dated December 3, 1996 between the
Registrant and Bank of America, FSB.
21.1 Subsidiaries of the Registrant.
*23.1 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit
5.1).
23.2 Consent of Ernst & Young LLP, independent auditors.
**24.1 Powers of Attorney.
24.2 Powers of Attorney.
</TABLE>
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* To be filed by amendment.
** Filed previously.
(b) FINANCIAL STATEMENT SCHEDULES.
All schedules have been omitted because they are not applicable, not required
or the required information is included in the financial statements and notes
thereto.
ITEM 17. UNDERTAKINGS
(a) EQUITY OFFERINGS OF NONREPORTING REGISTRANTS. The undersigned Registrant
hereby undertakes to provide to the Underwriters at the closing specified in
the Underwriting Agreement, certificates in such denominations and registered
in such names as required by the Underwriters to permit prompt delivery to each
purchaser.
(b) INDEMNIFICATION. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other that the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) RULE 430A PROSPECTUSES. The undersigned Registrant hereby undertakes
that:
(1) For the purpose of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY HAS
DULY CAUSED THIS AMENDMENT TO REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAN
FRANCISCO, CALIFORNIA, ON DECEMBER 9, 1996.
BA Merchant Services, Inc.
By: /s/ Susan Lau
---------------------------------
SUSAN LAU
SENIOR VICE PRESIDENT AND GENERAL
COUNSEL
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Sharif M. Bayyari* President, Chief December 9, 1996
- ------------------------------------- Executive Officer
SHARIF M. BAYYARI and Director
(Principal
Executive Officer)
/s/ James H. Williams* Chief Financial December 9, 1996
- ------------------------------------- Officer (Principal
JAMES H. WILLIAMS Financial Officer
and Principal
Accounting Officer)
/s/ Barbara J. DeSoer* Director December 9, 1996
- -------------------------------------
BARBARA J. DESOER
/s/ Donald R. Dixon* Director December 9, 1996
- -------------------------------------
DONALD R. DIXON
/s/ James G. Jones* Director December 9, 1996
- -------------------------------------
JAMES G. JONES
/s/ William Fisher* Director December 9, 1996
- -------------------------------------
WILLIAM FISHER
Director
- -------------------------------------
THOMAS E. PETERSON
*By: /s/ Cheryl Sorokin
--------------------------------
CHERYL SOROKIN
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
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<C> <S>
1.1 Form of Underwriting Agreement.
3.1(i) Amended and Restated Certificate of Incorporation of the
Registrant.
**3.1(ii) Bylaws of the Registrant.
4.1 Specimen Certificate for the Class A Common Stock, par value $.01
per share, of the Registrant.
4.2 Form of Registration Rights Agreement among the Registrant, Bank
of America NT&SA and Bank of America NW, National Association.
*5.1 Form of Opinion of Pillsbury Madison & Sutro LLP as to the
validity of the securities being offered.
10.1 Form of Lease Agreement among the Registrant, Bank of America
NT&SA and Bank of America NW, National Association.
10.2 Sponsorship and Processing Agreement dated as of December 3, 1996
between the Registrant and Bank of America NT&SA.
10.3 Trademark License Agreement dated as of December 3, 1996 between
the Registrant and BankAmerica Corporation.
10.4 Administrative and Support Services Agreement dated December 3,
1996 among the Registrant, Bank of America NT&SA and Bank of
America NW, National Association.
10.5(i) Form of Marketing Agreement among the Registrant, Bank of America
NT&SA and Bank of America NW, National Association.
10.5(ii) Form of Marketing Agreement among Bank of America NA, Bank of
America NW, National Association and the Registrant.
10.6 Form of Tax Allocation Agreement between the Registrant and
BankAmerica Corporation.
*10.7 Merchant Card Services Agreement dated June 29, 1994 between the
Registrant and Total System Services, Inc.
10.8 Asset Transfer Agreement dated as of December 3, 1996 among the
Registrant, Bank of America NT&SA and Bank of America NW,
National Association.
10.9 BA Merchant Services, Inc. Nonemployee Director Stock Plan.
10.10 BA Merchant Services, Inc. Short-Term Incentive Plan.
10.11 BA Merchant Services, Inc. Long-Term Incentive Plan.
10.12 Form of Asian Acquisition Agreement between the Registrant and
Bank of America NT&SA relating to Asian businesses.
10.13 Non-Competition and Corporate Opportunities Allocation Agreement
dated as of December 3, 1996 between the Registrant and
BankAmerica Corporation.
10.14 Stockholders Agreement dated as of December 3, 1996 among the
Registrant, Bank of America NT&SA and Bank of America NW,
National Association.
10.15(i) Processing Services Agreement dated December 3, 1996 between the
Registrant and Bank of America Texas, N.A.
10.15(ii) Processing Services Agreement dated December 3, 1996 between the
Registrant and Bank of America, FSB.
21.1 Subsidiaries of the Registrant.
*23.1 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit
5.1).
23.2 Consent of Ernst & Young LLP, independent auditors.
**24.1 Powers of Attorney.
24.2 Powers of Attorney.
</TABLE>
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* To be filed by amendment.
** Filed previously.
<PAGE>
Exhibit 1.1
CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
----------------------
UNDERWRITING AGREEMENT
(U.S. VERSION)
----------------------
December __, 1996
Goldman, Sachs & Co.,
Montgomery Securities,
Salomon Brothers Inc,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
BA Merchant Services, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
11,200,000 shares (the "Firm Shares") and, at the election of the Underwriters,
up to 1,680,000 additional shares (the "Optional Shares") of Class A Common
Stock, par value $.01 per share ("Stock") of the Company (the Firm Shares and
the Optional Shares that the Underwriters elect to purchase pursuant to Section
3 hereof being collectively called the "Shares"). The Company was organized to
hold and operate the merchant processing businesses of Bank of America National
Trust and Savings Association, a national banking association (the "Bank"), and
the Seafirst Bank Division of Bank of America NW, N.A. ("Seafirst"). The Bank
and Seafirst are wholly-owned subsidiaries of BankAmerica Corporation, a
Delaware corporation ("BankAmerica").
It is understood and agreed to by all parties that the Company is concurrently
entering into an agreement (the "International Underwriting Agreement")
providing for the sale by the Company of up to a total of 3,220,000 shares of
Stock (the "International Shares"), including the overallotment option
thereunder, through arrangements with certain underwriters outside the United
States (the "International Underwriters"), for whom Goldman Sachs International,
Montgomery Securities and Salomon Brothers International Limited are acting as
lead managers. Anything herein or therein to the contrary notwithstanding, the
respective closings under this Agreement and the International Agreement are
hereby expressly made conditional on one another. The Underwriters hereunder
and the International Underwriters are simultaneously entering into an Agreement
between U.S. and International Underwriting Syndicates (the "Agreement between
Syndicates") which provides, among other things, for the transfer of shares of
Stock between the two syndicates. Two forms of prospectus are to be used in
connection with the offering and sale of shares of Stock contemplated by the
foregoing, one relating to the Shares hereunder and the other relating to the
International Shares. The latter form of prospectus will be identical to the
former except for certain substitute pages.
<PAGE>
Except as used in Sections 3, 4, 5, 10 and 12 herein, and except as the context
may otherwise require, references hereinafter to the Shares shall include all
the shares of Stock which may be sold pursuant to either this Agreement or the
International Underwriting Agreement, and references herein to the "U.S.
Prospectus" whether in preliminary or final form, and whether as amended or
supplemented, shall refer to the prospectus relating to the Shares hereunder and
references herein to the "International Prospectus" whether in preliminary or
final form, and whether as amended or supplemented, shall refer to the
prospectus relating to the International Shares.
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-13985) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto, to
you for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing, no other
document with respect to the Initial Registration Statement has heretofore
been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the
Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) of the rules and regulations of the Commission under the Act,
is hereinafter called a "Preliminary Prospectus"; the various parts of the
Initial Registration Statement, including all exhibits thereto and
including the information contained in the form of final U.S. Prospectus
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 6(a) hereof and deemed by virtue of Rule 430A under
the Act to be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration Statement,
if any, became or hereafter becomes effective, each as amended at the time
such part of the registration statement became effective, are hereinafter
collectively called the "Registration Statement"; and such final U.S.
Prospectus, in the form first filed pursuant to Rule 424(b) under the Act,
collectively with the International Prospectus is hereinafter called the
"Prospectus").
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein;
-2-
<PAGE>
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through Goldman, Sachs & Co. expressly for use therein;
(d) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the capital
stock or long-term debt of the Company and there has been no material
change in the working capital and no increase in the long-term debt of the
Company or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise
than as set forth or contemplated in the Prospectus;
(e) The Company and its subsidiaries own no real property and have good
and marketable title to all personal property owned by them, free and clear
of all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries; and any real property
and buildings held under lease by the Company and its subsidiaries are held
by them under valid, subsisting and enforceable leases or subleases with
such exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
-3-
<PAGE>
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description of the Stock contained in the
Prospectus; except as disclosed in the Registration Statement, the Company
does not own, directly or indirectly, any shares of capital stock or any
other equity or long-term debt securities or have any equity interest in
any firm, partnership, joint venture or other entity except for capital
stock, securities or interests that in the aggregate do not exceed 2% of
the Company's assets;
(h) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder and under the International Underwriting Agreement
have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein and in the International
Underwriting Agreement, will be duly and validly issued and fully paid and
non-assessable and will conform in all material respects to the description
of the Stock contained in the Prospectus;
(i) The issue and sale of the Shares by the Company hereunder and
under the International Underwriting Agreement and the compliance by the
Company with all of the provisions of this Agreement and the International
Underwriting Agreement, the consummation of the transactions herein and
therein contemplated and the performance by the Company, BankAmerica, the
Bank and Seafirst of their respective obligations under the Corporate
Opportunities Agreement, the License Agreement, the Sponsorship Agreement,
the Administrative Services Agreement, the Marketing Agreement, the lease
agreement and the Tax Allocation Agreement, each as described in the
Prospectus under the caption "Relationship with BankAmerica," will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, in each case that is
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or the validity, performance or
consummation of the transactions contemplated by this Agreement and the
International Underwriting Agreement, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws
of the Company or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Shares or the consummation by the Company of the transactions
contemplated by this Agreement and the International Underwriting
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may
be required (i) from the Office of the Comptroller of the Currency and the
Federal Reserve Board that have been obtained prior to the date hereof,
(ii) foreign regulatory authorities in connection with the transfer of any
part of the Bank's merchant processing business in Asia ("BAMSA") to the
Company and (iii) under state or foreign securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters and the International Underwriters;
-4-
<PAGE>
(j) Neither the Company nor any of its subsidiaries (i) is in violation
of its Certificate of Incorporation or By-laws or (ii) in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound that is reasonably likely
to have a material adverse effect on the Company and its subsidiaries,
taken as a whole, or the validity, performance or consummation of the
transactions contemplated by this Agreement and the International
Underwriting Agreement;
(k) The statements set forth in the Prospectus under the caption
Description of Capital Stock, insofar as they purport to constitute a
summary of the terms of the Stock, in the International Prospectus under
the caption "Certain United States Tax Considerations for Non-U.S. Holders
of Common Stock", and in the Prospectus under the captions Relationship
with BankAmerica and Underwriting, insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate,
complete and fair in all material respects;
(l) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(m) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an investment company or an entity
controlled by an investment company, as such terms are defined in the
Investment Company Act of 1940, as amended (the Investment Company Act);
and
(n) Ernst & Young LLP, who have certified certain financial statements
of the Company and BAMSA, are independent public accountants as required by
the Act and the rules and regulations of the Commission thereunder.
2. BankAmerica represents and warrants to, and agrees with, each of the
Underwriters that:
(a) The Bank and Seafirst have each transferred to the Company good and
marketable title to or a valid leasehold interest in all personal property
and other assets related to their respective payment processing services
business (other than BAMSA), in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such assets and do not
materially interfere with the use made and proposed to be made of such
assets by the Company; and
(b) The compliance by BankAmerica with all of the provisions of this
Agreement and the International Underwriting Agreement and the consummation
of the transactions
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herein and therein contemplated and the performance by BankAmerica, the
Bank and Seafirst of their respective obligations under the Corporate
Opportunities Agreement, the License Agreement, the Sponsorship Agreement,
the Administrative Services Agreement, the Marketing Agreement, the lease
agreement and the Tax Allocation Agreement, each as described in the
Prospectus under the caption "Relationship with BankAmerica," will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which
BankAmerica or any of its subsidiaries or affiliates (including the
Company) is a party or by which BankAmerica or any of its subsidiaries or
affiliates (including the Company) is bound or to which any of the property
or assets of BankAmerica or any of its subsidiaries or affiliates
(including the Company) is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws
or other charter documents of BankAmerica, the Bank, Seafirst or the
Company or any statute or any order, rule or regulation of any court or
government agency or body having jurisdiction over BankAmerica or any of
its subsidiaries or affiliates or any of their properties, in each case
that is reasonably likely to have a material adverse effect on the Company
and its subsidiaries, taken as a whole, or the validity, performance or
consummation of the transactions contemplated by this Agreement and the
International Underwriting Agreement; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Shares or the consummation by BankAmerica of the transactions
contemplated by this Agreement and the International Underwriting
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may
be required (i) from the Office of the Comptroller of the Currency and the
Federal Reserve Board that have been obtained prior to the date hereof,
(ii) foreign regulatory authorities in connection with the transfer of any
part of BAMSA to the Company and (iii) under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
Underwriters and the International Underwriters.
3. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $........................, the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto and
(b) in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Shares as provided below, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the company, at the purchase price
per share set forth in clause (a) of this Section 3, that portion of the number
of Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction, the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to purchase
as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Shares that all of the
Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 1,680,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares offered upon the
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terms and conditions set forth in the Prospectus. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 5
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
4. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
5. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in
such names as Goldman, Sachs & Co. may request upon at least forty-eight
hours' prior notice to the Company, shall be delivered by or on behalf of
the Company to Goldman, Sachs & Co., for the account of such Underwriter,
against payment by or on behalf of such Underwriter of the purchase price
therefor by wire transfer in immediately available funds. The Company will
cause the certificates representing the Shares to be made available for
checking and packaging at least twenty-four hours prior to the Time of
Delivery (as defined below) with respect thereto at the office of Goldman,
Sachs & Co., 85 Broad Street, New York, New York 10004 (the "Designated
Office"). The time and date of such delivery and payment shall be, with
respect to the Firm Shares, 9:30 a.m., New York City time, on
, 1996 or such other time and date as Goldman, Sachs & Co. and
-------------
the Company may agree upon in writing, and, with respect to the Optional
Shares, 9:30 a.m., New York time, on the date specified by Goldman, Sachs &
Co. in the written notice given by Goldman, Sachs & Co. of the
Underwriters' election to purchase such Optional Shares, or such other time
and date as Goldman, Sachs & Co. and the Company may agree upon in writing.
Such time and date for delivery of the Firm Shares is herein called the
"First Time of Delivery", such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the "Second
Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the
cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 8(k) hereof, will be delivered at the
offices of Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San
Francisco, California 94104 (the "Closing Location"), and the Shares will
be delivered at the Designated Office, all at such Time of Delivery. A
meeting will be held at the Closing Location at 1:00 p.m., San Francisco
time, on the New York Business Day next preceding such Time of Delivery, at
which meeting the final drafts of the documents to be delivered pursuant to
the preceding sentence will be available for review by the parties hereto.
For the purposes of this Section 5, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by
law or executive order to close.
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<PAGE>
6. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
the U.S. Prospectus pursuant to Rule 424(b) under the Act not later than
the Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus which shall be disapproved by you promptly after reasonable
notice thereof; to advise you, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been filed
or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to advise
you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; and, in
the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to
obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering
or sale of the Shares and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in order
to comply with the Act, to notify you and upon your request to prepare and
furnish without charge to each Underwriter and to any dealer in securities
as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with sales of
any of the Shares at any time nine months or more after the time of issue
of the Prospectus, upon your request but at the expense of such
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<PAGE>
Underwriter, to prepare and deliver to such Underwriter as many copies as
you may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earning statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations thereunder (including, at the option of the Company,
Rule 158);
(e) During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder and under the International Underwriting Agreement, any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than (i) in connection with the
transfer of any part of BAMSA to the Company, (ii) pursuant to employee or
non-employee director stock option, incentive or benefit plans existing on,
or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement or (iii) in
connection with one or more business combinations in which the aggregate
value of the securities issued by the Company does not exceed $20 million),
without your prior written consent;
(f) To the extent necessary to comply with the rules of the New York
Stock Exchange, to furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement), to publish
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to
deliver to you as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the
Company is listed;
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement and the International Underwriting Agreement in
the manner specified in the Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of issuance,
the Shares on the New York Stock Exchange (the "Exchange");
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<PAGE>
(j) To file with the Commission such reports on Form SR as may be
required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act.
7. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the International Underwriting Agreement, the
Agreement between Syndicates, the Selling Agreement, the Blue Sky Memorandum,
closing documents (including compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Shares; (iii)
all expenses in connection with the qualification of the Shares for offering and
sale under state securities laws as provided in Section 6(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky survey; (iv) any filing
fees incident to, and the fees (together with those in clause (iii) not to
exceed $10,000) and disbursements of counsel for the Underwriters in connection
with, any required reviews by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; (v) all fees and expenses in
connection with listing the Shares on the New York Stock Exchange; (vi) the cost
of preparing stock certificates; (vii) the cost and charges of any transfer
agent or registrar; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 9 and 12 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees and expenses of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses connected with any offers they may make.
8. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and BankAmerica herein are, at and as of such Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The U.S. Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 6(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become effective
by 10:00 p.m., Washington, D.C. Time, on the date of this Agreement; no
stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all requests
for additional
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<PAGE>
information on the part of the Commission shall have been complied with to
your reasonable satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such opinion or opinions (a draft of each such opinion is
attached as Annex II(a) hereto), dated such Time of Delivery, with respect
to the matters covered in paragraphs (i), (ii), (iv), (viii) and (x) of
subsection (c) below as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Pillsbury Madison & Sutro LLP, counsel for the Company, shall have
furnished to you their written opinion (a draft of each such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form and
substance reasonably satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with full corporate power and authority to own its properties and conduct
its business as described in the Prospectus;
(ii) The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so qualified in
any such jurisdiction (such counsel being entitled to rely in respect of
the opinion in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company, provided that
such counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates);
(iii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery)
have been duly and validly authorized and issued and are fully paid and
nonassessable; and the Shares conform to the description of the Stock
contained in the Prospectus;
(iv) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of
which any property of the Company or any of its subsidiaries is the subject
that is of a character required to be disclosed in the Registration
Statement which is not adequately disclosed therein; and, to the best of
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(v) This Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by the Company and
BankAmerica;
(vi) The Corporate Opportunities Agreement, the License Agreement,
the Sponsorship Agreement, the Administrative Services Agreement, the
Marketing
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<PAGE>
Agreement, the lease agreement and the Tax Allocation Agreement, each as
described in the Prospectus under the caption "Relationship with
BankAmerica," have been duly authorized, executed and delivered by the
Company and BankAmerica, the Bank and Seafirst, as applicable, and each
constitutes a valid and legally binding agreement, enforceable in
accordance with its terms by the Company, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles;
(vii) The issue and sale of the Shares being delivered at such
Time of Delivery by the Company, the compliance by the Company with all of
the provisions of this Agreement and the International Underwriting
Agreement, the consummation of the transactions herein and therein
contemplated and the performance by the Company, BankAmerica, the Bank and
Seafirst of their respective obligations under the Corporate Opportunities
Agreement, the License Agreement, the Sponsorship Agreement, the
Administrative Services Agreement, the Marketing Agreement, the lease
agreement and the Tax Allocation Agreement, each as described in the
Prospectus under the caption "Relationship with BankAmerica," will not
result in any violation of the provisions of the Certificate of
Incorporation or By-laws or other charter documents of the Company or any
statute or any order, rule or regulation known to such counsel of any court
or government agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties;
(viii) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is in violation of its Certificate of Incorporation or
By-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its properties
may be bound;
(ix) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, in the International Prospectus under
the caption "Certain United States Tax Considerations for Non-U.S. Holders
of Common Stock", and in the Prospectus under the captions "Relationship
with BankAmerica" and "Underwriting", insofar as they purport to describe
the provisions of the laws and documents referred to therein, are accurate,
complete and fair in all material respects;
(x) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act; and
(xi) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time
of Delivery (other than the financial statements and related schedules and
other financial information contained therein or that should have been
contained therein, as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the Act and
the rules and regulations thereunder, although they do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except for those
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referred to in the opinion in subsection (ix) of this Section 8(c); nothing
has come to the attention of such counsel to cause them to believe that, as
of its effective date, the Registration Statement or any further amendment
thereto made by the Company prior to such Time of Delivery (other than the
financial statements and related statements and related schedules therein
or that should have been contained therein, as to which such counsel need
express no opinion) contained an 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 not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial statements
and related schedules therein or that should have been contained therein,
as to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading or that, as of such Time of Delivery,
either the Registration Statement or the Prospectus or any further
amendment or supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules therein
or that should have been contained therein, as to which such counsel need
express no opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than the United
States, the State of California and the corporate law of the State of
Delaware.
(d) Counsel for BankAmerica shall have furnished to you their written
opinions (a draft of each such opinion is attached as Annex II(c) hereto),
dated such Time of Delivery, in form and substance reasonably satisfactory
to you, to the effect that:
(i) Each subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation or otherwise has been duly organized and is
in good standing under the laws of its jurisdiction of organization; and
all of the issued shares of capital stock of each such subsidiary have been
duly and validly authorized and issued, are fully paid and non-assessable,
and (except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect to
matters of fact upon certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions and
certificates);
(ii) Any material real property and buildings held under lease by
the Company and its subsidiaries in the States of California or Washington
are held by them under valid, subsisting and enforceable leases or
subleases with such exceptions as do not materially interfere with the use
made and proposed to be made of such property and buildings by the Company
or such subsidiary (in giving the opinion in this clause, such counsel may
state that no examination of record titles for the purpose of such opinion
has been made, and that they are relying upon a general review of the
titles of the Company and its subsidiaries, upon opinions of local counsel
and abstracts, reports and policies of title companies rendered or issued
at or subsequent to the time of
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acquisition of such property by the Company and its subsidiaries, upon
opinions of counsel to the lessors of such property and, in respect to
matters of fact, upon certificates of officers of the Company and its
subsidiaries, provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions, abstracts,
reports, policies and certificates);
(iii) The issue and sale of the Shares being delivered at such
Time of Delivery by the Company, the compliance by the Company and
BankAmerica with all of the provisions of this Agreement and the
International Underwriting Agreement, the consummation of the transactions
herein and therein contemplated and the performance by the Company,
BankAmerica, the Bank and Seafirst of their respective obligations under
the Corporate Opportunities Agreement, the License Agreement, the
Sponsorship Agreement, the Administrative Services Agreement, the Marketing
Agreement, the lease agreement and the Tax Allocation Agreement , each as
described in the Prospectus under the caption "Relationship with
BankAmerica," will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which BankAmerica, the Bank, Seafirst
or the Company is a party or by which BankAmerica, the Bank, Seafirst or
the Company is bound or to which any of the property or assets of
BankAmerica, the Bank, Seafirst or the Company is subject, nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or By-laws or other charter documents of BankAmerica, the
Bank or Seafirst or any statute or any order, rule or regulation known to
such counsel of any court or government agency or body having jurisdiction
over BankAmerica, the Bank or Seafirst or any of their properties, in each
case that is reasonably likely to have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or the validity,
performance or consummation of the transactions contemplated by this
Agreement and the International Underwriting Agreement;
(iv) No notice, consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement and the International Underwriting Agreement, except the
registration under the Act of the Shares, and such notices, consents,
approvals, authorizations, registrations or qualifications as may be
required to be given to or received from (i) the Office of the Comptroller
of the Currency and the Board of Governors of the Federal Reserve System
that have been provided or obtained prior to the date hereof, (ii) foreign
regulatory authorities in connection with the transfer of any part of BAMSA
to the Company, and (iii) under state or foreign securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
Underwriters and the International Underwriters; and
(v) Although such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, nothing has come to the attention
of such counsel to cause such counsel to believe that, as of its effective
date, the Registration Statement or any further amendment thereto made by
the Company prior to such Time of Delivery (other than the financial
statements and related statements and related schedules therein or that
should have been contained therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or omitted to
state
-14-
<PAGE>
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the Prospectus
or any further amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules therein or that should have been contained therein or that should
have been contained therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading or
that, as of such Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial statements
and related schedules therein or that should have been contained therein,
as to which such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; and they do not know of any amendment to
the Registration Statement required to be filed or of any contracts or
other documents of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as required;
In rendering such opinion, such counsel may state that they express
no opinion as to the laws of any jurisdiction outside the United States.
(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, Ernst &
Young LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to
you, to the effect set forth in Annex I hereto (the executed copy of the
letter delivered prior to the execution of this Agreement is attached as
Annex I(a) hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration
Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);
(f)(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case described in
Clause (i) or (ii), is in the judgment of the Representatives so material
and adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus;
-15-
<PAGE>
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a suspension or
material limitation in trading in the Company's securities on the New York
Stock Exchange; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York or California State authorities; or
(iv) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war, if
the effect of any such event specified in this Clause (iv) in the judgment
of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(h) The Shares to be sold at such Time of Delivery shall have been
duly listed subject to notice of issuance, on the New York Stock Exchange;
(i) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each of BankAmerica, the Bank and
Seafirst, substantially to the effect set forth in Subsection 6(e) hereof
in form and substance satisfactory to you;
(j) The Company shall have complied with the provisions of Section
6(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(k) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of the President and the Chief
Financial Officer of the Company as to the accuracy of the representations
and warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a) and (f) of this Section (excluding, however, as to
subsection (f), the reference to the judgment of the Representatives) and
as to such other matters as you may reasonably request.
9. (a) The Company and BankAmerica will jointly and severally
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal
or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses
are incurred; provided, however, that neither the Company nor BankAmerica
shall be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company or BankAmerica by or on behalf
of any Underwriter through Goldman, Sachs & Co. expressly for use therein;
and provided, further, that the Company shall not be liable to
-16-
<PAGE>
any Underwriter under the indemnity agreement in this subsection (a) with
respect to any Preliminary Prospectus to the extent any such loss, claim
damage or liability of such Underwriter results from the fact that such
Underwriter sold Shares to a person as to whom it shall be established that
there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus or the Prospectus as then amended or
supplemented in any case where such delivery is required by the Act if the
Company has previously furnished copies thereof in sufficient quantity to
such Underwriter and the loss, claim, damage or liability of such
Underwriter results from an untrue statement of material fact or omission
of a material fact contained in the Preliminary Prospectus which was
corrected in the Prospectus or in the Prospectus as then amended or
supplemented.
(b) Each Underwriter will indemnify and hold harmless the Company and
BankAmerica against any losses, claims, damages or liabilities to which the
Company or BankAmerica may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such
Underwriter through Goldman, Sachs & Co. expressly for use therein; and
will reimburse the Company and BankAmerica for any legal or other expenses
reasonably incurred by the Company or BankAmerica in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, (i) the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation and
(ii) the indemnified party agrees to cooperate with the indemnifying party
in the defense of such action against such indemnified party except to the
extent such cooperation would prejudice in any respect
-17-
<PAGE>
the rights of the indemnified party in such action or under this Section 9.
The indemnifying party shall not be liable for any settlement of any action
or claim effected without its written consent, which shall not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
BankAmerica on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and BankAmerica on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company and BankAmerica on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters
with respect to the Shares purchased under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied
by the Company or BankAmerica on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Company, BankAmerica and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to
-18-
<PAGE>
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and BankAmerica under this Section
9 shall be in addition to any liability which the Company or BankAmerica
may otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section 9 shall be
in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to
each officer and director of the Company and BankAmerica and to each
person, if any, who controls the Company or BankAmerica within the meaning
of the Act.
10. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or
other parties to purchase such Shares on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not
arrange for the purchase of such Shares, then the Company shall be entitled
to a further period of thirty-six hours within which to procure another
party or other parties satisfactory to you to purchase such Shares on such
terms. In the event that, within the respective prescribed periods, you
notify the Company that you have so arranged for the purchase of such
Shares, or the Company notifies you that it has so arranged for the
purchase of such Shares, you or the Company shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby
be made necessary. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to
such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of
Delivery, then the Company shall have the right to require each non-
defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Shares which such Underwriter agreed to
purchase hereunder) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, or if
the Company shall not exercise the right
-19-
<PAGE>
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this
Agreement (or, with respect to the Second Time of Delivery, the obligations
of the Underwriters to purchase and of the Company to sell the Optional
Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be
borne by the Company and the Underwriters as provided in Section 7 hereof
and the indemnity and contribution agreements in Section 9 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for
its default.
11. The respective indemnities, agreements, representations, warranties and
other statements of the Company, BankAmerica and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company or BankAmerica, or any officer or director or controlling person of the
Company or BankAmerica, and shall survive delivery of and payment for the
Shares.
12. If this Agreement shall be terminated pursuant to Section 10 hereof,
the Company and BankAmerica shall not then be under any liability to any
Underwriter except as provided in Sections 7 and 9 hereof; but, if for any other
reason, any Shares are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Underwriters through you for all out-of-
pocket expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company and
BankAmerica shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 7 and 9
hereof.
13. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company or BankAmerica shall be delivered or sent by
mail or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 9(c) hereof shall be delivered or sent by
mail or facsimile transmission to such Underwriter at its address set forth in
its Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect at the time of
receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company, BankAmerica and, to the extent provided in
Sections 9 and 11 hereof, the officers and directors of the Company and
BankAmerica and each person who controls the Company, BankAmerica or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
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<PAGE>
15. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
17. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters, the Company and
BankAmerica. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters (U.S. Version), the form of which shall be
submitted to the Company for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
BA Merchant Services, Inc.
By:
Name:
Title:
BankAmerica Corporation
By:
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Montgomery Securities
Salomon Brothers Inc
By:
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
-21-
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
<S> <C> <C>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
- ----------- --------------- ---------
Goldman, Sachs & Co............
Montgomery Securities..........
Solomon Brothers Inc...........
[NAMES OF OTHER UNDERWRITERS]..
Total................ 11,200,000 1,680,000
========== =========
</TABLE>
-22-
<PAGE>
ANNEX I
FORM OF LETTER OF ERNST & YOUNG LLP
TO BE DELIVERED PURSUANT TO SECTION 8(D)
Pursuant to Section 8(d) of the Underwriting Agreement, the accountants shall
furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been furnished separately to the
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees
with the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for 1993, 1994 and 1995 and the
unaudited consolidated financial statements for 1991 and 1992;
(v) They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them to
believe that this information does not conform
<PAGE>
in all material respects with the disclosure requirements of Items 301,
302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an examination
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Prospectus) or any increase in the consolidated long-
term debt of the Company and its subsidiaries, or any
2
<PAGE>
decreases in consolidated net current assets or stockholders' equity
or other items specified by the Representatives, or any increases in
any items specified by the Representatives, in each case as compared
with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in Clause
(E) there were any decreases in consolidated net revenues or operating
profit or the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared with
the comparable period of the preceding year and with any other period
of corresponding length specified by the Representatives, except in
each case for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.
3
<PAGE>
Exhibit 3.1(i)
AMENDED AND RESTATED
--------------------
CERTIFICATE OF INCORPORATION OF
-------------------------------
BA MERCHANT SERVICES, INC.
--------------------------
BA Merchant Services, Inc. a corporation organized and existing under
--------------------------
the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is BA Merchant Services, Inc. BA
Merchant Services, Inc. was originally incorporated under the same name, and the
original Certificate of Incorporation of the corporation was filed with the
Secretary of State of the State of Delaware on October 11, 1996.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
restates and integrates and further amends the provisions of the Certificate of
Incorporation of this corporation.
3. The text of the Amended and Restated Certificate of Incorporation
as heretofore amended or supplemented is hereby restated and further amended to
read in its entirety as follows:
I. FIRST: The name of the corporation is: BA Merchant Services, Inc.
-----
(hereinafter, the "Corporation").
II. SECOND: The address of the registered office of the Corporation
------
in the State of Delaware is Corporation Trust Center, 1209 Orange Street,
in the City of Wilmington, County of New Castle. The name of its registered
agent at such address is:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
III. THIRD: The nature of the business or purposes to be conducted or
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promoted 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
(the "GCL").
IV. FOURTH: A. The total number of shares of stock that the
------
Corporation shall have authority to issue is Two-Hundred Sixty Million
(260,000,000) of which (i) Two-Hundred Million (200,000,000) shares shall
be shares of Class A Common Stock, $.01 par value per share (the "Class A
Common Stock"), and Fifty Million (50,000,000) shares shall be shares of
Class B Common Stock, $.01 par value per share (the "Class B Common Stock")
(the Class A Common Stock and the Class B Common Stock being
-1-
<PAGE>
collectively referred to herein as the "Common Stock"), and (ii) Ten
Million (10,000,000) shares shall be shares of Preferred Stock, $.01 par
value per share (the "Preferred Stock").
B. The number of authorized shares of any class or classes of stock
may be increased or decreased (but not below the number of shares thereof
then outstanding) by the affirmative vote of the holders of a majority of
the votes entitled to be cast by the holders of the Common Stock of the
Corporation, voting together as a single class, irrespective of the
provisions of Section 242(b)(2) of the GCL or any corresponding provision
hereinafter enacted.
C. The following is a statement of the powers, preferences, and
relative participating, optional or other special rights and
qualifications, limitations and restrictions of the Class A Common Stock
and Class B Common Stock of the Corporation:
1. Except as otherwise set forth below in this ARTICLE FOURTH,
the powers, preferences and relative participating, optional or other
special rights and qualifications, limitations or restrictions of the
Class A Common Stock and Class B Common Stock shall be identical in
all respects.
2. Subject to the rights of the holders of Preferred Stock, and
subject to any other provisions of this Amended and Restated
Certificate of Incorporation, holders of Class A Common Stock and
Class B Common Stock shall be entitled to receive such dividends and
other distributions in cash, stock or property of the Corporation as
may be declared thereon by the Board of Directors of the Corporation
from time to time out of assets or funds of the Corporation legally
available therefor. If any dividend or other distribution in cash or
other property is paid with respect to Class A Common Stock or with
respect to Class B Common Stock (other than dividends or other
distributions payable in shares of Common Stock), a like dividend or
other distribution in cash or other property shall also be paid with
respect to shares of the other class of Common Stock, in an amount
equal per share. In the case of dividends or other distributions
payable in Common Stock, including distributions pursuant to stock
splits or divisions of Common Stock of the Corporation, only shares of
Class A Common Stock shall be paid or distributed with respect to
Class A Common Stock and only shares of Class B Common Stock shall be
paid or distributed with respect to Class B Common Stock. The number
of shares of Class A Common Stock and Class B Common Stock so
distributed shall be equal
-2-
<PAGE>
in number on a per share basis. Neither the shares of Class A Common
Stock nor the shares of Class B Common Stock may be reclassified,
subdivided or combined unless such reclassification, subdivision or
combination occurs simultaneously and in the same proportion for each
class.
3. (a) At every meeting of the stockholders of the Corporation,
every holder of Class A Common Stock shall be entitled to one vote in
person or by proxy for each share of Class A Common Stock standing in
his or her name on the transfer books of the Corporation, and every
holder of Class B Common Stock shall be entitled to ten votes in
person or by proxy for each share of Class B Common Stock standing in
his or her name on the transfer books of the Corporation in connection
with the election of directors and all other matters submitted to a
vote of the stockholders; provided, however, that with respect to any
proposed conversion subsequent to a Tax-Free Spin-Off (as defined in
paragraph (C)(6)(b)(i) below) of the shares of Class B Common Stock
into shares of Class A Common Stock pursuant to paragraph
(C)(6)(b)(iii) below, each holder of a share of Common Stock,
irrespective of class, shall have one vote in person or by proxy for
each share of Common Stock standing in his or her name on the transfer
books of the Corporation. Except as may be otherwise required by this
ARTICLE FOURTH, the holders of Class A Common Stock and Class B Common
Stock shall vote together as a single class, subject to any voting
rights which may be granted to holders of Preferred Stock, on all
matters submitted to a vote of the holders of Common Stock.
(b) Subject to any rights of the holders of Preferred Stock,
the provisions of this Amended and Restated Certificate of
Incorporation shall not be modified, revised, altered or amended,
repealed or rescinded in whole or in part, without the approval of a
majority of the votes entitled to be cast by the holders of the Class
A Common Stock and the Class B Common Stock, voting together as a
single class; provided, however, that with respect to any proposed
amendment of this Amended and Restated Certificate of Incorporation
which would alter or change the powers, preferences or special rights
of the shares of Class A Common Stock or Class B Common Stock so as to
affect them adversely, the approval of a majority of the votes
entitled to be cast by the holders of the shares affected by the
proposed amendment, voting separately as a class, shall be obtained in
addition to the approval of a majority of the votes entitled to be
cast by the holders of the
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<PAGE>
Class A Common Stock and the Class B Common Stock voting together as a
single class as hereinbefore provided. Any increase in the authorized
number of shares of any class or classes of stock of the Corporation
or creation, authorization or issuance of any securities convertible
into, or warrants, options or similar rights to purchase, acquire or
receive, shares of any such class or classes of stock shall be deemed
not to affect adversely the powers, preferences or special rights of
the shares of Class A Common Stock or Class B Common Stock. Neither
the outcome of any vote with respect to any proposed conversion
subsequent to a Tax-Free Spin-Off of the shares of Class B Common
Stock into shares of Class A Common Stock pursuant to paragraph
(C)(6)(b)(iii) below nor the occurrence of the events described in the
last sentence of paragraph (C)(6)(b)(iii) below shall be deemed to be
a modification, revision, alteration, amendment, repeal or rescission
of the provisions of this Amended and Restated Certificate of
Incorporation.
(c) Every reference in this Certificate of Incorporation to
a majority or other proportion of shares of Common Stock, Class A
Common Stock or Class B Common Stock shall refer to such majority or
other proportion of the votes to which such shares of Common Stock,
Class A Common Stock or Class B Common Stock, as applicable, are
entitled.
4. In the event of any dissolution, liquidation or winding
up of the affairs of the Corporation, whether voluntary or
involuntary, after payment in full of the amounts required to be paid
to the holders of Preferred Stock, the remaining assets and funds of
the Corporation shall be distributed pro rata to the holders of Class
A Common Stock and Class B Common Stock. For the purposes of this
paragraph (C)(4), the voluntary sale, conveyance, lease, exchange or
transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the assets of the
Corporation or a consolidation or merger of the Corporation with one
or more other corporations (whether or not the Corporation is the
corporation surviving such consolidation or merger) shall not be
deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary.
5. In the event of (i) any reorganization or any
consolidation of the Corporation with one or more other corporations
or a merger of the Corporation with another corporation unless (ii)
immediately following such event, and
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<PAGE>
based solely on the securities issued in connection therewith, a
majority of the total voting power of the successor corporation is
held by Persons that were stockholders of the Corporation immediately
prior to such event, each holder of a share of Class A Common Stock
shall be entitled to receive with respect to such share the same kind
and amount of shares of stock and other securities and property
(including cash) receivable upon such reorganization, consolidation or
merger by a holder of a share of Class B Common Stock and each holder
of a share of Class B Common Stock shall be entitled to receive with
respect to such share the same kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reorganization, consolidation or merger by a holder of a share of
Class A Common Stock.
6. (a) Prior to the date on which shares of Class B Common
Stock are distributed to stockholders of BankAmerica (as defined in
paragraph (C)(6)(b)(i) below), or to stockholders of the Class B
Transferee (as defined in paragraph (C)(6)(b)(ii) below) in a Tax-Free
Spin-Off, each record holder of shares of Class B Common Stock may
convert from time to time any or all of such shares into an equal
number of shares of Class A Common Stock by surrendering the
certificates for such shares, accompanied by any required tax transfer
stamps and by a written notice by such record holder to the
Corporation stating that such record holder desires to convert such
shares of Class B Common Stock into the same number of shares of Class
A Common Stock and requesting that the Corporation issue all of such
shares of Class A Common Stock to Persons named therein, setting forth
the number of shares of Class A Common Stock to be issued to each such
Person and the denominations in which the certificates therefor are to
be issued. To the extent permitted by law, such voluntary conversion
shall be deemed to have been effected at the close of business on the
date of such surrender. Following a Tax-Free Spin-Off, shares of Class
B Common Stock shall no longer be convertible into shares of Class A
Common Stock except as set forth in paragraph (C)(6)(b) below.
(b)(i) Prior to a Tax-Free Spin-Off, each share of Class B
Common Stock shall automatically convert into one share of Class A
Common Stock immediately prior to the transfer of such share if, after
such transfer, such share is not Beneficially Owned (as defined below)
by BankAmerica or, as set forth below in this paragraph (C)(6)(b), by
a Class B Transferee or any subsidiary of a Class B Transferee. Shares
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<PAGE>
of Class B Common Stock shall not convert into shares of Class A
Common Stock (x) in any transfer effected in connection with a
distribution of Class B Common Stock as a spin-off, split-up or split-
off to stockholders of BankAmerica or stockholders of a Class B
Transferee intended to be on a tax-free basis under the Internal
Revenue Code of 1986, as amended from time to time (the "Code") (a
"Tax-Free Spin-Off") or (y) except as otherwise set forth below in
this paragraph (C)(6)(b), in any transfer after a Tax-Free Spin-Off.
For purposes of this paragraph (C)(6), a Tax-Free Spin-Off shall be
deemed to have occurred at the time shares are first transferred to
stockholders of BankAmerica or stockholders of a Class B Transferee,
as the case may be, following receipt of an affidavit described in
clauses (vi) or (vii) of the first sentence of paragraph (C)(6)(d)
below. For purposes of this paragraph (C)(6), "BankAmerica" shall mean
BankAmerica Corporation, a Delaware corporation, all successors to
BankAmerica Corporation by way of merger, consolidation or sale of all
or substantially all its assets, and all corporations, partnerships,
joint ventures, associations and other entities in which BankAmerica
Corporation Beneficially Owns (as defined below), directly or
indirectly, 50% or more of the voting power of the outstanding voting
stock or similar voting interests ("Voting Interests") (each, a
"Subsidiary Entity"), but which shall not include the Corporation or
any Subsidiary Entity in which the Corporation Beneficially Owns (as
defined below), directly or indirectly, 50% or more of the outstanding
Voting Interest. For purposes of this paragraph (C)(6), the terms
"Beneficially Own," "Beneficially Owns" and "Beneficially Owned" shall
have the meanings ascribed to such terms in Rule 13d-3 of the General
Rules and Regulations of the Securities Exchange Act of 1934, as in
effect on October 11, 1996.
(ii) Prior to a Tax-Free Spin-Off, shares of Class B Common
Stock representing more than a 50% economic interest in the then
outstanding shares of Common Stock taken as a whole transferred in a
single transaction to one Person who is not an affiliate of
BankAmerica (a "Class B Transferee") or to a Class B Transferee and
any Subsidiary Entity of such Class B Transferee, and shares of Class
B Common Stock transferred among a Class B Transferee and any
Subsidiary Entity thereof, shall not automatically convert to Class A
Common Stock upon the transfer of such shares. Any shares of Class B
Common Stock retained by BankAmerica (or, subject to the preceding
sentence, a Class B Transferee) following any such transfer of shares
of Class B Common
-6-
<PAGE>
Stock to a Class B Transferee (or subsequent Class B Transferee) shall
automatically convert into shares of Class A Common Stock upon such
transfer. For purposes of this paragraph (C)(6), the term "Person"
shall mean any individual, firm, corporation or other entity; each
reference to an "individual" (or to a "record holder" of shares, if an
individual) shall be deemed to include in his or her representative
capacity a guardian, committee, executor, administrator or other legal
representative of such individual or record holder.
(iii) In the event of a Tax-Free Spin-Off, shares of Class B
Common Stock shall automatically convert into shares of Class A Common
Stock on the fifth anniversary of the date on which shares of Class B
Common Stock are first transferred to stockholders of BankAmerica or
the stockholders of a Class B Transferee, as the case may be, in a
Tax-Free Spin-Off unless, prior to such Tax-Free Spin-Off, BankAmerica
or a Class B Transferee, as the case may be, delivers to the
Corporation the written advice of counsel, reasonably satisfactory to
the Corporation, to the effect that (x) such conversion could
adversely affect the ability of BankAmerica or such Class B
Transferee, as the case may be, to obtain a favorable ruling from the
Internal Revenue Service that the distribution would be a Tax-Free
Spin-Off under the Code or (y) the Internal Revenue Service has
adopted a general non-ruling policy on tax-free spinoffs and that such
conversion could adversely affect the status of the transaction as a
Tax-Free Spinoff. If such written advice of counsel is received,
approval of such conversion shall be submitted to a vote of the
holders of the Common Stock as soon as practicable after the fifth
anniversary of the Tax-Free Spin-Off. At the meeting of stockholders
called for such purpose, every holder of Common Stock shall be
entitled to one vote (irrespective of the voting rights provided for
such shares under paragraph (C)(3)(a)) in person or by proxy for each
share of Common Stock standing in his or her name on the transfer
books of the Corporation. Approval of such conversion shall require
the approval of a majority of the votes, on the per share voting basis
provided in the preceding sentence, entitled to be cast by the holders
of the Class A Common Stock and Class B Common Stock present and
voting, voting together as a single class, and the holders of the
Class B Common Stock shall not be entitled to a separate class vote.
Such conversion shall be effective on the date on which such approval
is given at a meeting of stockholders called for such purpose.
Notwithstanding the foregoing, if BankAmerica or the Class B
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<PAGE>
Transferee, as the case may be, delivers to the Corporation prior to
such anniversary the written advice of counsel, reasonably
satisfactory to the Corporation, to the effect that such vote could
adversely affect the status of the transaction as a Tax-Free Spin-Off
(including without limitation the ability to obtain a favorable ruling
from the Internal Revenue Service) such vote shall not be held and no
such conversion shall take place. Upon delivery of such written advice
of counsel as to such vote, and the further advice that the continued
existence of this paragraph (C)(6)(b)(iii) itself could adversely
affect the status of the transaction as a Tax-Free Spin-Off (including
without limitation the ability to obtain a favorable ruling from the
Internal Revenue Service), then this paragraph (C)(6)(b)(iii) shall
thereafter be null and void and no longer deemed to be part of this
Amended and Restated Certificate of Incorporation.
(iv) If at any time prior to a Tax-Free Spin-Off BankAmerica
or a Class B Transferee shall cease respectively to Beneficially Own a
number of outstanding shares of Class B Common Stock at least equal to
30% of the economic ownership represented by the aggregate number of
shares of Common Stock then outstanding, then each share of Class B
Common Stock Beneficially Owned by such less than 30% owner shall
automatically convert into one share of Class A Common Stock.
(v) The Corporation will provide notice of any automatic
conversion of all outstanding shares of Class B Common Stock to
holders of record as soon as practicable after the conversion;
provided, however, that the Corporation may satisfy such notice
requirement by providing such notice prior to conversion. Such notice
shall be provided by mailing notice of such conversion first class
postage prepaid, to each holder of record of the Common Stock, at such
holder's address as it appears on the transfer books of the
Corporation; provided, however, that no failure to give such notice
nor any defect therein shall affect the validity of the automatic
conversion of any shares of Class B Common Stock. Each such notice
shall state, as appropriate, the following:
(w) the automatic conversion date;
(x) that all outstanding shares of Class B Common Stock are
automatically converted;
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<PAGE>
(y) the place or places where certificates for such shares are to
be surrendered for conversion; and
(z) that no dividends will be declared on the shares of Class B
Common Stock converted after such conversion date.
Immediately upon such conversion, the rights of the holders of
shares of Class B Common Stock as such shall cease and such holders
shall be treated for all purposes as having become the record owners
of the shares of Class A Common Stock issuable upon such conversion;
provided, however, that such Persons shall be entitled to receive when
paid any dividends declared on the Class B Common Stock as of a record
date preceding the time of such conversion and unpaid as of the time
of such conversion, subject to paragraph (C)(6)(f) below.
(c) Prior to a Tax-Free Spin-Off, holders of shares of Class
B Common Stock may (i) sell or otherwise dispose of or transfer any or
all of such shares held by them, respectively, only in connection with
a transfer which meets the qualifications of paragraph (C)(6)(d)
below, and under no other circumstances, or (ii) convert any or all of
such shares into shares of Class A Common Stock as provided in
paragraph (C)(6)(a) above. Prior to a Tax-Free Spin-Off, no one other
than those Persons in whose names shares of Class B Common Stock
originally are registered on the stock ledger of the Corporation, or
transferees or successive transferees who receive shares of Class B
Common Stock in connection with a transfer which meets the
qualifications set forth in paragraph (C)(6)(d) below, shall by virtue
of the acquisition of a certificate for shares of Class B Common Stock
have the status of an owner or holder of shares of Class B Common
Stock or be recognized as such by the Corporation or be otherwise
entitled to enjoy for his or her own benefit the special rights and
powers of a holder of shares of Class B Common Stock.
Holders of shares of Class B Common Stock may at any and all
times transfer to any Person the shares of Class A Common Stock
issuable upon conversion of such shares of Class B Common Stock.
(d) Prior to a Tax-Free Spin-Off, shares of Class B Common
Stock shall be transferred on the books of the Corporation and a new
certificate therefor issued, upon presentation at the office of the
Secretary of the Corporation
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<PAGE>
(or at such additional place or places as may from time to time be
designated by the Secretary of the Corporation) of the certificate for
such shares, in proper form for transfer and accompanied by all
requisite stock transfer tax stamps, only if such certificate when so
presented shall also be accompanied by any one of the following:
(i) an affidavit from BankAmerica stating that such certificate
is being presented to effect a transfer by BankAmerica of such shares
to a Subsidiary Entity of BankAmerica; or
(ii) an affidavit from BankAmerica stating that such certificate
is being presented to effect a transfer by any Subsidiary Entity of
BankAmerica of such shares to BankAmerica or another Subsidiary Entity
of BankAmerica; or
(iii) an affidavit from BankAmerica (or a Class B Transferee)
stating that such certificate is being presented to effect a transfer
by BankAmerica (or such Class B Transferee) or any of its (or such
Class B Transferee's) Subsidiary Entities of such shares to a Class B
Transferee or a Subsidiary Entity of such Class B Transferee as
contemplated by paragraph (C)(6)(b); or
(iv) an affidavit from a Class B Transferee stating that such
certificate is being presented to effect a transfer by such Class B
Transferee of such shares to a Subsidiary Entity of such Class B
Transferee; or
(v) an affidavit from a Class B Transferee stating that such
certificate is being presented to effect a transfer by any Subsidiary
Entity of such Class B Transferee of such shares to such Class B
Transferee or another Subsidiary Entity of such Class B Transferee; or
(vi) an affidavit from BankAmerica stating that such certificate
is being presented to effect a transfer by BankAmerica of such shares
to the stockholders of BankAmerica in connection with a Tax-Free Spin-
Off; or
(vii) an affidavit from a Class B Transferee stating that such
certificate is being presented to effect a transfer by such Class B
Transferee of such shares to the stockholders of such Class B
Transferee in connection with a Tax-Free Spin-Off.
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<PAGE>
Each affidavit of a record holder furnished pursuant to this
paragraph (C)(6)(d) shall be verified as of a date not earlier than
five days prior to the date of delivery thereof, and, where such
record holder is a corporation or partnership, shall be verified by an
officer of the corporation or by a general partner of the partnership,
as the case may be.
(e) Prior to the occurrence of a Tax-Free Spin-Off, each
certificate for shares of Class B Common Stock shall bear a legend on
the face thereof reading as follows:
"The shares of Class B Common Stock represented by this
certificate may not be transferred to any person or entity in
connection with a transfer that does not meet the qualifications set
forth in paragraph (C)(6)(d) of ARTICLE FOURTH of the Certificate of
Incorporation of this Corporation and no person who receives such
shares in connection with a transfer which does not meet the
qualifications prescribed by paragraph (C)(6)(d) of said ARTICLE
FOURTH is entitled to own or to be registered as the record holder of
such shares of Class B Common Stock and such shares will have been
automatically converted into Class A Common Stock upon any such
purported transfer. The record holder of this certificate may at any
time convert such shares of Class B Common Stock into the same number
of shares of Class A Common Stock. Each holder of this certificate,
by accepting the same, accepts and agrees to all of the foregoing."
Upon and after the transfer of shares in a Tax-Free Spin-Off,
shares of Class B Common Stock shall no longer bear the legend set
forth above in this paragraph (C)(6)(e).
(f) Upon any conversion of shares of Class B Common Stock into
shares of Class A Common Stock pursuant to the provisions of this
paragraph (C)(6), any dividend, for which the payment date shall be
subsequent to such conversion, which may have been declared on the
shares of Class B Common Stock so converted shall be deemed to have
been declared, and shall be payable, with respect to the shares of
Class A Common Stock into or for which such shares of Class B Common
Stock shall have been so converted, and any such dividend payable in
Common Stock shall be deemed to have been declared, and shall be
payable, in shares of Class A Common Stock.
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<PAGE>
(g) The Corporation shall not reissue or resell any shares
of Class B Common Stock which shall have been converted into shares of
Class A Common Stock pursuant to or as permitted by the provisions of
this paragraph (C)(6), or any shares of Class B Common Stock which
shall have been acquired by the Corporation in any other manner. The
Corporation shall, from time to time, take such appropriate action as
may be necessary to retire such shares and to reduce the authorized
amount of Class B Common Stock accordingly.
The Corporation shall at all times reserve and keep available,
out of its authorized but unissued Common Stock, such number of shares
of Class A Common Stock as would become issuable upon the conversion
of all shares of Class B Common Stock then outstanding.
(h) In connection with any transfer or conversion of any
stock of the Corporation pursuant to or as permitted by the provisions
of this paragraph (C)(6) or in connection with the making of any
determination referred to in this paragraph (C)(6):
(1) the Corporation shall be under no obligation to make any
investigation of facts unless an officer, employee or agent of the
Corporation responsible for making such transfer or determination or
issuing Class A Common Stock pursuant to such conversion has
substantial reason to believe, or unless the Board of Directors (or a
committee of the Board of Directors designated for such purpose)
determines that there is substantial reason to believe, that any
affidavit or other document is incomplete or incorrect in a material
respect or that an investigation would disclose facts upon which any
determination referred to in paragraph (C)(6)(f) above should be made,
in either of which events the Corporation shall make or cause to be
made such investigation as it may deem necessary or desirable in the
circumstances and have a reasonable time to complete such
investigation; and
(2) neither the Corporation nor any director, officer, employee
or agent of the Corporation shall be liable in any manner for any
action taken or omitted in good faith.
(i) The Corporation will not be required to pay any documentary,
stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Class A Common Stock on the conversion
of shares of Class B Common Stock
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<PAGE>
pursuant to this paragraph (C)(6), and no such issue or delivery shall
be made unless and until the Person requesting such issue has paid to
the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
7. All rights to vote and all voting power (including,
without limitation thereto, the right to elect directors) shall be
vested exclusively in the holders of Common Stock, voting together as
a single class, except as otherwise expressly provided in this Amended
and Restated Certificate of Incorporation, in a Preferred Stock
Designation or as otherwise expressly required by applicable law.
D. Subject to the limitations and in the manner provided by law,
shares of the Preferred Stock may be issued from time to time in series,
and the Board of Directors of the Corporation or a duly-authorized
committee of the Board of Directors of the Corporation, in accordance with
the laws of the State of Delaware, is hereby authorized to determine or
alter the relative rights, powers (including voting powers), preferences,
privileges and restrictions granted to or imposed upon Preferred Stock or
any wholly unissued series of shares of Preferred Stock, and to increase or
decrease (but not below the number of shares of any series of Preferred
Stock then outstanding) the number of shares of any such series subsequent
to the issue of shares of that series. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall
upon the taking of any action required by applicable law resume the status
which they had prior to the adoption of the resolution originally fixing
the number of shares of such series.
V. FIFTH: In accordance with Section 203(b)(3) of the GCL, the
-----
Corporation expressly elects not to be governed by Section 203 of the GCL.
VI. SIXTH: The books and records of the Corporation may be kept (subject
-----
to any mandatory requirement of law) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of
Directors or by the Bylaws of the Corporation.
VII. SEVENTH: Special meetings of stockholders of the Corporation, for
-------
any purpose or purposes, unless otherwise prescribed by statute or by this
Amended and Restated Certificate of Incorporation, may be called by the
Chairman of the Board or the President and shall be called by the Chairman
of the Board or the President or Secretary at the request in writing of a
majority of the Board of Directors, or at the request in writing of
stockholders owning a majority in amount of the total voting power of the
entire capital
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<PAGE>
stock of the Corporation issued and outstanding and entitled to vote. Such
request shall state the purpose or purposes of the proposed meeting.
EIGHTH: In furtherance and not in limitation of the powers conferred
------
upon it by the laws of the State of Delaware, the Board of Directors shall
have the power to adopt, amend, alter or repeal the Corporation's Bylaws.
NINTH: No director of the Corporation shall be liable to the
-----
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
GCL, or (iv) for any transaction from which the director derived an
improper personal benefit.
If the GCL hereafter is amended to further eliminate or limit the
liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended
GCL. Any repeal or modification of this paragraph by the stockholders of
the Corporation shall be prospective only, and shall not adversely affect
any limitation on the personal liability of a director of the Corporation
existing at the time of such repeal or modification.
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
has been signed by Cheryl Sorokin, its authorized officer this 29th day of
November, 1996.
BA Merchant Services, Inc.
By /s/ CHERYL SOROKIN
----------------------------
Title: Secretary
----------------------
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<PAGE>
Exhibit 4.1
- -------------- --------------
NUMBER SHARES
BPI
- -------------- --------------
COMMON STOCK COMMON STOCK
[ILLUSTRATION APPEARS HERE]
THIS CERTIFICATE IS TRANSFERABLE IN SEE REVERSE FOR CERTAIN
SAN FRANCISCO, CA, RIDGEFIELD PARK, NJ DEFINITIONS AND RESTRICTIONS
OR NEW YORK, NY
BA Merchant Services, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
---------------------------------------------------------------
THIS CERTIFIES THAT CUSIP 055239 10 7
IS THE RECORD HOLDER OF
---------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF THE CLASS A COMMON STOCK,
PAR VALUE $.01 PER SHARE, OF
BA Merchant Services, Inc., transferable in person or by duly authorized
attorney, upon surrender of this certificate properly endorsed. This certificate
is not valid unless countersigned by the Transfer Agent and registered by the
Registrar.
CERTIFICATE OF STOCK
Witness the facsimile signatures of the duly authorized officers of the
Corporation.
Dated: COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
BY
/s/ CHERYL SOROKIN /s/ SHARIF M. BAYYARI
SECRETARY PRESIDENT AUTHORIZED SIGNATURE
<PAGE>
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights as established, from time to time, by the Certificate of
Incorporation of the Corporation and by any certificate of determination, the
number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge at
the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -- ______________ Custodian ___________________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act ________________________________________
in common (State)
UNIF TRF MIN ACT -- _____________ Custodian (until age ________)
(Cust)
__________________ under Uniform Transfers
(Minor)
to Minors Act ______________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ___________________________ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated __________________________________
X ______________________________________
X ______________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAMES(S) AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of this ____ day of December, 1996 by and among BANK OF AMERICA NT & SA,
-----------------------
a national banking association (the "Bank"), and BANK OF AMERICA NW, NATIONAL
----------------------------
ASSOCIATION, a national banking association ("BANW" and, collectively with the
- -----------
Bank, the "Holders") and BA MERCHANT SERVICES, INC., a Delaware corporation
--------------------------
("BAMSI").
RECITALS
A. The Holders. The Bank and BANW are each an existing national banking
-----------
association duly organized and in good standing under the laws of the United
States with their respective principal executive offices located in San
Francisco, California and Seattle, Washington.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of the
-----
State of Delaware, with its principal executive offices located in San
Francisco, California. All of the outstanding Common Stock of BAMSI is
currently owned by the Bank and BANW.
C. Corporate Approvals. Each of the parties to this Agreement has
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obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend to
-------------------------
conduct their relationships hereunder on an arm's length basis.
E. BAC/BAMSI Transactions; The Offering. The Bank and BANW, each a
------------------------------------
subsidiary of BankAmerica Corporation ("BAC"), currently own 100% of the
outstanding common stock of BAMSI. The Bank and BANW have entered into certain
agreements with BAMSI (1) transferring the Bank's United States domestic
merchant processing business and the BANW merchant processing business to BAMSI
effective as of December 3, 1996 and (2) covering the contemplated transfer of
the Philippine and Thailand merchant processing businesses of the Bank to BAMSI
upon the receipt of certain governmental approvals (collectively, the "Asset
Transfers"). BAMSI is contemplating the issuance of shares of BAMSI's Class A
common stock, $.01 par value per share (the "Class A Common Stock"), in an
initial public offering pursuant to a Registration Statement on Form S-1
(Registration No. 333-13985) (the "Offering") and following the Offering, the
Bank and BANW will each be the beneficial and record owner of 25,670,000 shares
and 4,530,000 shares, respectively, of BAMSI's Class B common stock, $.01 par
value per share (the "Class B Common Stock"), convertible into 25,670,000 shares
and 4,530,000 shares, respectively, of the Class A Common Stock.
-1- Registration Rights Agreement
<PAGE>
F. Registration Rights. In consideration of the Asset Transfers and in
-------------------
conjunction with the Offering, the Holders and BAMSI desire to enter into this
Agreement to provide the Holders with certain registration rights as provided
herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration had and
received, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
-----------
following respective meanings:
"Affiliate" shall mean any Person that directly or indirectly
controls, is controlled by, or is under common control with such Person. A
Person shall be deemed to control another Person if such Person owns 50% or
more of any equity interest in the "controlled" Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership
of stock or partnership interests, by contract, agreement or understanding
(whether oral or written), or otherwise.
"Class A Common Stock" shall have the meaning set forth in Recital E
of this Agreement.
"Class B Common Stock" shall have the meaning set forth in Recital E
of this Agreement.
"Designated Transferee" shall have the meaning set forth in Section
10 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holders" shall mean the Bank and BANW, any Affiliate of the Bank or
BANW (other than BAMSI) and any Designated Transferees who are holders of
record of any Registrable Shares, and any combination of one or more such
Holders.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Other Holders" shall mean Persons who are holders of record of equity
securities of BAMSI who subsequent to the date hereof acquire more than 5%
of the outstanding shares of Class A Common Stock pursuant to a transaction
with BAMSI and to whom BAMSI grants registration rights pursuant to a
written agreement in connection with such transaction.
-2- Registration Rights Agreement
<PAGE>
"Person" shall mean any individual, corporation, association,
partnership, group (as defined in Section 13(d)(3) of the Exchange Act),
limited liability company, joint venture, business trust or unincorporated
organization, or a government or any agency or political subdivision
thereof.
"Registrable Shares" shall mean (i) the 30,200,000 shares of Class A
Common Stock which would result upon the conversion of the 30,200,000
shares of Class B Common Stock owned by the Holders on the date of this
Agreement, and (ii) any shares of Class A Common Stock acquired by a Holder
directly or upon exercise of conversion of any equity securities of BAMSI
issued or distributed after the date of this Agreement to a Holder in
respect of Registrable Shares by way of any stock dividend, stock split or
other distribution or any recapitalization or reclassification. As to any
particular Registrable Share, such Registrable Share shall cease to be a
Registrable Share when (w) it shall have been sold, transferred or
otherwise disposed of or exchanged pursuant to a registration statement
under the Securities Act; (x) it shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act;
(y) it shall have been sold or transferred to a Person other than a
Designated Transferee in a private transaction effected other than pursuant
to a registration statement; or (z) it shall have been sold, transferred or
otherwise disposed of in violation of this Agreement.
"Registration Expenses" shall have the meaning set forth in Section 7
hereof.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2. Incidental Registrations
------------------------
(a) Right to Include Registrable Shares. Each time BAMSI shall determine
-----------------------------------
to file a registration statement under the Securities Act in connection with a
proposed offer and sale for cash of any equity securities (other than an
offering of debt securities which are convertible into equity securities or an
offering of equity securities in an amount not in excess of 5% of the number of
shares of Class A Common Stock outstanding at such time) either by it or by any
holders of its outstanding equity securities, BAMSI will give prompt written
notice of its determination to each Holder and of such Holder's rights under
this Section 2, at least 30 days prior to the anticipated filing date of such
registration statement. Upon the written request of each Holder made within 21
days after the receipt of any such notice from BAMSI, (which request shall
specify the Registrable Shares intended to be disposed of by such Holder), BAMSI
will use its best efforts to effect the registration under the Securities Act of
all Registrable Shares which BAMSI has been so requested to register by the
Holders thereof, to the extent required to permit the disposition of the
Registrable
-3- Registration Rights Agreement
<PAGE>
Shares so to be registered; provided, however, that (i) if, at any time after
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giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, BAMSI shall determine for any reason not to proceed with the
proposed registration of the securities to be sold by it, BAMSI may, at its
election, give written notice of such determination to each Holder of
Registrable Shares and thereupon shall be relieved of its obligation to register
any Registrable Shares in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith), and (ii)
if such registration involves an underwritten offering, all Holders of
Registrable Shares requesting to be included in BAMSI's registration must sell
their Registrable Shares to the underwriters on the same terms and conditions as
apply to BAMSI, with such differences, including any with respect to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings. If a registration requested pursuant
to this Section 2 involves an underwritten public offering, any Holder of
Registrable Shares requesting to be included in such registration may elect, in
writing prior to the effective date of the registration statement filed in
connection with such registration, not to register such securities in connection
with such registration. No registration effected under this Section 2 shall
relieve BAMSI of its obligations to effect registrations upon request under
Section 4 hereof.
(b) Priority in Incidental Registration. If a registration pursuant to
-----------------------------------
this Section 2 involves an underwritten offering and the managing
underwriter(s) in good faith advise(s) BAMSI in writing that, in its opinion,
the number of securities which BAMSI, the Holders and any other Persons intend
to include in such registration exceeds the largest number of securities which
can be sold in such offering without having an adverse effect on such offering
(including the price at which such securities can be sold), then BAMSI will
include in such registration (i) first, if the registration pursuant to this
Section 2 was initiated by Other Holders exercising demand registration rights,
100% of the securities such Other Holders propose to sell (except to the extent
the terms of such Other Holders' registration rights provide otherwise); (ii)
second, 100% of the securities BAMSI proposes to sell for its own account; (iii)
third, to the extent that the number of securities which such Other Holders
exercising demand registration rights and BAMSI propose to sell is less than the
number of securities which BAMSI has been advised can be sold in such offering
without having the adverse effect referred to above, such number of Registrable
Shares which the Holders have requested to be included in such registration
pursuant to Section 2(a) hereof and which, in the opinion of such managing
underwriter(s), can be sold without having the adverse effect referred to above;
and (iv) fourth, to the extent that the number of securities which are to be
included in such registration pursuant to clauses (i), (ii) and (iii) is, in the
aggregate, less than the number of securities which BAMSI has been advised can
be sold in such offering without having the adverse effect referred to above,
such number of other securities requested to be included in the offering for the
account of any Other Holders which, in the opinion of such managing
underwriter(s), can be sold without having the adverse effect referred to above.
-4- Registration Rights Agreement
<PAGE>
3. Holdback Agreements.
-------------------
(a) If any registration of Registrable Shares shall be in connection with
an underwritten public offering, the Holders shall not effect any public sale or
distribution (except in connection with such public offering), of any equity
securities of BAMSI, or of any security convertible into or exchangeable or
exercisable for any equity security of BAMSI (in each case, other than as part
of such underwritten public offering), during the 90-day period (or such lesser
period as the managing underwriter(s) beginning on the effective date of such
registration, if, and to the extent, the managing underwriter(s) of any such
offering determine(s) such action is necessary or desirable to effect such
offering; provided, however, that each Holder has received the written notice
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required by Section 2(a) hereof; provided, however, that each Holder shall not
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be obligated to comply with such restrictions arising as a result of an
underwritten public offering subject to Section 2 hereof more than once in any
12-month period.
(b) If any registration of Registrable Shares shall be in connection with
any underwritten public offering, BAMSI shall not effect any public sale or
distribution (except in connection with such public offering) of any of its
equity securities or of any security convertible into or exchangeable or
exercisable for any of its equity securities (in each case other than as part of
such underwritten public offering) during the 180-day period (or such lesser
period as the managing underwriter(s) may permit) beginning on the effective
date of such registration, and BAMSI shall use its best efforts to cause each
member of the management of BAMSI who holds any equity security and each other
holder of 5% or more of the outstanding shares of any equity security, or of any
security convertible into or exchangeable or exercisable for any equity
security, of BAMSI purchased from BAMSI (at any time other than in a public
offering) to so agree.
4. Registration on Request.
-----------------------
(a) Request by Holders. Upon the written request of the Holders of at
------------------
least 10% of the Registrable Shares (calculated on the based on the number in
clause (i) of its definition) that BAMSI effect the registration under the
Securities Act of all or part of such Holders' Registrable Shares, and
specifying the amount (which shall not be less than 10% of the Registrable
Shares (calculated on the based on the number in clause (i) of its definition)
in the aggregate) and the intended method of disposition thereof, BAMSI will
promptly give notice of such requested registration to all other Holders of
Registrable Shares and, as expeditiously as possible, use its best efforts to
effect the registration under the Securities Act of: (i) the Registrable Shares
which BAMSI has been so requested to register by Holders of at least 10% of the
Registrable Shares; and (ii) all other Registrable Shares which BAMSI has been
requested to register by any other Holder thereof by written request received by
BAMSI within 21 days after the giving of such written notice by BAMSI (which
request shall specify the intended method of disposition of such Registrable
Shares); provided, however, that BAMSI shall not be required to effect more than
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two registrations pursuant to this Section 4; provided, further, that BAMSI
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shall not be obligated to file a registration statement relating to a
registration request under this Section 4 (x) if the registration request is
delivered after delivery of a notice by BAMSI of an intended
-5- Registration Rights Agreement
<PAGE>
registration and prior to the effective date of the registration statement
referred to in such notice, or (y) within a period of 90 days after the
effective date of any other registration statement of BAMSI requested by a
Holder pursuant to this Section 4 or pursuant to which the Holders included
Registrable Shares. The Holders initially requesting a registration pursuant to
this Section 4 may, at any time prior to the effective date of the registration
statement relating to such registration, revoke such request by providing a
written notice to BAMSI revoking such request; provided, however, that, in the
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event the Holders shall have made a written request for a demand registration
(I) which is subsequently withdrawn by the Holders after BAMSI has filed a
registration statement with the SEC in connection therewith but prior to such
demand registration being declared effective by the SEC or (II) which is not
declared effective solely as a result of the failure of Holders to take all
actions reasonably required in order to have the registration and the related
registration statement declared effective by the SEC, then, in any such event,
such demand registration shall be counted as a demand registration for purposes
of this Section 4(a). Promptly after the expiration of the 21-day period
referred to in clause (ii) above, BAMSI will notify all the Holders to be
included in the registration of the other Holders and the number of shares of
Registrable Shares requested to be included therein.
(b) Registration Statement Form. If any registration requested pursuant
---------------------------
to this Section 4 which is proposed by BAMSI to be effected by the filing of a
registration statement on Form S-3 (or any successor or similar short-form
registration statement) shall be in connection with an underwritten public
offering, and if the managing underwriter(s) shall advise BAMSI in writing that,
in its opinion, the use of another form of registration statement is of material
importance to the success of such proposed offering, then such registration
shall be effected on such other form.
(c) Effective Registration Statement. A registration requested pursuant
--------------------------------
to this Section 4 will not be deemed to have been effected unless it has become
effective under the Securities Act and has remained effective for 270 days or
such shorter period as all the Registrable Shares included in such registration
have actually been sold thereunder. In addition, if within 180 days after it has
become effective, the offering of Registrable Shares pursuant to such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court, such registration
will be deemed not to have been effected for purposes of this Section 4.
(d) Priority in Requested Registrations. If a requested registration
-----------------------------------
pursuant to this Section 4 involves an underwritten offering and the managing
underwriter(s) in good faith advise(s) BAMSI in writing that, in its opinion,
the number of securities requested to be included in such registration
(including securities of BAMSI which are not Registrable Shares) exceeds the
largest number of securities which can be sold in such offering without having
an adverse effect on such offering (including the price at which such securities
can be sold), then BAMSI will include in such registration (i) first, 100% of
the Registrable Shares requested to be registered pursuant to Section 4(a)
hereof (provided that if the number of Registrable Shares requested to be
registered pursuant to Section 4(a) hereof exceeds the number which BAMSI has
been advised can be sold in such offering without having the adverse effect
referred to above, the number of such Registrable Shares to be
-6- Registration Rights Agreement
<PAGE>
included in such registration by the Holders shall be allocated pro rata among
such Holders on the basis of the relative number of Registrable Shares each such
Holder has requested to be included in such registration); (ii) second, to the
extent that the number of Registrable Shares requested to be registered pursuant
to Section 4(a) hereof is less than the number of securities which BAMSI has
been advised can be sold in such offering without having the adverse effect
referred to above, such number of shares of equity securities BAMSI requests to
be included in such registration, and (iii) third, to the extent that the number
of Registrable Shares requested to be included in such registration pursuant to
Section 4(a) hereof and the securities which BAMSI proposes to sell for its own
account are, in the aggregate, less than the number of equity securities which
BAMSI has been advised can be sold in such offering without having the adverse
effect referred to above, such number of other securities proposed to be sold by
any Other Holder which, in the opinion of such managing underwriter(s), can be
sold without having the adverse effect referred to above (provided that if the
number of such securities of such Other Holder requested to be registered
exceeds the number which BAMSI has been advised can be sold in such offering
without having the adverse effect referred to above, the number of such
securities to be included in such registration pursuant to this Section 4(d)
shall be allocated pro rata among all such Other Holders on the basis of the
relative number of securities each such Other Holder has requested to be
included in such registration).
(e) Additional Rights. If BAMSI at any time grants to any other holders
-----------------
of equity securities of BAMSI any rights to request BAMSI to effect the
registration of any such shares of equity securities on terms more favorable to
such holders than the terms set forth in this Section 4 and in Section 5 hereof,
the terms of this Section 4 and of Section 5 hereof shall be deemed amended or
supplemented to the extent necessary to provide the Holders such more favorable
rights and benefits. In no event shall BAMSI grant to any person any rights to
request BAMSI to effect the registration of any shares of equity securities of
BAMSI on terms which are adverse to rights of the Holders set forth in Section 2
and this Section 4.
5. Registration Procedures.
-----------------------
(a) If and whenever BAMSI is required by the provisions of Section 2 or 4
hereof to use its best efforts to effect or cause the registration of
Registrable Shares, BAMSI shall as expeditiously as possible:
(i) prepare and, in any event within 60 days after the end of the
period within which a request for registration may be given to BAMSI, file
with the SEC a registration statement with respect to such Registrable
Shares and use its best efforts to cause such registration statement to
become effective;
(ii) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a
period not in excess of 270 days and to comply with the provisions of the
Securities
-7- Registration Rights Agreement
<PAGE>
Act, the Exchange Act, and the rules and regulations promulgated thereunder
with respect to the disposition of all the securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the Holders thereof set forth in such
registration statement; provided, however, that (A) before filing a
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registration statement (including an initial filing) or prospectus, or any
amendments or supplements thereto, BAMSI will furnish to one counsel
selected by the Holders of a majority of the Registrable Shares covered by
such registration statement copies of all documents proposed to be filed,
which documents will be subject to the review and comment of such counsel,
and (B) BAMSI will notify each Holder of Registrable Shares covered by such
registration statement of any stop order issued or threatened by the SEC,
any other order suspending the use of any preliminary prospectus or of the
suspension of the qualification of the registration statement for offering
or sale in any jurisdiction, and take all reasonable actions required to
prevent the entry of such stop order, other order or suspension or to
remove it if entered;
(iii) furnish to each Holder and each underwriter, if applicable, of
Registrable Shares covered by such registration statement such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as each Holder
of Registrable Shares covered by such registration statement may reasonably
request in order to facilitate the disposition of the Registrable Shares by
such Holder;
(iv) use its best efforts to register or qualify such Registrable
Shares covered by such registration statement under the state securities or
blue sky laws of such jurisdictions as each Holder of Registrable Shares
covered by such registration statement and, if applicable, each
underwriter, may reasonably request, and do any and all other acts and
things which may be reasonably necessary to consummate the disposition in
such jurisdictions of the Registrable Shares owned by such Holder, except
that BAMSI shall not for any purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for the
requirements of this clause (iv), it would not be obligated to be so
qualified;
(v) use its best efforts to cause such Registrable Shares covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
Holders thereof to consummate the disposition of such Registrable Shares;
(vi) if at any time when a prospectus relating to the Registrable
Shares is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus as then in
effect
-8- Registration Rights Agreement
<PAGE>
would include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, immediately give written notice thereof
to each Holder and the managing underwriter or underwriters, if any, of
such Registrable Shares and prepare and furnish to each such Holder a
reasonable number of copies of an amended or supplemental prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus shall not include an untrue statement
of material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vii) use its best efforts to list any portion of such Registrable
Shares not already listed on any securities exchange on which similar
securities of BAMSI are then listed, and enter into customary agreements
including a listing application and indemnification agreement in customary
form, provided that the applicable listing requirements are satisfied, and
provide a transfer agent and registrar for such Registrable Shares covered
by such registration statement not later than the effective date of such
registration statement;
(viii) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions as
each Holder of Registrable Shares being sold or the underwriter or
underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Shares, including customary
indemnification and opinions;
(ix) use its best efforts to obtain a "cold comfort" letter or
letters from BAMSI's independent public accountants in customary form and
covering matters of the type customarily covered by "cold comfort" letters
as the Holders of the Registrable Shares being sold or the underwriters
retained by such Holders shall reasonably request;
(x) make available for inspection by representatives of any Holder of
Registrable Shares covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by such Holders or any such underwriter, all financial and other
records pertinent corporate documents and properties of BAMSI and its
subsidiaries' officers, directors and employees to supply all information
and respond to all inquiries reasonably requested by such Holders or any
such representative, underwriter, attorney, accountant or agent in
connection with such registration statement;
(xi) promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the prospectus
(after initial filing of the registration statement), provide copies of
such document to counsel to the Holders of Registrable Shares covered by
such
-9- Registration Rights Agreement
<PAGE>
registration statement and to the managing underwriter(s), if any, make
BAMSI's representatives available for discussion of such document and make
such changes in such document prior to the filing thereof as counsel for
such Holders or underwriter(s) may reasonably request;
(xii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable after the effective date of the
registration statement, an earning statement which shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations promulgated thereunder;
(xiii) not later than the effective date of the applicable
registration statement, use its best efforts to provide a CUSIP number for
any portion of such Registrable Shares not already included in a CUSIP
number for similar securities of BAMSI, and provide the applicable transfer
agents with printed certificates for the Registrable Shares which are in a
form eligible for deposit with the Depository Trust Company;
(xiv) notify counsel for the Holders of Registrable Shares included
in such registration statement and the managing underwriter or
underwriters, if any, immediately and confirm the notice in writing, (A)
when the registration statement, or any post-effective amendment to the
registration statement, shall have become effective, or any supplement or
amendment to the prospectus shall have been filed, (B) of the receipt of
any comments from the SEC and (C) of any request of the SEC to amend the
registration statement or amend or supplement the prospectus or for
additional information; and
(xv) cooperate with each seller of Registrable Shares and each
underwriter, if any, participating in the disposition of such Registrable
Shares and their respective counsel in connection with any filings required
to be made with the NASD.
(b) Each Holder of Registrable Shares hereby agrees that, upon receipt of
any notice from BAMSI of the happening of any event of the type described in
Section 5(a)(vi) hereof, such Holder shall forthwith discontinue disposition of
such Registrable Shares covered by such registration statement or related
prospectus until such Holder's receipt of the copies of the supplemental or
amended prospectus contemplated by Section 5(a)(vi) hereof, and, if so directed
by BAMSI, such Holder will deliver to BAMSI (at BAMSI's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Shares at the time of receipt of such
notice. In the event BAMSI shall give any such notice, the period mentioned in
Section 5(a)(ii) hereof shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 5(a)(vi) hereof and including the date when such Holder shall have
received the copies of the supplemental or amended prospectus contemplated by
Section 5(a)(vi) hereof. If for any other reason the
-10- Registration Rights Agreement
<PAGE>
effectiveness of any registration statement filed pursuant to Section 4 hereof
is suspended or interrupted prior to the expiration of the time period regarding
the maintenance of the effectiveness of such Registration Statement required by
Section 5(a)(ii) hereof so that Registrable Shares may not be sold pursuant
thereto, the applicable time period shall be extended by the number of days
equal to the number of days during the period beginning with the date of such
suspension or interruption to and ending with the date when the sale of
Registrable Shares pursuant to such registration statement may be recommenced.
(c) Each Holder hereby agrees to provide BAMSI, upon receipt of its
request, with such information about such Holder to enable BAMSI to comply with
the requirements of the Securities Act and to execute such certificates as BAMSI
may reasonably request in connection with such information and otherwise to
satisfy any requirements of law.
6. Underwritten Registrations. Subject to the provisions of Sections 2,
--------------------------
3 and 4 hereof, any of the Registrable Shares covered by a registration
statement may be sold in an underwritten offering at the discretion of the
Holder thereof. In the case of an underwritten offering pursuant to Section 2
hereof, the managing underwriter(s) that will administer the offering shall be
selected by BAMSI; provided, however, that such managing underwriter(s) shall be
-------- -------
reasonably satisfactory to the Holders of a majority of the Registrable Shares
to be registered. In the case of any underwritten offering pursuant to Section
4 hereof, the managing underwriter(s) that will administer the offering shall be
selected by the Holders of a majority of the Registrable Shares to be
registered; provided, however, that such underwriter(s) shall be reasonably
-------- -------
satisfactory to BAMSI.
7. Expenses.
--------
(a) Subject to Section 7(b), BAMSI shall pay all fees, costs and expenses
of all registrations pursuant to Section 2 hereof, including all SEC and stock
exchange or NASD registration and filing fees and expenses, reasonable fees and
expenses of any "qualified independent underwriter" and its counsel as may be
required by the rules of the NASD, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters, if any, in connection with blue sky qualifications
of the Registrable Shares), rating agency fees, printing expenses (including
expenses of printing certificates for Registrable Shares and prospectuses),
messenger, telephone and delivery expenses, the fees and expenses incurred in
connection with the listing of the securities to be registered on each
securities exchange or national market system on which similar securities issued
by BAMSI are then listed, fees and disbursements of counsel for BAMSI and all
independent certified public accountants (including the expenses of any annual
audit, special audit and "cold comfort" letters required by or incident to such
performance and compliance), the fees and disbursements of the underwriters
customarily paid by issuers or sellers of securities (including expenses
relating to "road shows" and other marketing activities), the reasonable fees
and expenses of special experts required to be retained by BAMSI in connection
with such registration, and the reasonable fees and expenses of other Persons
required to be retained by BAMSI (collectively, "Registration Expenses");
provided, however, that Registration Expenses shall not include (i) any
- -------- -------
allocation of the overhead of BAMSI, including any allocation of the
compensation
-11- Registration Rights Agreement
<PAGE>
or benefits of employees of BAMSI that assist in a registration, or (ii) any
other expense to the extent it would have been incurred by BAMSI in the absence
of any sale of securities in connection with a registration pursuant to this
Agreement (including the cost of BAMSI's annual audit).
(b) The Holders shall pay the following: (i) all fees, costs and expenses
of all registrations effected pursuant to Section 4 hereof including all
Registration Expenses, (ii) any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of Registrable Shares by the
Holders pursuant to this Agreement and (iii) all fees, costs and expenses of
counsel to the Holders pursuant to this Agreement in connection with any
registration pursuant to this Agreement.
8. Indemnification.
---------------
(a) Indemnification by BAMSI. In the event of any registration of any
------------------------
securities of BAMSI under the Securities Act pursuant to Section 2 or 4 hereof,
BAMSI will, and it hereby does, indemnify and hold harmless, to the extent
permitted by law, each of the Holders of any Registrable Shares covered by such
registration statement, each Affiliate of such Holder (other than BAMSI) and
their respective directors and officers, each other Person who participates as
an underwriter in the offering or sale of such securities and each other Person,
if any, who controls such Holder or any such underwriter within the meaning of
the Securities Act (collectively, the "Indemnified Parties"), against any and
all losses, claims, damages or liabilities, joint or several, and expenses
(including any amounts paid in any settlement effected with BAMSI's consent,
which consent shall not be unreasonably withheld) to which any Indemnified Party
may become subject under the Securities Act, state securities or blue sky laws,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof, whether or not such Indemnified
Party is a party thereto) or expenses arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereof, (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any violation by BAMSI of any
federal, state or common law rule or regulation applicable to BAMSI and relating
to action required of or inaction by BAMSI in connection with any such
registration, and BAMSI will reimburse such Indemnified Party for any legal or
any other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided,
--------
however, that BAMSI shall not be liable to any Indemnified Party in any such
- -------
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereof or in any
such preliminary, final or summary prospectus in reliance upon and in conformity
with written information with respect to such Holder furnished to BAMSI by such
Holder specifically for use in the preparation thereof. Such indemnity shall
remain in full force and
-12- Registration Rights Agreement
<PAGE>
effect regardless of any investigation made by or on behalf of such Holder or
any Indemnified Party and shall survive the transfer of such securities by such
Holder.
(b) Indemnification by the Holders and the Underwriters. BAMSI may
---------------------------------------------------
require, as a condition to including any Registrable Shares in any registration
statement filed in accordance with Section 2 or 4 hereof, that BAMSI shall have
received an undertaking reasonably satisfactory to it from the Holders of such
Registrable Shares or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 8(a) hereof) BAMSI
with respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement, if such statement
or alleged statement or omission or alleged omission was made in reliance upon
and in conformity with written information with respect to the Holders of the
Registrable Shares being registered or such underwriter furnished to BAMSI by
such Holders or such underwriter specifically for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment or
supplement, or a document incorporated by reference into any of the foregoing;
provided, however, that no such Holder shall be liable for any indemnity claims
- -------- -------
in excess of the amount of the net proceeds received by such Holder from the
sale of Registrable Shares. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of BAMSI or any of
the Holders, or any of their respective Affiliates (other than BAMSI),
directors, officers or controlling Persons, and shall survive the transfer of
such securities by such Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
----------------------
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 8, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, however, that the failure
-------- -------
of the indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 8, except to the extent
that the indemnifying party is actually materially prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the indemnified party shall have the
-------- -------
right, at the sole cost and expense of the indemnifying party, to employ counsel
to represent the indemnified party and its respective controlling persons,
directors, officers, employees or agents who may be subject to liability arising
out of any claim in respect of which indemnity may be sought by the indemnified
party against such indemnifying party under this Section 8 if (i) the employment
of such counsel shall have been authorized in writing by such indemnifying party
in connection with the defense of such action, (ii) the indemnifying party shall
not have promptly employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action or counsel, or (iii) any indemnified
party shall have reasonably
-13- Registration Rights Agreement
<PAGE>
concluded that there may be defenses available to such indemnified party or its
respective controlling persons, directors, officers, employees or agents which
are in conflict with or in addition to those available to an indemnifying party;
provided, further, that the indemnifying party shall not be obligated to pay for
- -------- -------
more than the expenses of one firm of separate counsel for the indemnified party
(in addition to the reasonable fees and expenses of one firm serving as local
counsel). No indemnifying party will consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to any indemnified party under Section 8(a) or 8(b) hereof
or is insufficient to hold it harmless in respect of any loss, claim, damage or
liability, or any action in respect of any loss, claim, damage or liability, or
any action in respect thereof referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the indemnified party and indemnifying party or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the indemnified party
and indemnifying party with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. Notwithstanding any
other provision of this Section 8(d), no Holder of Registrable Shares shall be
required to contribute an amount greater than the dollar amount of the proceeds
received by such Holder with respect to the sale of any such Registrable Shares.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that specified in
---------------------
the preceding subdivisions of this Section 8 (with appropriate modifications)
shall be given by BAMSI and each Holder of Registrable Shares with respect of
any required registration or other qualification of securities under any federal
or state law or regulation other than the Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this Section 8
---------------
shall be in addition to any liability which any party may otherwise have to any
other party.
9. Rule 144. BAMSI covenants that it will file in a timely manner the
--------
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder (or, if BAMSI is not
required to file such reports, it will, upon the request of any Holder of
Registrable Shares, make publicly available such information), and it will take
such further action as any Holder of Registrable Shares may reasonably request,
all to the extent required from time to time to enable such Holder to sell
Registrable Shares without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be
-14- Registration Rights Agreement
<PAGE>
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Shares, BAMSI
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
10. Assignability. This Agreement shall be binding upon and shall inure
-------------
to the benefit of the parties hereto and their respective successors and
permitted assigns. Except as provided herein, no party may assign any of its
rights or delegate any of its duties under this Agreement without the express
consent of the other parties hereto. In addition, and whether or not any
express assignment shall have been made, the provisions of this Agreement which
are for the benefit of the parties hereto other than BAMSI shall also be for the
benefit of and enforceable by any subsequent Holder of any Registrable Shares,
subject to the provisions contained herein. Any Holder may assign any of its
rights or delegate any of its duties under this Agreement, in whole or in part,
without any prior consent of BAMSI only to a Person (a "Designated Transferee")
(a) who is an Affiliate of the Bank or BANW or (b) who is a transferee of
Registrable Shares (whether through purchase, share exchange, bequest or
otherwise) and who agrees to be bound by the terms of this Agreement. Any
purported assignment in violation of this Section 10 shall be void.
11. Notices. Any and all notices, designations, consents, offers,
-------
acceptances or any other communications shall be given in writing by either (a)
personal delivery to and receipted for by the addressee or by (b) telecopy or
registered or certified mail which shall be addressed, in the case of BAMSI, to:
BA Merchant Services, Inc., One South Van Ness Avenue, 5th Floor, San Francisco,
California 94103, attention: General Counsel #3710; in the case of Holders, to
the address or addresses thereof appearing on the books of BAMSI or of the
transfer agent and registrar for its Class A Common Stock. All such notices and
communications shall be deemed to have been duly given and effective: when
delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
12. No Inconsistent Agreements. BAMSI will not hereafter enter into any
--------------------------
agreement with respect to its securities which is inconsistent with the rights
granted to the Holders in this Agreement.
13. Specific Performance. BAMSI acknowledges that the rights granted to
--------------------
the Holders in this Agreement are of a special, unique and extraordinary
character, and that any breach of this Agreement by BAMSI could not be
compensated for by damages. Accordingly, if BAMSI breaches its obligations
under this Agreement, the Holders shall be entitled, in addition to any other
remedies that they may have, to enforcement of this Agreement by a decree of
specific performance requiring BAMSI to fulfill its obligations under this
Agreement. BAMSI consents to personal jurisdiction in any such action brought
in the United States District Court for the Northern District of California or
any such other court and to service of process upon it in the manner set forth
in Section 11 hereof.
14. Severability. If any provision of this Agreement or any portion
------------
thereof is finally determined by a court of competent jurisdiction to be
unlawful or unenforceable, such provision or portion thereof shall in no way
affect any other provision of this
-15- Registration Rights Agreement
<PAGE>
Agreement, the application of any such provision and any other circumstances,
and any portion of such invalidated provision that is not invalidated by such a
determination shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument.
16. Defaults. A default by any party to this Agreement in such party's
--------
compliance with any of the conditions or covenants hereof or performance of any
of the obligations of such party hereunder shall not constitute a default by any
other party.
17. Amendments, Waivers. This Agreement may not be amended, modified or
-------------------
supplemented and no waivers of or consents to or departures from the provisions
hereof may be given unless consented to in writing by BAMSI and the holders of a
majority of the Registrable Shares; provided, however, that no such amendment,
-------- -------
supplement, modification or waiver shall deprive any Holder of any rights under
Section 2 or 4 hereof without the consent of such Holder.
18. Construction. The captions contained in this Agreement are for
------------
reference purposes only and shall not constitute a part of this Agreement.
Unless the context requires otherwise, the use of the masculine shall include
the feminine, and the use of the singular shall include the plural. The word
"including" shall mean "including, without limitation."
19. Attorneys' Fees. In any action or proceeding brought to enforce any
---------------
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
20. Third Party Beneficiaries. Except as expressly provided in this
-------------------------
Agreement, the parties hereto intend that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person other than the
parties hereto.
21. Entire Agreement. This Agreement contains the entire agreement among
----------------
the parties hereto with respect to the transactions contemplated herein and
understandings among the parties relating to the subject matter hereof. Any and
all previous agreements and understandings between or among the parties hereto
regarding the subject matter hereof are, whether written or oral, superseded by
this Agreement.
-16- Registration Rights Agreement
<PAGE>
22. Governing Law. This Agreement is made pursuant to and shall be
-------------
construed in accordance with the laws of the State of California without regard
to that state's conflicts of laws principles.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date first written
above.
BANK OF AMERICA NT & SA
By______________________________
Name:_________________________
Title:________________________
BANK OF AMERICA NW, NATIONAL
ASSOCIATION
By______________________________
Name:_________________________
Title:________________________
BA MERCHANT SERVICES, INC.
By______________________________
Name:_________________________
Title:________________________
-17- Registration Rights Agreement
<PAGE>
Exhibit 10.1
LEASE AGREEMENT
This Lease is made as of December 3, 1996 between Bank of America
National Trust and Savings Association and Bank of America NW, National
Association, both national banking associations, as lessors (together the
"Lessors" and each individually a "Lessor"), and BA Merchant Services, Inc.
("BAMSI"), a corporation organized under the laws of the State of Delaware, as
lessee.
1. FACILITIES, SERVICES AND COMPENSATION
A. The Lessors shall provide BAMSI office space for the transaction of
its business at the locations indicated on the attached Schedule A.
B. BAMSI will pay to the Lessors monthly rental in an amount equal to one
twelfth the annual rent for each property as shown on the attached
Schedule A, payable monthly in advance by the fifth business day of
each month, which payment will include compensation for office space,
utilities and access to other portions of the premises where BAMSI is
located as may be required for the needs of BAMSI.
C. The rental payments are intended to be fair and reasonable
compensation for the facilities in accordance with payments for
comparable facilities, and shall be reasonably adjusted from time-to-
time by mutual consent of the parties, to result in continued fair and
reasonable compensation to the Lessors.
D. The Lessors shall provide BAMSI with additional office space under
such terms and conditions as may be mutually agreed by the Lessor and
BAMSI from time to time.
E. The Lessors will also provide BAMSI with access to limited space (e.g.
a desk or conference room) in other premises without additional
compensation, it being understood that the rental payments indicated
on Schedule A include compensation for such additional space. Any
such additional space will be subject to availability and such
reasonable limitations or conditions that may be imposed by the
Lessors.
1
<PAGE>
2. INDEPENDENT CONTRACTOR: In performing the services called for under this
Lease, the Lessors are for all purposes an independent contractor of BAMSI,
each with exclusive control over its employees and agents engaged in the
performance of the services provided by the Lessors under this Lease.
3. INDEMNIFICATION: BAMSI must defend and indemnify the Lessors against and
hold each harmless from any and all claims made by third parties for loss
or damage arising directly or indirectly from any and all services provided
by the Lessors pursuant to this Lease, except that due to the knowing and
willful misconduct of a Lessor. In the foregoing sentence the words "loss
or damage" include, but are not limited to, loss or damage arising directly
or indirectly from any actions or omissions of any employee or authorized
representative of NT&SA or NW.
4. CONFIDENTIALITY: All information disclosed by any party to the another
under the terms of this Lease, except such information as may be generally
available to the public or the banking industry, is and will be kept
confidential unless its disclosure is required by law or is required to be
submitted to the regulatory supervisor(s) of either party.
5. TERMS OF THE LEASE:
A. Unless sooner terminated as hereinafter provided, this Lease is in
effect for 5 years from the date hereof. At the expiration of the 5-
year term, and of any succeeding 5-year term, this Lease is
automatically renewed and extended for another 5-year term, unless a
Lessor or the Lessee gives at least 6 months notice in writing of its
intention not to renew or extend.
B. A Lessor or the Lessee may terminate this Lease with respect to any
covered location at any time upon 6 months prior written notice to the
other party.
C. The foregoing notwithstanding, this Lease terminates immediately if at
any time a majority of the voting securities of BAMSI is not owned,
directly or indirectly, by BankAmerica Corporation.
6. NOTICES: All notices relating to this Lease must be in writing and will be
considered to have been given by either party to the other party upon
personal delivery
2
<PAGE>
to a party's designated representative or upon the mailing thereof to the
other party by registered or certified mail at its address set forth on the
signature page of this Lease, or to such other address as the other party
may specify in writing.
7. BREACH: Upon the breach of any obligation under this Lease by either
party, the aggrieved party must give to the defaulting party notice of such
breach which notice must specify the exact nature of the breach. If this
Lease is terminated, the right of the aggrieved party to any damages for
such breach shall not be prejudiced.
8. INTEGRATION: This Lease supersedes all oral communications and prior
writings in respect of the subject matter hereof. In the event of any
conflict between the terms, conditions and provisions of this Lease and
those of any other prior agreements, documents or communications, the terms
and conditions of this Lease shall prevail.
9. CHOICE OF LAW: This Lease is governed by and construed in accordance with
the laws of the State where the real property is located.
10. SUBLEASE: If this Lease is a sublease "Lessor" means the tenant of the
master landlord under a master lease (a copy of which has been previously
provided) and "BAMSI" means the subtenant under the master lease for the
premises specified in paragraph 1.A. above. BAMSI takes such premises
subject to and agrees to abide by all of the provisions of the master
lease.
BA MERCHANT SERVICES, INC. BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: By:
------------------------- ---------------------------
By: By:
------------------------- ---------------------------
Address: Address:
- ----------------------------- ------------------------------
- ----------------------------- ------------------------------
BANK OF AMERICA NW, NATIONAL
3
<PAGE>
ASSOCIATION
By:
---------------------------
By:
---------------------------
Address:
------------------------------
------------------------------
4
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
===========================================================================
LOCATION SQ. FT. ANNUAL RENT LESSOR
===========================================================================
<S> <C> <C> <C>
1130 S. Figueroa Bldg 5,538 $123,886 NT&SA
Los Angeles, California
- ---------------------------------------------------------------------------
Van Ness & Market 58,336 $1,436,167 NT&SA
San Francisco, California
- ---------------------------------------------------------------------------
Hester Branch 1,500 $52,380 NT&SA
Rancho Cordova, California
- ---------------------------------------------------------------------------
Azusa-Gladstone 7,935 $153,304 NT&SA
Azusa, California
- ---------------------------------------------------------------------------
Aliso Viejo 1,169 $28,898 NT&SA
Los Angeles, California
- ---------------------------------------------------------------------------
11070 White Rock Road 1,742 $39,927 NT&SA
Rancho Cordova, California
- ---------------------------------------------------------------------------
Seafirst BankCard Building 7,000 $106,540 NW
1616 S. Rustle
Spokane, Washington 99204
- ---------------------------------------------------------------------------
Rainer Plaza 10,700 $225,984 NW
777 108th Avenue, N.E.
Bellevue, Washington 98004
- ---------------------------------------------------------------------------
Fifth Avenue Plaza 4,500 $125,505 NW
800 5th Avenue
Seattle, Washington 98124
- ---------------------------------------------------------------------------
4101 E. Charleston Blvd. 1,500 NT&SA
Las Vegas, Nevada 89502
- ---------------------------------------------------------------------------
BofA Tower 1,500 NT&SA
101 N. 1st Avenue
Phoenix, Arizona 85003
- ---------------------------------------------------------------------------
Omni Building 1,000 $24,000 NT&SA
335 Earle Ovington Blvd.
Uniondale, New York 11553
- ---------------------------------------------------------------------------
Foster City, California NT&SA
===========================================================================
</TABLE>
1
<PAGE>
Exhibit 10.2
SPONSORSHIP AND PROCESSING AGREEMENT
------------------------------------
THIS SPONSORSHIP AND PROCESSING AGREEMENT is made as of December 3rd, 1996
between BA MERCHANT SERVICES, INC. ("BAMSI") and BANK OF AMERICA NATIONAL TRUST
-------------------------- ------------------------------
& SAVINGS ASSOCIATION (the "Bank").
- ---------------------
RECITALS
A. The Bank. The Bank is an existing national banking association duly
--------
organized and in good standing under the laws of the United States with its
principal executive offices located in San Francisco, California and a member in
good standing of Visa U.S.A., Inc. ("Visa") and a member in good standing of
MasterCard International, Incorporated ("MasterCard").
B. BAMSI. BAMSI is an existing corporation formed under the laws of the
-----
State of Delaware with its principal executive offices located in San Francisco,
California, which provides data processing, settlement and authorization
services for merchants who participate in the Visa and MasterCard and other
bankcard programs (such activities being referred to as "Merchant Bankcard
Business").
C. Corporate Approvals. Each of the parties to this Agreement has
-------------------
obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend to
-------------------------
conduct their relationships hereunder on an arm's length basis.
E. BAC/BAMSI Transactions. The Bank and Bank of America NW, National
----------------------
Association ("BANW"), each a subsidiary of BankAmerica Corporation, a Delaware
corporation ("BAC"), currently own 100% of the outstanding common stock of
BAMSI. The Bank and BANW have entered or will enter into certain agreements
with BAMSI (1) transferring the Bank's United States domestic merchant
processing businesses and the BANW merchant processing business to BAMSI and (2)
covering the contemplated transfer of the Philippine and Thailand merchant
processing businesses of the Bank to BAMSI upon the receipt of certain
governmental approvals (collectively, the BAC/BAMSI Transactions"). BAMSI is
currently considering an initial public offering of shares of its Class A common
stock, $.01 par value per share.
F. Related Agreements. BAMSI has entered or will enter into (1) a Non-
------------------
Competition and Corporate Opportunities Allocation Agreement of even date
herewith between BAC and BAMSI (the "Corporate Opportunities Agreement"), (2) a
Marketing Agreement of even date herewith among BAMSI, the Bank and BANW (the
"Marketing Agreement"), (3) Processing Services Agreements of even date herewith
between BAMSI and other subsidiary banking institutions of BAC (the "Affiliate
Bank Processing Agreements"), (4) an Administrative Services Agreement of even
date herewith between the
-1- Sponsorship Agreement
<PAGE>
Bank and BAMSI (the "Administrative Services Agreement"), (5) a Trademark
License Agreement of even date herewith between BAC and BAMSI (the "License
Agreement"), (6) a Registration Rights Agreement to be entered into among BAMSI,
the Bank and BANW (the "Registration Rights Agreement"), and (7) a Tax
Allocation Agreement of even date herewith between BAC and BAMSI (the "Tax
Agreement"). The Corporate Opportunities Agreement, the Marketing Agreement,
the Affiliate Bank Processing Agreement, the Administrative Services Agreement,
the Trademark Agreement, the Registration Rights Agreement and the Tax Agreement
are herein collectively referred to as the "Related Agreements."
G. Sponsorship and Services. BAMSI and the Bank have concluded that it
------------------------
is in their mutual best interests for (1) the Bank to sponsor BAMSI as a member
of Visa and MasterCard, (2) BAMSI to act as an agent of the Bank for purposes of
providing data processing, settlement and authorization services for merchants
with respect to their Visa and MasterCard transactions, and (3) BAMSI to use the
Bank for certain banking relationships.
NOW, THEREFORE, in consideration of the premises, the representations,
acknowledgments, and mutual agreements set out in this Agreement and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged by the parties, BAMSI and the Bank agree as follows:
ARTICLE I
MERCHANT PROCESSING, SETTLEMENT
-------------------------------
AND AUTHORIZATION SERVICES
--------------------------
1.1 Applicability of Article I. The Bank and BAMSI agree and acknowledge
--------------------------
that, depending on various factors, including Merchant (as hereinafter defined)
location and the requirements of Visa or MasterCard rules and regulations, to
the extent such rules and regulations are applicable, BAMSI shall act as the
Bank's Member Service Provider (as defined in such rules and regulations) with
respect to certain Merchants in connection with the provision of Merchant
Processing Services (as hereinafter defined) and the provisions of this Article
I shall operate to govern such relationship.
1.2 Appointment as Agent. The Bank appoints BAMSI, and BAMSI agrees to
--------------------
serve, to the extent required or necessary under the Visa or MasterCard rules
and regulations or any official interpretations thereof, as the Bank's sole
agent (i) to provide authorization, processing and settlement services with
respect to credit, debit and charge card transactions under the Visa,
MasterCard, Diners Club, AMEX, JCB, Carte Blanche, Discover, Interlink and other
programs ("Merchant Processing Services") to merchants who desire to receive
Merchant Processing Services from the Bank or BAMSI ("Merchants") and (ii) to
enter into contracts with merchants ("Merchant Contracts") for the provision of
Merchant Processing Services as agent of the Bank. The Bank agrees that BAMSI
may use the Bank's name and
-2- Sponsorship Agreement
<PAGE>
its BIN, ICA and any other Visa and MasterCard identification numbers to the
extent necessary or appropriate to perform the Merchant Processing Services.
1.3 Performance by BAMSI. BAMSI shall have full responsibility for the
--------------------
proper performance of the Merchant Processing Services under each Merchant
Contract except for the obligations and responsibilities which the Bank assumes
hereunder. Without limiting the foregoing, BAMSI shall provide authorization
services to the Merchants, perform data capture services with respect to all
credit, debit and charge card transactions by the Merchants, submit such data to
the applicable Interchange (as hereinafter defined), process retrievals and
chargebacks, and direct the settlement of such transactions. In providing
Merchant Processing Services, BAMSI agrees to comply with (i) all Visa and
MasterCard Bylaws, Manuals, Operating Regulations and other written materials as
they may from time to time be amended which bind or apply to the Bank as a
member of Visa and MasterCard with respect to Merchant Processing Services or to
BAMSI as a third party processor with respect to Merchant Processing Services
("Rules"), (ii) all agreements between Merchants and the Bank with respect to
Merchant Processing Services, and (iii) all applicable laws and regulations,
whether state or federal. BAMSI agrees to enter into any agreements with Visa
and MasterCard necessary to perform this Agreement in accordance with its terms,
subject to the rights of BAMSI to terminate this Agreement pursuant to
Section 6.2. Without in any way limiting the foregoing, BAMSI agrees as follows:
(a) any material containing any of the Visa Card Program Marks used by it in
performing this Agreement will prominently identify the Bank by name and city
adjacent to such marks and, in identifying BAMSI, will specify that BAMSI is
acting as agent or representative of the Bank; (b) any solicitation material
used by BAMSI shall clearly disclose that BAMSI is acting as agent or
representative of the Bank; and (c) BAMSI acknowledges that it does not have
authority to permit the use of Visa Card Program Marks by any of its own agents.
BAMSI and the Bank agree that the foregoing clauses shall be deemed modified
from time to time to reflect any changes in Visa's requirements applicable to
BAMSI's use of Visa Card Program Marks and solicitation material or to the terms
required herein.
1.4 Merchant Contracts. BAMSI, as agent of the Bank, shall be
------------------
responsible for establishing the terms and conditions of the Merchant Contracts,
including all changes thereunder, subject to Section 1.7 below. Without in any
way limiting the authority granted in Section 1.1, the Bank hereby authorizes
BAMSI to use the Bank's name to the extent necessary or appropriate in
accordance with the terms of this Agreement to enter into and to renew Merchant
Contracts, to modify Merchant Contracts to the extent necessary to assign them
to the Bank, to perform the Merchant Contracts and to take other necessary or
appropriate actions with respect to the Merchant Contracts, all in accordance
with requirements of Visa and MasterCard. As between BAMSI and the Bank, BAMSI
shall be responsible for all credit, fraud and other risks associated with each
Merchant Contract.
1.5 Authorization Services. BAMSI, or its designated third parties,
----------------------
shall provide the Merchants with telephonic or electronic authorization for all
Visa and MasterCard transactions exceeding any floor amount specified pursuant
to such Merchant's contract.
-3- Sponsorship Agreement
<PAGE>
1.6 Processing and Submission to Interchange. BAMSI shall process all
----------------------------------------
data received by it reflecting the Visa and MasterCard sales transactions and
any related return credits by the Merchants and shall submit to the applicable
Visa or MasterCard interchange networks ("Interchange") "Settlement Files"
reflecting such transactions and directing the applicable Interchange to pay the
net amount due to an account established by the Bank for the purpose of
receiving all settlement amounts paid by Visa and MasterCard with respect to the
transactions processed by BAMSI pursuant to this Agreement and effecting
appropriate payments to the Merchants and BAMSI in accordance with this
Agreement (the "Bank Account").
1.7 Account Settlement.
------------------
(a) Payment Instructions. BAMSI shall prepare and transmit to the
--------------------
Bank, in a mutually acceptable format, instructions specifying the payments
to be made from the Bank Account to the Merchants and to BAMSI pursuant to
this Agreement (the "Payment Instructions"). Payment Instructions shall be
delivered to the Bank in accordance with the schedule and procedures
established from time to time by the parties.
(b) Payment. In accordance with the Payment Instructions, the Bank
-------
shall pay the Merchants on a timely basis the net settlement amounts due to
them and shall credit BAMSI's account at the Bank for the fees due to BAMSI
hereunder. Such payments to Merchants shall be effected through mutually
acceptable procedures which are consistent with the payment procedures
established pursuant to the Merchant Contracts. BAMSI shall perform on the
Bank's behalf all of the administrative and bookkeeping functions necessary
to effect payment in such manner.
1.8 Due Diligence by the Bank; BAMSI's Standards.
--------------------------------------------
(a) Due Diligence Prior to Execution of Agreement. Senior management
---------------------------------------------
officials of BAMSI have met with the Bank and have discussed with the Bank
officials the credit and financial review procedures and standards used by
BAMSI in deciding whether to accept or retain Merchants as customers for
Merchant Processing Services, as well as BAMSI's experience with respect to
any losses resulting from financial failures or fraud by its merchant
customers. Schedule A attached hereto outlines the credit and financial
review procedures and standards currently used by BAMSI.
(b) Continuing Due Diligence: BAMSI's Risk Standards. BAMSI shall
-------------------------------------------------
keep the Bank advised of any material changes in the credit and financial
review procedures and standards and of any material exceptions to such
procedures and standards which may from time to time be made with respect
to particular Merchants. BAMSI shall not make any such changes or
exceptions until its senior management has approved such changes or
exceptions after carefully evaluating the relative advantages and
disadvantages
-4- Sponsorship Agreement
<PAGE>
expected to result from such changes or exceptions. BAMSI also shall
continue to advise the Bank on a timely basis with respect to any
substantial loss (meaning any loss of $1,000,000 or more in the aggregate
in any twelve month period) incurred by BAMSI as a result of any financial
failures or fraud by its merchant customers. If the Bank reasonably
determines from time to time that any changes are needed in BAMSI's credit
and financial review procedures and standards or in the implementation
thereof in order to avoid any significant increase in BAMSI's losses from
financial failures or fraud by its merchant customers, then the Bank shall
so notify BAMSI in writing, and BAMSI and the Bank shall mutually agree
upon, and BAMSI shall implement appropriate changes.
(c) Due Diligence by the Bank for BAMSI Pricing Standards. Senior
-----------------------------------------------------
management officials of BAMSI have met with the Bank and have discussed
with the Bank officials the pricing procedures and standards used for
Merchants as customers for Merchant Processing Services. BAMSI shall keep
the Bank advised of any material changes in its pricing procedures and
standards and of any material exceptions to such procedures and standards
which may from time to time be made with respect to particular Merchants.
BAMSI shall not make any such changes or exceptions until its management
committee has approved such changes or exceptions after carefully
evaluating the relative advantages and disadvantages expected to result
from such changes or exceptions. If the Bank reasonably determines from
time to time that any changes are needed in BAMSI's pricing procedures and
standards or in the implementation thereof, then the Bank shall so notify
BAMSI in writing, and BAMSI and the Bank shall mutually agree upon, and
BAMSI shall implement appropriate changes.
ARTICLE II
BANKING SERVICES
----------------
2.1 Merchant Processing. As soon as practicable after the Effective Date
-------------------
BAMSI shall enter into agreements or make other mutually acceptable arrangements
with the Bank pursuant to which the Bank will provide those banking services
which are necessary for BAMSI to provide the Merchant Processing Services and
which the parties wish the Bank to provide.
2.2 Authority to Establish Bank Accounts. BAMSI shall have authority to
------------------------------------
establish at the Bank or any other mutually acceptable financial institution any
deposit accounts on behalf of the Bank as may be necessary to provide some or
all of the Merchant Processing Services contemplated by this Agreement for such
periods as the Bank and BAMSI agree. No provision of this Agreement authorizes
or shall be construed to authorize BAMSI to incur any debt to the Bank or any
other financial institution, or to create any overdraft, which the Bank is
obligated directly or indirectly to repay.
-5- Sponsorship Agreement
<PAGE>
2.3 Loans and Overdrafts. Nothing in this Agreement shall be deemed to
--------------------
create any obligation on the part of the Bank to loan or advance to BAMSI any
amounts in connection with Merchant Processing Services for any period of time.
ARTICLE III
FEES AND EXPENSES
-----------------
3.1 Charges to Merchants. As between BAMSI and the Bank, BAMSI shall
--------------------
receive all fees, discounts and other amounts payable by Merchants for Merchant
Processing Services with respect to Merchant Contracts.
3.2 Expenses. BAMSI shall bear all expenses of maintaining facilities
--------
and connections necessary to provide Merchant Processing Services, except for
the facilities and connection maintained by the Bank for purposes of effecting
payments pursuant to Section 1.6(b). In addition, BAMSI agrees to pay or
reimburse the Bank in full all interchange or issuer reimbursement fees on
outgoing merchant sales volume, as well as all fee assessments or charges
imposed on the Bank by Visa or MasterCard as a result of the Merchant Processing
Services performed by BAMSI. Such fees shall be paid by BAMSI directly when due
or shall be paid by BAMSI to the Bank on the banking day immediately prior to
the day on which the Bank must pay such fees. All such fees, assessments and
charges for which the Bank seeks payment by BAMSI shall upon request be
documented to BAMSI's reasonable satisfaction as being attributable to BAMSI's
Merchant Processing Services.
ARTICLE IV
INDEMNIFICATION
---------------
4.1 Indemnification. BAMSI agrees to indemnify, defend and save the Bank,
---------------
its directors, officers and employees harmless from all losses, claims,
judgments, awards, penalties, expenses and other amounts of any nature arising
out of:
(a) BAMSI's failure to perform this Agreement in accordance with its
terms including but not limited to the failure to pay expenses, charges and
other amounts in accordance with the provisions of this Agreement;
(b) the negligent exercise of or the exceeding by any Joint Officer of
the authority granted pursuant to this Agreement to act an officer of the
Bank; or
(c) the Bank's grant of authority to BAMSI pursuant to this Agreement.
-6- Sponsorship Agreement
<PAGE>
including, but not limited to, all court costs, investigation expenses and the
reasonable fees and expenses of separate counsel for the Bank selected by the
Bank, provided, however, that the Bank shall not be entitled to indemnification
as to amounts arising from the negligence or willful misconduct of the Bank.
ARTICLE V
COMPLIANCE MODIFICATIONS
------------------------
5.1 Compliance Modifications. In the event that:
------------------------
(a) the laws, rules and/or regulations or any official
interpretations thereof applicable to the Bank as a national bank or the
Visa or MasterCard rules and/or regulations or any official interpretations
thereof applicable to the Bank and the matters covered by this Agreement
are modified such that:
(i) Any modification in the relationship or transactions
contemplated hereby between the Bank and BAMSI or in the provisions of this
Agreement are needed to comply with any such laws, rules, regulations or
official interpretations thereof; or
(ii) some or all of the activities contemplated by this Agreement are
prohibited; or
(b) Visa or MasterCard requires, as a condition to performance of
this Agreement, that BAMSI enter into an agreement with Visa or MasterCard
that BAMSI considers unacceptable;
then at BAMSI's request, the parties will cooperate in making any modifications
to this Agreement and to the parties' relationship hereunder to the extent any
such modifications will permit BAMSI to continue processing, settling and
authorizing bankcard transactions (or continue performing some of such
functions) in compliance with the laws, rules, regulations or any official
interpretations thereof applicable to the Bank as a National Bank and the Visa
and MasterCard rules, regulations, and interpretations thereof and any
contractual terms required by Visa or Mastercard and acceptable to BAMSI (any
such modifications being referred to as "Compliance Modifications"), provided
that such Compliance Modifications are reasonable and are not unduly burdensome
to the Bank, and BAMSI reimburses the Bank for any additional costs reasonably
incurred by the Bank in connection with such Compliance Modifications.
5.2 Failure to Make Compliance Modification. If BAMSI does not request
---------------------------------------
any Compliance Modifications or the parties cannot agree upon the terms of any
Compliance Modifications, then either party may terminate this Agreement upon
prior written notice to the other party effective at the later of: (a) the
deadline imposed by Visa or MasterCard for complying with any such rule,
regulation, official interpretation or contract requirement or
-7- Sponsorship Agreement
<PAGE>
(b) 120 days after actual notice to BAMSI of such rule, regulation,
interpretation or contract requirement.
ARTICLE VI
TERM AND TERMINATION
--------------------
6.1 Term. The term of this Agreement shall be five years commencing on
----
the Effective Date and ending at the close of business on the fifth anniversary
of the Effective Date. This Agreement shall automatically renew for successive
one-year terms unless one party gives the other party written notice of non-
renewal at least six months prior to automatic renewal.
6.2 Termination. Either party may terminate this Agreement without
-----------
penalty and without prejudice to any claims arising prior to termination as
follows:
(a) Upon the written agreement of both parties.
(b) Upon the other party's breach of this Agreement provided the
terminating party has given written notice of the breach to the other party
specifying the breach, the action necessary to cure the breach and the
breaching party has not cured the breach within 30 days after notice is
given of any failure by BAMSI to provide any funds required hereunder to be
provided by BAMSI to pay Merchants or within thirty business days after
notice is given of any other breach.
(c) By the Bank immediately upon BAMSI's voluntary filing of any
petition or complaint seeking relief under any federal or state bankruptcy
or other debt relief statute or upon any involuntary petition in bankruptcy
being filed against BAMSI if such petition is not dismissed within 90 days
after it is filed.
(d) By BAMSI immediately in the event that any agreements between the
Bank and Visa and/or MasterCard or the Bank's membership in either such
bankcard association shall be terminated or materially limited which
termination or material limitation would impair the ability of BAMSI to
authorize, process or settle merchant bankcard transactions.
(e) By the Bank in the event BAC and its affiliates (other than
BAMSI) beneficially own less than a majority of the voting power of the
outstanding common stock of BAMSI.
6.3 Survival. The provisions of Sections 2.3, 3.2, 4.1, 7.1 and 9.6 of
--------
this Agreement shall survive any termination. No termination shall prejudice
any claim or rights of any party which accrued prior to termination.
-8- Sponsorship Agreement
<PAGE>
ARTICLE VII
CONFIDENTIALITY
---------------
7.1 Confidentiality. In performing this Agreement, each party will have
---------------
access to confidential information of the other. Each party agrees to hold in
confidence and to instruct its employees and agents to hold in confidence all
information and materials, in whatever form, reasonably designated as
confidential by the party requesting confidentiality. BAMSI agrees to comply
with all laws and regulations relating to confidentiality of customer lists and
other information which are applicable to the Bank and its agents or to BAMSI.
The Bank agrees to comply with all contractual obligations of BAMSI actually
known to the Bank and all laws and regulations applicable to the Bank or BAMSI
relating to confidentiality of customer lists and other information.
ARTICLE VIII
NOTICES
-------
8.1 Notices. All notices which are required or permitted by this
-------
Agreement shall be in writing and shall be (i) delivered personally to the
designated addressee, (ii) sent by the United States Mail addressed to the
designated person by certified mail, return receipt requested, all postage
prepaid, or (iii) sent by overnight delivery service addressed to the designated
person, all charges prepaid, or (iv) by other means such as facsimile machine if
the designated addressee acknowledges receipt in writing. Notices shall be
addressed as follows:
If to BAMSI: BA Merchant Services, Inc.
One South Van Ness Avenue
5th Floor
San Francisco, CA 94103
Attn: General Counsel #3710
If to the Bank: Bank of America NT & SA
555 California Street
6th Floor
San Francisco, CA 94104
Attn: Corporate Secretary #3018
With a copy to: BankAmerica Corporation
555 California Street
8th Floor
San Francisco, CA 94104
Attn: General Counsel #3017
-9- Sponsorship Agreement
<PAGE>
Notices personally delivered are given when received. Notices sent by United
States Mail, certified mail, return receipt requested, are given five business
days after delivery to the United States Postal Service unless prior actual
receipt by the addressee is proven. Notice sent by overnight delivery service
is deemed given one business day after delivery to and acceptance by overnight
delivery service for next day delivery. Notices sent by other means and
acknowledged are deemed given when acknowledged in writing.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Headings. The headings are for information and are not part of this
--------
Agreement.
9.2 Entire Agreement, Modification. This Agreement and the attachments to
------------------------------
it represent the entire agreement of the parties with respect to the subject
matter of the Agreement. This Agreement may not be modified except by a written
agreement which expressly refers to the Agreement and is signed by both parties.
9.3 Severability. If any section of this Agreement is deemed void illegal
------------
or unenforceable, that section shall be severed and the balance shalt remain in
effect.
9.4 Governing Law; Arbitration.
--------------------------
(a) This Agreement and its interpretation shall be governed by the laws of
the State of California without regard to conflicts of laws rules.
(b) Any dispute, controversy or claim between the Bank and BAMSI arising
out of or relating to this Agreement, the Merchant Processing Services or any
agreements or instruments relating hereto or delivered in connection herewith,
will be resolved by arbitration conducted in San Francisco, California under the
auspices and according to the Commercial Arbitration Rules of the American
Arbitration Association. The arbitration shall be conducted in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement.
9.5 Binding Agreement, Assignment Prohibited. This Agreement shall bind
----------------------------------------
the parties, their successors and permitted assigns. Neither party shall assign
this Agreement or any rights under it except with the prior written consent of
the other.
10.6 Supervision and Regulation. The Bank is an insured institution
--------------------------
subject to regulation and supervision by the Office of the Comptroller of the
Currency (the "OCC") and various of the services under this Agreement may
constitute bank services under 12 U.S.C. (S)1867(c). To the extent required by
law or regulation, the parties will advise the OCC of the existence of this
Agreement and will cooperate with any examination which the OCC or any other
governmental regulatory agency may conduct in connection with this Agreement or
the services provided thereunder.
-10- Sponsorship Agreement
<PAGE>
10.7 Relationship. Nothing in this Agreement shall be deemed to create a
------------
partnership, joint venture or agency relationship between the parties. Both
parties are independent contractors and neither party is to be considered the
agent or legal representative of the other for any purpose whatsoever.
10.8. Third Party Beneficiaries. Except as expressly provided in this
-------------------------
Agreement, the parties hereto intend that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person other than the
parties hereto.
10.9 Monitoring by the Bank. BAMSI shall admit properly identified and
----------------------
authorized the Bank employees and agents onto its premises for purposes of
monitoring BAMSI's compliance with this Agreement. It is understood that such
monitoring will occur during normal business hours, will be preceded by
reasonable notification to BAMSI, and must not interfere with BAMSI's normal
operations.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the Effective Date.
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By: /s/ Thomas E. Peterson
----------------------------
Thomas E. Peterson
Vice Chairman
BA MERCHANT SERVICES, INC.
By: /s/ Sharif M. Bayyari
----------------------------
Sharif M. Bayyari
President
-11- Sponsorship Agreement
<PAGE>
Exhibit 10.3
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Agreement") is made as of the 3rd
day of December 1996 between BANKAMERICA CORPORATION, a Delaware corporation
-----------------------
("BAC") and BA MERCHANT SERVICES, INC., a Delaware corporation ("BAMSI").
-------------------------
RECITALS
A. BAC. BAC is an existing corporation duly organized and in good
---
standing under the laws of the State of Delaware, with its principal executive
offices located in San Francisco, California.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of
-----
the State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
-------------------
obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend
-------------------------
to conduct their relationships hereunder on an arm's length basis.
E. BAC/BAMSI Transactions. Bank of America National Trust and
----------------------
Savings Association ("BofA") and Bank of America NW, National Association
("BANW"), each a subsidiary of BAC, currently own 100% of the outstanding common
stock of BAMSI. BofA and BANW have entered or will enter into certain
agreements with BAMSI (1) transferring the BofA United States domestic merchant
processing business and the BANW merchant processing business to BAMSI and (2)
covering the contemplated transfer of the Philippine and Thailand merchant
processing businesses of BofA to BAMSI upon the receipt of certain governmental
approvals (collectively, the BAC/BAMSI Transactions"). BAMSI is currently
considering an initial public offering of shares of its Class A common stock,
$.01 par value per share.
F. Related Agreements. BAMSI has entered or will enter into (1) a
------------------
Non-Competition and Corporate Opportunities Allocation Agreement of even date
herewith between BAC and BAMSI (the "Corporate Opportunities Agreement"), (2) a
Marketing Agreement of even date herewith among BAMSI, BofA and BANW (the
"Marketing Agreement"), (3) a Sponsorship and Processing Services Agreement of
even date herewith between BAMSI and BofA (the "Sponsorship Agreement") (4)
Processing Services Agreements of even date herewith between BAMSI and other
subsidiary banking institutions of BAC (the "Affiliate Bank Processing
Agreements"), (5) an Administrative Services Agreement of even date herewith
between BofA and BAMSI (the "Administrative Services Agreement"), (6) a
Registration Rights Agreement to be entered into among BAMSI, BofA and BANW (the
"Registration Rights Agreement"), and (7) a Tax Allocation Agreement of
-1- Trademark License Agreement
<PAGE>
even date herewith between BAC and BAMSI (the "Tax Agreement"). The Corporate
Opportunities Agreement, the Marketing Agreement, the Sponsorship Agreement, the
Affiliate Bank Processing Agreement, the Administrative Services Agreement, the
Registration Rights Agreement and the Tax Agreement are herein collectively
referred to as the "Related Agreements."
G. Trademark Licenses. In connection with the consummation of the
------------------
BAC/BAMSI Transactions and entry into the Related Agreements, (i) BAMSI desires
to license from BAC and BAC is willing to grant to BAMSI a nonexclusive license
to the BAC Trademarks (as defined below), and (ii) BAC desires to license from
BAMSI and BAMSI is willing to grant to BAC and its Affiliates a nonexclusive
license to the BAMSI Trademarks (as defined below), all in accordance with and
subject to the terms and provisions herein set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of their
mutual promises and obligations herein contained, intending to be legally bound,
the parties do hereby agree as follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 "Affiliate" means with respect to any person, any other
person which directly or indirectly controls, is controlled by, or is under
common control with, such person. A person is regarded in control of another
person if it owns, or directly or indirectly controls, at least 50% of the
voting stock or other ownership interest of the other person, or if it directly
or indirectly possesses the power to direct or cause the direction of the
management and policies of the other person by any means whatsoever; provided
however that, for the purposes of this Agreement, BAMSI shall not be an
Affiliate of BAC and BAC shall not be an Affiliate of BAMSI.
Section 1.2 "BAC Services" means the products and services of BAC and
its Affiliates defined as "Bank Services" in the Marketing Agreement, as amended
from time to time pursuant to the terms thereof.
Section 1.3 "BAC Trademarks" means the trademarks, service marks,
tradenames and other intellectual property of BAC identified on Schedule A,
which include the "Bank's Marks" as defined in the Marketing Agreement.
Section 1.4 "BAMSI Services" means the merchant processing business
of BAMSI defined as "BAMSI Services" in the Marketing Agreement, as amended from
time to time pursuant to the terms thereof.
Section 1.5 "BAMSI Trademarks" means the trademarks, service marks,
tradenames and other intellectual property of BAMSI identified on Schedule B,
which include "BAMSI's Marks" as defined in the Marketing Agreement.
-2- Trademark License Agreement
<PAGE>
Section 1.6 "Effective Date" means the date of this Agreement.
Section 1.7 "Licensee" means, as the case may be, BAC in its capacity
as licensee of the BAMSI Trademarks hereunder, and BAMSI in its capacity as
licensee of the BAC Trademarks hereunder.
Section 1.8 "Licensor" means, as the case may be, BAC in its capacity
as licensor of the BAC Trademarks hereunder, and BAMSI in its capacity as
licensor of the BAMSI Trademarks hereunder.
Section 1.9 "Licensor's Trademarks" means the BAC Trademarks, in the
case of BAC, and the BAMSI Trademarks, in the case of BAMSI.
ARTICLE 2 - GRANTS OF TRADEMARK LICENSES
Section 2.1 BAC Grant of License.
--------------------
(a) BAC grants to BAMSI the worldwide, nonexclusive right and license
to use the BAC Trademarks in the marketing, promotion, sale and provision of
BAMSI Services and BAC Services in accordance with the provisions of the
Marketing Agreement.
(b) The BAC Trademarks are initially as established by BAC as of the
Effective Date and may be modified from time to time by BAC in its sole
discretion and reflected on a revised Schedule A.
Section 2.2 BAMSI Grant of License.
----------------------
(a) BAMSI grants to BAC and its Affiliates the worldwide, nonexclusive
right and license to use the BAMSI Trademarks in the marketing, promotion, sale
and provision of BAC Services and BAMSI Services in accordance with the
provisions of the Marketing Agreement.
(b) The BAMSI Trademarks are initially as established by BAMSI as of
the Effective Date and may be modified from time to time by BAMSI in its sole
discretion and reflected on a revised Schedule B.
Section 2.3 Fees. In consideration of the rights and licenses
----
granted under Sections 2.1 and 2.2, each Licensee shall pay to each Licensor
royalty fees as set forth on Schedule C. The net consideration paid by the
parties hereto take into account the benefits and value that BAC and BAMSI each
derive from the Related Agreements.
Section 2.4 Restrictions on Sublicenses.
---------------------------
(a) The right and license granted to BAMSI under Section 2.1 shall not
include the right to grant sublicenses to any third party, except (i) wholly-
owned subsidiaries of
-3- Trademark License Agreement
<PAGE>
BAMSI, or (ii) with the prior written consent of BAC. Any sublicense consented
to by BAC shall be at least as restrictive and allow BAMSI to ensure compliance
with all of the terms and conditions of this Agreement. BAMSI shall guarantee
the full performance and compliance of any such sublicensee with all of the
terms and conditions of this Agreement.
(b) The right and license granted to BAC and its Affiliates under
Section 2.2 shall not include the right to grant sublicenses to any third party,
except with the prior written consent of BAMSI. Any sublicense consented to by
BAMSI shall be at least as restrictive and allow BAC to ensure compliance with
all of the terms and conditions of this Agreement. BAC or the relevant Affiliate
shall guarantee the full performance and compliance of any such sublicensee with
all of the terms and conditions of this Agreement.
Section 2.5 Use.
---
(a) BAMSI undertakes and agrees to use the BAC Trademarks only in the
manner approved by BAC and only in connection with the provision of BAMSI
Services in strict compliance with Section 2.1. BAMSI shall not use the BAC
Trademarks in a manner that is likely to cause confusion, mistake or deception
as to the source, origin, association, affiliation, sponsorship or endorsement
between BAC and BAMSI as separate companies, or their respective products or
services.
(b) BAC undertakes and agrees to use the BAMSI Trademarks only in the
manner approved by BAMSI and only in connection with the provision of BAC
Services in strict compliance with Section 2.2. BAC shall not use the BAMSI
Trademarks in a manner that is likely to cause confusion, mistake or deception
as to the source, origin, association, affiliation, sponsorship or endorsement
between BAMSI and BAC as separate companies, or their respective products or
services.
Section 2.6 Indemnification by Licensees. Each Licensee shall hold
----------------------------
harmless and indemnify each Licensor and its Affiliates and their respective
officers, directors, employees, agents, representatives and attorneys-in-fact
from and against any claims or liabilities which may arise in connection with
the use of the Licensor's Trademarks by such Licensee or its Affiliates.
ARTICLE 3 - PROTECTION OF TRADEMARKS
Section 3.1 No Registration. Each Licensee acknowledges and agrees
---------------
that ownership of the Licensor's Trademarks is retained by the Licensor and such
Licensee will not make any filings to register any of the Licensor's Trademarks
in any jurisdiction. Any and all such registrations shall be made by the
Licensor in its sole discretion.
Section 3.2 Compliance with Law. Each Licensee shall comply with
-------------------
all laws and governmental regulations pertaining to the proper use and
designation of the Licensor's Trademarks in the various countries where the
Licensor's Trademarks are used.
-4- Trademark License Agreement
<PAGE>
Section 3.3 Validity. Each Licensee admits the validity of the
--------
Licensor's Trademarks and agrees that any and all rights and goodwill that might
be acquired by the use of the Licensor's Trademarks by such Licensee shall inure
to the sole benefit of the Licensor. Each Licensee agrees to fully cooperate as
requested with the Licensor in registering and maintaining the Licensor's
Trademarks and recording this Agreement, all at the Licensor's expense.
Section 3.4 No Similar Registrations. Each Licensee agrees not to
------------------------
use or register in any country any trademarks resembling or confusingly similar
to the Licensor's Trademarks during the term of this Agreement and thereafter.
Whenever the attention of a Licensee is called by a Licensor to any such uses or
registrations, such Licensee agrees to take appropriate steps immediately to
remedy or avoid such trademarks.
Section 3.5 Infringement. Each Licensee shall give the Licensor
------------
notice of any known or presumed infringements of the Licensor's Trademarks, and
such Licensee shall give the Licensor full cooperation in the protection of the
Licensor's Trademarks. Such Licensor shall have the right to determine the
appropriate course of action to be taken to enforce the Licensor's Trademarks or
otherwise abate the infringement, to take or refrain from taking any appropriate
action to enforce the Licensor's Trademarks, to control any litigation or other
enforcement action and to enter into or permit the settlement of any such
litigation or other enforcement action with respect to the Licensor's
Trademarks. If the Licensor decides to enforce the Licensor's Trademarks
against an infringer, all costs incurred and all recoveries made shall be for
the account of the Licensor, unless otherwise agreed to in a separate writing
between the parties. The Licensor shall have the right to name the Licensee as
a party in any litigation involving any such enforcement of rights, provided the
Licensor agrees to indemnify the Licensee for any damages awarded to any third
party as a result of the enforcement of such rights.
ARTICLE 4 - TERM AND TERMINATION
Section 4.1 Term. The term of this Agreement shall commence on the
----
Effective Date and shall continue for five years thereafter, unless terminated
earlier pursuant to Section 4.2 or extended by the mutual agreement of the
parties.
Section 4.2 Termination by BAC. BAC shall have the right to
------------------
terminate this Agreement upon the occurrence of any of the following events:
(a) A material breach of this Agreement by BAMSI or any of its
Affiliates that is not cured within 30 days after receipt of written notice of
such breach from BAC;
(b) A material breach of the Corporate Opportunities Agreement or
the Marketing Agreement by BAMSI which is not cured within 30 days after receipt
of written notice from BAC; or
-5- Trademark License Agreement
<PAGE>
(c) At any time upon 30 days' prior written notice to BAMSI, if
BAC and its Affiliates beneficially own shares representing less than a majority
of the voting power of the outstanding common stock of BAMSI.
Section 4.3 Termination by BAMSI. BAMSI shall have the right to
--------------------
terminate this Agreement upon the occurrence of any of the following events:
(a) A material breach of this Agreement by BAC or any of its
Affiliates that is not cured within 30 days after receipt of written notice of
such breach from BAMSI; or
(b) A material breach of the Corporate Opportunities Agreement or
the Marketing Agreement by BAC or any of its Affiliates which is not cured
within 30 days after receipt of written notice from BAMSI.
Section 4.4 Rights on Termination. Upon the termination of this
---------------------
Agreement, neither Licensee shall have any further right or license to use the
Licensor's Trademarks and each Licensee shall discontinue all further use of the
Licensor's Trademarks in the marketing, promotion, sale or provision of BAC
Services or BAMSI Services or otherwise. Termination of this Agreement for any
reason shall not terminate the obligations described in Sections 2.6 which shall
survive any such termination.
ARTICLE 5 - RESOLUTION OF DISPUTES
Section 5.1 Arbitration. Any dispute, controversy or claim between
-----------
BAC and BAMSI arising out of or relating to this Agreement, the BAC Trademarks,
the BAMSI Trademarks, the licenses or any agreements or instruments relating
hereto or delivered in connection herewith, will be resolved by arbitration
conducted in San Francisco, California under the auspices and according to the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement.
ARTICLE 6 - MISCELLANEOUS PROVISIONS
Section 6.1 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of California without regard to principles
of conflicts of laws.
Section 6.2 Notices. Any notice permitted or required by this
-------
Agreement shall be deemed given when sent by personal service, by certified or
registered mail return receipt requested, postage prepaid, by facsimile
transmission or by overnight delivery by a nationally recognized courier and
addressed as follows: if to BAC, BankAmerica Corporation, 555 California
Street, San Francisco, CA 94104, attention: Corporate Secretary #3018, with a
copy to BankAmerica Corporation, 555 California Street, 8th Floor, San
-6- Trademark License Agreement
<PAGE>
Francisco, CA 94104, attention: General Counsel #3017; and if to BAMSI, to BA
Merchant Services, Inc., One South Van Ness, 5th Floor, San Francisco,
California 94103, attention: General Counsel #3710. Actual receipt of notice
or other communication shall overcome any deficiency in manner of delivery
thereof.
Section 6.3 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which, when executed by both parties to this
Agreement, shall be deemed to be an original, and all of which counterparts
together shall constitute one and the same instrument.
Section 6.4 Entire Agreement. This Agreement constitutes the entire
----------------
agreement of the parties with respect to its subject matter, superseding all
prior oral and written communications, proposals, negotiations, representations,
understandings, courses of dealing, agreements, contracts, and the like between
the parties.
Section 6.5 Amendments. This Agreement may be changed, amended,
----------
modified, or rescinded only by an instrument in writing signed by the party
against which enforcement of such change, amendment, modification or rescission
is sought.
Section 6.6 Waivers. The provisions of this Agreement may be waived
-------
only by a written instrument executed by the party so waiving. Except as
expressly set forth the failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect such
party's right at a later time to enforce the same. No waiver by any party of
any condition, or breach of any provision of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of any other condition
or of the breach of any other provision of this Agreement.
Section 6.6 Relationship. Nothing in this Agreement shall be deemed
------------
to create a partnership, joint venture or agency relationship between the
parties. Both parties are independent contractors and neither party is to be
considered the agent or legal representative of the other for any purpose
whatsoever.
Section 6.7 Successors and Assigns. This Agreement shall bind and
----------------------
inure to the benefit of the parties and their respective successors and assigns,
except that no obligation under this Agreement may be delegated, nor may this
Agreement be assigned by either party, without the prior written consent of the
other party, except as provided in Section 2.4. Any such purported assignment
of this Agreement by either party without the prior written consent of the other
party shall be void and without effect.
-7- Trademark License Agreement
<PAGE>
Section 6.8 Third Party Beneficiaries. Except as expressly provided
-------------------------
in this Agreement, the parties hereto intend that this Agreement shall not
benefit or create any right or cause of action in or on behalf of any person
other than the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BANKAMERICA CORPORATION
By: /s/ Barry L. Pyle
----------------------------
Barry L. Pyle
Senior Vice President
BA MERCHANT SERVICES, INC.
By: /s/ Sharif M. Bayyari
-----------------------------
Sharif M. Bayyari
President
-8- Trademark License Agreement
<PAGE>
Exhibit 10.4
ADMINISTRATIVE AND SUPPORT SERVICES AGREEMENT
This ADMINISTRATIVE AND SUPPORT SERVICES AGREEMENT (this "Agreement") is
made this 3rd day of December, 1996, by and between BANK OF AMERICA NT & SA, a
-----------------------
national banking association (the "Bank"), BANK OF AMERICA NW, NATIONAL
----------------------------
ASSOCIATION, a national banking association ("BANW" and together with the Bank,
- -----------
the "Providers"), and BA MERCHANT SERVICES, INC., a Delaware corporation
--------------------------
("BAMSI").
RECITALS
A. Providers. The Bank and BANW are each an existing national banking
---------
association duly organized and in good standing under the laws of the United
States with its principal executive offices located in San Francisco,
California.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of the
-----
State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
-------------------
obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend to
-------------------------
conduct their relationships hereunder on an arm's length basis.
E. BAC/BAMSI Transactions. The Bank and BANW, each a subsidiary of
----------------------
BankAmerica Corporation, a Delaware corporation ("BAC"), currently own 100% of
the outstanding common stock of BAMSI. The Bank and BANW have entered or will
enter into certain agreements with BAMSI (1) transferring the Bank's United
States domestic merchant processing business and the BANW merchant processing
business to BAMSI and (2) covering the contemplated transfer of the Philippine
and Thailand merchant processing businesses of the Bank to BAMSI upon the
receipt of certain governmental approvals. BAMSI is currently considering an
initial public offering of shares of its Class A common stock, $.01 par value
per share.
F. Related Agreements. BAMSI has entered or will enter into (1) a Non-
------------------
Competition and Corporate Opportunities Allocation Agreement of even date
herewith between BAC and BAMSI (the "Corporate Opportunities Agreement"), (2) a
Marketing Agreement of even date herewith among BAMSI, the Bank and BANW (the
"Marketing Agreement"), (3) a Sponsorship and Processing Services Agreement of
even date herewith between BAMSI and the Bank (the "Sponsorship Agreement") (4)
Processing Services Agreements of even date herewith between BAMSI and other
subsidiary banking institutions
-1- Administrative Services Agreement
<PAGE>
of BAC (the "Affiliate Bank Processing Agreements"), (5) a Trademark License
Agreement of even date herewith between BAC and BAMSI (the "License Agreement"),
(6) a Registration Rights Agreement to be entered into among BAMSI, the Bank and
BANW (the "Registration Rights Agreement"), and (7) a Tax Allocation Agreement
of even date herewith between BAC and BAMSI (the "Tax Agreement"). The
Corporate Opportunities Agreement, the Marketing Agreement, the Sponsorship
Agreement, the Affiliate Bank Processing Agreement, the License Agreement, the
Registration Rights Agreement and the Tax Agreement are herein collectively
referred to as the "Related Agreements."
G. Administrative Services. BAMSI desires to receive from the Providers
-----------------------
and the Providers are willing to provide to BAMSI certain administrative and
support services as described hereunder pursuant to the terms and conditions of
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
premises and agreements set forth herein, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1. Administrative and Support Services.
-----------------------------------
(a) The Bank and BANW shall make available and provide to BAMSI, in
accordance with the terms and conditions of this Agreement, certain
administrative and support services (the "Services"). The Services available to
BAMSI shall include, without limitation, purchasing, advertising, publicity,
marketing, data processing (including procurement, maintenance and support),
personnel and human resources (including hiring), training, legal services,
regulatory and compliance services, payroll services, accounting, appraisal and
audit services, treasury and tax services, insurance, corporate security, credit
review and analysis, credit bureau services, and facilities (including lease
administration), as set forth in the service memoranda attached as Schedules A-1
to A-14 hereto.
(b) From time to time, BAMSI may request and the Bank and BANW may make
available and provide to BAMSI, as the parties may mutually agree,
administrative and support services in addition to those set forth in Schedules
A-1 to A-14 ("Additional Services"). Such Additional Services shall be reflected
in separate service memoranda which shall be attached hereto as additional
consecutively numbered Schedules (beginning with Schedule B-1) and executed by
both parties hereto. The terms of this Agreement shall govern all such
additional Schedules.
(c) The Bank and BANW shall use good faith efforts to provide the Services
and any Additional Services in a good, workmanlike and professional manner.
(d) Subject to the provisions of Section 6, (i) BAMSI shall afford to the
Bank and BANW, their employees and authorized agents and representatives
reasonable access to
-2- Administrative Services Agreement
<PAGE>
the properties, books, records, contracts, documents, files and other
information in order to enable the Bank and BANW to perform and provide the
Services and the Additional Services, and (ii) the Bank and BANW shall afford to
BAMSI, its employees and authorized agents and representatives reasonable access
to all information related to the Services or the Additional Services produced
or generated by the Bank or BANW in the course of providing the same, including
without limitation, technical, economic and business data, computer information
data bases and the like.
2. Fees. BAMSI shall compensate the Bank and BANW for each Service
----
provided to BAMSI at the rates set forth on Schedules A-1 to A-14 hereto. The
rates and fees for any Additional Services shall be set forth on the additional
Schedules covering such Additional Services. The Bank or BANW, as the case may
be, may change its fees from time to time with 90 days' written notice to BAMSI.
Such changes shall be determined by the Bank or BANW, as the case may be, and
shall be based upon market competitive pricing terms for the Services or
Additional Services, as the case may be. BAMSI shall pay fees to the Bank and
BANW in accordance with the attached Schedules and any additional Schedules on a
quarterly basis, in arrears or on such other basis as the parties may mutually
agree, commencing on December 31, 1996, and at the end of each subsequent fiscal
quarter for as long as this Agreement remains in effect.
3. Term and Termination.
--------------------
(a) The Bank and BANW shall provide the Services to BAMSI hereunder for
the period beginning on the effective date of this Agreement, and ending on a
date five years from the date hereof or, with respect to each particular Service
or Additional Service, on the date specified in a notice of termination
delivered pursuant to Section 3(b) below with respect to such Service or
Additional Service. Thereafter, on the anniversary of this Agreement, BAMSI may
renew this Agreement for successive one-year terms (each such successive one-
year term, an "Additional Term") at its option; provided, however, that the Bank
-------- -------
and BANW may exercise their right to change its fees during an Additional Term
pursuant to the provisions of Section 2 hereunder.
(b) BAMSI may terminate any portion of the Services or Additional Services
by giving 90 days' prior written notice to the Bank and BANW, provided that any
terminated Service or Additional Service may be renewed by the parties in
accordance with Section 1(b) above. If either party shall default in the
performance of any of its material obligations under this Agreement and shall
fail or refuse to remedy such default to the reasonable satisfaction of the
other party within 30 days after receipt of written notice, the non-breaching
party may terminate this Agreement. If the default in performance relates only
to a specific Service or Additional Service, termination will be limited to
termination of that Service or Additional Service. If any party shall become
insolvent, be placed in receivership, make an assignment for the benefit of
creditors or seek relief or have a petition
-3- Administrative Services Agreement
<PAGE>
filed against it under federal bankruptcy law, the other party may terminate
this Agreement immediately upon written notice.
(c) If action by a federal, state or other governmental regulatory agency
materially affects a party's rights or obligations hereunder, such party may
terminate any portion of the Services or Additional Services or this Agreement
by giving 90 days' prior written notice to the other, or such shorter period as
may be required by such agency or by law.
(d) The Bank or BANW may terminate this Agreement at any time upon 90
days' prior written notice to BAMSI in the event BAC and its affiliates (other
than BAMSI) beneficially own shares representing less than a majority of the
voting power of the outstanding common stock of BAMSI.
(e) The Bank or BANW may terminate this Agreement upon expiration or
termination of the Corporate Opportunities Agreement, the License Agreement or
the Marketing Agreement.
(f) Expiration or termination of all or a portion of this Agreement for
any reason shall not terminate the obligations described in Sections 3(g), 4 and
6 which shall survive any such termination.
(g) Expiration or termination of this Agreement for any reason shall not
terminate either party's obligations or rights arising out of any act or
omission of such party occurring prior to such termination or expiration.
4. Indemnification. Each party shall hold harmless and indemnify the
---------------
other party and its officers, directors, employees, agents, representatives and
attorneys-in-fact from and against any claims or liabilities which may arise in
connection with the Services and/or Additional Services, unless such claims or
liabilities arise directly out of the gross negligence or willful misconduct of
the party or person seeking indemnification.
5. Relationship.
------------
(a) Nothing in this Agreement shall be deemed to create a partnership,
joint venture or agency relationship between the parties. Both parties are
independent contractors and neither party is to be considered the agent or legal
representative of the other for any purpose whatsoever.
(b) The Bank and BANW, in providing the Services and the Additional
Services, will be solely responsible for (i) determining the terms and
conditions of employment between itself and its employees, agents and
representatives, including without limitation,
-4- Administrative Services Agreement
<PAGE>
hiring, termination, hours of work, rates and payment of compensation, and (ii)
the payment, reporting, collection and withholding of taxes and similar
contributions.
6. Confidential Information.
------------------------
(a) The parties hereto agree: (i) to hold in trust and maintain
confidential, (ii) not to disclose to others without prior written approval from
the disclosing party, (iii) not to use for any purpose, other than for the
purpose intended or such purpose as may be authorized in writing by the
disclosing party, and (iv) to prevent duplication of and disclosure to any other
party, any Information (as hereinafter defined) received from the disclosing
party or developed, presently held or continued to be held, or otherwise
obtained by the receiving party, under this Agreement.
(b) "Information" shall include all results of the Services and Additional
Services, information disclosed by either party orally, visually, in writing, or
in other tangible form in the course of providing or receiving Services or
Additional Services, and shall include, without limitation, technical, economic
and business data, know-how, flow sheets, drawings, business plans, computer
information data bases, and the like.
(c) The foregoing obligations of confidentiality, non-disclosure and non-
use shall not apply to any Information to the extent that the obligated party
demonstrates that:
(i) such Information is or becomes knowledge generally available to
the public other than through the acts or omissions of the obligated party
which constitute a breach of this Agreement;
(ii) such Information is subsequently received by the obligated
party on a non-confidential basis from a third party who did not receive it
directly or indirectly from the disclosing party;
(iii) such Information is developed independently by the obligated
party without reference to the Information; or
(iv) disclosure of such Information is required under applicable law
or regulations or in connection with a lawsuit, claim, litigation or other
proceeding or in connection with tax or regulatory matters.
Specific Information shall not be deemed to fall within the above exceptions
merely because it is embraced by more general Information which is or becomes
public knowledge.
(d) The parties hereto further agree that any specific agreements between
them containing confidentiality provisions shall supersede the general
provisions set forth in this Section.
-5- Administrative Services Agreement
<PAGE>
7. Excusable Delay or Failure in Performance. No party to this Agreement
-----------------------------------------
shall be liable for failure to perform any of its obligations under this
Agreement during any time such party is unable to perform due to any act of God,
sabotage, military operation, national emergency, civil commotion, labor
disturbance, utility or computer failure, or the order, requisition, request or
recommendation of any government agency or acting government authority, or any
party's compliance therewith, or government proration, regulation, or priority,
or any change in laws or regulations which prevent any party from providing
services required by this Agreement, or any other cause beyond any party's
reasonable control whether similar or dissimilar to the foregoing causes. This
paragraph does not apply to the amounts owed or owing to any party on or before
the date of the occurrence of any force majeure.
8. Supervision and Regulation. The Bank and BANW are each an insured
--------------------------
institution subject to regulation and supervision by the Office of the
Comptroller of the Currency (the "OCC") and various of the Services and
Additional Services may constitute bank services under 12 U.S.C. (S)1867(c). To
the extent required by law or regulation, the parties will advise the OCC of the
existence of this Agreement and will cooperate with any examination which the
OCC or any other governmental regulatory agency may conduct in connection with
this Agreement or the Services or the Additional Services provided thereunder.
9. Notices. Any notice permitted or required by this Agreement shall be
-------
deemed given when sent by personal service, by certified or registered mail
return receipt requested, postage prepaid, by facsimile transmission or by
overnight delivery by a nationally recognized courier and addressed as follows:
if to BAMSI, to BA Merchant Services, Inc., One South Van Ness, 5th Floor, San
Francisco, California 94103, attention: General Counsel #3710; if to the Bank,
to Bank of America NT & SA, 555 California Street, 6th Floor, San Francisco, CA
94104, attention: Corporate Secretary #3018, with a copy to BankAmerica
Corporation, 555 California Street, 8th Floor, San Francisco, CA, attention:
General Counsel #3017; and, if to BANW, to Bank of America NW, N.A., 701 Fifth
Avenue, Seattle, WA 98104, attention: General Counsel #3922. Actual receipt of
notice or other communication shall overcome any deficiency in manner of
delivery thereof.
10. Governing Law. This Agreement shall be governed by the laws of the
-------------
State of California without giving effect to the conflict of laws provisions
thereof.
11. Arbitration. Any dispute, controversy or claim between the Bank and
-----------
BANW, on the one hand, and BAMSI, on the other, arising out of or relating to
this Agreement, the Services, any Additional Services or any agreements or
instruments relating hereto or delivered in connection herewith, will be
resolved by arbitration conducted in San Francisco, California under the
auspices and according to the Commercial Arbitration Rules of the American
Arbitration Association. The arbitration shall be conducted in accordance
-6- Administrative Services Agreement
<PAGE>
with the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement.
12. Entire Agreement. This Agreement constitutes the entire agreement,
----------------
and supersedes all prior agreements, between the parties with respect to the
subject matter hereof. No change or modification of this Agreement shall be
valid and binding on either party unless set forth in a writing signed by both
parties.
13. Severability. Any provision of this Agreement that is held by a court
------------
of competent jurisdiction to violate applicable law shall be limited or
nullified only to the extent necessary to bring the Agreement within the
requirements of such law.
14. No Assignment. Neither of the parties hereto may assign or transfer
-------------
any of its rights or delegate any of its obligations (whether by operation of
law or otherwise) under this Agreement to any other person or entity, provided,
however, that the Bank and BANW may each assign any of its rights or delegate
any of its duties under this Agreement, in whole or in part, without any prior
consent of BAMSI, to an Affiliate of the Bank or BANW, as the case may be, who
has the ability to perform the Services and Additional Services in substantially
the same manner as the Bank or BANW, as the case may be. For purposes of this
Agreement, an "Affiliate" means any person which directly or indirectly
controls, is controlled by, or is under common control with, such person. A
person is regarded in control of another person if it owns, or directly or
indirectly controls, at least 50% of the voting stock or other ownership
interest of the other person, or if it directly or indirectly possesses the
power to direct or cause the direction of the management and policies of the
other person by any means whatsoever; provided however that, for the purposes of
this Agreement, BAMSI shall not be an Affiliate of the Bank or BANW. Any
purported assignment or delegation that is made other than in accordance with
this Section 14 shall be void and of no effect. Subject to the foregoing
provisions of this Section 14, this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
14. Third Party Beneficiaries. Except as expressly provided in this
-------------------------
Agreement, the parties hereto intend that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person other than the
parties hereto.
-7- Administrative Services Agreement
<PAGE>
15. Counterparts. This Agreement may be executed in counterparts and each
------------
such counterpart shall be deemed an original hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and each of the undersigned hereby warrants and represents that he or
she has been and is, on the date of this Agreement, duly authorized by all
necessary and appropriate action to execute this Agreement.
BANKAMERICA CORPORATION
By: /s/ Thomas E. Peterson
-----------------------------
Thomas E. Peterson
Vice Chairman
BANK OF AMERICA NW, NATIONAL ASSOCIATION
By: /s/ Josef E. Gray
-----------------------------
Josef E. Gray
President of the
Seafirst Bank Division
BA MERCHANT SERVICES, INC.
By: /s/ Sharif M. Bayyari
-----------------------------
Sharif M. Bayyari
President
-8- Administrative Services Agreement
<PAGE>
SCHEDULES A-1 to A-14
Schedule Service
- -------- -------
A-1 Legal Services
A-2 Audit & Investigative Services
A-3 Forms Management & Field Services
A-4 Credit Reports
A-5 Support Services
A-6 Data Processing Services
A-7 Funds Transfer Services
A-8 Accounting Services
A-9 Investment Management & Cash Management
A-10 Human Resources
A-11 Credit Administration
A-12 Marketing/Advertising/Publications
A-13 Insurance
A-14 Corporate Secretary Services
<PAGE>
Exhibit 10.5(i)
MARKETING AGREEMENT
Bank of America NT&SA and NW
This Agreement, made as of December ____, 1996, is between Bank of
America NT&SA, a national banking association ("BofA"), and Bank of America NW,
N.A., a national banking association ("BANW") (collectively referred to as the
"Bank"), and BA Merchant Services, Inc., a Delaware corporation ("BAMSI").
Recitals
--------
A. The Bank has been a processor of credit card, charge card, ATM card
and debit card transactions for merchants accepting any combination of credit
cards, charge cards, ATM cards and debit cards and a provider of check
verification services for payment at point of sale ("Merchant Services").
B. The parties desire that BAMSI and the Bank cooperate and work
together in joint marketing opportunities, account-acquisition channels and
related services and support.
C. The parties intend to conduct their relationships under this
Agreement on an arm's length basis.
D. BofA and BANW, each a subsidiary of BankAmerica Corporation ("BAC"),
a Delaware corporation, currently own 100% of the outstanding common stock of
BAMSI and have entered into certain agreements with BAMSI as of the date shown
above: (1) transferring BofA's U.S. domestic Merchant Services businesses and
BANW's Merchant Services business to BAMSI; and (2) covering the contemplated
transfer of Bank of America's Philippines, Taiwan and Thailand Merchant Services
businesses to BAMSI upon receipt of certain government approvals. BAMSI is
currently considering an initial public offering of shares of its Class A common
stock, $0.01 par value per share. BANW and BofA intend for BANW to merge into
BofA, effective January 1, 1997.
E. Concurrently with the execution and delivery of this Agreement,
BAMSI has entered into, as of the date shown above: (1) a Non-Competition and
Corporate Opportunities Allocation Agreement between BAC and BAMSI (the
"Corporate Opportunities Agreement"), (2) a Sponsorship and Processing Service
Agreement between BAMSI and the Bank (the "Sponsorship and Processing
Agreement"), (3) a Processing Service Agreement between BAMSI and certain other
BAC affiliates, (4) a Trademark License Agreement between BAMSI and BAC (the
"Trademark License Agreement"), (5) a Registration Rights Agreement among BAMSI,
BofA and BANW (the Registration Rights Agreement"), and (6) a
-1-
<PAGE>
Tax Allocation Agreement between BAC and BAMSI (the "Tax Agreement").
NOW, THEREFORE, for valuable consideration, the parties hereby agree as
follows:
Agreement
---------
1. Marketing and Promotions.
------------------------
(a) BAMSI Services.
--------------
(1) During the term of this Agreement, the Bank and BAMSI will
cooperate and work together to market, promote and sell Merchant Services that
are provided by or may be transferred to BAMSI ("BAMSI Services") to existing
and prospective Merchant Services customers (collectively "Customers") according
to standards or requirements which the parties may establish from time to time
by mutual agreement. Except as provided in the Corporate Opportunities
Agreement, during the term of this Agreement, the Bank will not promote or offer
Merchant Services other than BAMSI Services. BAMSI Services which the Bank will
promote will include, among other things, authorization and processing services
for credit cards, charge cards, ATM cards and debit cards, check verification
and recovery services, and other Merchant Services products or services which
BAMSI develops or which an Association (defined below) develops and BAMSI
offers.
(2) The Bank will give BAMSI access to the Bank's retail and commercial
solicitation and distribution channels which include, without limitation, direct
mail, statement inserts, telemarketing, Internet and other on-line media and
cross-sell databases. If, through expansion, merger, acquisition or any other
means, the Bank acquires or adds new branches, commercial, corporate or
wholesale offices or sales forces, the Bank will give BAMSI access to any new or
additional solicitation and distribution channels available through the Bank's
new branches, offices or sales forces.
(b) Bank Services.
-------------
(1) During the term of this Agreement, the Bank and BAMSI will
cooperate and work together to market and promote the products and services of
the Bank or its affiliates ("Bank Services") to Customers. Bank Services will
include, without limitation, deposit-related accounts, credit-related products,
ATM sales and distribution, Business Banking, Commercial Cards (including
Corporate Cards and Purchasing Cards), interactive banking and home banking.
BAMSI will not promote banking products and services other than Bank Services
and will market
-2-
<PAGE>
and promote Bank Services according to standards or requirements which the
parties may establish from time to time by mutual agreement.
(2) BAMSI will give the Bank access to BAMSI's retail and commercial
solicitation and distribution channels which include, without limitation, direct
mail, statement inserts, telemarketing, Internet and other on-line media and
cross-sell databases. If, through expansion, merger or acquisition, BAMSI
acquires or adds new businesses, offices or sales forces, BAMSI will give the
Bank access to any new or additional solicitation and distribution channels
available through BAMSI's new businesses, offices or sales forces.
2. Sales Training and Support.
--------------------------
(a) To facilitate the Bank's promotion of BAMSI Services, BAMSI, at
BAMSI's expense, will: (1) from time to time and as product changes warrant,
supply the Bank with sales and promotional information, literature and related
materials in any appropriate medium, which the Bank, to the extent reasonably
possible, will display and distribute to Customers, and (2) provide training and
related support services for the Bank's sales personnel. To facilitate BAMSI's
promotion of Bank Services, the Bank, at the Bank's expense, will: (1) from time
to time and as product changes warrant, supply BAMSI with sales and promotional
information, literature and related materials in any appropriate medium, which
BAMSI, to the extent reasonably possible, will distribute to Customers, and (2)
provide training and related support services for BAMSI's sales personnel.
(b) The Bank and BAMSI will coordinate and cooperate with each other to
conduct joint promotions, including joint and contemporaneous sales calls to
Customers, to complement the features and benefits of each other's products and
services.
3. Information Access.
------------------
The Bank will give BAMSI direct, on-line access to any account and
related information on each Customer on which the Bank has a record, including
access to checking-account balances for BAMSI's check verification services and
access to information needed for payment authorization services, to the extent
legally permissible. BAMSI will maintain the confidentiality of all such
information in accordance with Section 8 below.
4. Compensation.
------------
(a) Fees or Credit. BAMSI will pay, credit or
--------------
-3-
<PAGE>
reimburse the Bank in accordance with the Compensation Schedule (attached as
Appendix A to this Agreement) for each Merchant Services application which the
Bank refers to BAMSI and which results in the acquisition of a new Customer. The
Bank will pay, credit or reimburse BAMSI in accordance with the Compensation
Schedule for each Bank product or service sold as a result of the referral or
promotion efforts of BAMSI. The rates of compensation in the Compensation
Schedule take into account the benefits and value which the Bank and BAMSI each
derive from joint and cooperative marketing efforts under this Agreement. The
parties may change the terms and rates of compensation from time to time by
mutual agreement. Each component of compensation between the parties will be
based on mutually agreeable and market-competitive pricing terms.
(b) Reports. As part of the compensation to the Bank for the Bank's
-------
marketing services, BAMSI will furnish the Bank with MIS reports on Customer
information on Customers acquired through the Bank, to the extent legally
permissible and operationally feasible for BAMSI.
(c) Payment. Unless the parties agree to use BAC's intercompany
-------
accounting system, each party will pay the other party by electronic transfer or
by check for the other party's services within 30 days following receipt of the
other party's itemized invoice.
5. Marks.
-----
(a) The Bank hereby authorizes BAMSI, in accordance with the Trademark
License Agreement, to use the Bank's trademarks, tradenames and service marks
(the "Bank's Marks") to market and promote the Bank's Services or BAMSI
Services. The Bank's Marks include, without limitation, Bank of America(R),
BankAmericard(R), Versatel(R) and Versateller(R).
(b) BAMSI hereby authorizes the Bank, in accordance with the Trademark
License Agreement, to use BAMSI's trademarks, tradenames and service marks
("BAMSI's Marks") to market and promote BAMSI Services or Bank Services.
BAMSI's Marks include, without limitation, BA Merchant Services and PayLink.
6. Term; Termination.
-----------------
(a) The term of this Agreement will start as of the date first shown
above and continue without interruption for 5 years. After the initial 5-year
term, the term will automatically renew for 1-year terms unless either party
gives at least 6 months' advance written notice of termination. However, the
Bank may terminate this Agreement at any time upon 6 months' advance written
notice if BAC and its affiliates (other than BAMSI) beneficially own shares
representing less
-4-
<PAGE>
than a majority of the voting power of the outstanding common stock of BAMSI.
(b) If a party materially fails to perform an obligation under this
Agreement, the other party may give written notice describing the failure to
perform, and if the failure is not corrected within 30 days, the notifying party
may terminate the Agreement immediately and will have the right to all available
remedies.
7. Independent Contractor.
----------------------
(a) Each party, in performing services under this Agreement, will be an
independent contractor of the other party, with exclusive control over its own
employees and agents who perform the terms under this Agreement.
(b) Each party is solely responsible for determining the terms and
conditions of employment between itself and its employees and agents, including,
without limitation, hiring, termination, hours of work, rates and payment of
compensation, and for the payment, reporting, collection and withholding of
taxes and similar contributions.
8. Confidentiality.
---------------
(a) BAMSI will treat as strictly confidential and as the Bank's
exclusive proprietary property all documents and information concerning the
Bank's marketing plans, marketing data, pricing plans, customer names or account
numbers, and related material which BAMSI receives in connection with this
Agreement (collectively the "Bank Information"). Except as authorized by the
Bank in a signed writing, BAMSI will not sell or disclose Bank Information,
directly or indirectly, to a third party. BAMSI will ensure that any agent
which BAMSI employs or retains to work with Bank Information will adhere to this
restriction of non-disclosure. This section does not apply to Bank Information
placed in the public domain other than by virtue of BAMSI's wrongful act or
omission.
(b) The Bank will treat as strictly confidential and as BAMSI's
exclusive proprietary property all documents and information concerning BAMSI's
marketing plans, marketing data, pricing plans, customer names or account
numbers, and related material which the Bank receives in connection with this
Agreement (collectively "BAMSI Information"). Except as authorized by BAMSI in
a signed writing, the Bank will not sell or disclose BAMSI Information, directly
or indirectly, to a third party. The Bank will ensure that any agent which the
Bank employs or retains to work with BAMSI Information will adhere to this
restriction of non-disclosure. This section
-5-
<PAGE>
does not apply to BAMSI Information placed in the public domain other than by
virtue of the Bank's wrongful act or omission.
(c) If either party receives a subpoena or other legal process which
specifically seeks to discover Information created by or belonging to the other
party or which constitutes the other party's proprietary property, the party
served with the subpoena or process will notify the other party immediately and
will cooperate at the other party's expense to contest the subpoena or process
if that is the desire of the other party.
(d) Each party will provide a secure environment to protect the
Information of the other party, and will take reasonable precautions to prevent
its disclosure, loss or damage.
(e) Upon expiration or termination of this Agreement, each party will
return or destroy within 5 business days all written Information and marketing
materials in its possession relating to the other party or the other party's
products and services through a mutually agreeable method.
(f) This Section 8 will survive expiration or termination of this
Agreement.
9. Indemnification.
---------------
(a) By the Bank. The Bank will defend, indemnify and hold BAMSI and
-----------
each of its officers, directors, employees and agents harmless from and against
each liability, claim, demand, cost, damage, loss and cause of action
(collectively "Claim") arising from the Bank's failure to perform its
obligations under this Agreement, except in the case of BAMSI's gross negligence
or willful misconduct.
(b) By BAMSI. BAMSI will defend, indemnify and hold the Bank and each
--------
of its officers, directors, employees and agents harmless from and against each
Claim arising from BAMSI's failure to perform its obligations under this
Agreement, except in the case of the Bank's gross negligence or willful
misconduct.
(c) Notice. Either party seeking indemnification under this Agreement
------
will give prompt written notice to the other party of any Claim for which
indemnification is sought.
(d) Taxes. Each party will indemnify, reimburse and hold the other
-----
party harmless from and for any applicable sales or use taxes arising from the
indemnifying party's performance of the terms of this Agreement.
-6-
<PAGE>
(e) This Section 9 will survive expiration or termination of this
Agreement.
10. Supervision and Regulation.
--------------------------
(a) The Bank is an insured institution subject to regulation and
supervision by the Office of the Comptroller of the Currency (OCC), and BAMSI is
a subsidiary of the Bank. Some of the services under this Agreement constitute
bank services under 12 U.S.C. (S)1867(c). To the extent required by law or
regulation, the parties will advise the OCC of the existence of this Agreement
and will cooperate with any examination which the OCC may wish to conduct in
connection with this Agreement or in connection with BAMSI's ongoing operations.
(b) This Section 10 will survive expiration or termination of this
Agreement.
11. Arbitration.
-----------
(a) Any dispute, controversy or claim between the the Bank and BAMSI
arising from or relating to this Agreement, BAMSI Services or Bank Services or
any related agreements or instruments will be resolved by arbitration conducted
in San Francisco, California, under the auspices, and in accordance with the
Commercial Arbitration Rules, of the American Arbitration Association, and in
accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice-of-law provision in this Agreement.
(b) This Section 11 will survive termination of this Agreement.
12. Notices.
-------
Each notice under this Agreement will be in writing and signed and will
be deemed effective when one party delivers it in person or transmits it
electronically, or 3 days after the notice is mailed by registered or certified
mail, to the designated representative of the other party at the applicable
address below.
To the Bank:
-----------
Bank of America NT&SA
555 California Street
San Francisco, CA 94104
Attention: Corporate Secretary #3018
-7-
<PAGE>
w/copy to:
General Counsel #3017
BankAmerica Corporation
555 California Street, 8th floor
San Francisco, CA 94104
To BAMSI:
--------
BA Merchant Services, Inc. #3710
One South Van Ness Avenue
San Francisco, CA 94103
Attention: Director of Product/
Strategy/Technology Support
13. Assignment. Neither party may assign this Agreement without the
----------
written consent of the other party. Upon consent, this Agreement will be
binding on and inure to the benefit of the parties' respective successors and
assigns.
14. Governing Law.
-------------
The lf the State of California will govern this Agreement, and any
provisions on conflict of laws will have no effect.
15. Third-Party Beneficiaries.
-------------------------
Except as expressly provided in this Agreement, the parties to this
Agreement intend that this Agreement will not benefit or create any right or
cause of action in or on behalf of any person other than the parties to this
Agreement.
16. Entire Agreement.
----------------
This Agreement, including the attached Appendices, sets forth the entire
agreement between the parties relating to the subject matter of this Agreement,
superseding all prior written or oral understandings. This Agreement may not be
amended or modified without a writing signed by both parties.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
first date shown above.
BANK OF AMERICA NT&SA BA MERCHANT SERVICES, INC.
By __________________________ By ___________________________
Thomas E. Peterson Sharif M. Bayyari
Vice Chairman President & Chief Executive Officer
BANK OF AMERICA NW, N.A.
By __________________________
Josef E. Gray
President
-8-
<PAGE>
APPENDIX A
TO MARKETING AGREEMENT
Compensation Schedule
Compensation to the Bank.
- ------------------------
The Bank's compensation for marketing and promotional services described in
Section 1 above are:
Retail Branches
---------------
For each BAMSI Customer location acquired from referral by a branch:
. $55 reimbursement paid to the retail branch's region (if in the U.S.)
or to the branch (if outside the U.S.) for each Customer location up
to a maximum of 50 Customer locations for each Customer
Commercial Banking
------------------
For each BAMSI Customer location acquired from referral by a Commercial
Banking Officer:
. $55 reimbursement to the Commerical Banking Office for each Customer
location up to a maximum of 50 Customer locations for each Customer
Compensation to BAMSI.
- ---------------------
Float From Immediate Sales-Draft Credits. To the extent that a BAMSI
----------------------------------------
Customer has a demand deposit account with the Bank to which BAMSI deposits
same-day credit for processed credit-card and debit-card sales drafts of the
BAMSI Customer, the Bank will pay BAMSI each month the average interest
revenue earned as a result of the float period from the date of BAMSI's
deposit to the date that BAMSI collects the amounts of those
-9-
<PAGE>
sales drafts through the applicable Association settlement system, calculated as
follows:
Paper and Electronic merchant sales will be retrieved from the merchant
database at the branch level.
- Paper sales float days for the average monthly sales is set at 2.95
days.
- Electronic sales float days for average monthly sales is set at 2.20
days.
On the 5th day of each month, BAC Corporate Treasury's three-year pool
rate for the prior calendar month will be applied to the calculated
float-days sales during the prior calendar month to arrive at the
monthly float amount.
Example:
Monthly float = ((Electronic sales x 2.20 days) + (Paper sales x 2.95
days)) x .00623/365
-10-
<PAGE>
Exhibit 10.5 (ii)
MARKETING AGREEMENT
Bank of America NA
This Agreement, made as of December 3, 1996, is between Bank of America
NA, a national banking association and Bank of America NW, N.A., a national
banking association (collectively the "Bank"), and BA Merchant Services, Inc., a
Delaware corporation ("BAMSI").
Recitals
--------
A. The Bank is in the business of marketing, offering, issuing and
servicing consumer, business, corporate and purchasing credit cards bearing the
Visa(R) or MasterCard(R) brand which the Bank develops, which are transferred to
the Bank or which an Association (defined below) develops and the Bank offers
("Bank Products").
B. BAMSI is in the business of marketing, offering and providing
merchant authorization and processing services for credit card, charge card,
debit card and ATM card transactions, and check verification and recovery
services, and other merchant services which BAMSI develops, which are
transferred to BAMSI or which an Association (defined below) develops and BAMSI
offers ("BAMSI Services").
C. The parties desire that BAMSI and the Bank cooperate and work
together in joint marketing opportunities, account-acquisition channels and
related services and support.
D. The parties intend to conduct their relationships under this
Agreement on an arm's length basis.
E. Bank of America NT&SA ("BofA") and Bank of America NW, N.A.
("BANW"), each a subsidiary of BAC, a Delaware corporation, currently own 100%
of the outstanding common stock of BAMSI and have entered into certain
agreements with BAMSI as of the date shown above: (1) transferring BofA's U.S.
domestic Merchant Services businesses and BANW's Merchant Services business to
BAMSI as of the date shown above; and (2) covering the contemplated transfer of
Bank of America's Philippines, Taiwan and Thailand Merchant Services businesses
to BAMSI upon receipt of certain government approvals. BAMSI is currently
considering an initial public offering of shares of its Class A common stock,
$0.01 par value per share. BANW and BofA intend for BANW into merge into BofA,
effective January 1, 1997.
F. Concurrently with the execution and delivery of this Agreement,
BAMSI has entered into, as of the date shown above: (1) a Non-Competition and
Corporate Opportunities
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<PAGE>
Allocation Agreement between BAMSI and BAC (the "Corporate Opportunities
Agreement"), (2) a Sponsorship and Processing Service Agreement between BAMSI
and BofA and Seafirst (the "Sponsorship and Processing Agreement"), (3) a
Processing Service Agreement between BAMSI and certain other BAC affiliates, and
(4) a Trademark License Agreement between BAMSI and BAC.
NOW, THEREFORE, for valuable consideration, the parties hereby agree as
follows:
Agreement
---------
1. Marketing and Promotions.
------------------------
(a) BAMSI Services.
--------------
(1) During the term of this Agreement, the Bank and BAMSI will
cooperate and work together to market, promote and sell Merchant Services that
are provided by BAMSI or are transferred to BAMSI ("BAMSI Services") to existing
and prospective Merchant Services customers (collectively "Customers") according
to standards or requirements which the parties may establish from time to time
by mutual agreement. Except as provided in the Corporate Opportunities
Agreement, during the term of this Agreement, the Bank will not promote or offer
Merchant Services other than BAMSI Services. BAMSI Services which the Bank will
promote will include, among other things, authorization and processing services
for credit cards, charge cards, ATM cards and debit cards, check verification
and recovery services, and other Merchant Services products or services which
BAMSI develops or which an Association (defined below) develops and BAMSI
offers.
(2) To the extent legally permissible, the Bank will give BAMSI access
to the Bank's solicitation and distribution channels and resources which
include, without limitation, direct mail, statement inserts, telemarketing,
Internet and other on-line media and cross-sell databases. If, through
expansion, merger, acquisition or other means, the Bank acquires or adds new
credit card portfolios, business partners, clients or sales forces, the Bank
will give BAMSI access to any new or additional solicitation and distribution
channels available through the Bank's new portfolios, business partners, clients
or sales forces.
(b) Bank Products.
-------------
(1) During the term of this Agreement, the Bank and BAMSI will
cooperate and work together to market and promote Bank Products to Customers.
Bank Products will include,
-2-
<PAGE>
without limitation, consumer credit, business, corporate and purchasing cards.
Except as provided in the Corporate Opportunities Agreement, BAMSI will not
promote banking products and services other than Bank Products and will market
and promote Bank Services according to standards or requirements which the
parties may establish from time to time by mutual agreement.
(2) To the extent legally permissible, BAMSI will give the Bank access
to BAMSI's retail and commercial solicitation and distribution channels and
resources which include, without limitation, direct mail, statement inserts,
telemarketing, Internet and other on-line media and cross-sell databases. If,
through expansion, merger, acquisition or other means, BAMSI acquires or adds
new businesses, offices or sales forces, BAMSI will give the Bank access to any
new or additional solicitation and distribution channels available through
BAMSI's new businesses, offices or sales forces.
2. Sales Training and Support.
--------------------------
(a) To facilitate the Bank's promotion of BAMSI Services, BAMSI, at
BAMSI's expense, may from time to time and as product changes warrant: (1)
supply the Bank with sales and promotional information and literature and
related materials in any appropriate medium to inform the Bank of BAMSI
Services, and (2) provide training and related support services for the Bank's
personnel. To facilitate BAMSI's promotion of Bank Services, the Bank, at the
Bank's expense, may from time to time and as product changes warrant: (1) supply
BAMSI with sales and promotional information and literature and related
materials in any appropriate medium to inform BAMSI of Bank Products, and (2)
provide training and related support services for BAMSI's personnel.
(b) The Bank and BAMSI will coordinate and cooperate with each other to
conduct joint promotions, including joint and contemporaneous sales calls to
Customers, to complement the features and benefits of each other's products and
services.
3. Information Access.
------------------
To the extent legally permissible, each party to this Agreement will
give the other party access to any account and related information on each
Customer to enable the other party to solicit the Customer for BAMSI Services
or Bank Products, as applicable. Each party will maintain the confidentiality
of all such information in accordance with Section 8 below.
-3-
<PAGE>
4. Compensation.
------------
(a) On a Customer-by-Customer or project-by-project basis, the parties
will mutually agree on the compensation each party will receive for marketing
services under this Agreement. For each Customer or project, the parties will
enter into an amendment to this Agreement which, by reference, will become a
part of this Agreement and which will describe the marketing services to be
performed and the compensation to be paid. Compensation under this Agreement
will be based on market-competitive pricing terms.
(b) Reports. As part of the compensation under this Agreement, each
-------
party will furnish the other party with MIS reports on Customers' account
information and transaction data, to the extent legally permissible and
operationally feasible.
(c) Payment. Unless the parties agree to use BAC's intercompany
-------
accounting system, each party will pay the other party by electronic transfer or
by check for the other party's services within 30 days following receipt of the
other party's itemized invoice.
5. Marks.
-----
(a) The Bank hereby authorizes BAMSI, in accordance with the Trademark
License Agreement, to use the Bank's trademarks, tradenames and service marks
(the "Bank's Marks") to market and promote Bank Products or BAMSI Services. The
Bank's Marks include, without limitation, Bank of America(R) and
BankAmericard(R).
(b) BAMSI hereby authorizes the Bank, in accordance with the Trademark
License Agreement, to use BAMSI's trademarks, tradenames and service marks
("BAMSI's Marks") to market and promote BAMSI Services or Bank Services.
BAMSI's Marks include, without limitation, BA Merchant Services and PayLink/TM/.
6. Term; Termination.
-----------------
(a) The term of this Agreement will start as of the date first shown
above and continue without interruption for 5 years. After the initial 5-year
term, the term will automatically renew for 1-year terms unless either party
gives at least 6 months' advance written notice of termination. However, the
Bank may terminate this Agreement at any time upon 6 months' advance written
notice if BAC and its affiliates (other than BAMSI) beneficially own shares
representing less than a majority of the voting power of the outstanding common
stock of BAMSI.
-4-
<PAGE>
(b) If a party materially fails to perform an obligation under this
Agreement, the other party may give written notice describing the failure to
perform, and if the failure is not corrected within 30 days, the notifying party
may terminate the Agreement immediately and will have the right to all available
remedies.
7. Independent Contractor.
----------------------
(a) Each party, in performing services under this Agreement, will be an
independent contractor of the other party, with exclusive control over its own
employees and agents who perform the terms under this Agreement.
(b) Each party is solely responsible for determining the terms and
conditions of employment between itself and its employees and agents, including,
without limitation, hiring, termination, hours of work, rates and payment of
compensation, and for the payment, reporting, collection and withholding of
taxes and similar contributions.
8. Confidentiality.
---------------
(a) BAMSI will treat as strictly confidential and as the Bank's
exclusive proprietary property all documents and information concerning the
Bank's marketing plans, marketing data, pricing, customer names or account
numbers, and related material which BAMSI receives in connection with this
Agreement (collectively the "Bank Information"). Except as authorized by the
Bank in a signed writing, BAMSI will not sell or disclose Bank Information,
directly or indirectly, to a third party. BAMSI will ensure that any agent
which BAMSI employs or retains to work with Bank Information will adhere to this
restriction of non-disclosure. This section does not apply to Bank Information
placed in the public domain other than by virtue of BAMSI's wrongful act or
omission.
(b) The Bank will treat as strictly confidential and as BAMSI's
exclusive proprietary property all documents and information concerning BAMSI's
marketing plans, marketing data, pricing, customer names or account numbers, and
related material which the Bank receives in connection with this Agreement
(collectively "BAMSI Information"). Except as authorized by BAMSI in a signed
writing, the Bank will not sell or disclose BAMSI Information, directly or
indirectly, to a third party. The Bank will ensure that any agent which the
Bank employs or retains to work with BAMSI Information will adhere to this
restriction of non-disclosure. This section does not apply to BAMSI Information
placed in the public domain other than by virtue of the Bank's wrongful act or
omission.
-5-
<PAGE>
(c) If either party receives a subpoena or other legal process which
specifically seeks to discover Information created by or belonging to the other
party or which constitutes the other party's proprietary property, the party
served with the subpoena or process will notify the other party immediately and
will cooperate at the other party's expense to contest the subpoena or process
if that is the desire of the other party.
(d) Each party will provide a secure environment to protect the
Information of the other party, and will take reasonable precautions to prevent
its disclosure, loss or damage.
(e) Upon expiration or termination of this Agreement, each party will
return or destroy within 5 business days all written Information and marketing
materials in its possession relating to the other party or the other party's
products and services through a mutually agreeable method.
(f) This Section 8 will survive expiration or termination of this
Agreement.
9. Indemnification.
---------------
(a) By the Bank. The Bank will defend, indemnify and hold BAMSI and
-----------
each of its officers, directors, employees and agents harmless from and against
each liability, claim, demand, cost, damage, loss and cause of action
(collectively "Claim") arising from the Bank's failure to perform its
obligations under this Agreement, except in the case of BAMSI's gross negligence
or willful misconduct.
(b) By BAMSI. BAMSI will defend, indemnify and hold the Bank and each
--------
of its officers, directors, employees and agents harmless from and against each
Claim arising from BAMSI's failure to perform its obligations under this
Agreement, except in the case of the Bank's gross negligence or willful
misconduct.
(c) Notice. Either party seeking indemnification under this Agreement
------
will give prompt written notice to the other party of any Claim for which
indemnification is sought.
(d) Taxes. Each party will indemnify, reimburse and hold the other
-----
party harmless from and for any applicable sales or use taxes arising from the
indemnifying party's performance of the terms of this Agreement.
(e) This Section 9 will survive expiration or termination of this
Agreement.
-6-
<PAGE>
10. Supervision and Regulation.
--------------------------
(a) The Bank is an insured institution subject to regulation and
supervision by the Office of the Comptroller of the Currency (OCC), and BAMSI is
a subsidiary of the Bank. Some of the services under this Agreement constitute
bank services under 12 U.S.C. (S)1867(c). To the extent required by law or
regulation, the parties will advise the OCC of the existence of this Agreement
and will cooperate with any examination which the OCC may wish to conduct in
connection with this Agreement or in connection with BAMSI's ongoing operations.
(b) This Section 10 will survive expiration or termination of this
Agreement.
11. Arbitration.
-----------
(a) Any dispute or controversy between the parties will be resolved by
arbitration conducted in San Francisco, California, under the auspices, and in
accordance with the Commercial Rules, of the American Arbitration Association,
and in accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice-of-law provision in this Agreement.
(b) This Section 11 will survive termination of this Agreement.
12. Notices.
-------
Each notice under this Agreement will be in writing and signed and will
be deemed effective when one party delivers it in person or transmits it
electronically, or 3 days after the notice is mailed by registered or certified
mail, to the designated representative of the other party at the applicable
address below.
To the Bank:
-----------
Bank of America NA #5060
1825 East Buckeye Road
Phoenix, AZ 85034
Attention: President and CEO
w/copy to:
Bank of America
General Counsel #3017
555 California Street, 8th floor
San Francisco, CA 94104
-7-
<PAGE>
To BAMSI:
--------
BA Merchant Services, Inc. #3710
One South Van Ness Avenue
San Francisco, CA 94103
Attention: General Counsel #3710
13. Assignment. Neither party may assign this Agreement without the
----------
written consent of the other party. Upon consent, this Agreement will be
binding on and inure to the benefit of the parties' respective successors and
assigns.
14. Governing Law.
-------------
The laws of the State of California will govern this Agreement, and any
provisions on conflict of laws will have no effect.
15. Third-Party Beneficiaries.
-------------------------
Except as expressly provided in this Agreement, the parties to this
Agreement intend that this Agreement will not benefit or create any right or
cause of action in or on behalf of any person other than the parties to this
Agreement.
16. Entire Agreement.
----------------
This Agreement, including the attached Appendices, sets forth the entire
agreement between the parties relating to the subject matter of this Agreement,
superseding all prior written or oral understandings. This Agreement may not be
amended or modified without a writing signed by both parties.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
first date shown above.
BANK OF AMERICA NA BA MERCHANT SERVICES, INC.
By __________________________ By ___________________________
James G. Jones Sharif M. Bayyari
Chairman President & Chief Executive Officer
-8-
<PAGE>
Exhibit 10.6
TAX ALLOCATION AGREEMENT BETWEEN
BAC AND BA MERCHANT SERVICES, INC.
This Tax Allocation Agreement ("Agreement"), made this ___ day of December
1996, by and between BankAmerica Corporation ("BAC") and BA Merchant Services,
Inc. ("BAMSI").
Whereas, a consolidated U.S. federal income tax return ("Consolidated
Return") is filed which includes BAC and all domestic, Canadian and certain
Mexican subsidiaries ("Consolidated Group"). BAC will include BAMSI in its
consolidated federal income tax return relating to periods during which the
members of the Consolidated Group own 80 percent of the voting power and 80
percent of the value of the stock of BAMSI within the meaning of section 1504 of
the Internal Revenue Code.
Whereas, consolidated, combined, joint or unitary income tax and franchise
tax returns on income ("Combined Returns") are also filed, as required by
certain state and local jurisdictions, including California.
Whereas, certain direct and indirect subsidiaries of BAC join in filing
Consolidated and/or Combined Returns (the "BAC Group")
Whereas, there will be periods during which BAMSI will join BAC in filing
either Consolidated or Combined Returns or both ("Affiliation Periods").
Whereas, BAMSI anticipates that it will sell 14,000,000 shares of its Class
A Common Stock to the public in an initial public offering (the "IPO")
(16,100,000 if the underwriters exercise their over-allotment option) and that
as a result, BAMSI will thereafter cease to be included in the Consolidated
Group (although BAMSI may continue to be included in certain Combined Returns);
Whereas, the parties wish to set forth in this Agreement the agreement
between BAC and BAMSI with respect to the allocation and settlement of the
federal, state and local taxes of the BAC Group and the agreement between BAC
and BAMSI with respect to the resolution of tax controversies;
Now, therefore, in consideration of the mutual covenants contained herein,
the parties agree as follows:
<PAGE>
1. Filing of Returns
-----------------
With respect to each Affiliation Period, BAC shall file, and BAMSI shall
agree to join in the filing of, Consolidated Returns and/or Combined Returns on
behalf of the BAC Group. BAMSI shall execute and file such consents, elections
and other documents as BAC reasonably requests with respect to the filing of the
BAC Group's Consolidated and Combined Returns and shall timely provide to BAC
such information as may be necessary for the filing of such returns or for the
determination of amounts due under this Agreement. BAMSI acknowledges and
agrees that the rights conferred upon BAC in connection with the filing of the
BAC Group's returns include, without limitation, the right to reasonably
determine the allocation of income (or loss) of BAC and BAMSI between the last
Affiliation Period and the next taxable period (including the allocation of tax
liability with respect to the date of the IPO). BAMSI shall file all required
Federal, state, local and foreign tax returns with respect to all periods for
which BAMSI is not includible on a return of BAC, and BAMSI shall be responsible
for the payment of all taxes in connection therewith. BAMSI shall file any such
tax returns in a manner consistent with the manner in which BAC filed its
returns for Affiliation Periods (except as required by law or to the extent any
inconsistency would not adversely affect the returns of the BAC Group).
For purposes of any Affiliation Period and any taxable period for which
BAMSI is included in any Consolidated Return or any Combined Returns, BAC and
BAMSI will settle taxes on income in the manner described below. BAC and BAMSI
will use the same settlement procedure for payments made between BAC and BAMSI
after BAMSI ceases to be a member of the BAC Group, which are attributable to
adjustments made to Affiliation Periods.
2. Allocation and Settlement of U.S. Federal Consolidated and Combined State
-------------------------------------------------------------------------
Income Taxes
------------
BAMSI will determine and settle its share of the Consolidated/Combined
income taxes based upon income taxes currently payable on a separate return
basis as modified below.
BAMSI will receive tax payments in the current year for its net operating
loss, its net capital loss, and its excess foreign tax credits and general
business credits (hereinafter referred to as "Tax Benefit Items"), as computed
on a separate return basis, provided these Tax Benefit Items can be carried back
on a separate return basis.
If BAMSI's Tax Benefit Items cannot be carried back on a separate return
basis, but are utilized in the Consolidated/Combined Returns, BAMSI will receive
a tax payment equal to the reduction of the Consolidated/Combined tax liability
relating to the utilization of BAMSI's Tax Benefit Items.
2.
<PAGE>
If more than one corporation has Tax Benefit Items which cannot be carried
back on a separate return basis and the full amount of such items are not
utilized in the Consolidated/Combined Returns, each corporation receives a pro-
rata tax payment equal to the reduction of the Consolidated/Combined tax
liability relating to the utilization of the corporation's Tax Benefit Items.
Any such Tax Benefit Items not utilized in the Consolidated/Combined Return are
carried forward. The specific ordering rules prescribed by the taxing
authorities are applied in computing the utilization of Tax Benefit Items.
Tax Benefit Items utilized in the Consolidated/Combined Returns for which a
tax payment was received by BAMSI will be excluded from the computation of
BAMSI's tax liability on a separate return basis for any succeeding year.
3. Controlled Group Tax Benefits
-----------------------------
Controlled group tax items, including apportionment of rate brackets,
minimum tax exemption, environmental tax exemption, and other similar items, are
determined on a Consolidated/Combined basis. The controlled group tax items are
allocated to each corporation in the BAC Group on an equitable and consistent
basis if such items are claimed on a Consolidated/Combined return.
4. Alternative Minimum Tax ("AMT") and Alternative Minimum Tax Credit ("AMTC")
---------------------------------------------------------------------------
AMT is determined on a Consolidated/Combined basis and allocated to each
corporation on an equitable and consistent basis. The allocation is based upon
each corporation's tax preferences, tax adjustments and other items causing the
AMT in the Consolidated/Combined return. AMT is not allocated to any
corporation that does not have any tax preferences, positive tax adjustment
items or other items causing AMT. The total amount of AMT allocated to each
corporation cannot exceed the Consolidated AMT and the Combined AMT, for any
given state, in any tax year.
In future years, as any Consolidated/Combined return AMTC is utilized, AMTC
is allocated to each corporation on an equitable and consistent basis. This
allocation is based upon the amount of AMT that had been previously allocated to
each corporation. To the extent that AMTC would otherwise be allocated to BAMSI,
if BAMSI had not left the BAC Group, due to an allocation of AMT to BAMSI during
an Affiliation Period, BAMSI shall be entitled to a payment from BAC in an
amount equivalent to such AMTC. The total amount of AMTC allocated to each
corporation cannot exceed the consolidated AMTC claimed in any tax year.
3.
<PAGE>
5. Combined State and Local Income and Franchise Taxes on Income
-------------------------------------------------------------
The tax liability of Combined Returns is calculated by applying BAMSI's
apportionment factors, as computed on a separate return basis, to BAMSI's
separate return taxable income using the tax accounting method applicable to the
state or local tax jurisdictions.
6. Tax Settlement Payments
-----------------------
In addition to settlements required by paragraphs 7 and 8, tax settlement
payments between BAC and BAMSI are made as follows:
(a) BAMSI will pay or receive its current year estimated tax liability or
refund, as computed on a separate return basis, at the respective quarterly
installment due dates, including the original return due date.
(b) BAMSI will pay BAC the amount of taxes or receive tax overpayments, as
computed on a separate return basis, (less previous settlements, if any) on the
extended due dates of the Consolidated/Combined Returns.
(c) BAMSI will receive a refund from BAC in the current
Consolidated/Combined year of previously paid taxes for Tax Benefit Items that
can be carried back on a separate return basis.
(d) BAMSI will receive a payment from BAC in the current year for the
reduction in the Consolidated/Combined tax liability that results from the
utilization of its Tax Benefit Items not utilized previously on a separate or
Consolidated/Combined basis.
(e) Federal and Combined taxes attributable to or from each foreign
subsidiary or branch of BAMSI will be settled directly with BAMSI.
(f) BAMSI will settle all taxes of separately filed tax returns directly
with the individual tax jurisdictions.
7. Restructuring Taxes
-------------------
Notwithstanding any other provision of this agreement, any amount payable
with respect to Restructuring Taxes and any related costs imposed upon any
member of the BAC Group shall be allocated in the year determined between the
BAC Group and BAMSI in accordance with Schedule A. "Restructuring Taxes" shall
mean any taxes resulting from transactions contemplated by the transfer of
assets to BAMSI by other BAC Group members or the
4.
<PAGE>
assumption by BAMSI of liabilities of such other BAC Group members in connection
with such transfers.
8. Subsequent Return Adjustments
-----------------------------
In the event the Consolidated or Combined Returns are amended or adjusted
(whether by reason of the filing of an amended return, a claim for refund, or
otherwise) the liability of BAMSI will be redetermined, adjusted and settled on
a separate return basis consistent with the above provisions.
In the event the Consolidated or Combined tax liability is redetermined or
adjusted pursuant to an audit or challenge by the taxing authorities, or if a
voluntary tax payment is made to limit the accrual of interest on audit issues,
the tax liability of BAMSI will be redetermined, adjusted and settled, as
appropriate. Payments reflecting such redeterminations or adjustments shall be
made when (a) a settlement (evidenced in writing or by the payment of taxes) is
entered into with the taxing authority, (b) a decision of a court having
jurisdiction in the matter becomes final and is not subject to appeal, or (c)
BAC makes a voluntary tax payment on behalf of the BAC Group with respect to the
Consolidated or Combined Returns.
BAC may allocate the liability for any redetermination or adjustment on a
tentative basis among the member corporations and BAMSI in accordance with its
estimate of each corporation's liability on a separate return basis. The
tentative allocations will be revised and settled when return adjustments are
finalized.
9. Penalties and Interest
----------------------
If penalties or interest are imposed by the taxing authorities, or if a
voluntary interest payment is made, the payment is allocated to and made by each
responsible corporation. If any interest from the taxing authorities is
received by BAC or its subsidiaries included in the Consolidated or Combined
Returns, such interest shall be allocated and refunded to the attributable
corporation.
10. Billing
-------
The Tax Department of Bank of America NT&SA determines the tax settlements
and provides written notification of the tax payments and refunds at the
respective installment due dates for estimated tax payments and at the original
and extended due dates of the Consolidated/Combined Returns.
In addition, written notification of any tax payment or overpayment for
adjustments reflected in amended returns and tax audits and of any Restructuring
Taxes will also be provided by the Tax Department, as appropriate.
5.
<PAGE>
Payments of income taxes, penalties and interest are payable within thirty
(30) days of billing. If payment is not made within the thirty-day period,
interest is charged from the date of billing to the date of payment. Interest
accrues on the late payment at the same rate used by the taxing authorities on
late payments during such period.
11. Determinations and Disputes
---------------------------
Subject to section 12 of this Agreement, in the event that any dispute must
be settled under this Agreement, the parties hereto agree to submit the issue in
writing to the Tax Advisory Committee ("Committee") for its review and
recommendation, with the final decision to be made by the Chief Accounting
Officer. The Committee consists of the Director of Tax and representatives from
Corporate Finance and Corporate Treasury. The Committee shall permit a
representative of BAMSI to participate in the review as appropriate. In the
event that reasonable mutual satisfaction cannot be reached between BAC and
BAMSI with respect to a final decision of the Chief Accounting Officer, the
dispute may be submitted to arbitration as described below.
Any dispute, controversy or claim between BAC and BAMSI arising out of or
relating to this Agreement, or any agreements or instruments relating hereto or
delivered in connection herewith, will be resolved by arbitration conducted in
San Francisco, California under the auspices and according to the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration
shall be conducted in accordance with the United States Arbitration Act (Title
9, U.S. Code), notwithstanding any choice of law provision in this Agreement.
12. Procedural Matters
------------------
(a) To the extent that BAMSI remains part of the Consolidated Return for
federal income tax purposes or part of a Combined Return, the Tax Department
will prepare and file Consolidated and Combined Returns, along with any other
documents or statements that are required to be filed with the taxing
authorities for the U.S. federal, state or local purposes, related to
Consolidated and Combined Returns. In its sole discretion, with respect to any
Consolidated/Combined Return which it has filed or will file, BAC has the right
to
(i) Determine:
1) The manner in which such returns, documents or statements
are prepared and filed including, without limitation, the manner in which any
item of income gain, loss, deduction or credit shall be reported;
2) The manner in which the Consolidated or Combined tax liability
will be allocated for the purpose of
6.
<PAGE>
determining the taxable earnings and profits of each corporation;
3) Whether any extensions may be requested; and
4) The elections that are made by any corporation included in
BAC's Consolidated/Combined Returns.
(ii) Except as otherwise expressly provided in (b) and (c), contest,
compromise or settle any adjustment or deficiency proposed, asserted or assessed
as a result of any audit of such returns by the taxing authorities;
(iii) File, prosecute, compromise or settle any claim for refund; and
(iv) Determine whether any refunds to which BAC and its subsidiaries
may be entitled are paid by way of refund or credited against the tax liability
of BAC and its subsidiaries.
Without limiting its rights and obligations, BAMSI hereby irrevocably
appoints BAC as its agent and attorney-in-fact to take such action (including
the execution of documents) as BAC may deem appropriate to effect the foregoing.
Filing positions taken in the Consolidated/Combined Returns may adversely
impact the computation of separate return tax liabilities of certain
corporations. Accordingly, the Tax Department will calculate each corporation's
separate return tax liability or refund using the different filing basis that
would be available to the corporation had it filed a separate return, if it
results in a material difference in computing the corporation's separate tax
liability.
(b) If any party receives notice of a tax examination, audit or challenge
involving amounts subject to this Agreement, such party shall timely notify the
other party of the information and shall provide the other party with a written
copy of any relevant letters, forms or schedules received from any taxing
authority or otherwise in its possession and shall provide notice and
information relating to all material proceedings in connection therewith. In
any audit conference or other proceeding with any taxing authority or in any
judicial proceedings concerning the determination of the tax liabilities of the
BAC Group or any of its members, including BAMSI, the BAC Group and each of its
members shall be represented by persons selected by BAC, except that BAMSI shall
select its own representative; provided however, the settlement and terms of
settlement of any issues relating to such audits shall be in the sole discretion
of BAC. In the event that BAMSI can show, by clear and convincing evidence, that
any such settlement or the terms of such settlement unreasonably and adversely
affects BAMSI, the resulting dispute between BAC and BAMSI may be submitted to
arbitration as described above in Section 11.
7.
<PAGE>
BAC shall have the right to review BAMSI's separate returns and records
relating thereto with respect to issues which are relevant for BAC's returns.
Such access shall be provided on a reasonable basis. BAC shall have a right to
participate in audits of BAMSI's separate returns with respect to issues which
are relevant for BAC's returns; provided however, the settlement and terms of
settlement of any issues relating to such audits shall be in the sole discretion
of BAMSI. In the event that BAC can show, by clear and convincing evidence,
that such settlement or the terms of such settlement unreasonably and adversely
affect BAC, the resulting dispute between BAC and BAMSI may be submitted to
arbitration as described above in Section 11.
(c) Notwithstanding (b), so long as any proposed deficiency solely involves
a tax issue of BAMSI, BAC shall contest such issue to the extent requested in
writing by BAMSI and shall permit BAMSI, at BAMSI's expense, to participate in
all conferences and meetings with taxing authorities with respect to the issue;
provided, however, that if (and so long as) the controversy also involves a tax
issue of BAC or member of the BAC Group other than BAMSI (whether for the
taxable year in question or another taxable year), BAC shall be entitled to the
choice of forum for the proceedings and shall have the right to make any
decision as to settlement of the contest or any issue; further, in no event
shall BAC be required to take any action requested by BAMSI unless and until (i)
BAMSI shall have given BAC an indemnity in a form satisfactory to BAC for any
liability, expense or loss arising out of or relating to BAMSI issues involved
in the dispute or contest (including, without limitation, all out-of-pocket
expenses solely of BAMSI (including internal computation costs of BAC Group
employees), costs, losses, reasonable disbursements, penalties, interest and
additions to tax relating to such issues, but excluding any expense of BAC
incurred for the purpose of monitoring the BAMSI issues) and (ii) if such
contest is to be conducted in a manner requiring payment of a proposed tax
deficiency, BAMSI shall have advanced to BAC on an interest-free basis an amount
attributable to the issue, together with any required interest or penalties.
13. Termination
-----------
This Agreement between BAC and BAMSI shall terminate if BAC and BAMSI
agree, in writing, to terminate this Agreement. In addition, BAC shall have the
right to terminate this Agreement at any time upon 30 days' prior written notice
to BAMSI, if BAC and its affiliates beneficially own less than a majority of the
voting power of the outstanding common stock of BAMSI.
With respect to BAC and BAMSI, notwithstanding the termination of this
Agreement, the provisions herein remain in effect for any tax year in which
Consolidated/Combined Returns have been filed.
8.
<PAGE>
Upon the departure of BAMSI from the BAC Group, BAC will pay BAMSI for any
previously unpaid tax benefits relating to Tax Benefit Items that were utilized
in the Consolidated/Combined Returns.
14. Indemnity
---------
BAMSI will be indemnified by BAC for any joint and several federal income
tax liability incurred during an Affiliation Period which is not attributable to
BAMSI.
15. Miscellaneous Provisions
------------------------
This agreement embodies the entire understanding and agreement of BAC and
BAMSI with respect to the allocation and settlement of income taxes.
16. Effective Date
--------------
This agreement is effective for 1996 and all subsequent years.
In Witness Whereof, the undersigned parties have caused this Agreement to
be executed as of the date first above written.
BankAmerica Corporation
By
------------------------------------
BA Merchant Services, Inc.
By
------------------------------------
9.
<PAGE>
SCHEDULE A
----------
If the actual tax bases immediately after the transfer are later adjusted
for any reason, BAMSI will pay BAC for any tax benefit it receives as a result
of such adjustments as BAMSI realizes such benefits on its tax returns and BAC
will reimburse BAMSI for any tax costs incurred by BAMSI as BAMSI realizes such
costs on its tax returns. This paragraph will not apply unless the net change
in net asset basis exceeds $2,000,000 for federal income tax purposes or for any
foreign tax jurisdiction. This section will not apply unless the net change in
net asset basis exceeds $5,000,000 for any state income, franchise, or capital
tax jurisdiction.
<PAGE>
Exhibit 10.8
ASSET TRANSFER AGREEMENT
THIS ASSET TRANSFER AGREEMENT is executed and delivered by and among BANK
----
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA" or a "Seller"), BANK
- ------------------------------------------------- ----
OF AMERICA NW, NATIONAL ASSOCIATION ("BANW" or a "Seller" and together with
- -----------------------------------
BofA, the "Sellers") and BA MERCHANT SERVICES, INC., a Delaware corporation
--------------------------
("BAMSI").
RECITALS
A. Sellers. Each of the Sellers is an existing national banking
-------
association duly organized and in good standing under the laws of the United
States and a subsidiary of BankAmerica Corporation, a Delaware corporation
("BAC"). BofA's principal executive offices are located in San Francisco,
California. BANW's principal offices are located in Seattle, Washington. BofA
currently owns 100% of the outstanding common stock of BAMSI.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of the
-----
State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
-------------------
obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties hereto intend to conduct their
-------------------------
relationships hereunder on an arm's length basis.
E. BAMSI Transactions; Related Agreements. BAMSI is currently
--------------------------------------
considering an initial public offering of shares of its Class A common stock,
$.01 par value per share ("Class A Common Stock"). BAMSI has entered or will
enter into (1) a Non-Competition and Corporate Opportunities Allocation
Agreement of even date herewith between BAC and BAMSI, (2) a Marketing Agreement
of even date herewith among BAMSI, BofA and BANW, (3) Processing Services
Agreements of even date herewith between BAMSI and other subsidiary banking
institutions of BAC, (4) an Administrative Services Agreement of even date
herewith between BofA and BAMSI, (5) a Trademark License Agreement of even date
herewith between BAC and BAMSI, (6) a Registration Rights Agreement to be
entered into among BAMSI, BofA and BANW, (7) a Tax Allocation Agreement of even
date herewith between BAC and BAMSI, (8) a Lease Agreement of even date herewith
between BofA and BAMSI covering various BAMSI premises and operating locations,
and (9) a Sponsorship Processing Agreement of even date herewith between BofA
and BAMSI.
F. Merchant Processing Business. Each Seller is engaged in the business
----------------------------
of providing an array of payment processing and related information products and
services to merchants who accept credit, charge and debit cards as payments for
goods and services throughout the United States (collectively, the "Business").
The Sellers wish to transfer the Business to BAMSI and BAMSI desires to acquire
the Business, by purchasing the Assets (as hereinafter defined) in exchange for
shares of Class B Common Stock, par value $.01 per share ("Class B Common
-1- Asset Transfer Agreement
<PAGE>
Stock"), of BAMSI and the assumption by BAMSI of the Assumed Liabilities (as
hereinafter defined) as set forth herein.
NOW, THEREFORE, in consideration of the matters described above and the
premises, representations, warranties, mutual covenants and agreements
hereinafter set forth, and for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, BofA, BANW and BAMSI hereby
covenant and agree as follows:
1. Sale and Purchase of Assets. Each Seller hereby irrevocably sells,
---------------------------
grants, assigns, conveys, transfers and delivers to BAMSI, and BAMSI hereby
purchases, assumes and accepts delivery of, all of such Seller's right, title
and interest in and to all of the tangible and intangible assets primarily
related to and used primarily by the Business, as they exist as of the date
hereof, together with all accrued benefits and rights pertaining thereto
(collectively, the "Assets"), other than the Excluded Assets (as hereinafter
defined), including, without limitation:
(i) Receivables and Other Items. All of those accounts receivable,
---------------------------
notes receivable, prepayments by or on behalf of the Business, advances by or on
behalf of the Business and other receivables arising in each case exclusively
out of the Business and outstanding as of the date hereof;
(ii) Claims. All claims, demands, causes of action, judgments and
------
decrees in favor of each Seller arising exclusively out of the Business;
(iii) Inventories. All raw materials, work-in-process, finished goods,
-----------
supplies and other inventories in each case intended for use or sale by the
Business;
(iv) Personal Property. Any and all machinery, furniture, tools, spare
-----------------
parts, automobiles and other vehicles, office and computer equipment and other
personal property in each case used exclusively in the operation of the
Business;
(v) Contracts. All contracts, agreements, leases and offers open for
---------
acceptance of any nature, whether written or oral, exclusively relating to the
Business, including, without limitation, all merchant customer agreements for
the provision of merchant processing services by each Seller ("Merchant
Agreements") and all other customer contracts, leases of personal property and
purchase orders;
(vi) Merchant Accounts. All security interests in each demand deposit or
-----------------
similar account, either with a Seller or another financial institution, linked
to a customer under a Merchant Agreement;
(vii) Operating Permits. All licenses, permits and authorizations,
-----------------
environmental or otherwise, in each case exclusively used to operate the
Business;
(viii) Computer Programs. All interests of the Business in the software
-----------------
and computer programs and documentation used exclusively in conducting the
Business, including flow charts, diagrams, descriptive texts and programs,
computer printouts, underlying tapes, computer data bases and similar items;
-2- Asset Transfer Agreement
<PAGE>
(ix) Books and Records. All books and records exclusively relating to
-----------------
the Business, including, without limitation, all customer and supplier lists,
accounts and records, forms and office supplies, advertising and promotional
literature and price lists, all manuals and reports and other publications
relating exclusively to the Business; and
(x) Cash Balances. Cash balances for the Business existing on the date
-------------
hereof.
Without limiting the foregoing, the Assets shall consist of all assets (except
as provided in Section 2(i)) that would be reflected on a consolidated balance
sheet prepared on the date hereof in accordance with generally accepted
accounting principles consistent with the audited balance sheet of BAMSI at
December 31, 1995 and the unaudited balance sheet of BAMSI at September 30,
1996.
Section 2. Excluded Assets. Notwithstanding anything contained herein to
---------------
the contrary, the Assets shall not include, and each Seller will not, and will
not cause any Affiliate to, transfer to BAMSI and BAMSI will not accept any of
the following (collectively, the "Excluded Assets"):
(i) Drafts in transit outstanding as of the date hereof which are
retained by each Seller;
(ii) Books of original financial entry and internal accounting documents
and records relating to the Business and any other books and records relating to
the Business that either Seller is required to retain pursuant to statute, rule
or regulation, which BAMSI shall have the right to inspect and copy for any
proper purpose;
(iii) All rights to refunds of all federal, state, local, foreign and
provincial income, capital gains, gross receipts, profits, property, transfer,
sales, mercantile, value added, capital stock, franchise or other taxes,
including estimated taxes relating thereto and any interest and penalties
imposed thereon (collectively, "Taxes") relating to the Assets or the Business
to the extent such Taxes relate to a period commencing prior to the date hereof
and were not paid by BAMSI;
(iv) All of the right, title and interest in the bank accounts of the
Business;
(v) Policies of insurance, fidelity, surety or similar bonds and the
coverages afforded thereby;
(vi) Any assets of either Seller not primarily related to or used
primarily by the Business as conducted prior to the date hereof for the
Business; and
(vii) All rights, causes of action and claims arising out of any of the
Excluded Assets described in paragraphs (i) through (vii) hereof or any of the
Retained Liabilities (as hereinafter defined), including, without limitation,
any rights to reimbursement for damages, fees or expenses.
Section 3. Terms Related to the Transfer of Assets. Title to and risk of
---------------------------------------
loss or damage to the Assets for the Business shall pass to BAMSI as of the date
hereof. Each Seller's insurance coverage for the Business and the related
Assets shall cease as of the date hereof as to losses arising from events
occurring on or after the date hereof.
-3- Asset Transfer Agreement
<PAGE>
Section 4. Warranty.
--------
(a) Bank represents and warrants that: (i) the Assets constitute all of
the assets necessary for the conduct of the business of BAMSI as contemplated by
the Registration Statement (No. 333-13985) relating to the proposed offering of
shares of Class A Common Stock of BAMSI; (ii) at the Closing, Bank will have
transferred to BAMSI good and marketable title to or a valid leasehold interest
in all personal property and other assets relating to the Business, free and
clear of all liens, encumbrances and defects, except such as are described in
such Registration Statement or such as do not materially affect the value of
such assets and do not materially interfere with the use made and proposed to be
made of such Assets by BAMSI; and (iii) the audited financial statements of
BAMSI at and for the year ended December 31, 1995 and the unaudited financial
statements of BAMSI at and for the nine months ended September 30, 1996 have
been prepared in accordance with generally accepted accounting principles on a
consistent basis and fairly present the financial position and results of
operations of the Business and reflect all assets and liabilities that are part
of the Business.
(b) Each Seller agrees to assign to BAMSI such rights as each Seller
may have the right to assign under any warranty made by any vendor, manufacturer
or contractor with respect to any of the Assets.
Section 5. Assumed Liabilities and Obligations. Each Seller hereby
-----------------------------------
assigns and delegates to BAMSI, and BAMSI hereby assumes and agrees to
thereafter pay, satisfy, perform and discharge, as if the Business had been
operated by BAMSI from the commencement thereof and had never been owned by the
Sellers, all of the obligations and liabilities arising out of or relating to
the Business or the Assets, known or unknown, accrued, absolute, contingent or
otherwise, whether arising from pending or threatened claims against each
related to the Business or the Assets, including, without limitation,
environmental liabilities, whether arising as a result of the transactions
contemplated hereby, whether existing on the date hereof or arising at any time
or from time to time after the date hereof, and whether based on circumstances,
events or actions arising theretofore or thereafter, and whether or not such
obligations and liabilities shall have been disclosed herein or reflected on the
books and records of the Business (collectively, the "Assumed Liabilities"),
other than the Retained Liabilities (as hereinafter defined).
Section 6. Retained Liabilities and Obligations. The Assumed Liabilities
------------------------------------
shall not include, and each Seller will not assign to BAMSI, and BAMSI will not
assume any of the following (collectively, the "Retained Liabilities"):
(i) Any liability to the employees of the Business prior to or as of
the Closing for the Business to provide benefits to such employees under BofA
employee benefit plans which provide medical, dental, disability or life
insurance coverage for claims arising from occurrences (as defined in the
relevant plan) prior to the date hereof;
(ii) Any liability for vested benefits under BofA 401(k) and other
employee benefit plans which have accrued to any employee of the Business as of
the date hereof, as if such employee was terminated as of the date hereof;
-4- Asset Transfer Agreement
<PAGE>
(iii) Liabilities (a) for which an insurer has liability under an
insurance policy of either Seller, to the extent of actual coverage under such
policy, and (b) that arise out of occurrences (as defined in such policy) prior
to the date hereof;
(iv) Liabilities only for Taxes relating to the Assets or the Business
to the extent such Taxes relate to any period prior to the date hereof;
(v) Liabilities exclusively arising out of or related to any of the
Excluded Assets; and
(vi) With respect to liabilities that are required to be reflected on a
balance sheet prepared in accordance with generally accepted accounting
principles, those liabilities that would not be reflected on a consolidated
balance sheet prepared on the date of Closing in accordance with generally
accepted accounting principles consistent with the audited balance sheet of
BAMSI at December 31, 1995 and the unaudited balance sheet of BAMSI at September
30, 1996.
Section 7. Purchase Price. With respect to the Business, BAMSI will
--------------
assume the Assumed Liabilities and will deliver 25,670,000 shares of its Class B
Common Stock of BofA and 4,530,000 shares of its Class B Common Stock to BANW as
consideration for BofA's and BANW's selling, granting, assigning, conveying,
transferring and delivering to BAMSI all of their right, title and interest in
and to the Assets relating to the Business.
Section 8. Further Assurances. After the date hereof, each Seller will,
------------------
at BAMSI's reasonable request and without further consideration, except for
reimbursement of out-of-pocket expenses, execute such additional instruments of
conveyance and transfer and provide to BAMSI such additional documents as BAMSI
may require to effect or evidence the transfer of Assets to BAMSI. As soon as
practicable, but no later than 60 days from the date hereof the parties hereto
shall prepare and a schedule evidencing the assets transfered and liabilities
assumed hereunder, which schedule shall be attached to and become a part of this
Agreement.
Section 9. Limitation on Liability. Neither Seller nor BAMSI shall have
-----------------------
any liability for costs, loss of anticipated profits or otherwise as a result of
the transactions contemplated by this Agreement. Nothing in this Agreement,
express or implied, shall be deemed to confer upon any other person any rights
or remedies under, or by reason of, this Agreement; provided, that such other
persons shall not be deemed to include Affiliates, successors or permitted
assigns of any party.
-5- Asset Transfer Agreement
<PAGE>
Section 10. Governing Law. This Agreement and all transfers of property
-------------
and other actions confirmed hereby shall be governed by and construed in
accordance with the terms and conditions of the Agreement and the laws of the
State of California.
Dated as of December 3, 1996.
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION BA MERCHANT SERVICES, INC.
By /s/ Thomas E. Peterson By /s/ Sharif M. Bayyari
------------------------------ -----------------------------
Thomas E. Peterson Sharif M. Bayyari
Vice Chairman President
BANK OF AMERICA NW, NATIONAL
ASSOCIATION
By /s/ Josef E. Gray
-------------------------
Josef E. Gray
President of the
Seafirst Bank Division
-6- Asset Transfer Agreement
<PAGE>
EXHIBIT 10.9
Nonemployee Director Stock Plan
-------------------------------
BA Merchant Services, Inc.
November 1996
<PAGE>
Contents
- --------
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article 1. Establishment, Purpose, and Duration 1
Article 2. Definitions 1
Article 3. Administration 3
Article 4. Eligibility and Participation 3
Article 5. Nonqualified Stock Options 3
Article 6. Amendment, Modification, and Termination 6
Article 7. Miscellaneous 6
</TABLE>
<PAGE>
BA Merchant Services, Inc.
- --------------------------
Nonemployee Director Stock Plan
- -------------------------------
Article 1. Establishment, Purpose, and Duration
- -----------------------------------------------
1.1 Establishment of the Plan. BA Merchant Services, Inc. (the
-------------------------------
"Company") hereby establishes an incentive compensation plan to be known as the
"BA Merchant Services, Inc. Nonemployee Director Stock Plan" (the "Plan"), as
set forth in this document. The Plan permits the grant of Nonqualified Stock
Options, subject to the terms and provisions set forth herein.
Upon approval by the Board of Directors of the Company, the Plan shall
become effective as of the consummation of the Company's initial public offering
(the "Effective Date"), and shall remain in effect as provided in Section 1.3
herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
-------------------------
achievement of long-term objectives of the Company by linking the personal
interests of Nonemployee Directors to those of Company shareholders, and to
attract and retain Nonemployee Directors of outstanding competence.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date
--------------------------
and shall remain in effect, subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 6 herein. However, in no
event may an Option be granted under the Plan on or after November 30, 2006.
Article 2. Definitions
- ----------------------
Whenever used in the Plan, the following terms shall have the meanings
set forth below and, when the meaning is intended, the initial letter of the
word is capitalized:
(a) "Award Agreement" means an agreement entered into by and between the
Company and a Nonemployee Director, setting forth the terms and
provisions applicable to an Option granted under the Plan.
(b) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.
(c) "Board" or "Board or Directors" means the Board of Directors of
the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
<PAGE>
(e) "Committee" means the Executive Personnel and Compensation Committee
of the Board of Directors of the Company.
(f) "Company" means BA Merchant Services, Inc., a Delaware corporation,
or any successor thereto as provided in Section 7.6 herein.
(g) "Director" means any individual who is a member of the Board of
Directors of the Company.
(h) "Disability" means a permanent and total disability, within the
meaning of Code Section 22(e)(3).
(i) "Employee" means any nonunion, salaried employee of the Company or
of the Company's Subsidiaries. For purposes of the Plan, an
individual whose only employment relationship with the Company is as
a Director, shall not be deemed to be an Employee.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor Act thereto.
(k) "Fair Market Value" shall mean the closing price on the New York
Stock Exchange on the relevant date, or (if there were no sales on
such date) on the last trading date preceding the relevant date.
(l) "Nonemployee Director" means any individual who is a member of the
Board of Directors of the Company, but who is not otherwise an
Employee of the Company or an employee of BankAmerica Corporation or
any of its Subsidiaries.
(m) "Nonqualified Stock Option," "NQSO" or "Option" means an option to
purchase Shares, granted under Article 5 herein.
(n) "Option Price" means the price at which a Share may be purchased
under an Option.
(o) "Participant" means a Nonemployee Director of the Company who has
outstanding a viable Option granted under the Plan.
(p) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
(q) "Shares" means the shares of Class A common stock of the Company,
par value $.01 per share.
<PAGE>
(r) "Subsidiary" means any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least fifty percent
(50%) of the total combined voting power of all classes of stock, or
any other entity (including, but not limited to, partnerships and
joint ventures) in which the Company owns at least fifty percent
(50%) of the combined equity thereof.
Article 3. Administration
- -------------------------
3.1 The Executive Personnel and Compensation Committee. The Plan shall
-------------------------------------------------------
be administered by the Executive Personnel and Compensation Committee of the
Board of Directors of the Company, subject to the restrictions set forth in the
Plan.
3.2 Administration by the Committee. The Committee shall have the full
------------------------------------
power, discretion, and authority to interpret and administer the Plan in a
manner which is consistent with the Plan's provisions. However, in no event
shall the Committee have the power to determine Plan eligibility, or to
determine the number, the value, the vesting period, or the timing of Options to
be made under the Plan (all such determinations are automatic pursuant to the
provisions of the Plan).
3.3 Decisions Binding. All determinations and decisions made by the
----------------------
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Committee shall be final, conclusive, and binding on all
persons, including the Committee, its stockholders, Employees, Participants, and
their estates and beneficiaries.
Article 4. Eligibility and Participation
- ----------------------------------------
4.1 Eligibility. Persons eligible to participate in the Plan are limited
----------------
to Nonemployee Directors who are serving on the Board on the date of each
scheduled grant under the Plan.
4.2 Actual Participation. All eligible Nonemployee Directors shall
-------------------------
receive grants of Options pursuant to the terms and provisions set forth in
Article 5 herein.
Article 5. Nonqualified Stock Options
- -------------------------------------
5.1 Retainer. During the term of this Plan, each Nonemployee Director
-------------
shall receive his or her annual retainer in the form of Options. The number of
Options granted pursuant to this Section 5.1 shall have a value equivalent to
the cash value of the annual retainer as determined through a Black-Scholes
valuation method.
<PAGE>
5.2 Initial Grant of Options. Each individual who is a Nonemployee
-----------------------------
Director on the Effective Date and each individual who becomes a Nonemployee
Director following the Effective Date shall be granted an Option to purchase
five thousand (5,000) Shares. The specific terms and provisions of such Options
shall be incorporated in Award Agreements, executed pursuant to Section 5.5 of
the Plan.
5.3 Subsequent Grants of Options. During the time period beginning
---------------------------------
January 1997 and ending November 30, 2006, and subject to the limitation on the
number of Shares subject to the Plan, on the day following each annual meeting
of the Company's shareholders, each Nonemployee Director shall be granted an
Option to purchase two thousand five hundred (2,500) Shares, effective as of
each such day following the annual shareholders' meeting.
5.4 Limitation on Grant of Options. Other than those grants of Options
-----------------------------------
set forth in Sections 5.1, 5.2, and 5.3 herein, no additional Options shall be
granted under the Plan.
5.5 Option Award Agreement. Each Option grant shall be evidenced by an
---------------------------
Award Agreement that shall specify the Option Price, the duration of the Option,
the number of Shares available for purchase under the Option, and such other
provisions as the Board shall determine.
5.6 Option Price. The purchase price per Share available for purchase
-----------------
under an Option shall equal the Fair Market Value of a Share on the date the
Option is granted.
5.7 Duration of Options. Each Option shall expire on the tenth (10th)
------------------------
anniversary date of its grant.
5.8 Vesting of Shares Subject to Option. Subject to the terms of this
----------------------------------------
Plan, all Options granted under this Plan shall vest one hundred percent (100%)
upon the day preceding the first annual shareholder meeting following the grant
of such Options, and shall remain exercisable until the tenth anniversary of
their grant date.
Regardless of the vesting schedule set forth in this Section 5.8, all
Options held by a Participant shall immediately become one hundred percent
(100%) vested upon the first to occur of the following:
(a) The death of the Participant; or
(b) The Disability of the Participant.
<PAGE>
5.9 Termination of Directorship. In the event a Participant ceases to be
--------------------------------
a Director for any reason other than death or Disability, all Options not vested
as of the effective date of termination shall be forfeited and shall revert back
to the Company (with no further vesting to occur). All Options which are vested
as of such date shall remain exercisable for six (6) months following the date
the Director's service on the Board terminates, or until their expiration date,
whichever period is shorter.
To the extent an Option is exercisable immediately following the date of
death of a Participant, it shall remain exercisable at any time prior to its
expiration date, or for one (1) year after the date of death, whichever period
is shorter, by such persons that have acquired the Participant's rights under
the Option by will or by the laws of descent and distribution.
To the extent an Option is exercisable immediately following the
effective date of Disability (the "Disability Date"), it shall remain
exercisable at any time prior to its expiration date, or for one (1) year after
the Disability Date, whichever period is shorter, by the Participant or such
person or persons as shall have been named as the Participant's legal
representative or beneficiary.
5.10 Payment. Options shall be exercised by the delivery of a written
-------------
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by tendering
previously acquired Shares having a Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares tendered upon Option
exercise have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a) and
(b).
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased pursuant to the exercise of the Option.
5.11 Restrictions on Share Transferability. The Board shall impose such
-------------------------------------------
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable federal securities laws, under the requirements of any Stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares; provided,
however, that no such restriction shall be imposed if the restriction could
result in the failure to comply with the "formula award" exception for grants of
Options to Directors.
<PAGE>
5.12 Nontransferability of Options. No Option granted under the Plan may
-----------------------------------
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
or her lifetime only by such Participant.
Article 6. Amendment, Modification, and Termination
- ---------------------------------------------------
6.1 Amendment, Modification, and Termination. Subject to the terms set
---------------------------------------------
forth in this Section 6.1, the Board may terminate, amend, or modify the Plan at
any time and from time to time; provided, however, that the provisions set forth
in the Plan regarding the amount of securities to be awarded to Directors, the
price of securities awarded to Directors, and the timing of Option grants to
Directors, may not be amended more than once within any six (6) month period,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974 as amended from time to time, or the rules thereunder.
Without the approval of the stockholders of the Company (as may be
required by the Code, by the insider trading rules of Section 16 of the Exchange
Act, by any national securities exchange or system on which the Shares are then
listed or reported, or by a regulatory body having jurisdiction with respect
hereto) no such termination, amendment, or modification may:
(a) Change the class of Participants eligible to participate in the
Plan; or
(b) Materially increase the cost of the Plan, or materially increase the
benefits accruing to Participants.
6.2 Awards Previously Granted. Unless required by law, no termination,
------------------------------
amendment, or modification of the Plan shall in any material manner adversely
affect any Option previously granted under the Plan, without the written consent
of the Participant holding the Option.
Article 7. Miscellaneous
- ------------------------
7.1 Gender and Number. Except where otherwise indicated by the context,
----------------------
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
7.2 Severability. In the event any provision of the Plan shall be held
-----------------
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
<PAGE>
7.3 Beneficiary Designation. Each Participant under the Plan may, from
----------------------------
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in the event of his or her death (and/or who may exercise the Participant's
vested Options following his or her death). Each designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate (and, subject to the terms and provisions of the
Plan, any unexercised vested Options may be exercised by the administrator or
executor of the Participant's estate).
7.4 No Right of Nomination. Nothing in the Plan shall be deemed to
---------------------------
create any obligation on the part of the Board to nominate any Director for
reelection by the Company's shareholders.
7.5 Shares Available. The Shares made available pursuant to Options
---------------------
under the Plan may be either authorized but unissued Shares, or Shares which
have been or may be reacquired by the Company, as determined from time to time
by the Board.
7.6 Successors. All obligations of the Company under the Plan with
---------------
respect to Options granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
7.7 Requirements of Law. The granting of Options under the Plan
------------------------
shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges
as may be required.
7.8 Governing Law. To the extent not preempted by federal law, the Plan,
------------------
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware.
<PAGE>
EXHIBIT 10.10
Short-Term Incentive Plan
BA Merchant Services, Inc.
November 1996
<PAGE>
Contents
- --------
- --------------------------------------------------------------------------------
Page
----
Article 1. Purposes and Effective Date 1
Article 2. Definitions 1
Article 3. Designation of Participants 2
Article 4. Determination of Incentive Pool 2
Article 5. Determination of Awards for Senior Officers 3
Article 6. Payment and Deferral 3
Article 7. Other Provisions 4
<PAGE>
BA Merchant Services, Inc.
- --------------------------
Short-Term Incentive Plan
- -------------------------
Article 1. Purposes and Effective Date
- --------------------------------------
The purpose of the BA Merchant Services, Inc. Short-Term Incentive Plan (the
"Plan") is to encourage superior performance by eligible Senior Officers of BA
Merchant Services, Inc. and its subsidiaries and affiliates through the payment
of annual cash incentive awards.
This Plan is effective as of the consummation of the Company's initial
public offering.
Article 2. Definitions
- ----------------------
2.1 The following items shall have the meanings set forth below, if
capitalized.
(a) "Committee" means the Executive Personnel and Compensation
Committee of the Board of Directors of BA Merchant Services, Inc..
(b) "CEO" means the Chief Executive Officer of BA Merchant Services,
Inc.
(c) "Company" means BA Merchant Services, Inc. and any subsidiary or
affiliate of BA Merchant Services, Inc. which has been authorized
by BA Merchant Services, Inc. to participate in the Plan.
(d) "Participant" means an officer of the Company designated as a
Participant for a Plan Year under Sections 3.1 or 3.2.
(e) "Plan" means the BA Merchant Services, Inc. Short-Term Incentive
Plan as it may be amended from time to time.
(f) "Plan Year" means the calendar year.
(g) "Retirement" means early, normal or postponed retirement as defined
under the retirement policy of the Company.
(h) "Senior Officer" means an individual designated by the BA Merchant
Services, Inc. Board of Directors as an executive officer for
federal securities law purposes or an officer of the Company
designated by the CEO as a Senior Officer.
<PAGE>
Article 3. Designation of Participants
- --------------------------------------
3.1 Each Senior Officer of the Company shall be a Participant in the Plan,
unless such officer participates in an annual cash incentive program within his
or her business unit or subsidiary.
3.2 No member of the Committee, and no member of the Board of Directors of
BA Merchant Services, Inc. who is not also a regular salaried employee of the
Company, shall be eligible to participate in the Plan.
3.3 The Committee may, but need not, consider for prorated or full
incentive awards Participants who have ceased employment because of death,
disability, or retirement prior to the date the Committee determines incentive
awards under the Plan. Participants who terminate employment (or give notice of
intent to terminate employment) for reasons other than death, disability, or
retirement prior to the date the Committee determines the incentive awards under
the Plan will not be eligible to be considered for an incentive award, unless
the Committee determines in its sole discretion that, because of special
circumstances, the Participant should be eligible to be considered.
3.4 Participation in the Plan shall not entitle any officer to an award
under the Plan. All awards shall be made in the sole discretion of the
Committee.
Article 4. Determination of Incentive Pool
- ------------------------------------------
4.1 Incentive awards under the Plan shall be made from the Incentive Award
Pool established for each Plan Year. The Incentive Award Pool shall be an amount
equal to two (2) percent of BA Merchant Services, Inc.'s income for the Plan
Year before income tax expense, extraordinary items, amortized goodwill,
acquisition-related interest changes, and the cumulative effect of accounting
changes as specified in the Company's announcement of annual financial results
filed with the Securities and Exchange Commission.
4.2 The Committee may, but need not, grant incentive awards up to the full
amount of the Incentive Award Pool.
4.3 All officers are expected to maintain satisfactory operational and
financial controls for their respective areas of responsibility. As applicable,
Participants are expected to achieve satisfactory audits, both internal and
external, satisfactory credit examinations, to maintain proper financial records
and controls in accordance with applicable policy, and to respond promptly to
any control problems that might arise. The maintenance of and adherence to
internal controls is a key factor in evaluation of performance. If the
Participant fails to satisfactorily meet the requirements described above, the
Committee and CEO, in their sole judgment, may grant a lesser award or make no
award to a Participant in view of such failure.
<PAGE>
Article 5. Determination of Awards for Senior Officers
- ------------------------------------------------------
5.1 The CEO shall establish a target award for each Senior Officer who is a
Participant as soon as practicable after the beginning of the Plan Year. The CEO
shall advise the Committee of the target award for each Participant. No
Participant's annual incentive award shall exceed $1,000,000.
5.2 The Committee may, in its sole discretion, and as appropriate for tax
reasons, allocate a percentage of the Incentive Award Pool to a Senior Officer
who is a Participant for the Plan Year. The allocation shall be made prior to
January 31, 1997 and prior to January 1 of each subsequent Plan Year.
5.3 After the end of the Plan Year, each Participant's performance shall be
assessed by the CEO who shall make an award recommendation to the Committee for
the Participant. For Participants with preallocated percentages in the Incentive
Award Pool, the CEO's designee shall calculate the nominal value of each
Participant's allocated percentage of the Incentive Award Pool.
5.4 The designation of annual award recipients and the amount of individual
awards shall be in sole discretion of the Committee following receipt of
recommendations from the CEO. In determining awards, the Committee may follow
the award recommendation by the CEO or may make a lesser or greater award,
taking into account the Participant's overall contribution to the Company for
the Plan Year, the corporate performance of BA Merchant Services, Inc. for the
Plan Year, and such other criteria as the Committee may determine to promote the
purposes of the Plan in an individual case. For Participants with preallocated
percentages of the Incentive Award Pool, the Committee may use its discretion
only to reduce an incentive award below the nominal value of a Participant's
allocated percentage of the Incentive Award Pool.
Article 6. Payment and Deferral
- -------------------------------
6.1 Incentive awards granted by the Committee, less applicable withholding
taxes, shall be paid in cash as soon as reasonably possible after being awarded.
6.2 The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash that would otherwise be due to such
Participant. If any such deferral election is required or permitted, the
Committee shall, in its sole discretion, establish rules and procedures for such
payment deferrals.
<PAGE>
Article 7. Other Provisions
- ---------------------------
7.1 The Board of Directors of BA Merchant Services, Inc. reserves the right
to modify, suspend or terminate this Plan at any time.
7.2 The Committee and CEO shall each have the power to construe and
interpret the Plan. Any decision arising out of or in connection with the
construction, interpretation and administration of the Plan shall lie within the
Committee's absolute discretion and shall be final and binding on all parties.
7.3 The designation of an officer as a Participant or the grant of an award
to an officer shall not give such officer any right to be retained in the employ
of the Company and the ability of the Company to dismiss or discharge the
officer is specifically reserved.
7.4 No Participant shall have the right to alienate, assign, encumber,
hypothecate or pledge his or her interest in any award under the Plan,
voluntarily or involuntarily, prior to payment and any attempt to dispose of any
such interest shall be void. Notwithstanding the preceding sentence, the Company
shall have the right to offset from an unpaid or deferred award any amounts due
and owing from the Participant to the extent permitted by law. The Company shall
not be required to segregate physically any cash or to establish any separate
account or accounts to fund any awards made or to be made under the Plan.
7.5 This document is a complete statement of the Plan and as of the date
below supersedes all prior plans, proposals, representations, promises and
inducements, written or oral, relating to its subject matter. The Company shall
not be bound by or liable to any person for any representation, promise or
inducement made by any person which is not embodied in this document or in any
authorized written amendment to the Plan.
7.6 The Plan shall be construed and enforced in accordance with Delaware
law.
<PAGE>
EXHIBIT 10.11
Long-Term Incentive Plan
- ------------------------
BA Merchant Services, Inc.
November 1996
<PAGE>
Contents
- --------
- --------------------------------------------------------------------------------
Page
----
Article 1. Establishment, Objectives, and Duration 1
Article 2. Definitions 1
Article 3. Administration 5
Article 4. Shares Subject to the Plan and Maximum Awards 6
Article 5. Eligibility and Participation 7
Article 6. Stock Options 7
Article 7. Stock Appreciation Rights 9
Article 8. Restricted Stock 10
Article 9. Performance Units and Performance Shares 12
Article 10. Performance Measures 13
Article 11. Beneficiary Designation 13
Article 12. Deferrals 14
Article 13. Rights of Employees 15
Article 14. Amendment, Modification, and Termination 15
Article 15. Withholding 16
Article 16. Indemnification 16
Article 17. Successors 16
Article 18. Legal Construction 17
<PAGE>
BA Merchant Services, Inc.
- --------------------------
Long-Term Incentive Plan
- ------------------------
Article 1. Establishment, Objectives, and Duration
- --------------------------------------------------
1.1. Establishment of the Plan. BA Merchant Services, Inc., a Delaware
-------------------------------
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "BA Merchant Services, Inc. Long-
Term Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares and Performance Units.
Upon approval by the Board of Directors and the shareholders of the Company,
the Plan shall become effective upon consummation of the Company's initial
public offering (the "Effective Date") and shall remain in effect as provided in
Section 1.3 hereof.
1.2. Objectives of the Plan. The objectives of the Plan are to optimize the
----------------------------
profitability and growth of the Company through incentives which are consistent
with the Company's goals and which link the personal interests of Participants
to those of the Company's stockholders; to provide Participants with an
incentive for excellence in individual performance; and to promote teamwork
among Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3. Duration of the Plan. The Plan shall commence on the Effective Date, as
--------------------------
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 14 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after November 30, 2006.
Article 2. Definitions
- ----------------------
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1. "Award" means, individually or collectively, a grant under this Plan of
------------
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares or Performance Units.
<PAGE>
2.2. "Award Agreement" means an agreement entered into by the Company and
-----------------------
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
2.3. "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
------------------------ ----------------------
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.4. "Board" or "Board of Directors" means the Board of Directors of the
------------- --------------------
Company.
2.5. "Code" means the Internal Revenue Code of 1986, as amended from time
------------
to time.
2.6. "Committee" means the Executive Personnel and Compensation Committee
-----------------
of the Board, as specified in Article 3 herein, or such other Committee
appointed by the Board to administer the Plan with respect to grants of Awards.
2.7. "Company" means BA Merchant Services, Inc., a Delaware corporation,
---------------
including any and all Subsidiaries, and any successor thereto as provided in
Article 17 herein.
2.8. "Director" means any individual who is a member of the Board of
----------------
Directors of the Company.
2.9. "Disability" shall have the meaning ascribed to such term in the
------------------
Participant's governing long-term disability plan, or if no such plan exists, at
the discretion of the Committee.
2.10. "Effective Date" shall have the meaning ascribed to such term in
----------------------
Section 1.1 hereof.
2.11. "Employee" means any active employee on the Payroll of the Company
----------------
or its Affiliates. Directors who are not employed by the Company shall not be
considered Employees under this Plan. For this purpose, "Affiliate" shall
include BankAmerica Corporation and its Subsidiaries and any other entity in
which the Company holds a significant ownership interest. "Employee" does not
include (i) any individual who is compensated for services by a person other
than the Company, a Subsidiary or an Affiliate and who for any reason is deemed
to be an employee of the Company, a Subsidiary, or an Affiliate, (ii) any
individual who is not on the Payroll of the Company, a Subsidiary or an
Affiliate and who for any reason is deemed to be an employee of the Company, a
Subsidiary, or an Affiliate, and (iii) any individual who is subject to a
written agreement that provides that such individual shall not be eligible to
participate in the Plan. If, during any period, neither the Company, a
Subsidiary, nor an Affiliate has treated an individual
<PAGE>
as an Employee and, for that reason, has not withheld employment taxes with
respect to that individual, then that individual shall not be an Employee for
that period, even in the event that the individual is determined, retroactively,
to have been an Employee during all or any portion of that period. An
individual's status as an Employee shall be determined by the Company in its
sole discretion.
2.12. "Exchange Act" means the Securities Exchange Act of 1934, as amended
--------------------
from time to time, or any successor act thereto.
2.13. "Fair Market Value" shall be determined on the basis of the closing
-------------------------
sale price on the principal securities exchange on which the Shares are traded
or, if there is no such sale on the relevant date, then on the last previous day
on which a sale was reported.
2.14. "Freestanding SAR" means an SAR that is granted independently of any
------------------------
Options, as described in Article 7 herein.
2.15. "Incentive Stock Option" or "ISO" means an option to purchase Shares
------------------------------ -----
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Code Section 422.
2.16. "Insider" shall mean an individual who is, on the relevant date, an
---------------
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.17. "Named Executive Officer" means a Participant who, as of the date of
-------------------------------
vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.
2.18. "Nonemployee Director" means an individual who is a member of the
----------------------------
Board of Directors of the Company but who is not an Employee of the Company.
2.19. "Nonqualified Stock Option" or "NQSO" means an option to purchase
--------------------------------- ------
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
2.20. "Option" means an Incentive Stock Option or a Nonqualified Stock
--------------
Option, as described in Article 6 herein.
2.21. "Option Price" means the price at which a Share may be purchased by a
--------------------
Participant pursuant to an Option.
<PAGE>
2.22. "Participant" means an Employee who has outstanding an Award granted
-------------------
under the Plan. The term "Participant" shall not include Nonemployee Directors.
2.23. "Payroll" means the system used by an entity to pay those individuals
---------------
it treats as its employees for their services and to withhold employment taxes
from the compensation it pays to such employees. "Payroll" does not include
(i) any system the entity uses to pay individuals whom it does not treat as its
employees and for whom it does not actually withhold employment taxes
(including, but not limited to, individuals it treats as independent
contractors) for their services or (ii) for individuals working in the United
States, any system that does not result in the issuance of a Form W-2 to such
individual.
2.24. "Performance-Based Exception" means the performance-based exception
-----------------------------------
from the tax deductibility limitations of Code Section 162(m).
2.25. "Performance Share" means an Award granted to a Participant, as
-------------------------
described in Article 9 herein.
2.26. "Performance Unit" means an Award granted to a Participant, as
------------------------
described in Article 9 herein.
2.27. "Period of Restriction" means the period during which the transfer of
-----------------------------
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8 herein.
2.28. "Person" shall have the meaning ascribed to such term in Section
--------------
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof .
2.29. "Restricted Stock" means an Award granted to a Participant pursuant to
------------------------
Article 8 herein.
2.30. "Retirement" shall have the meaning ascribed to such term in the
------------------
Company's tax-qualified retirement plan.
2.31. "Shares" means the shares of Class A Common Stock, $.01 par value per
--------------
Share of the Company.
2.32. "Stock Appreciation Right" or "SAR" means an Award, granted alone or
-------------------------------- -----
in connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
<PAGE>
2.33. "Subsidiary" means any corporation in which the Company (or, for
------------------
purposes of the definition of Employee, BankAmerica Corporation) owns directly,
or indirectly through subsidiaries, at least fifty percent (50%) of the total
combined voting power of all classes of stock, or any other entity (including,
but not limited to, partnerships and joint ventures) in which the Company (or,
for purposes of the definition of Employee, BankAmerica Corporation) owns at
least fifty percent (50%) of the combined equity thereof.
2.34. "Tandem SAR" means an SAR that is granted in connection with a related
------------------
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
Article 3. Administration
- -------------------------
3.1. The Executive Personnel and Committee. The Plan shall be administered
--------------------------------------------
by the Board or the Executive Personnel and Compensation Committee of the Board,
or by any other Committee appointed by the Board. The members of the Committee
shall be appointed from time to time by, and shall serve at the discretion of,
the Board of Directors.
3.2. Authority of the Committee. Except as limited by law or by the
---------------------------------
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Employees who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan as they apply to Employees; establish, amend, or waive rules
and regulations for the Plan's administration as they apply to Employees; and
(subject to the provisions of Article 14 herein) amend the terms and conditions
of any outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further, the Committee
shall make all other determinations which may be necessary or advisable for the
administration of the Plan, as the Plan applies to Employees. As permitted by
law, the Committee may delegate its authority as identified herein.
3.3. Decisions Binding. All determinations and decisions made by the
------------------------
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Employees, Participants, and their
estates and beneficiaries.
<PAGE>
Article 4. Shares Subject to the Plan and Maximum Awards
- --------------------------------------------------------
4.1. Number of Shares Available for Grants. Subject to adjustment as
-------------------------------------------
provided in Section 4.2 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be six million (6,000,000). The
Compensation Committee shall determine the appropriate methodology for
calculating the number of shares issued pursuant to the Plan. Unless and until
the Committee determines that an Award to a Named Executive Officer shall not be
designed to comply with the Performance-Based Exception, the following rules
shall apply to grants of such Awards under the Plan:
(a) Stock Options: The maximum aggregate number of Shares that may be
--------------
granted in the form of Stock Options, pursuant to any Award granted in
any one fiscal year to any one single Participant shall be five hundred
thousand (500,000).
(b) SARs: The maximum aggregate number of Shares that may be granted in the
-----
form of Stock Appreciation Rights, pursuant to any Award granted in any
one fiscal year to any one single Participant shall be five hundred
thousand (500,000).
(c) Restricted Stock: The maximum aggregate grant with respect to Awards of
-----------------
Restricted Stock granted in any one fiscal year to any one Participant
shall be two hundred fifty thousand (250,000) Shares.
(d) Performance Shares/Performance Units: The maximum aggregate payout with
-------------------------------------
respect to Awards of Performance Shares or Performance Units granted
in any one fiscal year to any one Participant shall be the value of two
hundred fifty thousand (250,000) Shares at the end of the Performance
Period.
4.2. Adjustments in Authorized Shares. In the event of any change in
--------------------------------------
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under
Section 4.1, in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, and in the Award limits set forth in
subsections 4.1(a), 4.1(b), 4.1(c), and 4.1(d) as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number.
<PAGE>
Article 5. Eligibility and Participation
- ----------------------------------------
5.1. Eligibility. Persons eligible to participate in this Plan include
-----------------
all Employees of the Company, including Employees who are members of the Board.
5.2. Actual Participation. Subject to the provisions of the Plan, the
--------------------------
Committee may, from time to time, select from all eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.
Article 6. Stock Options
- ------------------------
6.1. Grant of Options. Subject to the terms and provisions of the Plan,
-----------------
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
6.2. Award Agreement. Each Option grant shall be evidenced by an Award
---------------------
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Code Section 422, or an
NQSO whose grant is intended not to fall under the provisions of Code
Section 422.
6.3. Option Price. The Option Price for each grant of an Option under this
------------------
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted (except in the case of
Options granted in substitution for outstanding unexercised options granted
under the BankAmerica Corporation 1992 Management Stock Plan).
6.4. Duration of Options. Each Option granted to an Employee shall expire at
-------------------------
such time as the Committee shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5. Exercise of Options. Options granted under this Article 6 shall be
-------------------------
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
6.6. Payment. Options granted under this Article 6 shall be exercised by
-------------
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
<PAGE>
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a) and
(b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law.
Subject to any governing rules or regulations, as soon as practicable after
receipt of a written notification of exercise and full payment, the Company
shall deliver to the Participant, in the Participant's name, Share certificates
in an appropriate amount based upon the number of Shares purchased under the
Option(s).
6.7. Restrictions on Share Transferability. The Committee may impose such
-------------------------------------------
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8. Termination of Employment. Each Participant's Option Award Agreement
-------------------------------
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's employment with
the Company. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Options issued pursuant to this
Article 6, and may reflect distinctions based on the reasons for termination of
employment.
6.9. Nontransferability of Options.
-----------------------------------
(a) Incentive Stock Options. No ISO granted under the Plan may be sold,
------------------------
transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further,
all ISOs granted to a Participant under the Plan shall be exercisable
during his or her lifetime only by such Participant.
<PAGE>
(b) Nonqualified Stock Options. Except as otherwise provided in a
--------------------------
Participant's Award Agreement, no NQSO granted under this Article 6 may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will, by the laws of descent and
distribution, or pursuant to a qualified domestic relations order.
Further, except as otherwise provided in a Participant's Award
Agreement, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such
Participant.
Article 7. Stock Appreciation Rights
- ------------------------------------
7.1. Grant of SARs. Subject to the terms and conditions of the Plan, SARs
------------------
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value of a
Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2. Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
----------------------------
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3. Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
----------------------------------
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
<PAGE>
7.4. SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
------------------
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5. Term of SARs. The term of an SAR granted under the Plan shall be
-----------------
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6. Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
--------------------------
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date of
exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7. Termination of Employment. Each SAR Award Agreement shall set forth the
------------------------------
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and/or
its subsidiaries. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
7.8. Nontransferability of SARs. Except as otherwise provided in a
-------------------------------
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, by the laws of descent and distribution, or pursuant to a
qualified domestic relations order. Further, except as otherwise provided in a
Participant's Award Agreement, all SARs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant.
Article 8. Restricted Stock
- ---------------------------
8.1. Grant of Restricted Stock. Subject to the terms and provisions of the
------------------------------
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2. Restricted Stock Agreement. Each Restricted Stock grant shall be
-------------------------------
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.
<PAGE>
8.3. Transferability. Except as provided in this Article 8, the Shares of
--------------------
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will, by the laws of
descent and distribution, or pursuant to a qualified domestic relations order,
until the end of the applicable Period of Restriction established by the
Committee and specified in the Restricted Stock Award Agreement, or upon earlier
satisfaction of any other conditions, as specified by the Committee in its sole
discretion and set forth in the Restricted Stock Award Agreement. All rights
with respect to the Restricted Stock granted to a Participant under the Plan
shall be available during his or her lifetime only to such Participant.
8.4. Other Restrictions. Subject to Article 10 herein, the Committee shall
-----------------------
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional, and/or individual), time-
based restrictions on vesting following the attainment of the performance goals,
and/or restrictions under applicable federal or state securities laws.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
8.5. Voting Rights. During the Period of Restriction, Participants holding
------------------
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.6. Dividends and Other Distributions. During the Period of Restriction,
--------------------------------------
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying Shares
while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate. Without limiting the generality
of the preceding sentence, if the grant or vesting of Restricted Shares granted
to a Named Executive Officer is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such Restricted
Shares, such that the dividends and/or the Restricted Shares maintain
eligibility for the Performance-Based Exception.
<PAGE>
8.7. Termination of Employment. Each Restricted Stock Award Agreement shall
------------------------------
set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant's employment
with the Company. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Shares of Restricted Stock issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of employment; provided, however that, except in the cases of
terminations by reason of death or Disability, the vesting of Shares of
Restricted Stock which qualify for the Performance-Based Exception and which are
held by Named Executive Officers shall occur at the time they otherwise would
have, but for the employment termination.
Article 9. Performance Units and Performance Shares
- ---------------------------------------------------
9.1. Grant of Performance Units/Shares. Subject to the terms of the Plan,
--------------------------------------
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
9.2. Value of Performance Units/Shares. Each Performance Unit shall have an
--------------------------------------
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Units/Shares that will be paid out to the
Participant. For purposes of this Article 9, the time period during which the
performance goals must be met shall be called a "Performance Period."
9.3. Earning of Performance Units/Shares. Subject to the terms of this Plan,
----------------------------------------
after the applicable Performance Period has ended, the holder of Performance
Units/Shares shall be entitled to receive payout on the number and value of
Performance Units/Shares earned by the Participant over the Performance Period,
to be determined as a function of the extent to which the corresponding
performance goals have been achieved.
9.4. Form and Timing of Payment of Performance Units/ Shares. Payment of
------------------------------------------------------------
earned Performance Units/Shares shall be made in a single lump sum following the
close of the applicable Performance Period. Subject to the terms of this Plan,
the Committee, in its sole discretion, may pay earned Performance Units/Shares
in the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares may
be granted subject to any restrictions deemed appropriate by the Committee.
<PAGE>
At the discretion of the Committee, Participants may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares which have
been earned, but not yet distributed to Participants (such dividends shall be
subject to the same accrual, forfeiture, and payout restrictions as apply to
dividends earned with respect to Shares of Restricted Stock, as set forth in
Section 8.6 herein). In addition, Participants may, at the discretion of the
Committee, be entitled to exercise their voting rights with respect to such
Shares.
9.5. Termination of Employment Due to Death, Disability, or Retirement.
----------------------------------------------------------------------
Unless determined otherwise by the Committee and set forth in the Participant's
Award Agreement, in the event the employment of a Participant is terminated by
reason of death, Disability, or Retirement during a Performance Period, the
Participant shall receive a payout of the Performance Units/Shares which is
prorated, as specified by the Committee in its discretion.
Payment of earned Performance Units/Shares shall be made at a time specified
by the Committee in its sole discretion and set forth in the Participant's Award
Agreement. Notwithstanding the foregoing, with respect to Named Executive
Officers who retire during a Performance Period, payments shall be made at the
same time as payments are made to Participants who did not terminate employment
during the applicable Performance Period.
9.6. Termination of Employment for Other Reasons. In the event that a
------------------------------------------------
Participant's employment terminates for any reason other than those reasons set
forth in Section 9.5 herein, all Performance Units/Shares shall be forfeited by
the Participant to the Company unless determined otherwise by the Committee, as
set forth in the Participant's Award Agreement.
9.7. Nontransferability. Except as otherwise provided in a Participant's
-----------------------
Award Agreement, Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will, by the
laws of descent and distribution, or pursuant to a qualified domestic relations
order. Further, except as otherwise provided in a Participant's Award Agreement,
a Participant's rights under the Plan shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's legal
representative.
Article 10. Performance Measures
- --------------------------------
Unless and until the Committee proposes for shareholder vote and
shareholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Named Executive Officers which are
designed to qualify for the Performance-Based Exception, the performance
measure(s) to be used for purposes of such grants shall be chosen by the
<PAGE>
Committee from among the following: revenues, profits, economic profit, net
income (either before or after taxes), operating expense reductions, share
price, earnings per share, total shareholder return, return on assets, return on
equity, return on gross sales, operating income, return on capital or
investments or economic value added.
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance goals; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception,
and which are held by Named Executive Officers, may not be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).
Article 11. Beneficiary Designation
- -----------------------------------
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death (and/or who may
exercise the Participant's vested Options following his or her death). Each
designation shall revoke all prior designations by the same Participant, shall
be in a form prescribed by the Company, and will be effective only when filed by
the Participant in writing with the Company during the Participant's lifetime.
In the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate (and, subject to
the terms and provisions of the Plan, any unexercised vested Options may be
exercised by the administrator or executor of the Participant's estate).
Article 12. Deferrals
- ---------------------
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock, or the satisfaction of any requirements or goals with respect to
Performance Units/Shares. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
<PAGE>
Article 13. Rights of Employees
- -------------------------------
13.1. Employment. Nothing in the Plan shall interfere with or limit in any
----------------
way the right of the Company to terminate any Participant's employment at any
time and for any reason, nor confer upon any Participant any right to continue
in the employ of the Company.
13.2. Participation. No Employee shall have the right to be selected to
-------------------
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
Article 14. Amendment, Modification, and Termination
- ----------------------------------------------------
14.1. Amendment, Modification, and Termination. The Board may at any time
----------------------------------------------
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part.
14.2. Adjustment of Awards Upon the Occurrence of Certain Unusual or
--------------------------------------------------------------------
Nonrecurring Events. The Committee may make adjustments in the terms and
- -------------------
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.2 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan; provided that no such adjustment
shall be authorized to the extent that such authority would be inconsistent with
the Plan's meeting the requirements of Section 162(m) of the Code, as from time
to time amended.
14.3. Awards Previously Granted. No termination, amendment, or modification
-------------------------------
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
14.4. Compliance with Code Section 162(m). At all times when Code
-----------------------------------------
Section 162(m) is applicable, all Awards granted under this Plan shall comply
with the requirements of Code Section 162(m); provided, however, that in the
event the Committee determines that such compliance is not desired with respect
to any Award or Awards available for grant under the Plan, then compliance with
Code Section 162(m) will not be required. In addition, in the event that changes
are made to Code Section 162(m) to permit greater flexibility with respect to
any Award or Awards available under the Plan, the Committee may, subject to this
Article 14, make any adjustments it deems appropriate.
<PAGE>
Article 15. Withholding
- -----------------------
15.1. Tax Withholding. The Company shall have the power and the right to
---------------------
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld or deducted with respect to any
taxable event arising as a result of this Plan.
15.2. Share Withholding. With respect to withholding required upon the
-----------------------
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
Article 16. Indemnification
- ---------------------------
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgement in any such action, suit, or proceeding against him or her, provided
he or she shall give the Company an opportunity, at its own expense, to handle
and defend the same before he or she undertakes to handle and defend it on his
or her own behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
Article 17. Successors
- ----------------------
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
<PAGE>
Article 18. Legal Construction
- ------------------------------
18.1. Gender and Number. Except where otherwise indicated by the context,
-----------------------
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
18.2. Severability. In the event any provision of the Plan shall be held
------------------
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
18.3. Requirements of Law. The granting of Awards and the issuance of Shares
-------------------------
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
18.4. Securities Law Compliance. With respect to Insiders, transactions
-------------------------------
under this Plan are intended to comply with all applicable conditions or
Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of
the plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
18.5. Governing Law. To the extent not preempted by federal law, the Plan,
-------------------
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the state of Delaware.
<PAGE>
Exhibit 10.12
ASIAN ACQUISITION AGREEMENT
THIS ASIAN ACQUISITION AGREEMENT (this "Agreement") made this ____ day of
December, 1996 by and between BANK OF AMERICA NATIONAL TRUST & SAVINGS
----------------------------------------
ASSOCIATION, a national banking association ("Bank"), and BA MERCHANT SERVICES,
- ----------- ---------------------
INC., a Delaware corporation ("BAMSI"):
- ----
RECITALS
A. Bank. Bank is an existing national banking association duly organized
----
and in good standing under the laws of the United States with its principal
executive offices located in San Francisco, California.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of the
-----
State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
-------------------
obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend to
-------------------------
conduct their relationships hereunder on an arm's length basis.
E. BAC/BAMSI Transactions. Bank and Bank of America NW, National
----------------------
Association ("BANW"), each a subsidiary of BankAmerica Corporation, a Delaware
corporation ("BAC"), currently own 100% of the outstanding common stock of
BAMSI. Bank and BANW have entered into certain agreements dated as of December
3, 1996 with BAMSI transferring Bank's domestic processing businesses and BANW's
merchant processing business to BAMSI effective as of such date. BAMSI is
currently considering an initial public offering of shares of its Class A common
stock, $.01 par value per share ("Class A Common Stock").
F. Related Agreements. BAMSI has entered or will enter into (1) a Non-
------------------
Competition and Corporate Opportunities Allocation Agreement dated as of
December 3, 1996 between BAC and BAMSI (the "Corporate Opportunities
Agreement"), (2) a Marketing Agreement dated as of December 3, 1996 among BAMSI,
Bank and BANW (the "Marketing Agreement"), (3) Processing Services Agreements
dated as of December 3, 1996 between BAMSI and other subsidiary banking
institutions of BAC (the "Affiliate Bank Processing Agreements"), (4) an
Administrative Services Agreement dated as of December 3, 1996 between Bank and
BAMSI (the "Administrative Services Agreement"), (5) a Trademark License
Agreement dated as of December 3, 1996 between BAC and BAMSI (the "License
Agreement"), (6) a Registration Rights Agreement to be entered into among BAMSI,
Bank and BANW (the "Registration Rights Agreement"), (7) a Tax Allocation
Agreement dated as of December 3, 1996 between BAC and BAMSI (the "Tax
Agreement") and (8) a Sponsorship Processing Agreement dated as of December 3,
1996 between Bank and BAMSI (the "Sponsorship Agreement"). The Corporate
Opportunities Agreement, the
-1- Asian Acquisition Agreement
<PAGE>
Marketing Agreement, the Affiliate Bank Processing Agreements, the
Administrative Services Agreement, the Trademark Agreement, the Registration
Rights Agreement, the Tax Agreement and the Sponsorship Agreement are herein
collectively referred to as the "Related Agreements."
G. Asian Merchant Processing Businesses. Bank owns and operates merchant
------------------------------------
processing businesses in Thailand (the "Thailand Business") and the Philippines
(the "Philippines Business" and together with the Thailand Business, the "Asian
Businesses" and individually, each an "Asian Business"), Taiwan (the "Taiwan
Business"), India (the "Indian Business") and South Korea (the "Korean
Business"). In addition, Bank has established a program to operate a merchant
processing business in The Peoples Republic of China (the "PRC Business") and
has applied for a license or has explored opportunities to conduct a merchant
processing business in Indonesia (the "Indonesian Business") and Vietnam (the
"Vietnamese Business" and together with the Taiwan Business, the Indian
Business, the Korean Business and the Indonesian Business, the "Additional Asian
Businesses" and individually, each an "Additional Asian Business").
H. Acquisition of Asian Businesses. Pursuant to the terms and conditions
-------------------------------
set forth in this Agreement, (i) Bank desires to transfer each of the Asian
Businesses to BAMSI, and BAMSI desires to acquire each of the Asian Businesses,
by purchasing the Assets (as hereinafter defined) in exchange for shares of
Class B Common Stock, par value $.01 per share ("Class B Common Stock") of BAMSI
and the assumption by BAMSI of the Assumed Liabilities (as hereinafter defined)
as set forth herein, and (ii) Bank and BAMSI desire to work cooperatively to
enable BAMSI to acquire the Additional Asian Businesses in the future.
NOW, THEREFORE, in consideration of the premises, representations,
warranties, mutual covenants and agreements hereinafter set forth, and for good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Bank and BAMSI hereby covenant and agree as follows:
ARTICLE I
TRANSFER OF ASSETS
------------------
Section 1.1 Transferred Assets. At each Closing (as hereinafter defined)
------------------
for an Asian Business, Bank shall sell, assign, grant, convey, transfer and
deliver to BAMSI, and BAMSI shall acquire from Bank, all of Bank's right, title
and interest in and to all of the tangible and intangible assets primarily
related to and used primarily by such Asian Business, as they exist as of the
Closing (as hereinafter defined) for such Asian Business, together with all
accrued benefits and rights pertaining thereto (collectively, the "Assets"),
other than the Excluded Assets (as hereinafter defined), including, without
limitation:
-2- Asian Acquisition Agreement
<PAGE>
(a) Receivables. All accounts receivable, drafts in transit, notes
-----------
receivable, prepayments by or on behalf of such Asian Business, advances by or
on behalf of such Asian Business and outstanding at the Closing;
(b) Claims. All claims, demands and causes of action in favor of Bank
------
arising primarily out of such Asian Business;
(c) Inventories. All raw materials, work-in-process, finished goods,
-----------
supplies and other inventories in each case intended for use or sale by such
Asian Business;
(d) Real Property. Those certain premises or parcels of land, in each case
-------------
leased by Bank and used in the conduct of the Business as listed on Schedule
l.l(d) ("Real Property"), together with any and all buildings, plants and other
structures and improvements thereon, any and all rights and privileges
pertaining thereto, including, without limitation, ownership interests,
leasehold interests, easements, transferable permits, licenses, rights of way,
leases, and purchase and option agreements with respect to any such Real
Property and, any and all fixtures, machinery, equipment and other property
appurtenant thereto;
(e) Personal Property. Any and all machinery, furniture, tools, spare
-----------------
parts, automobiles and other vehicles, office and computer equipment and other
personal property in each case used exclusively in the operation of such Asian
Business;
(f) Contracts. Subject to Section 7.1, all contracts, agreements, leases
---------
and offers open for acceptance of any nature, whether written or oral,
exclusively relating to such Asian Business, including, without limitation, all
assignable merchant customer agreements for the provision of merchant processing
services by such Asian Business ("Merchant Agreements") and all other customer
contracts, leases of personal property and purchase orders;
(g) Merchant Accounts. All security interests in each demand deposit or
-----------------
current or similar account, either with Bank or another financial institution,
linked to a customer under a Merchant Agreement, in accordance with Section 5.3;
(h) Operating Permits. Subject to Section 7.1, all licenses, permits and
-----------------
authorizations, environmental or otherwise, in each case exclusively used to
operate such Asian Business;
(i) Computer Programs. All interests of such Asian Business in the
-----------------
software and computer programs and documentation used exclusively in conducting
such Asian Business, including flow charts, diagrams, descriptive texts and
programs, computer printouts, underlying tapes, computer data bases and similar
items;
(j) Books and Records. All books and records exclusively relating to such
-----------------
Asian Business, including, without limitation, all customer and supplier lists,
accounts and records, forms and office supplies, advertising and promotional
literature and price lists, all manuals and reports and other publications
relating exclusively to such Asian Business;
-3- Asian Acquisition Agreement
<PAGE>
(k) Cash balances for such Asian Business existing on the date of Closing;
(l) Any employee plan assets ("Plan Assets") maintained by Bank for the
benefit of the employees of any of the Asian Business (collectively, the
"Employee Benefit Plans"); and
(m) In the case of the Philippines Business, certificates evidencing all of
the outstanding shares of BA Card Services, Inc., a Philippines corporation ("BA
Card Services"), owned by Bank.
Without limiting the foregoing, the Assets shall consist of all assets
relating to such Asian Business that would be reflected on a consolidated
balance sheet prepared on the date of Closing in accordance with generally
accepted accounting principles consistent with the audited balance sheet of BA
Merchant Services (Asia) at December 31, 1995 and the unaudited balance sheet of
BA Merchant Services (Asia) at September 30, 1996.
Section 1.2 Assets Held by Affiliates. Bank shall, prior to each Closing
-------------------------
for an Asian Business, acquire from its Affiliates and sell, assign, convey or
transfer to BAMSI, without additional consideration from BAMSI, and BAMSI shall,
at each such Closing, acquire from Bank, subject to transfer at the Closing, all
of such Affiliates' right, title and interest, if any, in any of the Assets
related to such Asian Business. For purposes of this Agreement, "Affiliate"
means any person directly or indirectly controlling or controlled by or under
direct or indirect "common" control with the Bank (including without limitation,
their respective officers, directors and employees); provided, that in no event
shall BAMSI or the Business be treated as an Affiliate of Bank, nor shall any
person directly or indirectly controlled by BAMSI (including without limitation
for this purpose, its officers, directors and employees) as a result of such
person's relationship with BAMSI be treated as an Affiliate of Bank. For this
purpose, "control" means the power to direct the management and policies of a
person through the ownership of securities, by contract or otherwise and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
Section 1.3 Excluded Assets. Notwithstanding anything contained herein to
---------------
the contrary, the Assets shall not include, and Bank will not, and will not
cause any Affiliate to, transfer to BAMSI and BAMSI will not accept any of the
following (collectively, the "Excluded Assets"):
(a) Books of original financial entry and internal accounting documents and
records relating to any Asian Business and any other books and records relating
to any Asian Business that Bank is required to retain pursuant to statute, rule
or regulation, but BAMSI in such event shall have the right to inspect and copy
for any proper purpose;
(b) Any assets of employee benefit plans, other than the Plan Assets;
(c) All rights to refunds of all federal, state, local, foreign and
provincial income, capital gains, gross receipts, profits, property, transfer,
sales, mercantile, value added, capital stock, franchise or other taxes,
including estimated taxes relating thereto and any interest
-4- Asian Acquisition Agreement
<PAGE>
and penalties imposed thereon (collectively, "Taxes") relating to the Assets or
the Asian Businesses to the extent such Taxes relate to a period commencing
prior to the Closing and were not paid by BAMSI;
(d) Any of the right, title and interest in the bank accounts of the Asian
Businesses, subject to Section 5.3;
(e) Policies of insurance, fidelity, surety or similar bonds and the
coverages afforded thereby;
(f) Any assets of Bank or any Affiliate thereof not primarily related to or
used primarily by an Asian Business as conducted prior to the Closing for such
Asian Business; and
(g) All rights, causes of action and claims to the extent arising out of
any of the Excluded Assets described in paragraphs (a) through (g) hereof or any
of the Retained Liabilities (as hereinafter defined), including, without
limitation, any rights to reimbursement for damages, fees or expenses.
Section 1.4 Terms Related to the Transfer of Assets. Title to and risk of
---------------------------------------
loss or damage to the Assets for each Asian Business shall pass to BAMSI at the
Closing for such Asian Business. Bank's insurance coverage for such Asian
Business and the related Assets shall cease as of such Closing as to losses
arising from events occurring on or after the date thereof.
Section 1.5 Warranty.
--------
(a) Bank represents and warrants that at each Closing (i) the Assets
constitute all of the assets necessary for the conduct of the business of such
Asian Business as contemplated by the Registration Statement (No. 333-13985)
relating to the proposed offering of shares of Class A Common Stock of BAMSI and
(ii) Bank will have transferred to BAMSI good and marketable title to or a valid
leasehold interest in all personal property and other assets relating to such
Asian Business, free and clear of all liens, encumbrances and defects except
such as are described in such Registration Statement or such as do not
materially affect the value of such assets and do not materially interfere with
the use made and proposed to be made of such Assets by BAMSI.
(b) Bank agrees to assign to BAMSI such rights as Bank may have the right
to assign under any warranty made by any vendor, manufacturer or contractor with
respect to any of the Assets. Except as otherwise provided herein, all of the
Assets shall remain "as is" and "where is" on the date of this Agreement through
such Closing.
-5- Asian Acquisition Agreement
<PAGE>
ARTICLE II
ASSUMPTION OF LIABILITIES
-------------------------
Section 2.1 Assumed Liabilities and Obligations. At each Closing for
-----------------------------------
an Asian Business, Bank shall delegate to BAMSI, and BAMSI shall assume and
agree to thereafter pay, satisfy, perform and discharge, as if such Asian
Business had been operated by BAMSI from the commencement thereof and had never
been owned by Bank, all of the obligations and liabilities to the extent arising
out of or relating to such Asian Business or the related Assets, known or
unknown, accrued, absolute, contingent or otherwise, whether arising from
pending or threatened claims against Bank related to such Asian Business or the
related Assets, including, without limitation, environmental liabilities,
whether arising as a result of the transactions contemplated hereby, whether
existing at such Closing or arising at any time or from time to time after the
Closing, and whether based on circumstances, events or actions arising
theretofore or thereafter, and whether or not such obligations and liabilities
shall have been disclosed herein or reflected on the books and records of such
Asian Business (collectively, the "Assumed Liabilities"), other than the
Retained Liabilities (as hereinafter defined).
Section 2.2 Retained Liabilities and Obligations. The Assumed
------------------------------------
Liabilities shall not include, and Bank will not assign to BAMSI, and BAMSI will
not assume any of the following (collectively, the "Retained Liabilities"):
(a) Any liability to the employees of an Asian Business prior to or as
of the Closing for such Asian Business to provide benefits to such employees
under those employee benefit plans which provide medical, dental, disability or
life insurance coverage (collectively, "Employee Insurance Plans") for claims
arising from occurrences (as defined in the relevant plan) prior to the Closing
for such Asian Business;
(b) Any liability for vested benefits under the Employee Benefit Plans
which have accrued to any employee of an Asian Business as of the Closing for
such Asian Business, as if such employee was terminated as of such Closing;
(c) Liabilities for which an insurer has liability under a Bank
insurance policy, to the extent of actual coverage under such policy, and to the
extent arising out of occurrences (as defined in such policy) prior to Closing;
provided that, notwithstanding the foregoing, Bank shall not retain any
environmental liabilities of any Asian Business whether based on circumstances,
events or actions arising before or after the Closings or whether arising under
present or future laws or any actual or alleged contractual obligations of Bank
or BAMSI or any Asian Business;
(d) Liabilities solely for Taxes relating to the Assets or the Asian
Businesses to the extent such Taxes relate to any period prior to the respective
Closing dates;
(e) Liabilities exclusively arising out of or related to any of the
Excluded Assets; and
-6- Asian Acquisition Agreement
<PAGE>
(f) With respect to liabilities that are required to be reflected on a
balance sheet prepared in accordance with generally accepted accounting
principles, those liabilities that would not be reflected on a consolidated
balance sheet prepared on the date of Closing in accordance with generally
accepted accounting principles consistent with the audited balance sheet of BA
Merchant Services (Asia) at December 31, 1995 and the unaudited balance sheet of
BA Merchant Services (Asia) at September 30, 1996.
ARTICLE III
PURCHASE PRICE
--------------
Section 3.1 Purchase Price. With respect to each Asian Business, BAMSI
--------------
will assume the Assumed Liabilities and will deliver shares of its Class B
Common Stock to Bank as consideration for Bank's selling, granting, assigning,
conveying, transferring and delivering to BAMSI all of its right, title and
interest in and to the Assets relating to such Asian Business as follows:
Thailand Business 150,000 shares (the "Thailand Consideration")
Philippines Business 550,000 shares (the "Philippines Consideration")
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 Representations and Warranties of Bank. Bank hereby
--------------------------------------
represents and warrants to BAMSI that:
(a) Incorporation and Good Standing. Bank is a national banking
-------------------------------
association duly organized, validly existing and in good standing under the laws
of the United States of America, with requisite corporate power to own and
operate the Assets and to carry on the Asian Businesses as now being conducted.
(b) Authorization. The execution, delivery and performance by Bank of this
-------------
Agreement are within the corporate power of Bank, has been duly authorized by
all necessary corporate action and does not contravene or constitute a default
under any provision of the articles of association or by-laws of Bank. To the
knowledge of Bank, except for the Fed Approval (as hereinafter defined) and the
Asian Approvals (as hereinafter defined), the execution, delivery and
performance by Bank of this Agreement requires no action by or in respect of, or
filing with, any governmental body, agency or official, and no consents or
approvals of any public body or authority. This Agreement constitutes a valid
and binding agreement of Bank, enforceable against Bank in accordance with its
terms.
-7- Asian Acquisition Agreement
<PAGE>
(c) Absence of Restrictions. To the knowledge of Bank, the execution and
-----------------------
delivery of this Agreement by Bank and the performance by Bank of its
obligations hereunder does not and will not contravene, constitute a default
under, or give rise to or result in any right of termination, cancellation or
acceleration or in the creation of any lien under, any material agreement,
judgment, injunction, order, decree or other instrument to which Bank or BA Card
Services is a party.
(d) Litigation. To the knowledge of Bank, there is no action, proceeding
----------
or investigation pending or threatened against Bank or BA Card Services which
questions or challenges the validity of this Agreement or any action taken or to
be taken by Bank or BA Card Services pursuant to this Agreement or in connection
with the transactions contemplated hereby.
(e) Compliance With Laws. To the knowledge of Bank, neither Bank nor BA
--------------------
Card Services is in violation of any applicable federal, state, or local law,
regulation or order or any other requirement of any governmental, regulatory or
administration agency or authority or court or other tribunal relating
specifically to the Assets or the Asian Businesses, where such violation could
reasonably be expected to have a material adverse effect on such Assets, such
Asian Businesses or Bank's ability to transfer the Asian Businesses to BAMSI.
(f) Financial Statements. The audited financial statements of BA Merchant
--------------------
Services (Asia) at and for the year ended December 31, 1995 and the unaudited
financial statements of BA Merchant Services (Asia) at and for the nine months
ended September 30, 1996 have been prepared in accordance with generally
accepted accounting principles on a consistent basis and fairly present the
financial position and results of operations of the Asian Businesses and the
Taiwan Business on a combined basis and reflect all assets and liabilities that
are part of such businesses.
Section 4.2 Representations and Warranties of BAMSI. BAMSI hereby
---------------------------------------
represents and warrants to Bank that:
(a) Incorporation and Good Standing. BAMSI is a corporation duly
-------------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware with requisite corporate power to own and operate its assets and
properties and to carry on its business as now being conducted and as proposed
to be conducted. BAMSI is duly qualified to do business and is in good standing
as a foreign corporation in the State of California.
(b) Authorization. The execution, delivery and performance of this
-------------
Agreement by BAMSI is within BAMSI's corporate power and has been duly
authorized by all necessary corporate action and does not contravene or
constitute a default under any provision of BAMSI's certificate of incorporation
or by-laws. To the knowledge of BAMSI, except for the Fed Approval and the
Asian Approvals, BAMSI's execution, delivery and performance of this Agreement
requires no action by or in respect of, or filing with, any governmental body,
agency or official, and no consents or approvals of any public body or
authority. This
-8- Asian Acquisition Agreement
<PAGE>
Agreement constitutes a valid and binding agreement of BAMSI, enforceable
against BAMSI in accordance with its terms.
(c) Absence of Restrictions. To the knowledge of BAMSI, the execution and
-----------------------
delivery of this Agreement and the performance by BAMSI of its obligations
hereunder does not and will not contravene, constitute a default under, or give
rise to or result in any right of termination, cancellation or acceleration or
in the creation of any lien under, any material agreement, judgment, injunction,
order, decree or other instrument to which BAMSI is a party.
(d) Litigation. To the knowledge of BAMSI, there is no action, proceeding
----------
or investigation pending or threatened against or involving BAMSI, which
questions or challenges the validity of this Agreement or any action taken or to
be taken by BAMSI pursuant to this Agreement or in connection with the
transactions contemplated hereby.
(e) Compliance With Laws. To the knowledge of BAMSI, BAMSI is not in
--------------------
violation of any applicable federal, state, or local law, regulation or order or
any other requirement of any governmental, regulatory or administration agency
or authority or court or other tribunal relating to it, where such violation
could reasonably be expected to have a material adverse effect on its ability to
carry out the transactions contemplated under this Agreement.
ARTICLE V
COVENANTS OF BANK
-----------------
Section 5.1 Pre-Closing Activities. From and after the date of this
----------------------
Agreement until the earlier of the Closing for each Asian Business or until this
Agreement shall terminate pursuant to Article XI, except as otherwise agreed in
writing, Bank will use reasonable commercial efforts (a) to conduct such Asian
Businesses in the ordinary course and in a manner consistent with past
practices, except as may otherwise be permitted hereby, or (b) as necessary or
appropriate to consummate the transactions contemplated hereby.
Section 5.2 Approvals and Consents.
----------------------
(a) Bank shall use reasonable commercial efforts to obtain any governmental
or regulatory approvals or consents, including the Fed Approvals and the Asian
Approvals, and make or cause to be made (or assist BAMSI in making) any
declarations, filings and registrations with governmental or regulatory
authorities, which are necessary for Bank to consummate the sale of each of the
Asian Businesses; provided, however, that Bank shall not be obligated to pay any
consideration therefor (except for filing fees and other similar charges).
(b) Bank shall use reasonable commercial efforts to obtain any consent,
substitution, approval or amendment required to novate or assign all agreements,
leases,
-9- Asian Acquisition Agreement
<PAGE>
licenses and other rights of any nature whatsoever relating to the Asian
Businesses; provided, however, that Bank shall not be obligated to pay any
consideration therefor (except for filing fees and other similar charges) to the
third party from whom such consents, approvals, substitutions and amendments are
requested.
Section 5.3 Bank Accounts and Powers; Merchant Accounts.
-------------------------------------------
(a) As of the Closing for each Asian Business, Bank will close all of the
bank accounts of such Asian Business and revoke, and shall hereby be deemed to
have revoked, all guarantees by Bank made with respect to such bank accounts and
the related Assets, and will revoke, and shall hereby be deemed to have revoked,
authorizations and powers of attorney of employees of such Asian Business to act
on behalf of such Asian Business, except (i) with respect to the accounts listed
on Schedule 5.3 as to which Bank will use reasonable efforts to transfer to
BAMSI's name at such Closing, subject to agreement by the relevant financial
institution if not Bank, and (ii) any such accounts shall remain open and any
funds contained in such accounts at the Closing shall remain on deposit therein
to the extent necessary pursuant to the following sentence. Bank agrees that
any outstanding claims against funds contained in those accounts at the Closing
due to checks or drafts written against such funds in the ordinary course of
business consistent with past practice but not yet cleared by the financial
institution shall be paid when presented for payment to the appropriate
financial institution, in the order in which presented up to but not in excess
of the amount of funds contained in the respective accounts at the Closing.
(b) As a part of the Closing for each Asian Business, Bank will, at BAMSI's
reasonable request and without further consideration, except for reimbursement
of out-of-pocket expenses, execute such additional security agreements,
instruments or other documents as BAMSI may require to effect the assignment and
transfer to BAMSI of Bank's security interest in each Merchant Account pursuant
to Section 1.1(g).
Section 5.4 Further Assurances. After the Closing for each Asian
------------------
Business, Bank will, at BAMSI's reasonable request and without further
consideration, except for reimbursement of out-of-pocket expenses, execute such
additional instruments of conveyance and transfer and provide to BAMSI such
additional documents as BAMSI may require to effect or evidence the transfer of
such Asian Business and related Assets to BAMSI.
Section 5.5 Employee Benefit Plans and Employee Insurance Plans. Bank
---------------------------------------------------
agrees that with respect to the employee benefit plans listed on Schedule
1.3(b), benefits accrued to employees of each Asian Business who participate in
those plans will become vested on the Closing date for such Asian Business, and,
for purposes of such plans, such employees will cease to be employees of Bank as
of the Closing for such Asian Business and will be treated as "terminated" as of
the Closing.
ARTICLE VI
COVENANTS OF BAMSI
------------------
-10- Asian Acquisition Agreement
<PAGE>
Section 6.1 Approvals and Consents.
----------------------
(a) BAMSI shall use reasonable commercial efforts to obtain all
governmental or regulatory approvals and consents, including the Fed Approval
and the Asian Approvals, and make or cause to be made (or assist Bank in making)
any declarations, filings and registrations with governmental or regulatory
authorities which are necessary for BAMSI to consummate the purchase and sale of
each of the Asian Businesses.
(b) BAMSI shall use reasonable commercial efforts to obtain any consent,
substitution, approval or amendment required for the assignment or novation of
all agreements, leases, licenses and other rights of any nature whatsoever
relating to the Asian Businesses.
Section 6.2 Further Assurances. After the Closing for each Asian
------------------
Business, BAMSI will, at Bank's reasonable request, and without further
consideration, except for reasonable out-of-pocket expenses, execute such
additional instruments of assumption and provide to Bank such additional
documents as Bank may require to effect or ensure the proper assignment and
assumption of the Assumed Liabilities by BAMSI.
Section 6.3 Preservation of Books and Records Post-Closing Access. From
-----------------------------------------------------
and after the Closing Date for each Asian Business, BAMSI agrees that it shall
preserve and keep the books and records of such Asian Business delivered to it
hereunder for such period of time as may be required by any government agency or
ongoing investigation, litigation or proceeding, and shall make its books,
records and employees available to Bank as may be reasonably required in
connection with any legal proceedings against or governmental investigations of
Bank, in connection with any tax examination or filing of Bank, or for any other
reasonable business purpose arising from or relating to the Assumed Liabilities
or the Retained Liabilities.
Section 6.4 Employees. Effective as of the Closing for each Asian
---------
Business, all employees of such Asian Business will cease to be employees of
Bank. BAMSI agrees that it will offer employment to every employee of such
Asian Business. All current employees are listed on Schedule 6.4, which
schedule shall be updated by Bank as of such Closing.
ARTICLE VII
FURTHER COVENANTS OF THE PARTIES
--------------------------------
Section 7.1 Non-assignable Contracts and Permits. Nothing in this
------------------------------------
Agreement shall be construed as an attempt to assign to BAMSI any contract,
commitment, or other agreement or permit, license or authorization which is by
law or its terms nonassignable or the assignment of which would constitute a
violation of statute, rule, regulation, contract, commitment or other agreement.
If, as of the Closing for any Asian Business, an attempted assignment of any
contract, commitment or other agreement would be ineffective or would affect
Bank's rights thereunder so that BAMSI would not in fact receive all such
rights, Bank shall cooperate with BAMSI in a mutually acceptable arrangement, at
BAMSI's cost,
-11- Asian Acquisition Agreement
<PAGE>
to provide for BAMSI the benefit (including the economic benefit) of such
contract, commitment or other agreement (other than legal title). If and so
long after the Closing as such assignment shall not have been made, Bank will
(a) to the extent that such action will not result in a violation of such
contract, commitment or other agreement, transfer to BAMSI all assets and
rights, including all monies, received in respect of such contract and hold such
contract, commitment or other agreement in trust for BAMSI and (b) to the extent
that the provisions of clause (a) above are not sufficient to transfer all of
the benefits (including the economic benefit) of such contract, commitment or
other agreement (other than legal title), or any of such contract, commitment or
other agreement has been canceled as a result of the attempted assignment, take
such actions (which, without limitation, may include entering into
subcontracting arrangements with BAMSI, but in no event shall Bank be obligated
to enter into a commercially unreasonable arrangement) as are necessary to
provide all of the benefits (or the equivalent thereof, including the economic
benefit) of such contract, commitment or other agreement (other than legal
title) to BAMSI. BAMSI shall obtain, at its own expense, as of the Closing or
as soon thereafter as practicable, all permits, licenses or authorizations
required by any governmental agency with respect to such Asian Business or
related Assets without any guaranty or liability of Bank with respect thereto,
except for those permits, licenses or authorizations which can be assigned by
Bank at the Closing without the consent of any third party. Subsequent to the
Closing, Bank shall have the right to cancel any permits, licenses or
authorizations and bonds or guarantees related thereto which are applicable to
such Asian Business or related Assets but are unable to be assigned within 90
days from the Closing. BAMSI shall reimburse Bank for any and all costs
associated with the assignment or failure to cancel any such non-assignable
contracts, commitments or other agreements (including, without limitation, the
costs of providing to BAMSI the benefits thereunder) or permits, licenses or
authorizations.
Section 7.2 Conduct of Litigation. BAMSI and Bank shall cooperate fully
---------------------
in the prosecution or defense of any action, proceeding or claim arising out of
or relating to the Retained Liabilities, on the one hand, and the Assumed
Liabilities, on the other hand, and shall consult and confer with one another
with respect thereto, at no cost to BAMSI, on the one hand, or Bank, on the
other hand.
Section 7.3 Modification of Marketing Agreement. As a part of the Closing
-----------------------------------
for each Asian Business, BAMSI and Bank shall modify the Marketing Agreement and
the Administrative Services Agreement to provide for the inclusion of such Asian
Business within the provisions thereof on mutually agreeable terms.
Section 7.4 Additional Asian Businesses. During the term of this
---------------------------
Agreement, Bank and BAMSI agree to work cooperatively and use their reasonable
commercial efforts to enable BAMSI to acquire the Additional Asian Businesses.
In addition, Bank and BAMSI agree to work cooperatively and evaluate the
possibility of entering into an outsourcing or other arrangement that would
permit the Company to participate meaningfully in Bank's merchant processing
business in Taiwan. Bank will assist BAMSI in obtaining any governmental or
regulatory approvals or consents and in making any declarations, filings and
registrations with governmental or regulatory authorities which are necessary to
transfer each of the Additional Asian Businesses to BAMSI; provided, however,
that,
-12- Asian Acquisition Agreement
<PAGE>
notwithstanding anything to the contrary contained herein, Bank shall not be
obligated to (a) pay any consideration, fees or incur any other costs in
obtaining such approvals or consents, or (b) maintain, pursue, expand or develop
a merchant processing business in any Additional Asian Country. The purchase
price to be paid by BAMSI to acquire an Additional Asian Business will be
mutually agreed upon by BAMSI and Bank prior to any such acquisition, and may
consist of cash, Common Stock of BAMSI or any combination thereof.
ARTICLE VIII
TAX MATTERS
-----------
Section 8.1 Cooperation. BAMSI will cooperate with the Bank in connection
-----------
with any audit by the United States Internal Revenue Service or any other tax
authority of any tax return in connection with the operations of the Asian
Businesses prior to any of the Closing Dates.
Section 8.2 Tax Agreement. Bank and BAMSI agree that the Tax Agreement
-------------
shall govern all tax matters between them following the Closings.
-13- Asian Acquisition Agreement
<PAGE>
ARTICLE IX
CONDITIONS PRECEDENT TO
OBLIGATIONS OF BANK AND BAMSI FOR EACH CLOSING
----------------------------------------------
The obligations of Bank and BAMSI to be discharged under this Agreement on
or prior to each Closing are subject only to receipt of (a) the United States
regulatory approval set forth in Section 9.1 and (b) the local regulatory
approvals (collectively, the "Asian Approvals"), as set forth for the Asian
Businesses in Sections 9.2 and 9.3.
Section 9.1 Closing of the Purchase and Sale of each Asian Business. BAC
-------------------------------------------------------
and Bank shall have received approval from the Board of Governors of the Federal
Reserve System to establish the non-United States operations of BAMSI (the "Fed
Approval").
Section 9.2 Closing of the Purchase and Sale of the Thailand Business.
---------------------------------------------------------
Bank and/or BAMSI shall have received the following (collectively, the "Thailand
Approvals"):
(a) Approval from the Thai Ministry of Finance to establish a branch of
BAMSI in Thailand;
(b) Registration by BAMSI of its branch under the U.S.-Thai Treaty of
Amity and Economic Relations; and
(c) Such other governmental approvals and consents as are necessary for
Bank to transfer the Thailand Business to BAMSI.
Section 9.3 Closing of the Purchase and Sale of the Philippines Business.
------------------------------------------------------------
Bank and/or BAMSI shall have received the following (collectively, the
"Philippine Approvals"):
(a) Approval from the Philippines Securities and Exchange Commission to
establish a branch office of BAMSI in the Philippines;
(b) Receipt of a favorable ruling from the Philippines Bureau of Internal
Revenue regarding the transfer by Bank of the Philippines Business to
BAMSI; and
(c) Such other governmental approvals and consents as are necessary for
Bank to transfer the Philippines Business to BAMSI.
Section 9.4 Conditions Independent of One Another. Except for receipt of
-------------------------------------
the Fed Approval under Section 9.1, none of the closing conditions in this
Article IX are dependent upon any other closing condition.
-14- Asian Acquisition Agreement
<PAGE>
ARTICLE X
CLOSINGS
--------
Section 10.1 The Closings.
------------
(a) The consummation of the purchase and sale of each Asian Business
(each a "Closing") contemplated by this Agreement shall take place at 10:00 a.m.
local time on a date determined in accordance with Sections 10.1(b), (c) and (d)
at the offices of Bank, 555 California Street, San Francisco, California 94104,
or at such other time, date and place as the parties hereto may agree.
(b) The Closing for the purchase and sale of the Thailand Business and
the related Assets shall take place on a date as soon as practicable following
satisfaction of the conditions set forth in Sections 9.1 and 9.2, but in no
event later than the Final Closing Date.
(c) The Closing for the purchase and sale of the Philippines Business
and the related Assets shall take place on a date as soon as practicable
following satisfaction of the conditions set forth in Sections 9.1 and 9.3, but
in no event later than the Final Closing Date.
(d) Notwithstanding anything to the contrary contained herein, in no
event shall any Closing be consummated after December 31, 1997 (the "Final
Closing Date").
Section 10.2 Deliveries at the Closings.
--------------------------
(a) At each of the Closings, Bank and BAMSI shall deliver or cause to
be delivered, the following documents duly executed by the appropriate parties
and acknowledged where appropriate:
(i) in the case of the Closing for the Thailand Business, delivery
by BAMSI to Bank of the Thailand Consideration;
(ii) in the case of the Closing for the Philippines Business,
delivery by BAMSI to Bank of the Philippines Consideration;
(iii) a Bill of Sale in the form of Exhibit A, executed by Bank;
(iv) an Instrument of Assumption of Liabilities in the form of
Exhibit B, executed by BAMSI;
(v) in the case of the Closing for the Philippines Business,
certificates evidencing all of the outstanding shares of BA
Card Services owned by Bank, executed by Bank; and
-15- Asian Acquisition Agreement
<PAGE>
(vi) such other documents, certificates and instruments as are
required to assign and transfer the Assets to BAMSI and to effect
the assumption of the Assumed Liabilities by BAMSI, including
such documents, certificates and instruments that may be required
under applicable local laws and regulations.
(b) The delivery of all documents and the performance of all acts at each
Closing shall be deemed to have occurred or to have been taken simultaneously.
ARTICLE XI
NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES
---------------------------------------------
Section 11.1 Survival. The representations, warranties and covenants made
--------
by Bank and BAMSI, including, without limitation, statements contained in any
certificate or Schedule or Exhibit delivered by Bank to BAMSI pursuant to this
Agreement, shall not survive the Closings.
ARTICLE XII
TERMINATION
-----------
Section 12.1 Termination. This Agreement and the transactions
-----------
contemplated hereby may be terminated as to any Asian Business at any time prior
to the Closing therefor and as to any Additional Asian Business (a) by mutual
agreement of Bank and BAMSI in writing, or (b) by Bank or BAMSI on or after
December 31, 1997, provided that, with respect to any such Asian Business, one
or more of the conditions provided in Article IX of this Agreement shall not yet
have been fulfilled by December 31, 1997. No such termination shall affect a
Closing which shall have been previously consummated.
Section 12.2 Nondisclosure. If this Agreement is terminated, BAMSI will
-------------
not, for a period of five years from the date of this Agreement, use in any
manner or disclose to any third party any documents or information regarding the
Asian Business or the transactions contemplated by this Agreement, without
Bank's prior written consent. Upon any such termination, BAMSI will immediately
return to Bank all such documents.
ARTICLE XIII
MISCELLANEOUS
-------------
Section 13.1 Amendments. BAMSI and Bank may only amend, modify or
----------
supplement this Agreement in such manner as may be agreed upon by both of them
in writing.
-16- Asian Acquisition Agreement
<PAGE>
Section 13.2 Waivers. Either BAMSI or Bank may, by written notice to the
-------
other, (i) waive any of the conditions to its obligations hereunder or extend
the time for the performance of any of the obligations or actions of the other,
(ii) waive any inaccuracies in the representations of the other contained in
this Agreement or in any documents delivered pursuant to this Agreement, (iii)
waive compliance with any of the covenants of the other contained in this
Agreement, and (iv) waive or modify performance of any of the obligations of the
other. No action taken pursuant to this Agreement, including without limitation
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, condition or agreement contained herein. Waiver of the breach of any
one or more provisions of this Agreement shall not be deemed or construed to be
a waiver of other breaches or subsequent breaches of the same provisions.
Section 13.3 Public Announcements. Neither of the parties shall make,
--------------------
issue or release any oral or written public announcement or statement
concerning, or acknowledge the existence of, or reveal the terms, conditions and
status of, the transactions contemplated by this Agreement, without the other
party's prior approval of, or concurrence in, the contents of such announcement,
acknowledgment or statement.
Section 13.4 Notices. Any notice, request, instruction or other document
-------
to be given hereunder shall be in writing and delivered personally or sent by
telecopy or prepaid overnight courier: if to BAMSI, BA Merchant Services, Inc.,
One South Van Ness Avenue, 5th Floor, San Francisco, CA 94103, attention:
General Counsel #3710; and if to Bank, Bank of America NT & SA, 555 California
Street, 6th Floor, San Francisco, CA 94104, attention: Corporate Secretary
#3018, with a copy to BankAmerica Corporation, 555 California Street, 8th Floor,
San Francisco, CA 94104, attention: General Counsel #3017. Any notice or other
communication transmitted in accordance with this Section 13.4 shall for all
purposes of this Agreement be treated as given or effective, if personally
delivered, upon receipt, or, if sent by courier, upon the earlier of receipt or
the end of the business day following the date of delivery to such courier, or,
if telecopied, upon transmission and confirmation of receipt.
Section 13.5 Entire Agreement. The Schedules and Exhibits are
----------------
incorporated into this Agreement by reference. This Agreement and the Schedules
and Exhibits hereto embody the entire agreement between the parties and any and
all prior oral or written agreements, representations or warranties, contracts,
understandings, correspondence, conversations, and memoranda, whether written or
oral, between BAMSI and Bank or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors in
interest, with respect to the subject matter hereof, are merged herein and
replaced hereby.
Section 13.6 Assignability; Third Party Rights. Neither this Agreement
---------------------------------
nor any of the party's rights hereunder shall be assignable by either party
hereto without the prior written consent of the other party. In the event that
any such assignment is made, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, shall
-17- Asian Acquisition Agreement
<PAGE>
be deemed to confer upon any other person, including without limitation,
employees of any of the Asian Businesses, any rights or remedies under, or by
reason of, this Agreement; provided, that such other persons shall not be deemed
to include Affiliates, successors or permitted assigns of any party.
Section 13.7 Governing Law; Arbitration.
--------------------------
(a) This Agreement shall be construed in accordance with the laws of the
State of California without giving effect to principles of conflict of laws.
(b) Any dispute, controversy or claim between Bank and BAMSI arising out of
or relating to this Agreement or any agreements or instruments relating hereto
or delivered in connection herewith, if unable to be resolved by mutual
agreement of the parties, will be resolved by arbitration conducted in San
Francisco, California under the auspices and according to the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration
shall be conducted in accordance with the United States Arbitration Act (Title
9, U.S. Code), notwithstanding any choice of law provision in this Agreement.
Section 13.8 Expenses of Agreement. Each party shall pay its own costs
---------------------
and expenses incident to the negotiation, preparation and execution of this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, attorneys' and accounting fees, whether or not
the transactions contemplated herein are consummated. Bank and BAMSI shall
share equally the cost of any sales, transfer, use or value added taxes, plus
any interest or penalties related thereto, payable with respect to the sale,
conveyance and transfer of the Assets and the transactions contemplated by this
Agreement.
Section 13.9 Limitation on Liability. Neither BAMSI nor Bank shall have
-----------------------
any liability to the other for costs, loss of anticipated profits or otherwise
if the transactions contemplated by this Agreement are terminated pursuant to
the provisions of this Agreement.
Section 13.10 Headings, Definitions. The section and other headings
---------------------
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement. Wherever in this
Agreement words indicating the plural number appear, such words shall be
considered as words indicating the singular number and vice versa where the
context indicates the propriety of such use.
-18- Asian Acquisition Agreement
<PAGE>
Section 13.11 Counterparts. This Agreement may be executed in
------------
counterparts, each of which when so executed shall be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, BAMSI and Bank have each caused this Agreement to be
executed as of the date first above written.
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION
By:______________________________
Name:
Title:
BA MERCHANT SERVICES, INC.
By:______________________________
Name:
Title:
-19- Asian Acquisition Agreement
<PAGE>
Exhibit 10.13
NON-COMPETITION AND CORPORATE OPPORTUNITIES
ALLOCATION AGREEMENT
THIS NON-COMPETITION AND CORPORATE OPPORTUNITIES ALLOCATION AGREEMENT (this
"Agreement") is made as of the 3rd day of December 1996 between BANKAMERICA
-----------
CORPORATION, a Delaware corporation ("BAC") and BA MERCHANT SERVICES, INC., a
- ----------- -------------------------
Delaware corporation ("BAMSI").
RECITALS
A. BAC. BAC is an existing corporation duly organized and in good
---
standing under the laws of the State of Delaware, with its principal executive
offices located in San Francisco, California.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of
-----
the State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
-------------------
obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend
-------------------------
to conduct their relationships hereunder on an arm's length basis.
E. BAC/BAMSI Transactions. Bank of America National Trust and
----------------------
Savings Association ("BofA") and Bank of America NW, National Association
("BANW"), each a subsidiary of BAC, currently own 100% of the outstanding common
stock of BAMSI. BofA and BANW have entered or will enter into certain
agreements with BAMSI (1) transferring the BofA United States domestic merchant
processing business and the BANW merchant processing business to BAMSI and (2)
covering the contemplated transfer of the Philippine and Thailand merchant
processing businesses of BofA to BAMSI upon the receipt of certain governmental
approvals. BAMSI is currently considering an initial public offering of shares
of its Class A common stock, $.01 par value per share.
F. Related Agreements. BAMSI has entered or will enter into (1) a
------------------
Trademark License Agreement of even date herewith between BAC and BAMSI (the
"License Agreement"), (2) a Marketing Agreement of even date herewith among
BAMSI, BofA and Seafirst (the "Marketing Agreement"), (3) a Sponsorship and
Processing Services Agreement of even date herewith between BAMSI and BofA (the
"Sponsorship Agreement") (4) Processing Services Agreements of even date
herewith between BAMSI and other subsidiary banking institutions of BAC (the
"Affiliate Bank Processing Agreements"), (5) an Administrative Services
Agreement of even date herewith between BofA and BAMSI (the "Administrative
Services Agreement"), (6) a Registration Rights Agreement to be entered into
among BAMSI, BofA and BANW (the "Registration Rights Agreement"), and (7) a Tax
Allocation Agreement of even date herewith between BAC and BAMSI (the "Tax
-1- Corporate Opportunities Agreement
<PAGE>
Agreement"). The License Agreement, the Marketing Agreement, the Sponsorship
Agreement, the Affiliate Bank Processing Agreements, the Administrative Services
Agreement, the Registration Rights Agreement and the Tax Agreement are herein
collectively referred to as the "Related Agreements."
G. Allocation of Opportunities. In consideration of the transactions
---------------------------
contemplated by the Related Agreements and to preserve and enhance the goodwill
of the assets and business transferred to BAMSI, BAC is willing to enter into
this Agreement
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of their
mutual promises and obligations herein contained, intending to be legally bound,
the parties do hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 "Affiliate" means any person which directly or indirectly
controls, is controlled by, or is under common control with, BAC. A person is
regarded in control of another person if it owns, or directly or indirectly
controls, at least 50% of the voting stock or other ownership interest of the
other person, or if it directly or indirectly possesses the power to direct or
cause the direction of the management and policies of the other person by any
means whatsoever; provided however that, for the purposes of this Agreement,
BAMSI shall not be an Affiliate of BAC.
1.2 "BAMSI Independent Directors" means the directors of BAMSI who
are not employees of BAMSI or BAC or an Affiliate of BAC.
1.3 "Base Business" means payment processing for merchants to the
extent the payments arise from the use of credit, charge or debit cards for the
purchase of goods or services and are authorized through an electronic medium
originating at the point of sale.
1.4 "Fair Market Value" means the value determined as such by an
independent firm mutually selected by BAC and the BAMSI Independent Directors.
ARTICLE 2 - COMPETITION AND CORPORATE OPPORTUNITIES
2.1 Noncompetition by BAC or Affiliates. In consideration of the
-----------------------------------
transactions contemplated by the Related Agreements and to preserve and enhance
the goodwill of the assets and business transferred to BAMSI, BAC agrees that
for as long as the Marketing Agreement continues in effect, neither BAC nor any
Affiliate will compete with BAMSI in the Base Business in the countries set
forth in the next succeeding sentence of this Section 2.1, subject to the
exceptions set forth in Section 2.2. BAC agrees, subject to the exceptions set
forth in Section 2.2, that the geographic scope of this covenant not to compete
shall be the United States and the following countries upon the transfer of
BAC's Base Business in
-2- Corporate Opportunities Agreement
<PAGE>
each such country to BAMSI: Taiwan, the Philippines, Thailand, South Korea,
India, Indonesia, Vietnam and The Peoples Republic of China (each, an
"Additional Asian Country"). The parties hereto acknowledge and agree that,
notwithstanding the foregoing sentence of this Section 2.1, nothing in this
Agreement shall obligate BAC to (a) pursue any approvals in any Additional Asian
Country on other than commercially reasonable terms not involving the payment of
money, or (b) pursue, expand or develop a Base Business in any Additional Asian
Country. Without limiting the generality of the foregoing sentence, each of the
counties in the State of California shall be within the scope of this covenant
not to compete, it being the intent of the parties to comply in all respects
with the provisions of Section 16601 of the California Business & Professions
Code.
2.2 Exceptions to Noncompetition by BAC or Affiliates. The
-------------------------------------------------
restrictions contained in Section 2.1 shall not apply to the Base Businesses
described in subsections (a), (b), and (c) of this Section 2.2:
(a) Subject to subsections (b), (c) and (d) of this Section 2.2, the
independent pursuit and acquisition (as opposed to the de novo commencement) by
BAC or any Affiliate of a Base Business.
(b) Any corporation, limited liability company, partnership or other
entity (or all or substantially all of the assets of such entity) conducting a
Base Business acquired directly or indirectly by BAC or an Affiliate (an
"Acquired Base Business") that has annual net merchant fee revenue of less than
10% of BAMSI's annual net merchant fee revenue. For purposes of the preceding
sentence, such annual net merchant fee revenue shall be determined with
reference to the fiscal year of each such entity most recently ended. If such
an Acquired Base Business with annual net merchant fee revenue of less than 10%
of BAMSI's annual net merchant fee revenue shall experience net revenue growth
such that its annual net merchant fee revenue shall equal or exceed 10% of
BAMSI's annual net merchant fee revenue for any year, then BAC shall cause such
Acquired Base Business to be offered to BAMSI for purchase at Fair Market Value.
If any such Acquired Base Business shall be combined with or a part of a
corporation, limited liability company, partnership or other entity conducting a
business other than a Base Business, then BAC shall be obligated only to offer
the portion of such business which conducts the Base Business to BAMSI. Any
such offer shall be made to BAMSI no later than the end of the first fiscal
quarter of the year immediately following the first fiscal year for which the
determination of such annual net merchant fee revenue shall have been made, and
BAMSI shall exercise its right to acquire such Acquired Base Business within
three months after being so offered such business or BAC or any Affiliate shall
thereafter be free to conduct such business irrespective of the terms and
provisions of this Agreement. The determination of BAMSI to acquire or not
acquire any such Acquired Base Business shall be made by the BAMSI Independent
Directors.
(c) Any other Acquired Base Business not covered by subsection (b)
where BAMSI has been offered by BAC or an Affiliate the right to acquire such
Acquired Base Business at Fair Market Value and the BAMSI Independent Directors
shall not have determined that BAMSI shall so acquire such business. BAMSI
shall be offered the right to
-3- Corporate Opportunities Agreement
<PAGE>
so acquire such Acquired Base Business within six months after the acquisition
thereof by BAC or an Affiliate and the BAMSI Independent Directors must
determine that BAMSI shall exercise such right to acquire such business within
three months after being so offered such business or BAC or any Affiliate shall
thereafter be free to continue to conduct such business irrespective of the
provisions of this Agreement.
(d) Notwithstanding the foregoing provisions of this Section 2.2, BAC
agrees that, during the term of this Agreement, it shall not, and that it shall
cause its Affiliates to not, acquire any corporation, limited liability company,
partnership or other entity (or all or substantially all of the assets of any
such entity) conducting a Base Business, where (i) the Base Business of such
entity is conducted primarily in the United States or an Additional Asian
Country and (ii) the Base Business of such entity, for the fiscal year of such
entity most recently ended, generated more than 66 2/3% of the total revenues of
such entity determined on a consolidated basis; provided, however, that the
foregoing provisions of this subsection (d) shall not be deemed to prevent any
merger, consolidation, joint venture, partnership or other business combination
between BAMSI (or any subsidiary thereof) and any other such entity or the
acquisition of the assets of any such other entity by BAMSI.
2.3 Allocation of Corporate Opportunities. As
-------------------------------------
to any corporate opportunity outside the scope of the Base Business which may be
presented to BAMSI or BAC or any Affiliate and which could reasonably be
expected to be related to the Base Business, BAC shall be entitled to determine
the allocation thereof based upon its evaluation of the best interests of the
BAC stockholders under the circumstances.
2.4 BAC Determination Binding. The good faith determination of BAC
-------------------------
as to the scope of the Base Business or the applicability of any of the
exceptions provided for in Section 2.2 or the allocation of any corporate
opportunities by BAC pursuant to Section 2.3, shall be conclusive and binding
for all purposes.
ARTICLE 3 - TERM AND TERMINATION
3.1 Term. The term of this Agreement shall commence on the
----
Effective Date and shall continue for five years thereafter, unless terminated
earlier pursuant to Section 3.2 or extended by the mutual agreement of the
parties.
3.2 Termination. BAC shall have the right to terminate this
-----------
Agreement upon the occurrence of any of the following events:
(a) A material breach of this Agreement by BAMSI or any of its
Affiliates that is not cured within 30 days after receipt of written notice of
such breach from BAC; or
(b) A material breach of the License Agreement or the Marketing
Agreement by BAMSI which is not cured within 30 days after receipt of written
notice from BAC; or
-4- Corporate Opportunities Agreement
<PAGE>
(c) BAC and its Affiliates beneficially own shares representing less
than a majority of the voting power of the outstanding common stock of BAMSI.
ARTICLE 4 - RESOLUTION OF DISPUTES
4.1 Arbitration. Any dispute, controversy or claim between the Bank
-----------
and BAMSI arising out of or relating to this Agreement or any agreements or
instruments relating hereto or delivered in connection herewith, will be
resolved by arbitration conducted in San Francisco, California under the
auspices and according to the Commercial Arbitration Rules of the American
Arbitration Association. The arbitration shall be conducted in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement.
ARTICLE 5 - MISCELLANEOUS PROVISIONS
5.1 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California without regard to principles of
conflicts of laws.
5.2 Notices. Any notice permitted or required by this Agreement
-------
shall be deemed given when sent by personal service, by certified or registered
mail return receipt requested, postage prepaid, by facsimile transmission or by
overnight delivery by a nationally recognized courier and addressed as follows:
if to BAC, BankAmerica Corporation, 555 California Street, San Francisco, CA
94104, attention: Corporate Secretary #3018, with a copy to BankAmerica
Corporation, 555 California Street, 8th Floor, San Francisco, CA 94104,
attention: General Counsel #3017; and if to BAMSI, to BA Merchant Services,
Inc., One South Van Ness, 5th Floor, San Francisco, California 94103, attention:
General Counsel #3710. Actual receipt of notice or other communication shall
overcome any deficiency in manner of delivery thereof.
5.3 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which, when executed by both parties to this Agreement,
shall be deemed to be an original, and all of which counterparts together shall
constitute one and the same instrument.
5.4 Entire Agreement. This Agreement constitutes the entire
----------------
agreement of the parties with respect to its subject matter, superseding all
prior oral and written communications, proposals, negotiations, representations,
understandings, courses of dealing, agreements, contracts, and the like between
the parties.
5.5 Amendments. This Agreement may be changed, amended, modified, or
----------
rescinded only by an instrument in writing signed by the party against which
enforcement of such change, amendment, modification or rescission is sought.
-5- Corporate Opportunities Agreement
<PAGE>
5.6 Waivers. The provisions of this Agreement may be waived only by
-------
a written instrument executed by the party so waiving. Except as expressly set
forth the failure of any party at any time or times to require performance of
any provision of this Agreement shall in no manner affect such party's right at
a later time to enforce the same. No waiver by any party of any condition, or
breach of any provision of this Agreement, in any one or more instances, shall
be deemed to be or construed as a waiver of any other condition or of the breach
of any other provision of this Agreement.
5.7 Relationship. Nothing in this Agreement shall be deemed to
------------
create a partnership, joint venture or agency relationship between the parties.
Both parties are independent contractors and neither party is to be considered
the agent or legal representative of the other for any purpose whatsoever.
5.8 Successors and Assigns. This Agreement shall bind and inure to
----------------------
the benefit of the parties and their respective successors and assigns, except
that no obligation under this Agreement may be delegated, nor may any rights
under this Agreement be assigned by either party, without the prior written
consent of the other party, except by operation of law. Any such purported
assignment of this Agreement by either party without the prior written consent
of the other party shall be void and without effect. Except as expressly
provided in this Agreement, the parties hereto intend that this Agreement shall
not benefit or create any right or cause of action in or on behalf of any person
other than the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BANKAMERICA CORPORATION
By: /s/ Barry L. Pyle
---------------------------
Barry L. Pyle
Senior Vice President
BA MERCHANT SERVICES, INC.
By: /s/ Sharif M. Bayyari
----------------------------
Sharif M. Bayyari
President
-6- Corporate Opportunities Agreement
<PAGE>
Exhibit 10.14
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made and entered into as
of this 3rd day of December, 1996 by and among BANK OF AMERICA NT & SA, a
-----------------------
national banking association (the "Bank"), and BANK OF AMERICA NW, NATIONAL
----------------------------
ASSOCIATION, a national banking association ("BANW" and, collectively with the
- -----------
Bank, the "Holders") and BA MERCHANT SERVICES, INC., a Delaware corporation
--------------------------
("BAMSI").
RECITALS
A. The Holders. The Bank and BANW are each an existing national banking
-----------
association duly organized and in good standing under the laws of the United
States with their respective principal executive offices located in San
Francisco, California and Seattle, Washington.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of the
-----
State of Delaware, with its principal executive offices located in San
Francisco, California.
C. BAC/BAMSI Transactions; The Offering. The Bank and BANW, each a
------------------------------------
subsidiary of BankAmerica Corporation ("BAC"), currently own 100% of the
outstanding common stock of BAMSI. The Bank and BANW have entered or will enter
into certain agreements with BAMSI (1) transferring the Bank's United States
domestic merchant processing business and the BANW merchant processing business
to BAMSI and (2) covering the contemplated transfer of the Philippine and
Thailand merchant processing businesses of the Bank to BAMSI upon the receipt of
certain governmental approvals (collectively, the "Asset Transfers"). BAMSI is
contemplating the issuance of shares of BAMSI's Class A common stock, $.01 par
value per share (the "Class A Common Stock"), in an initial public offering (the
"Offering") and following the Offering, the Bank and BANW will each be the
beneficial and record owner of 25,670,000 shares and 4,530,000 shares,
respectively, of BAMSI's Class B common stock, $.01 par value per share (the
"Class B Common Stock").
D. OCC Approval and Restrictions on BAMSI's Activities. On November 14,
---------------------------------------------------
1996, the Office of the Comptroller of the Currency (the "OCC") approved the
application of BANW to hold the shares of Class B Common Stock (the "BANW
Shares"). As a condition to the OCC approval, the Holders and BAMSI have agreed
to provisions contained in this Agreement which provide to BANW certain rights
to restrict the activities of BAMSI as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration had and
received, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Restrictions on BAMSI's Activities.
----------------------------------
(a) During the term of this Agreement and for so long as BANW owns any of
the BANW Shares, BAMSI shall engage only in activities that are permissible for
national
-1- Stockholders Agreement
<PAGE>
banks. BAMSI shall be prohibited from engaging in any new activities without
prior notice to and approval by BANW in accordance with Section 1(b).
(b) Following the receipt of a notice from BAMSI under Section 1(a), BANW
shall, in its sole discretion, determine (i) whether the proposed activities are
permissible for national banks, and (ii) whether regulatory applications should
be filed seeking approval for the proposed activities. If BANW determines that
such activities are so permissible, it shall so notify BAMSI and BAMSI may
engage in such activities, subject to regulatory approval, if deemed necessary
by BANW. Notwithstanding anything to the contrary contained herein, if BANW, or
any regulatory agency with authority over BANW, the Bank or BAMSI, determines
that such new activities are not permissible for national banks, at the sole
option of BANW, (x) BAMSI shall be prohibited from engaging in such activities,
or (y) BANW shall sell to the Bank and the Bank shall purchase from BAMSI the
BANW Shares. The price of the BANW Shares pursuant to the foregoing sentence
shall be the fair market value of the same at the time of sale as reasonably
agreed to by the Bank and BANW.
2. Term. The term of this Agreement and the provisions of Section 1
----
shall commence on the date hereof and shall continue for so long as BANW owns
the BANW Shares and until terminated pursuant to Section 3.
3. Termination. This Agreement shall terminate upon the occurrence of
-----------
any of the following events: (a) termination of BANW's investment in BAMSI
pursuant to Section 1(b)(ii); or (b) BANW no longer owns any of the BANW Shares
or any shares of Class B Common Stock or Class A Common Stock.
4. Arbitration. Any dispute, controversy or claim between any of the
-----------
parties hereto arising out of or relating to this Agreement or any agreements or
instruments relating hereto or delivered in connection herewith, will be
resolved by arbitration conducted in San Francisco, California under the
auspices and according to the Commercial Arbitration Rules of the American
Arbitration Association. The arbitration shall be conducted in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement.
5. Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California without regard to principles of
conflicts of laws.
6. Notices. Any notice permitted or required by this Agreement shall be
-------
deemed given when sent by personal service, by certified or registered mail
return receipt requested, postage prepaid, by facsimile transmission or by
overnight delivery by a nationally recognized courier and addressed as follows:
if to BAMSI, to BA Merchant Services, Inc., One South Van Ness, 5th Floor, San
Francisco, California 94103, attention: General Counsel #3710; if to the Bank,
to Bank of America NT & SA, 555 California Street, 6th Floor, San Francisco, CA
94104, attention: Corporate Secretary #3018, with a copy to BankAmerica
Corporation, 555 California Street, 8th Floor, San Francisco, CA 94104,
attention: General Counsel; and, if to BANW, to Bank of America NW, N.A., 701
Fifth Avenue, Seattle, WA 98104, attention: General Counsel # 3922. Actual
receipt of notice or other communication shall overcome any deficiency in manner
of delivery thereof.
-2- Stockholders Agreement
<PAGE>
7. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which, when executed by all of the parties to this
Agreement, shall be deemed to be an original, and all of which counterparts
together shall constitute one and the same instrument.
8. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties with respect to its subject matter, superseding all prior oral and
written communications, proposals, negotiations, representations,
understandings, courses of dealing, agreements, contracts, and the like between
the parties.
9. Amendments. This Agreement may be changed, amended, modified, or
----------
rescinded only by an instrument in writing signed by the party against which
enforcement of such change, amendment, modification or rescission is sought.
10. Third Party Beneficiaries. Except as expressly provided in this
-------------------------
Agreement, the parties hereto intend that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person other than the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date first written
above.
BANKAMERICA CORPORATION
By: /s/ Thomas E. Peterson
----------------------------
Thomas E. Peterson
Vice Chairman
BANK OF AMERICA NW, NATIONAL
ASSOCIATION
By: /s/ Josef E. Gray
----------------------------
Josef E. Gray
President of the
Seafirst Bank Division
BA MERCHANT SERVICES, INC.
By: /s/ Sharif M. Bayyari
----------------------------
Sharif M. Bayyari
President
-3- Stockholders Agreement
<PAGE>
Exhibit 10.15 (i)
PROCESSING SERVICES AGREEMENT
THIS PROCESSING SERVICES AGREEMENT (the "Agreement") is made and entered
into this 3rd day of December, 1996 by and among BA MERCHANT SERVICES, INC.
--------------------------
("BAMSI") and BANK OF AMERICA TEXAS, N.A. ("Bank").
---------------------------
RECITALS
A. Bank. Bank is an existing national banking association duly
----
organized and in good standing under the laws of the United States with its
principal executive offices located in Dallas, Texas.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of
-----
the State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
-------------------
obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend to
-------------------------
conduct their relationships hereunder on an arm's length basis.
E. Related Agreements. BAMSI has entered or will enter into (1) a Non-
------------------
Competition and Corporate Opportunities Allocation Agreement of even date
herewith between BankAmerica Corporation and BAMSI (the "Corporate Opportunities
Agreement"), (2) a Marketing Agreement of even date herewith among BAMSI, Bank
of America NT & SA ("BofA") and Bank of America NW, National Association
("BANW") (the "Marketing Agreement"), (3) a Sponsorship and Processing Services
Agreement of even date herewith with BofA (the "Sponsorship Agreement") (4)
Processing Services Agreements of even date herewith between BAMSI and other
subsidiary banking institutions of BAC (the "Affiliate Bank Processing
Agreements"), (5) a Trademark License Agreement of even date herewith between
BAC and BAMSI (the "License Agreement"), (6) a Registration Rights Agreement to
be entered into among BAMSI, BofA and BANW (the "Registration Rights
Agreement"), and (7) a Tax Allocation Agreement of even date herewith between
BAC and BAMSI (the "Tax Agreement"). The License Agreement, the Marketing
Agreement, the Sponsorship Agreement, the Affiliate Bank Processing Agreements,
the Administrative Services Agreement, the Registration Rights Agreement and the
Tax Agreement are herein collectively referred to as the "Related Agreements."
F. Merchant Processing Services. BAMSI is a member of Visa U.S.A.
----------------------------
Incorporated ("Visa") and MasterCard International Incorporated ("MC") and is
authorized to provide credit, debit and charge card services to merchants under
the Visa, MC, Diners Club, AMEX, Carte Blanche, JCB, Discover, Interlink and
other programs ("Merchant
Processing Agreement - BofA Texas
-1-
<PAGE>
Services"). Bank has authorized BAMSI to perform certain processing services
related to the acceptance of Cards by Merchants.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, Bank and BAMSI agree
as follows:
1. Bank Responsibilities.
Bank will promote the availability of Merchant Services available from
BAMSI in accordance with the Marketing Agreement. Bank will not use agent or
subcontractors, other than its own employees, for these activities, without
BAMSI's written consent.
2. BAMSI Responsibilities.
Except as otherwise provided herein, during the term of this Agreement
BAMSI shall be the sole provider of, and shall satisfy all of Bank's
requirements for, the services necessary to authorize, process and settle
through the applicable Interchange systems, all card transactions effected by
Bank's Merchants and the services specified on Attachment A or other appropriate
addendum to this Agreement with respect to transactions effected by Bank's
Merchants involving any other credit cards covered hereby Such services include,
but are not limited to, the following with respect to Visa and MasterCard Card
transactions and such of the following as may hereafter be specified with
respect to other types of Card transactions:
(a) AUTHORIZATION OF ALL CARD TRANSACTIONS.
(b) DATA CAPTURE OF CARD TRANSACTIONS.
(c) COLLECTION OF FUNDS DUE FROM CARD TRANSACTIONS FROM CARD ISSUERS.
(d) SETTLEMENT OF INTERCHANGE EXPENSES.
(e) OTHER BANKCARD PROCESSING SERVICES.
(f) MERCHANT IMPLEMENTATION.
(g) PROCESSING OF CHARGEBACKS AND RETRIEVALS.
(h) CUSTOMER SERVICE.
(i) MANAGEMENT REPORTING.
(j) MARKETING/PRODUCT DEVELOPMENT.
Processing Agreement - BofA Texas
-2-
<PAGE>
3. Applications from Merchants.
BAMSI will provide Bank; with general requirements for businesses to
obtain Merchant Services from BAMSI. Bank will follow the application
documentation requirements provided by BAMSI and will not submit applications to
BAMSI for approval that do not conform to BAMSI's requirements. Bank will
ascertain from its available records whether there is significant information
about any prospective Merchant or its principals and will refrain from referring
any business to BAMSI if such information exists.
4. Approval of Merchants.
In its sole discretion, BAMSI will establish fees for Merchant
Services and decide whether it will approve applications and enter into a
Merchant Agreement with each business referred by Bank and whether it will
provide each Merchant with Merchant Services for each type of card.
5. Merchant Agreements.
This Agreement does not contemplate that Bank will enter into
agreements with Merchants for Merchant Services and Bank will not be liable to
BAMSI or Merchants for Merchant Services provided by BAMSI, except for Bank's
own failures to correctly process applications, Transaction Records, or deposits
and withdrawals to Merchants' accounts. BAMSI will (a) enter into a Merchant
Agreement with each Merchant meeting the requirements of BAMSI and of each Card
Association and (b) perform all its obligations under each Merchant Agreement.
6. Support Materials and Services.
BAMSI will provide Bank with Merchant Services advertising and
promotional materials. Bank will obtain BAMSI's written consent prior to
publication or display by Bank of any advertising or promotional material not
provided by BAMSI relating to Merchant Services. BAMSI will also provide Bank
with instructional material regarding sales of Merchant Services and the option
to attend periodic training workshops that BAMSI chooses to conduct.
7. Interchange of Paper.
Bank will not be responsible for handling Transaction Records of
Merchants who deliver Transaction Records directly to Bank for entry in the
interchange systems of the Card Associations. Bank will be responsible for
following BAMSI's instructions for Merchants delivering Transaction Records to
Bank for delivery to BAMSI.
8. Settlement of Paper; Discount Fees.
(a) Bank shall maintain a depositary account (the "Depository
Account") into which settlement amounts received by BAMSI from the applicable
Associations and due to Bank pursuant to this Agreement with respect to Sales
Drafts and Cash Advances processed and
Processing Agreement - BofA Texas
-3-
<PAGE>
settled by BAMSI for Bank (and Merchants) shall be deposited. Such Depository
Account may be maintained at Bank or at any other depository institution in the
United States specified by Bank. All settlement funds deposited to Bank's
Depository Account are subject to BAMSI's final audit and checking, and Bank
agrees that BAMSI may debit the Bank's Depository Account on a daily basis for
any and all fees and amounts owed BAMSI, and may debit or credit Bank's
Depository Account on a daily basis for any deficiencies and overages. Credits
to Bank's Depository Account are provisional until the expiration of the time
period for chargebacks under the Association Rules.
(b) As directed by each Merchant, BAMSI will deposit the amount due
the Merchant for Transaction Records to the Merchant's account at Bank. BAMSI's
Agreements with Merchants will authorize payment to BAMSI for Credit Vouchers
and Chargebacks from the Merchant's accounts at Bank and Bank will allow BAMSI
to withdraw funds, to the extent funds are available in the Merchants' accounts,
for all Credit Vouchers presented by Merchants to BAMSI and for all Transactions
Records BAMSI charges back to the Merchants.
(c) BAMSI will collect discount and other fees due BAMSI directly
from each Merchant, except to the extent the Merchant allows BAMSI to debit the
Merchant's account at Bank.
(d) Upon termination of this Agreement, Bank's Depository Account
shall remain open for a period of at least 280 days thereafter for the debiting
of any chargebacks which may remain valid under the Association Rules Sufficient
funds shall be held therein which are sufficient (together with the funds in any
escrow account) to cover such chargebacks. If a Bank Merchant has engaged in an
activity which may result in chargebacks for a period of time longer than 280
days, Bank's Depository Account shall remain open until the chargeback period
shall become expired.
(e) In addition to any other rights BAMSI has pursuant to this
Agreement, Bank authorizes BAMSI to debit Bank's Depository Account for, or
deduct from amounts otherwise due to Bank, amounts which BAMSI is entitled to
collect or hold in escrow pursuant to this Agreement.
(f) If Bank believes any adjustments are needed with respect to any
debits or credits effected by BAMSI with respect to Bank's Depository Account
for any amounts due to or due from Bank, Bank shall notify BAMSI in writing
within 45 days after such debit or credit is effected. If Bank fails to notify
BAMSI within such timeframe, BAMSI shall not be responsible for investigating or
effecting any required adjustments, absent BAMSI's gross negligence or their
employees' fraud or misconduct. If Bank notifies BAMSI after such time period
that it believes adjustments are needed, BAMSI may, in their discretion, assist
Bank in investigating whether any adjustments are appropriate and whether any
amounts are due to or from other parties, but BAMSI shall not have any liability
to effect any such adjustments absent BAMSI's gross negligence or their
employees' fraud or misconduct. Any voluntary efforts by BAMSI to assist Bank
in investigating such matters shall not create any obligation to continue such
investigation or assist with any investigation in response to any future notices
of possible adjustments that are not timely submitted.
Processing Agreement - BofA Texas
-4-
<PAGE>
(g) BAMSI shall debit Bank's Depository Account on a daily basis for
the fees set forth in Attachment A. BAMSI, at its option, may elect to debit
the Bank's Depository Account on a less frequent basis than daily for certain
fees. Any such election at any time by BAMSI to debit the Bank's Depository
Account for certain BAMSI fees on a less frequent basis than daily, will not be
taken or held as a waiver of BAMSI's rights to debit for fees on a daily basis
at any time thereafter.
(h) The fees set forth in Attachment A shall be subject to
adjustments to accommodate the imposition of new or amended fees by third
parties including additional unforeseen processing costs arising from any
requirements imposed by third parties beyond the normal processing contemplated
hereunder or from the imposition of new or amended regulations declared by the
Associations or governmental requirements, and will be immediately effective
upon the effective date of such adjustment.
(i) Bank shall be responsible for penalty charges, including
excessive chargeback handling fees levied by the Associations attributable to
any of Bank's Merchants, but excluding penalty charges, if any, attributable to
any error, omission or other fault or failure by BAMSI.
(j) If current exception processing volumes including but not
limited to, Chargebacks and retrievals, or if current merchant call volumes
increase disproportionally to increases in Bank portfolio dimensions, BAMSI
reserves the right to request corrective action from the bank to correct the
situation or charge additional fees to compensate for increased volume.
(k) From time to time, Bank will provide to BAMSI evidence of its
proper and timely payment of any applicable taxes on services or equipment
provided by and under this Agreement (including, if applicable, evidence of
resale certificates and evidence of the jurisdictions in which it pays any such
taxes). Bank assumes all liability for the proper and timely payment of any
such taxes.
9. Security Interest in Merchant's Accounts.
Merchants will grant BAMSI security interests in their deposit
accounts held at Bank. Bank acknowledges that all accounts of Merchants at Bank
will be subject to security interests in favor of BAMSI, except to the extent
explicitly excluded in BAMSI's Agreements with the Merchants. After BAMSI
notifies Bank that BAMSI wants to block or restrict access to the accounts of
any Merchant, Bank will cooperate with BAMSI to place funds in accounts subject
to BAMSI's security interest under the control of BAMSI. If a Merchant is also
in default on an obligation to Bank for which the Merchant's deposit account at
Bank serve as collateral, Bank will share the funds in the Merchant's deposit
accounts with BAMSI pro rata.
10. Compliance with Laws and Operating Regulations.
(a) BAMSI and Bank each agrees to comply with applicable laws
and regulations and the Association Rules in performing this Agreement and in
dealing with all of Bank's Merchants. Changes in the performance of the
obligations of Bank or BAMSI under this Agreement necessitated by a change in
applicable law or regulation, the Association Rules
Processing Agreement - BofA Texas
-5-
<PAGE>
or any interpretation thereof shall not constitute a breach of this Agreement,
but this shall not be construed to relieve any such party from liability
hereunder for any failure to comply with applicable laws, regulations,
Association Rules or the interpretations thereof. In the event that the
Association Rules are modified such that some or all of the activities
contemplated by this Agreement are prohibited, then all of the parties hereto
shall negotiate in good faith to make any amendments to this Agreement or to
enter into a new Agreement to provide for the continued future cooperative
relationship of BAMSI and Bank on terms as similar as possible to those
contemplated by this Agreement, provided that no party shall be obligated to
agree to any terms that are unreasonable or unduly burdensome to it.
(b) Bank shall also comply with the procedures and specific methods
of operation that BAMSI may issue from time to time.
(c) BAMSI and Bank each agrees to maintain books and records of all
transactions and investigations which such party performs hereunder and to make
such books and records available for inspection by the other party, and to the
extent required by applicable Card Association Rules to the Card Associations,
at reasonable hours and upon reasonable prior notice. Without in any way
limiting the foregoing, Bank agrees to retain for the periods required by the
Card Association Rules and to make available for inspection and copying by BAMSI
(and by the applicable Card Association, if required by applicable Card
Association Rules) records evidencing the on-site visits and credit
investigations of merchants performed on behalf of itself or BAMSI.
11. Indemnity; Limitation on Liability.
(a) BAMSI and Bank agree to indemnify each other against all claims,
actions, suits, losses, damages and liabilities (including independent
attorneys' fees, allocated costs for in-house legal services, attorneys' fees in
all bankruptcy proceedings) relating to any contention that: (i) the acts of
omissions of the indemnifying party constitute negligence or intentional
misconduct; or (ii) the indemnifying party has violated any term of this
Agreement or any provision of applicable Laws or Association Rules.
(b) BAMSI and Bank will not be liable for any consequential damages
(such as loss of business or profits) or for any failure to perform due to
causes beyond BAMSI's or Bank's control (such as earthquake or fires).
12. Compensation.
BAMSI will pay compensation to Bank in accordance with the attached
schedule. Such compensation to be fair and comparable to market rate.
13. Association Memberships.
Bank and BAMSI agree that Bank will at all times during the term of
this Agreement maintain its membership in each such Association in good standing
and fully
Processing Agreement - BofA Texas
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<PAGE>
comply with all requirements imposed under the applicable bylaws, articles of
incorporation and operating regulations of each such Association.
14. Independent Contractor.
(a) Bank is an independent contractor of BAMSI and not its employee.
(b) Bank will select its own employees, agents and representatives
who will be under the exclusive supervision and control of Bank and will not be
employees, agents or representatives of BAMSI. Bank is solely responsible for
determining the terms and conditions of employment for itself, its employees,
agents and representatives, including for example, hiring, termination, hours of
work, rates and payment of compensation and the payment, reporting and
withholding of all taxes and contributions. Bank will comply with all laws,
regulations and contracts regarding employment and taxes. Neither Bank nor its
employees, agents and representatives are eligible to participate in any of
BAMSI's employee benefit or similar programs and Bank will not represent that
they are eligible.
(c) Bank certifies either: (i) that it is exempt from the
requirements of Executive Order 1146 or similar federal, state or local laws or
regulations including the Equal Opportunity Clause of 41 C.F.R. 60-1.4a; or (ii)
that it is and will continue to be in compliance with them, in which case they
are considered to be part of this Agreement and included in each non-example
subcontract and purchase order permitted under this Agreement.
15. Cash Advances.
BAMSI will process cash advance transactions for Bank's customers and
credit Bank's account with BAMSI for funds received through interchange
settlement. Bank is responsible for all chargebacks, customer disputes and all
other liability concerning cash advance transactions except for losses caused by
BAMSI in processing cash advance transactions other than in accordance with
instructions conveyed by Bank that comply with Operating Regulations. Without
limiting other remedies, BAMSI may cease processing additional cash advance
transactions if Bank does not reimburse BAMSI immediately for any amounts of
BAMSI charged back to Bank.
16. Termination.
(a) Except as otherwise provided in this Agreement, this Agreement
may be terminated:
(i) With or without cause by either party upon 90 days' written
notice to the other party. Termination of this Agreement will not affect
the obligations concerning any transactions occurring or amounts due before
termination, or to Bank's obligations relating to security interests
granted to BAMSI by Merchants in accounts at Bank;
(ii) If at any time during the term hereunder the practices
hereunder are declared unlawful by federal or state authorities or by a
judicial body, or
Processing Agreement - BofA Texas
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<PAGE>
upon any deadline imposed by MasterCard or Visa for complying with any
Association Rule which precludes the continued performance by BAMSI or Bank
of their obligations hereunder, any party may terminate this Agreement
immediately.
(iii) If any party shall materially default in the performance of
its obligations hereunder and shall fail or refuse to remedy such default
within 30 days after written notice, the other party or parties may
terminate this Agreement on 7 days written notice.
(iv) At any time after the filing of any petition in bankruptcy or
for reorganization or debt consolidation under the federal bankruptcy laws
or receivership, or under any comparable law by or against a party hereto,
or upon a party making an assignment of its assets for the benefit of
creditors, or upon a party's application for the appointment of a receiver
or trustee of a party's assets, or upon an involuntary petition in
bankruptcy being filed against a party if such petition is not dismissed
within 60 days after it is filed, or upon the initiation by governmental
authorities of any receivership or assisted acquisition transaction, the
other party or parties may terminate this Agreement.
(v) Bank may terminate this Agreement upon expiration or
termination of the Corporate Opportunities Agreement, the Sponsorship
Agreement, the License Agreement or the Marketing Agreement.
(vi) Bank may terminate this Agreement in the event BAC and its
affiliates (other than BAMSI) beneficially own less than a majority of the
voting power of the outstanding common stock of BAMSI.
(b) Upon termination of this Agreement, Bank will return to BAMSI
or destroy the Merchant Services material provided by BAMSI as BAMSI may request
(including without limitation, unused Merchant Agreements, applications and
advertising materials). Bank will also immediately remove all decals and signs
containing any of the card service marks, or the name or any service mark or
trademark of BAMSI, except to the extent permissible under another continuing
relationship with BAMSI.
17. Miscellaneous.
(a) Bank will allow BAMSI and Card Associations to examine, at
reasonable times, all records of Bank relating to this Agreement or Transaction
Records of Merchants.
(b) Bank and BAMSI may each enter into other agreements to provide
Merchant Services to any business, whether or not covered by this Agreement,
even though that business may have previously entered into a similar agreement
with Bank or BAMSI. Any change in the financial institution with which a
business has an agreement for Merchant Services will be the decision of the
business. Other provisions of this Agreement to the contrary notwithstanding,
BAMSI covenants and agrees that it will not actively solicit Merchant
Processing Agreement - BofA Texas
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<PAGE>
Services agreements with businesses which have executed or which later execute
such agreements with Bank without prior consent of Bank.
(c) Bank and BAMSI agree to keep confidential any information about
the other party, Merchants and their respective policies, procedures or
practices obtained as a result of the relationship established pursuant to this
Agreement (including credit information on a Merchant); provided, however, that
nothing will (i) prevent BAMSI or Bank from carrying out their obligations under
this agreement, (ii) require BAMSI or Bank to violate any Laws or Operating
Regulations, (iii) restrict the ability of BAMSI to comply with any legal
process or governmental investigation, or (iv) prevent Bank of BAMSI from taking
any actions designed to prevent Merchant Services or Card fraud, or any
violation of this Agreement, a Merchant Agreement or any Operating Regulations.
(d) All notices under the Agreement will be hand-delivered or sent
by mail or facsimile transmission to the address indicated below, unless
notification in writing of a change of address is received by the other party in
advance. Unless otherwise indicated in the notice or this Agreement, a notice
will be effective upon receipt.
(e) This Agreement will be binding upon Bank and BAMSI and their
successors and assigns; provided, however, that this Agreement may not be
assigned by Bank without BAMSI's written consent. Any prohibited assignment is
void. Except as expressly provided in this Agreement, the parties hereto intend
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any person other than the parties hereto.
(f) This Agreement constitutes the entire agreement of the parties,
superseding all prior negotiations or prior oral or written understanding of the
parting relating to this subject matter. Any amendments to this Agreement must
be in writing and signed by Bank and BAMSI.
(g) This Agreement shall be governed by the laws of the State of
California without giving effect to the conflict of laws provisions thereof.
(h) Any notice or other communication hereunder must be given in
writing and either (i) delivered in person or by courier service, (ii)
transmitted by telecopy mechanism, provided that any notice so given is also
sent for delivery as provided in clause (i) or mailed by certified or registered
mail postage prepaid, as follows:
If to BAMSI: BA Merchant Services, Inc.
One South Van Ness Avenue
5th Floor
San Francisco, CA 94103
Attn: General Counsel #3710
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<PAGE>
If to Bank: Bank of America Texas, N.A.
555 California Street
6th Floor
San Francisco, CA 94104
Attn: Corporate Secretary #3018
With a copy to: Bank of America Texas, N.A.
1925 W. John W. Carpenter Freeway
Irving, TX 75063-3297
Attn: Legal Department #6399
18. Arbitration.
Any dispute, controversy or claim between the Bank and BAMSI arising
out of or relating to this Agreement or any agreements or instruments relating
hereto or delivered in connection herewith, will be resolved by arbitration
conducted in San Francisco, California under the auspices and according to the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement.
19. Definitions.
The following definitions apply to this Agreement:
(a) "Card Association" means the entity, such as Visa U.S.A., Inc. or
MasterCard International, responsible for the supervision of any card service.
(b) "Card" means a valid unexpired card bearing service marks owned
and licensed by a Card Association.
(c) "Chargeback" means a Transaction Record returned to a Merchant
through a Card Association for payment by the Merchant to BAMSI for credit to a
Cardholder's Account.
(d) "Credit Voucher" means a Transaction Record evidencing a refund
or price adjustment by a Merchant to be credited to a Cardholder's account.
(e) "Laws" means the Federal Consumer Credit Protection Act and
relevant regulations and any other applicable laws, judicial decisions or
regulations of the United States, state or local governments or agencies.
(f) "Merchant" means any person or entity that has a Merchant
Agreement with BAMSI to originate Transaction Records through acceptance of
Cards.
Processing Agreement - BofA Texas
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<PAGE>
(g) "Merchant Agreement" means any person or entity that has a
merchant Agreement with BAMSI to originate Transaction Records through
acceptance of Cards.
(h) "Operating Regulations" means (i) BAMSI's Consultant Merchant
Bank Manual; (ii) the Card Associations' Rules, Operating Regulations and
Operations Manuals and any other operations or procedures manuals published by
the Card Association from time to time; and (iii) any official notices issued by
the Card Associations, or by BAMSI concerning Merchant Services.
(i) "Transaction Record" means a record of a card transaction
commonly including "Sales Drafts," "Cash Advance Drafts" and "Credit Vouchers,"
whether in paper or electronic form.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BANK OF AMERICA TEXAS, N.A.
By: /s/ Christine R. Lundgren
-----------------------------
Christine R. Lundgren
Assistant Secretary
BA MERCHANT SERVICES, INC.
By: /s/ Sharif M. Bayyari
-----------------------------
Sharif M. Bayyari
President
Processing Agreement - BofA Texas
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<PAGE>
Exhibit 10.15(ii)
PROCESSING SERVICES AGREEMENT
THIS PROCESSING SERVICES AGREEMENT (the "Agreement") is made and entered
into this 3rd day of December, 1996 by and among BA MERCHANT SERVICES, INC.
--------------------------
("BAMSI") and BANK OF AMERICA, FSB ("Bank").
--------------------
RECITALS
A. Bank. Bank is an existing savings bank duly organized and in good
----
standing under the laws of the United States with its principal executive
offices located in San Francisco, California.
B. BAMSI. BAMSI is an existing corporation, formed under the laws of
-----
the State of Delaware, with its principal executive offices located in San
Francisco, California.
C. Corporate Approvals. Each of the parties to this Agreement has
-------------------
obtained all necessary corporate approvals for the execution and delivery of
this Agreement.
D. Arm's Length Relationship. The parties to this Agreement intend to
-------------------------
conduct their relationships hereunder on an arm's length basis.
E. Related Agreements. BAMSI has entered or will enter into (1) a Non-
------------------
Competition and Corporate Opportunities Allocation Agreement of even date
herewith between BankAmerica Corporation and BAMSI (the "Corporate Opportunities
Agreement"), (2) a Marketing Agreement of even date herewith among BAMSI, Bank
of America NT & SA ("BofA") and Bank of America NW, National Association
("BANW") (the "Marketing Agreement"), (3) a Sponsorship and Processing Services
Agreement of even date herewith with BofA (the "Sponsorship Agreement") (4)
Processing Services Agreements of even date herewith between BAMSI and other
subsidiary banking institutions of BAC (the "Affiliate Bank Processing
Agreements"), (5) a Trademark License Agreement of even date herewith between
BAC and BAMSI (the "License Agreement"), (6) a Registration Rights Agreement to
be entered into among BAMSI, BofA and BANW (the "Registration Rights
Agreement"), and (7) a Tax Allocation Agreement of even date herewith between
BAC and BAMSI (the "Tax Agreement"). The License Agreement, the Marketing
Agreement, the Sponsorship Agreement, the Affiliate Bank Processing Agreements,
the Administrative Services Agreement, the Registration Rights Agreement and the
Tax Agreement are herein collectively referred to as the "Related Agreements."
F. Merchant Processing Services. BAMSI is a member of Visa U.S.A.
----------------------------
Incorporated ("Visa") and MasterCard International Incorporated ("MC") and is
authorized to provide credit, debit and charge card services to merchants under
the Visa, MC, Diners Club, AMEX, Carte Blanche, JCB, Discover, Interlink and
other programs ("Merchant
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<PAGE>
Services"). Bank has authorized BAMSI to perform certain processing services
related to the acceptance of Cards by Merchants.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, Bank and BAMSI agree
as follows:
1. Bank Responsibilities.
Bank will promote the availability of Merchant Services available from
BAMSI. Bank will not use agent or subcontractors, other than its own employees,
for these activities, without BAMSI's written consent.
2. BAMSI Responsibilities.
Except as otherwise provided herein, during the term of this Agreement
BAMSI shall be the sole provider of, and shall satisfy all of Bank's
requirements for, the services necessary to authorize, process and settle
through the applicable Interchange systems, all card transactions effected by
Bank's Merchants and the services specified on Attachment A or other appropriate
addendum to this Agreement with respect to transactions effected by Bank's
Merchants involving any other credit cards covered hereby Such services include,
but are not limited to, the following with respect to Visa and MasterCard Card
transactions and such of the following as may hereafter be specified with
respect to other types of Card transactions:
(a) AUTHORIZATION OF ALL CARD TRANSACTIONS.
(b) DATA CAPTURE OF CARD TRANSACTIONS.
(c) COLLECTION OF FUNDS DUE FROM CARD TRANSACTIONS FROM CARD ISSUERS.
(d) SETTLEMENT OF INTERCHANGE EXPENSES.
(e) OTHER BANKCARD PROCESSING SERVICES.
(f) MERCHANT IMPLEMENTATION.
(g) PROCESSING OF CHARGEBACKS AND RETRIEVALS.
(h) CUSTOMER SERVICE.
(i) MANAGEMENT REPORTING.
(j) MARKETING/PRODUCT DEVELOPMENT.
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<PAGE>
3. Applications from Merchants.
BAMSI will provide Bank; with general requirements for businesses to
obtain Merchant Services from BAMSI. Bank will follow the application
documentation requirements provided by BAMSI and will not submit applications to
BAMSI for approval that do not conform to BAMSI's requirements. Bank will
ascertain from its available records whether there is significant information
about any prospective Merchant or its principals and will refrain from referring
any business to BAMSI if such information exists.
4. Approval of Merchants.
In its sole discretion, BAMSI will establish fees for Merchant
Services and decide whether it will approve applications and enter into a
Merchant Agreement with each business referred by Bank and whether it will
provide each Merchant with Merchant Services for each type of card.
5. Merchant Agreements.
This Agreement does not contemplate that Bank will enter into
agreements with Merchants for Merchant Services and Bank will not be liable to
BAMSI or Merchants for Merchant Services provided by BAMSI, except for Bank's
own failures to correctly process applications, Transaction Records, or deposits
and withdrawals to Merchants' accounts. BAMSI will (a) enter into a Merchant
Agreement with each Merchant meeting the requirements of BAMSI and of each Card
Association and (b) perform all its obligations under each Merchant Agreement.
6. Support Materials and Services.
BAMSI will provide Bank with Merchant Services advertising and
promotional materials. Bank will obtain BAMSI's written consent prior to
publication or display by Bank of any advertising or promotional material not
provided by BAMSI relating to Merchant Services. BAMSI will also provide Bank
with instructional material regarding sales of Merchant Services and the option
to attend periodic training workshops that BAMSI chooses to conduct.
7. Interchange of Paper.
Bank will not be responsible for handling Transaction Records of
Merchants who deliver Transaction Records directly to Bank for entry in the
interchange systems of the Card Associations. Bank will be responsible for
following BAMSI's instructions for Merchants delivering Transaction Records to
Bank for delivery to BAMSI.
8. Settlement of Paper; Discount Fees.
(a) Bank shall maintain a depositary account (the "Depository
Account") into which settlement amounts received by BAMSI from the applicable
Associations and due to Bank pursuant to this Agreement with respect to Sales
Drafts and Cash Advances processed and
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<PAGE>
settled by BAMSI for Bank (and Merchants) shall be deposited. Such Depository
Account may be maintained at Bank or at any other depository institution in the
United States specified by Bank. All settlement funds deposited to Bank's
Depository Account are subject to BAMSI's final audit and checking, and Bank
agrees that BAMSI may debit the Bank's Depository Account on a daily basis for
any and all fees and amounts owed BAMSI, and may debit or credit Bank's
Depository Account on a daily basis for any deficiencies and overages. Credits
to Bank's Depository Account are provisional until the expiration of the time
period for chargebacks under the Association Rules.
(b) As directed by each Merchant, BAMSI will deposit the amount due
the Merchant for Transaction Records to the Merchant's account at Bank. BAMSI's
Agreements with Merchants will authorize payment to BAMSI for Credit Vouchers
and Chargebacks from the Merchant's accounts at Bank and Bank will allow BAMSI
to withdraw funds, to the extent funds are available in the Merchants' accounts,
for all Credit Vouchers presented by Merchants to BAMSI and for all Transactions
Records BAMSI charges back to the Merchants.
(c) BAMSI will collect discount and other fees due BAMSI directly from
each Merchant, except to the extent the Merchant allows BAMSI to debit the
Merchant's account at Bank.
(d) Upon termination of this Agreement, Bank's Depository Account
shall remain open for a period of at least 280 days thereafter for the debiting
of any chargebacks which may remain valid under the Association Rules Sufficient
funds shall be held therein which are sufficient (together with the funds in any
escrow account) to cover such chargebacks. If a Bank Merchant has engaged in an
activity which may result in chargebacks for a period of time longer than 280
days, Bank's Depository Account shall remain open until the chargeback period
shall become expired.
(e) In addition to any other rights BAMSI has pursuant to this
Agreement, Bank authorizes BAMSI to debit Bank's Depository Account for, or
deduct from amounts otherwise due to Bank, amounts which BAMSI is entitled to
collect or hold in escrow pursuant to this Agreement.
(f) If Bank believes any adjustments are needed with respect to any
debits or credits effected by BAMSI with respect to Bank's Depository Account
for any amounts due to or due from Bank, Bank shall notify BAMSI in writing
within 45 days after such debit or credit is effected. If Bank fails to notify
BAMSI within such timeframe, BAMSI shall not be responsible for investigating or
effecting any required adjustments, absent BAMSI's gross negligence or their
employees' fraud or misconduct. If Bank notifies BAMSI after such time period
that it believes adjustments are needed, BAMSI may, in their discretion, assist
Bank in investigating whether any adjustments are appropriate and whether any
amounts are due to or from other parties, but BAMSI shall not have any liability
to effect any such adjustments absent BAMSI's gross negligence or their
employees' fraud or misconduct. Any voluntary efforts by BAMSI to assist Bank
in investigating such matters shall not create any obligation to continue such
investigation or assist with any investigation in response to any future notices
of possible adjustments that are not timely submitted.
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<PAGE>
(g) BAMSI shall debit Bank's Depository Account on a daily basis for
the fees set forth in Attachment A. BAMSI, at its option, may elect to debit
the Bank's Depository Account on a less frequent basis than daily for certain
fees. Any such election at any time by BAMSI to debit the Bank's Depository
Account for certain BAMSI fees on a less frequent basis than daily, will not be
taken or held as a waiver of BAMSI's rights to debit for fees on a daily basis
at any time thereafter.
(h) The fees set forth in Attachment A shall be subject to adjustments
to accommodate the imposition of new or amended fees by third parties including
additional unforeseen processing costs arising from any requirements imposed by
third parties beyond the normal processing contemplated hereunder or from the
imposition of new or amended regulations declared by the Associations or
governmental requirements, and will be immediately effective upon the effective
date of such adjustment.
(i) Bank shall be responsible for penalty charges, including excessive
chargeback handling fees levied by the Associations attributable to any of
Bank's Merchants, but excluding penalty charges, if any, attributable to any
error, omission or other fault or failure by BAMSI.
(j) If current exception processing volumes including but not limited
to, Chargebacks and retrievals, or if current merchant call volumes increase
disproportionally to increases in Bank portfolio dimensions, BAMSI reserves the
right to request corrective action from the bank to correct the situation or
charge additional fees to compensate for increased volume.
(k) From time to time, Bank will provide to BAMSI evidence of its
proper and timely payment of any applicable taxes on services or equipment
provided by and under this Agreement (including, if applicable, evidence of
resale certificates and evidence of the jurisdictions in which it pays any such
taxes). Bank assumes all liability for the proper and timely payment of any
such taxes.
9. Security Interest in Merchant's Accounts.
Merchants will grant BAMSI security interests in their deposit
accounts held at Bank. Bank acknowledges that all accounts of Merchants at Bank
will be subject to security interests in favor of BAMSI, except to the extent
explicitly excluded in BAMSI's Agreements with the Merchants. After BAMSI
notifies Bank that BAMSI wants to block or restrict access to the accounts of
any Merchant, Bank will cooperate with BAMSI to place funds in accounts subject
to BAMSI's security interest under the control of BAMSI. If a Merchant is also
in default on an obligation to Bank for which the Merchant's deposit account at
Bank serve as collateral, Bank will share the funds in the Merchant's deposit
accounts with BAMSI pro rata.
10. Compliance with Laws and Operating Regulations.
(a) BAMSI and Bank each agrees to comply with applicable laws and
regulations and the Association Rules in performing this Agreement and in
dealing with all of Bank's Merchants. Changes in the performance of the
obligations of Bank or BAMSI under this Agreement necessitated by a change in
applicable law or regulation, the Association Rules or
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<PAGE>
any interpretation thereof shall not constitute a breach of this Agreement, but
this shall not be construed to relieve any such party from liability hereunder
for any failure to comply with applicable laws, regulations, Association Rules
or the interpretations thereof. In the event that the Association Rules are
modified such that some or all of the activities contemplated by this Agreement
are prohibited, then all of the parties hereto shall negotiate in good faith to
make any amendments to this Agreement or to enter into a new Agreement to
provide for the continued future cooperative relationship of BAMSI and Bank on
terms as similar as possible to those contemplated by this Agreement, provided
that no party shall be obligated to agree to any terms that are unreasonable or
unduly burdensome to it.
(b) Bank shall also comply with the procedures and specific methods of
operation that BAMSI may issue from time to time.
(c) BAMSI and Bank each agrees to maintain books and records of all
transactions and investigations which such party performs hereunder and to make
such books and records available for inspection by the other party, and to the
extent required by applicable Card Association Rules to the Card Associations,
at reasonable hours and upon reasonable prior notice. Without in any way
limiting the foregoing, Bank agrees to retain for the periods required by the
Card Association Rules and to make available for inspection and copying by BAMSI
(and by the applicable Card Association, if required by applicable Card
Association Rules) records evidencing the on-site visits and credit
investigations of merchants performed on behalf of itself or BAMSI.
11. Indemnity; Limitation on Liability.
(a) BAMSI and Bank agree to indemnify each other against all claims,
actions, suits, losses, damages and liabilities (including independent
attorneys' fees, allocated costs for in-house legal services, attorneys' fees in
all bankruptcy proceedings) relating to any contention that: (i) the acts of
omissions of the indemnifying party constitute negligence or intentional
misconduct; or (ii) the indemnifying party has violated any term of this
Agreement or any provision of applicable Laws or Association Rules.
(b) BAMSI and Bank will not be liable for any consequential damages
(such as loss of business or profits) or for any failure to perform due to
causes beyond BAMSI's or Bank's control (such as earthquake or fires).
12. Compensation.
BAMSI will pay compensation to Bank in accordance with the attached
schedule. Such compensation to be fair and comparable to market rate.
13. Association Memberships.
Bank and BAMSI agree that Bank will at all times during the term of
this Agreement maintain its membership in each such Association in good standing
and fully
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<PAGE>
comply with all requirements imposed under the applicable bylaws, articles of
incorporation and operating regulations of each such Association.
14. Independent Contractor.
(a) Bank is an independent contractor of BAMSI and not its employee.
(b) Bank will select its own employees, agents and representatives who
will be under the exclusive supervision and control of Bank and will not be
employees, agents or representatives of BAMSI. Bank is solely responsible for
determining the terms and conditions of employment for itself, its employees,
agents and representatives, including for example, hiring, termination, hours of
work, rates and payment of compensation and the payment, reporting and
withholding of all taxes and contributions. Bank will comply with all laws,
regulations and contracts regarding employment and taxes. Neither Bank nor its
employees, agents and representatives are eligible to participate in any of
BAMSI's employee benefit or similar programs and Bank will not represent that
they are eligible.
(c) Bank certifies either: (i) that it is exempt from the requirements of
Executive Order 1146 or similar federal, state or local laws or regulations
including the Equal Opportunity Clause of 41 C.F.R. 60-1.4a; or (ii) that it is
and will continue to be in compliance with them, in which case they are
considered to be part of this Agreement and included in each non-example
subcontract and purchase order permitted under this Agreement.
15. Cash Advances.
BAMSI will process cash advance transactions for Bank's customers and
credit Bank's account with BAMSI for funds received through interchange
settlement. Bank is responsible for all chargebacks, customer disputes and all
other liability concerning cash advance transactions except for losses caused by
BAMSI in processing cash advance transactions other than in accordance with
instructions conveyed by Bank that comply with Operating Regulations. Without
limiting other remedies, BAMSI may cease processing additional cash advance
transactions if Bank does not reimburse BAMSI immediately for any amounts of
BAMSI charged back to Bank.
16. Termination.
(a) Except as otherwise provided in this Agreement, this Agreement may be
terminated:
(i) With or without cause by either party upon 90 days' written
notice to the other party. Termination of this Agreement will not affect
the obligations concerning any transactions occurring or amounts due before
termination, or to Bank's obligations relating to security interests
granted to BAMSI by Merchants in accounts at Bank;
(ii) If at any time during the term hereunder the practices
hereunder are declared unlawful by federal or state authorities or by a
judicial body, or
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<PAGE>
upon any deadline imposed by MasterCard or Visa for complying with any
Association Rule which precludes the continued performance by BAMSI or Bank
of their obligations hereunder, any party may terminate this Agreement
immediately.
(iii) If any party shall materially default in the performance of its
obligations hereunder and shall fail or refuse to remedy such default
within 30 days after written notice, the other party or parties may
terminate this Agreement on 7 days written notice.
(iv) At any time after the filing of any petition in bankruptcy or
for reorganization or debt consolidation under the federal bankruptcy laws
or receivership, or under any comparable law by or against a party hereto,
or upon a party making an assignment of its assets for the benefit of
creditors, or upon a party's application for the appointment of a receiver
or trustee of a party's assets, or upon an involuntary petition in
bankruptcy being filed against a party if such petition is not dismissed
within 60 days after it is filed, or upon the initiation by governmental
authorities of any receivership or assisted acquisition transaction, the
other party or parties may terminate this Agreement.
(v) Bank may terminate this Agreement upon expiration or
termination of the Corporate Opportunities Agreement, the Sponsorship
Agreement, the License Agreement or the Marketing Agreement.
(vi) Bank may terminate this Agreement in the event BAC and its
affiliates (other than BAMSI) beneficially own less than a majority of the
voting power of the outstanding common stock of BAMSI.
(b) Upon termination of this Agreement, Bank will return to BAMSI or
destroy the Merchant Services material provided by BAMSI as BAMSI may request
(including without limitation, unused Merchant Agreements, applications and
advertising materials). Bank will also immediately remove all decals and signs
containing any of the card service marks, or the name or any service mark or
trademark of BAMSI, except to the extent permissible under another continuing
relationship with BAMSI.
17. Miscellaneous.
(a) Bank will allow BAMSI and Card Associations to examine, at reasonable
times, all records of Bank relating to this Agreement or Transaction Records of
Merchants.
(b) Bank and BAMSI may each enter into other agreements to provide
Merchant Services to any business, whether or not covered by this Agreement,
even though that business may have previously entered into a similar agreement
with Bank or BAMSI. Any change in the financial institution with which a
business has an agreement for Merchant Services will be the decision of the
business. Other provisions of this Agreement to the contrary notwithstanding,
BAMSI covenants and agrees that it will not actively solicit Merchant Services
Processing Agreement-BofA FSB
-8-
<PAGE>
agreements with businesses which have executed or which later execute such
agreements with Bank without prior consent of Bank.
(c) Bank and BAMSI agree to keep confidential any information about the
other party, Merchants and their respective policies, procedures or practices
obtained as a result of the relationship established pursuant to this Agreement
(including credit information on a Merchant); provided, however, that nothing
will (i) prevent BAMSI or Bank from carrying out their obligations under this
agreement, (ii) require BAMSI or Bank to violate any Laws or Operating
Regulations, (iii) restrict the ability of BAMSI to comply with any legal
process or governmental investigation, or (iv) prevent Bank of BAMSI from taking
any actions designed to prevent Merchant Services or Card fraud, or any
violation of this Agreement, a Merchant Agreement or any Operating Regulations.
(d) All notices under the Agreement will be hand-delivered or sent by
mail or facsimile transmission to the address indicated below, unless
notification in writing of a change of address is received by the other party in
advance. Unless otherwise indicated in the notice or this Agreement, a notice
will be effective upon receipt.
(e) This Agreement will be binding upon Bank and BAMSI and their
successors and assigns; provided, however, that this Agreement may not be
assigned by Bank without BAMSI's written consent. Any prohibited assignment is
void. Except as expressly provided in this Agreement, the parties hereto intend
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any person other than the parties hereto.
(f) This Agreement constitutes the entire agreement of the parties,
superseding all prior negotiations or prior oral or written understanding of the
parting relating to this subject matter. Any amendments to this Agreement must
be in writing and signed by Bank and BAMSI.
(g) This Agreement shall be governed by the laws of the State of
California without giving effect to the conflict of laws provisions thereof.
(h) Any notice or other communication hereunder must be given in writing
and either (i) delivered in person or by courier service, (ii) transmitted by
telecopy mechanism, provided that any notice so given is also sent for delivery
as provided in clause (i) or mailed by certified or registered mail postage
prepaid, as follows:
If to BAMSI: BA Merchant Services, Inc.
One South Van Ness Avenue,
5th Floor
San Francisco, CA 94103
Attn: General Counsel #3710
Processing Agreement-BofA FSB
-9-
<PAGE>
If to Bank: Bank of America, FSB
555 California Street
6th Floor
San Francisco, CA 94104
Attn: Corporate Secretary #3018
With a copy to: BankAmerica Corporation
555 California Street
8th Floor
San Francisco, CA 94104
Attn: General Counsel #3017
18. Arbitration.
Any dispute, controversy or claim between the Bank and BAMSI arising
out of or relating to this Agreement or any agreements or instruments relating
hereto or delivered in connection herewith, will be resolved by arbitration
conducted in San Francisco, California under the auspices and according to the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement.
19. Definitions.
The following definitions apply to this Agreement:
(a) "Card Association" means the entity, such as Visa U.S.A., Inc. or
MasterCard International, responsible for the supervision of any card service.
(b) "Card" means a valid unexpired card bearing service marks owned and
licensed by a Card Association.
(c) "Chargeback" means a Transaction Record returned to a Merchant through
a Card Association for payment by the Merchant to BAMSI for credit to a
Cardholder's Account.
(d) "Credit Voucher" means a Transaction Record evidencing a refund or
price adjustment by a Merchant to be credited to a Cardholder's account.
(e) "Laws" means the Federal Consumer Credit Protection Act and relevant
regulations and any other applicable laws, judicial decisions or regulations of
the United States, state or local governments or agencies.
(f) "Merchant" means any person or entity that has a Merchant Agreement
with BAMSI to originate Transaction Records through acceptance of Cards.
Processing Agreement-BofA FSB
-10-
<PAGE>
(g) "Merchant Agreement" means any person or entity that has a merchant
Agreement with BAMSI to originate Transaction Records through acceptance of
Cards.
(h) "Operating Regulations" means (i) BAMSI's Consultant Merchant Bank
Manual; (ii) the Card Associations' Rules, Operating Regulations and Operations
Manuals and any other operations or procedures manuals published by the Card
Association from time to time; and (iii) any official notices issued by the Card
Associations, or by BAMSI concerning Merchant Services.
(i) "Transaction Record" means a record of a card transaction commonly
including "Sales Drafts," "Cash Advance Drafts" and "Credit Vouchers," whether
in paper or electronic form.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BANK OF AMERICA, FSB
By: /s/ Christine R. Lundgren
---------------------------
Christine R. Lundgren
Assistant Vice President and
Assistant Secretary
BA MERCHANT SERVICES, INC.
By: /s/ Sharif M. Bayyari
---------------------------
Sharif M. Bayyari
President
Processing Agreement-BofA FSB
-11-
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
None.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Combined Financial and Other Data" and to the use of our report
dated October 11, 1996, in Amendment No. 3 to the Registration Statement (Form
S-1, No. 333-13985) and related Prospectus of BA Merchant Services, Inc. for
the registration of shares of its Class A Common Stock.
/s/ Ernst & Young LLP
San Francisco, California
December 9, 1996
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
I hereby appoint SHARIF M. BAYYARI, JAMES H. WILLIAMS, CHERYL SOROKIN,
SUSAN LAU, BENJAMIN M. VANDEGRIFT and PATRICIA YOUNG, and each of them, my
attorneys-in-fact, each with full power of substitution, to sign for me as a
director of BA Merchant Services, Inc. and file with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 all registration statements
(including Registration No. 333-13985 and any Rule 462(b) registration
statement) and all amendments (including post-effective amendments) and
supplements thereto covering the public offering of Class A Common Stock of BA
Merchant Services, Inc., and all other instruments and documents filed as a part
thereof or in connection therewith.
This power of attorney, unless earlier revoked or terminated, will
terminate on June 30, 1997.
Dated: November 25, 1996.
/s/ WILLIAM FISHER
----------------------------------
<PAGE>
POWER OF ATTORNEY
I hereby appoint SHARIF M. BAYYARI, JAMES H. WILLIAMS, CHERYL SOROKIN,
SUSAN LAU, BENJAMIN M. VANDEGRIFT and PATRICIA YOUNG, and each of them, my
attorneys-in-fact, each with full power of substitution, to sign for me as a
director of BA Merchant Services, Inc. and file with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 all registration statements
(including Registration No. 333-13985 and any Rule 462(b) registration
statement) and all amendments (including post-effective amendments) and
supplements thereto covering the public offering of Class A Common Stock of BA
Merchant Services, Inc., and all other instruments and documents filed as a part
thereof or in connection therewith.
This power of attorney, unless earlier revoked or terminated, will
terminate on June 30, 1997.
Dated: November 25, 1996.
/s/ DONALD R. DIXON
----------------------------------
<PAGE>
POWER OF ATTORNEY
I hereby appoint SHARIF M. BAYYARI, JAMES H. WILLIAMS, CHERYL SOROKIN,
SUSAN LAU, BENJAMIN M. VANDEGRIFT and PATRICIA YOUNG, and each of them, my
attorneys-in-fact, each with full power of substitution, to sign for me as a
director of BA Merchant Services, Inc. and file with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 all registration statements
(including Registration No. 333-13985 and any Rule 462(b) registration
statement) and all amendments (including post-effective amendments) and
supplements thereto covering the public offering of Class A Common Stock of BA
Merchant Services, Inc., and all other instruments and documents filed as a part
thereof or in connection therewith.
This power of attorney, unless earlier revoked or terminated, will
terminate on June 30, 1997.
Dated: November 25, 1996.
/s/ JAMES G. JONES
---------------------------------
<PAGE>
POWER OF ATTORNEY
I hereby appoint SHARIF M. BAYYARI, JAMES H. WILLIAMS, CHERYL SOROKIN,
SUSAN LAU, BENJAMIN M. VANDEGRIFT and PATRICIA YOUNG, and each of them, my
attorneys-in-fact, each with full power of substitution, to sign for me as a
director of BA Merchant Services, Inc. and file with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 all registration statements
(including Registration No. 333-13985 and any Rule 462(b) registration
statement) and all amendments (including post-effective amendments) and
supplements thereto covering the public offering of Class A Common Stock of BA
Merchant Services, Inc., and all other instruments and documents filed as a part
thereof or in connection therewith.
This power of attorney, unless earlier revoked or terminated, will
terminate on June 30, 1997.
Dated: November 25, 1996.
/s/ BARBARA J. DESOER
---------------------------------
