1
EXECUTION
COPY
ASSET PURCHASE AND CONTRIBUTION AGREEMENT
by and among
MASTERCARD INTERNATIONAL INCORPORATED
("Seller"),
NATIONAL DATA CORPORATION
("Parent"),
and
POS ACQUISITION COMPANY LLC
("Newco")
DATED AS OF FEBRUARY 22, 1996
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TABLE OF CONTENTS
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ARTICLE I CONTRIBUTION AND SALE OF ASSETS .................................. 2
1.1 Contribution and Sale of Assets by Seller ........................ 2
1.2 Excluded Assets .................................................. 5
1.3 Contribution of Assets by Parent ................................. 6
1.4 Excluded Assets .................................................. 9
ARTICLE 2 ASSUMPTION OF LIABILITIES AND MISCELLANEOUS ...................... 10
2.1 Assumption of Seller's Liabilities ............................... 10
2.2 Excluded Liabilities of Seller ................................... 11
2.3 Assumption of Parent's Liabilities ............................... 12
2.4 Excluded Liabilities of Parent ................................... 12
2.5 Licenses, Subleases and Other Agreements ......................... 14
ARTICLE 3 PAYMENT OF PURCHASE PRICE ........................................ 14
3.1 The Purchase Price ............................................... 14
3.2 Allocation of Purchase Price ..................................... 14
ARTICLE 4 MEMBERSHIP INTERESTS ............................................. 15
4.1 Issuance of Membership Interests ................................. 15
4.2 Operating Agreement .............................................. 15
4.3 Payment of Transfer Expenses ..................................... 15
ARTICLE 5 PROCEDURE FOR CLOSING ............................................ 15
5.1 Time and Place of Closing ........................................ 15
5.2 Certain Consents ................................................. 16
5.3 Further Assurances ............................................... 17
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER ......................... 18
6.1 Organization and Qualification ................................... 18
6.2 Authority ........................................................ 18
6.3 Subsidiaries; Joint Ventures ..................................... 19
6.4 Financial Statements ............................................. 19
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6.5 Personal Property ................................................ 20
6.6 Real Property; Leased Real Property .............................. 20
6.7 Contracts ........................................................ 21
6.8 Intellectual Property ............................................ 22
6.9 Insurance ........................................................ 23
6.10 Environmental Matters and OSHA ................................... 23
6.11 Litigation ....................................................... 25
6.12 Absence of Changes ............................................... 25
6.13 Brokers and Finders .............................................. 27
6.14 Labor Matters .................................................... 27
6.15 Governmental Approval and Consents ............................... 28
6.16 Taxes ............................................................ 28
6.17 Employee Benefit Plans ........................................... 29
6.18 Compliance with Laws ............................................. 29
6.19 Governmental Approval and Consents ............................... 29
6.20 Adequacy of Acquired Assets ...................................... 30
6.21 Title to Assets .................................................. 30
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PARENT ......................... 30
7.1 Organization and Qualification ................................... 30
7.2 Authority ........................................................ 30
7.3 Subsidiaries; Joint Ventures ..................................... 31
7.4 Financial Statements ............................................. 31
7.5 Personal Property ................................................ 32
7.6 Real Property; Leased Real Property .............................. 32
7.7 Contracts ........................................................ 33
7.8 Intellectual Property ............................................ 34
7.9 Insurance ........................................................ 35
7.10 Environmental Matters and OSHA ................................... 35
7.11 Litigation ....................................................... 37
7.12 Absence of Changes ............................................... 37
7.13 Brokers and Finders .............................................. 39
7.14 Labor Matters .................................................... 39
7.15 Governmental Approval and Consents ............................... 39
7.16 Taxes ............................................................ 39
7.17 Employee Benefit Plans ........................................... 41
7.18 Compliance with Laws ............................................. 41
7.19 Governmental Approval and Consents ............................... 41
7.20 Adequacy of Acquired Assets ...................................... 41
7.21 Title to Assets .................................................. 42
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ARTICLE 8 COVENANTS OF SELLER .............................................. 42
8.1 Conduct of Business Prior to Closing ............................. 42
8.2 Notification of Changes .......................................... 43
8.3 Other Transactions ............................................... 43
8.4 Additional Reports ............................................... 43
8.5 Conditions Precedent ............................................. 44
8.6 Preparation of Financial Statements .............................. 44
ARTICLE 9 COVENANTS OF PARENT .............................................. 44
9.1 Conduct of Business Prior to Closing ............................. 44
9.2 Notification of Changes .......................................... 45
9.3 Additional Reports ............................................... 45
9.4 Conditions Precedent ............................................. 45
ARTICLE 10 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND NEWCO .......... 45
10.1 Certificate Regarding Schedules and Representations and
Warranties...................................................... 45
10.2 Compliance by Seller ............................................. 46
10.3 No Injunction, Etc. .............................................. 46
10.4 Consents ......................................................... 46
10.5 Incumbency ....................................................... 47
10.6 Certified Resolutions ............................................ 47
10.7 Release of Certain Liens ......................................... 47
10.8 No Adverse Change ................................................ 47
10.9 Instruments of Transfer .......................................... 47
10.10 Opinion of Counsel for Seller .................................... 47
10.11 Leased Real Property Certificates ................................ 48
10.12 Condition of Acquired Assets ..................................... 48
10.13 Hart-Scott-Rodino ................................................ 48
10.14 Subleases ........................................................ 48
10.15 Seller Transition Services Agreement ............................. 48
10.16 Operating Agreement .............................................. 48
10.17 Assumption of Contracts and Leases ............................... 48
ARTICLE 11 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER .................... 48
11.1 Certificate Regarding Schedules and Representations and
Warranties...................................................... 49
11.2 Compliance by Parent and Newco ................................... 49
11.3 Certified Resolutions ............................................ 49
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11.4 Consents ......................................................... 50
11.5 No Injunction; Etc. .............................................. 50
11.6 Incumbency ....................................................... 50
11.7 Opinion of Parent's Counsel ...................................... 50
11.8 Release of Certain Liens ......................................... 50
11.9 Instruments of Transfer .......................................... 50
11.10 Leased Real Property Certificates ................................ 51
11.12 Condition of Acquired Assets ..................................... 51
11.13 No Adverse Change ................................................ 51
11.14 Hart-Scott-Rodino ................................................ 51
11.15 Transition Services Agreement and Registration Rights Agreement... 51
11.16 Operating Agreement and Parent Services Agreement ................ 51
11.17 Offers of Employment ............................................. 51
11.18 Assumption of Contracts and Leases ............................... 52
ARTICLE 12 MUTUAL COVENANTS ................................................. 52
12.1 Governmental Filings ............................................. 52
12.2 Further Mutual Covenants ......................................... 52
12.3 Prorations ....................................................... 52
12.4 Access and Information ........................................... 54
12.5 Confidentiality .................................................. 54
ARTICLE 13 POST CLOSING MATTERS ............................................. 55
13.1 Employment of Employees .......................................... 55
13.2 Seller's Benefit Plans ........................................... 56
13.3 Vacation Pay ..................................................... 57
13.4 Newco's Benefit Plans ............................................ 57
13.5 Non-Solicitation ................................................. 59
13.6 Discharge of Business Obligations ................................ 59
13.7 Maintenance of Books and Records ................................. 59
13.8 Payments Received ................................................ 60
13.9 Covenants Not to Compete; Confidentiality ........................ 61
13.10 Cooperation ...................................................... 63
13.11 Delivery of Documents ............................................ 63
13.12 Cooperation and Marketing ........................................ 64
ARTICLE 14 TERMINATION ...................................................... 65
14.1 Termination ...................................................... 65
14.2 Effect of Termination ............................................ 66
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ARTICLE 15 INDEMNIFICATION .................................................. 66
15.1 Definitions ...................................................... 66
15.2 Agreement of Sellers to Indemnity ................................ 66
15.3 Agreement of Parent to Indemnify ................................. 67
15.4 Procedures for Indemnification ................................... 68
15.5 Third Party Claims ............................................... 68
15.6 Remedies ......................................................... 71
15.7 Survival ......................................................... 71
15.8 Time Limitations ................................................. 71
15.9 Amount Limitations ............................................... 71
15.10 Subrogation ...................................................... 72
15.11 Tax Neutralization ............................................... 72
ARTICLE 16 GENERAL PROVISIONS ............................................... 72
16.1 Fees and Expenses ................................................ 72
16.2 Notices .......................................................... 73
16.3 Assignment; Binding Effect ....................................... 74
16.4 No Benefit to Others ............................................. 75
16.5 Headings, Gender, and 'Person' ................................... 75
16.6 Counterparts ..................................................... 75
16.7 Integration of Agreement ......................................... 75
16.8 Time of Essence .................................................. 75
16.9 Governing Law .................................................... 75
16.10 Partial Invalidity ............................................... 75
16.11 Investigation .................................................... 75
16.12 Public Announcements ............................................. 76
16.13 Arbitration ...................................................... 76
16.14 Waiver ........................................................... 77
16.15 Partnership ...................................................... 77
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TABLE OF EXHIBITS
Exhibit A Form of Newco Sublease
Exhibit B Form of Seller Transition Services Agreement
Exhibit C Form of Parent Services Agreement
Exhibit D Form of Operating Agreement
Exhibit E Form of Opinion of Counsel to Seller
Exhibit F Form of Assignment and Assumption Agreement
Exhibit G Form of Opinion of Counsel to Parent
Exhibit H Form of Registration Rights Agreement
Exhibit I Form of Newco Assignment and Assumption Agreement
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CROSS REFERENCES TO DEFINED TERMS
TERM SECTION IN WHICH DEFINED
AAA Section 16.13(a)
Acquired Asset(s) Section 1.1
Acquisition Documents Section 6.2
Acquisition Proposal Section 8.4
Affiliate Section 6.8(a)
Agreement Preamble
Ambassador Disclosure Memorandum Section 1.1
Assignment and Assumption Agreement Section 10.19
Assumed Liabilities Section 2.1
Beneficiary Section 12.3(d)
benefit liabilities Section 6.19(c) (iv)
Books and Records Section 1.1(b)(vi)
Business of Newco Section 13.9(a)
CERCLA Section 6.11(a)
Closing Section 5.1(a)
Closing Date Section 5.1(a)
Competitive Activity Section 13.9(a)
Consent Section 5.2
Contract(s) Section 1.1(b)(iii)
controlled group Section 6.19(c)(ii)
Credit Cards Preamble
Deferred Acquired Assets Section 5.2
Effective Time Section 5.1(a)
eligible retirement plan Section 13.2(b)
Employees Section 6.16
employee benefit plan Section 2.2(a)
Environmental Permits Section 6.11(a) (v)
Equipment Charges Section 12.3(b)(iii)
ERISA Section 2.2(a)
ERISA Pension Plan Section 6.19(c)
Excluded Assets Section 1.2
Excluded Contracts Section 1.1(b)(iii)
Excluded Liabilities Section 2.2
GAAP Section 6.4
Hazardous Materials Section 6.11(a)
Hazardous Substances Section 6.11(a)
HSR Act Section 10.14
Indemnification Claim Section 15.1(a)
Indemnitees Section 15.1(b)
Indemnitor Section 15.1(c)
known to Parent Section 7.25
known to Seller Section 6.25
Labor Claims Section 6.16
License Agreement Section 1.2(i)
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Losses Section 15.1(d)
Merchants Preamble
multiemployer plan Section 6.19(d)(iii)
Newco Preamble
Newco Assignment and Assumption Agreement Section 11.15
Newco Assumed Liabilities Section 2.3
Newco Confidential Information Section 13.9(b)
Not Actively Employed Section 13.1(a)
Notice to Contest Section 15.5(c)
Notice of Settlement Section 15.5(c)
obligation to contribute Section 6.19(d)(ii)
Operating Agreement Section 4.3
MAPP Preamble
Parent Preamble
Parent Benefit Plans Section 7.19(a)
Parent Contributed Assets Section 1.3
Parent Excluded Liabilities Section 2.4
Parent Financial Statements Section 7.4
Parent Inventory Section 1.3(e)
Parent's Accounts Receivable Section 1.3(g)
Parent's 401(k) Plan Section 13.2(b)
Parent's Contracts Section 1.3(d)
Parent's Direct Merchant Network Business Preamble
Parent's Employees Section 7.19(a)
Parent's Equipment Section 1.3(c)
Parent's Indirect Merchant Network Business Preamble
Parent's Intellectual Property Section 1.3(f)
Parent's Leased Real Property Section 1.3(b)
Parent's Real Property Leases Section 1.3(b)
Parent Services Agreement Section 2.5(f)
Parent's Trustee Section 13.4(b)
Payor Section 12.3(d)
Payee Section 12.3(d)
Permitted Encumbrances Section 6.13
person Section 16.5
Personal Property Taxes Section 12.3(b)(v)
present value Section 6.19(c)(iii)
MasterCard Section 1.2(i)
MasterCard Automated Point-of-Sale Program Section 1.2(i)
MasterCard Disclosure Memorandum Section 1.1
Proration Items Section 12.3(a)
Purchased Assets Section 1.1(a)
Purchase Price Section 3.1
qualified beneficiaries Section 6.19(b)
qualifying event Section 6.19(b)
qualified plan Section 15.2(f)
RCRA Section 6.11(a)
Real Property Taxes Section 12.3(b)(iv)
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Recipient Section 12.3(d)
Rental Charges Section 12.3(b)(ii)
Rules Section 16.13(a)
Seller Preamble
Seller Benefit Plans Section 6.19(a)
Seller Confidential Information Section 13.9(c)
Seller Contributed Assets Section 1.1(a)
Seller Disclosure Memorandum Section 1.1
Seller Financial Statements Section 6.4
Seller's Accounts Receivable Section 1.1(b)(ix)
Seller's Equipment Section 1.1(b)(ii)
Seller's Indirect Merchant Network Business Preamble
Seller's Intellectual Property Section 1.1(b)(v)
Seller Inventory Section 1.1(b)(iv)
Seller's Leased Real Property Section 1.1(b)(i)
Seller's Network Preamble
Seller's Permits Section 1.1(b)(vii)
Seller's Real Property Leases Section 1.1(b)(i)
Seller's Retirement Plan Section 13.2(b)
Seller Transition Services Agreement Section 2.5(d)
Seller's Trustee Section 13.4(b)
single employee Section 2.2(a)
Sublease Section 2.5(b)
Taxes Section 2.2(i)
Territory Section 13.9(a)
Third Party Claim Section 15.1(e)
Threshold Amount Section 15.9
to the knowledge of Parent Section 7.25
to the knowledge of Seller Section 6.25
Toxic Substances Section 6.11(a)
Transfer Section 5.2
Transferred Employees Section 13.1(a)
Utility Charges Section 12.3(b)(i)
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ASSET PURCHASE AND CONTRIBUTION AGREEMENT
THIS ASSET PURCHASE AND CONTRIBUTION AGREEMENT (the "Agreement") is made
and entered into as of this 22nd day of February, 1996, among NATIONAL DATA
CORPORATION, a Delaware corporation ("Parent"), MASTERCARD INTERNATIONAL
INCORPORATED, a Delaware corporation ("Seller"), and POS ACQUISITION COMPANY
LLC ("Newco"), a Georgia limited liability company;
W I T N E S S E T H:
WHEREAS, Seller is engaged, through the MasterCard Automated Point-of-Sale
Program ("MAPP"), in the business of providing transaction processing services
involving the authorization (including voice authorization) and capture of
transactions involving credit, debit and similar cards ("Credit Cards") through
utilization of an electronic telecommunications and computer network ("Seller's
Network") indirectly to persons or entities that honor credit, debit and
similar cards ("Merchants") through banks and other associations and
institutions that participate in the handling of transactions involving Credit
Cards throughout the United States ("Seller's Indirect Merchant Network
Business");
WHEREAS, Parent is currently engaged in the business of providing
electronic transaction processing services involving the authorization
(including voice authorization), capture, settlement and clearing of
transactions involving Credit Cards, check verification, cash management,
electronic data interchange, electronic tax payment and filing, and other
ancillary services directly ("Parent's Direct Merchant Network Business") and
indirectly (including through Modular Data, Inc., a wholly owned subsidiary of
Parent ("Subsidiary")) ("Parent's Indirect Merchant Network Business") to
Merchants through utilization of an electronic telecommunications and computer
network;
WHEREAS, in anticipation of entering into this Agreement Parent and Seller
have formed Newco and intend to contribute certain of their assets to Newco,
and have Newco assume certain of their liabilities, related to Parent's
Indirect Merchant Network Business and Seller's Indirect Merchant Network
Business, on the terms and conditions set forth in this Agreement;
WHEREAS, certain assets utilized in providing support services to Parent's
Direct and Indirect Merchant Network Business will be included in the assets to
be contributed by Parent;
WHEREAS, the parties contemplate that Newco will purchase certain assets
of Seller's Indirect Merchant Network Business on the terms and conditions set
forth hereunder;
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WHEREAS, it is contemplated that Parent will receive a ninety-two and
one-half percent (92.5%) membership interest in Newco and Seller will receive a
seven and one-half percent (7.5%) membership interest in Newco;
WHEREAS, the parties hereto desire to provide for the securing of loaned
funds by Newco as set forth herein;
WHEREAS, the parties hereto desire to make arrangement for the provision
of transition services to Newco by Seller;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
CONTRIBUTION AND SALE OF ASSETS
1.1 Contribution and Sale of Assets by Seller.
(a) At the Closing (as hereinafter defined), on and subject to the terms
and conditions of this Agreement, Seller shall sell, assign, transfer, convey,
and deliver to Newco, and Newco shall purchase, acquire, and accept from
Seller, all of the right, title, and interest of Seller in and to the Acquired
Assets (as hereinafter defined) other than the Excluded Assets (as hereinafter
defined). The portion of the Acquired Assets described in SECTION 1.1(A) OF
THE SELLER DISCLOSURE MEMORANDUM (the "Purchased Assets") shall be purchased by
Newco for the Purchase Price and the remainder of the Acquired Assets (the
"Seller Contributed Assets") shall be contributed to Newco by Seller in
exchange for a membership interest in Newco, all as hereinafter described.
(b) Subject to the limitations on use of Seller's name and mark set forth
in Section 13.12(e), the Acquired Assets shall consist of all of the right,
title, and interest of Seller in and to all of the following assets,
properties, contracts, and rights of Seller, as the same shall exist at the
Closing Date (as hereinafter defined), which shall be delivered free and clear
of any and all liens, encumbrances, security interests, options and other
adverse claims whatsoever, except only for Permitted Encumbrances (as
hereinafter defined):
(i) All of Seller's rights in, to and under all real estate leases
(including, without limitation, any assignment of a real estate lease or
sublease) to which Seller is a party and which are identified in SECTION
1.1(B)(I) OF THE SELLER DISCLOSURE MEMORANDUM ("Seller's Real Property
Leases"), together with all of Seller's right, title, and interest pursuant to
Seller's Real Property Leases in the buildings, fixtures and improvements,
including construction-in-progress and appurtenances thereto located on
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the real property subject to such real estate leases, and any and all
assignable warranties of third parties with respect thereto ("Seller's Leased
Real Property");
(ii) Except as provided in Section 1.2, all equipment, tools,
computers, terminals, point of sale terminals, computer equipment, office
equipment, furniture, business machines, telephones and telephone systems,
parts, accessories and the like owned by Seller and permanently or normally
located on Seller's Leased Real Property or on the real property that is to be
subleased to Newco by Seller pursuant to this Agreement ("Seller's Subleased
Real Property") or owned and held by Seller principally for nonincidental and
active use in the day-to-day operations of Seller's Indirect Merchant Network
Business, wherever located, and any and all assignable warranties of third
parties with respect thereto ("Seller's Equipment");
(iii) All of Seller's rights and interests under the terms of the
contracts, agreements, personal property leases, license agreements,
warranties, commitments, arrangements, credit guaranties and purchase and sales
orders to which it is a party which principally relate to Seller's Indirect
Merchant Network Business, whether oral or written, and pursuant to which
Seller enjoys any right or benefit, including the assignment of telephone
numbers for nonincidental and active use in the day-to-day operations of
Seller's Indirect Merchant Network Business and any agreements pursuant to
which Seller has received any revenues reflected in the Seller Financial
Statements (as hereinafter defined) or will receive any revenues through the
Closing Date that would be reflected in financial statements prepared for
Seller's Indirect Merchant Network Business using the accounting principles and
conventions employed in preparing the Seller Financial Statements, together
with the right of Seller to receive income in respect of such contracts,
agreements, license agreements, warranties, commitments, arrangements,
(individually, a "Contract" and collectively, the "Contracts"), except (x)
those Contracts identified in SECTION 1.1(B)(III) OF THE SELLER DISCLOSURE
MEMORANDUM and (y) those Contracts or rights under the Contracts that relate
solely to Excluded Assets or Excluded Liabilities (the Contracts described in
(x) and (y) are hereinafter collectively referred to as the "Excluded
Contracts");
(iv) All goods owned and held by Seller for active and nonincidental
use in Seller's Indirect Merchant Network Business wherever located, including,
without limitation, supplies held by Seller for active and nonincidental use in
the day-to-day operations of Seller's Indirect Merchant Network Business and
which do not bear the Seller's trademarks or service marks (other than the
"MAPP" Mark) (the "Seller Inventory"), together, subject to Section 15.10, with
all rights of Seller against suppliers of the Seller Inventory, including,
without limitation, Seller's rights under express or implied warranties with
respect to the Seller Inventory;
(v) Except as set forth in Section 1.2(i) and SECTION 1.2 OF THE SELLER
DISCLOSURE MEMORANDUM, (a) all rights to and goodwill associated with the
"MAPP" mark, including all designs, art work, designs in progress and other
derivatives thereof including the "MAPP" mark; (b) all registrations and
applications therefor owned or
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belonging to Seller, both registered and unregistered, foreign and domestic;
(c) all trade secrets owned by or belonging to Seller used actively and
nonincidentally in the day-to-day operations of Seller's Indirect Merchant
Network Business; (d) subject to the rights of third-party licensors pursuant
to license agreements included in the Contracts, if any, all computer software
(including documentation and related object and, if applicable, source codes)
owned by, licensed by or belonging to Seller and used actively and
nonincidentally in the day-to-day operations of Seller's Indirect Merchant
Network Business; and (e) all confidential or proprietary information used
actively and nonincidentally in the day-to-day operations of Seller's Indirect
Merchant Network Business that is either owned by Seller or as to which Seller
has rights as licensee, including all know-how that is actively and
nonincidentally utilized in the day-to-day operations of Seller's Indirect
Merchant Network Business (collectively, "Seller's Intellectual Property");
(vi) All existing data, data bases, books, records, correspondence,
business plans and projections, records of sales, customer and vendor lists,
files and papers owned by or belonging to Seller and held for nonincidental and
active use in the day-to-day operations of Seller's Indirect Merchant Network
Business (Seller acknowledging that Parent and Newco shall have the right of
access for the period specified in Section 13.7(a) to all records used or held
for use in Seller's Indirect Merchant Network Business), and, to the extent
permitted under applicable law or regulation, copies of historical personnel
payroll records of each of the Transferred Employees (as defined in Section
13.1 hereof) belonging to and in the possession of Seller, including without
limitation, employment applications, notices of transfer, notices of rate
changes, other similar documents and any summaries of such documents regularly
prepared by Seller; a summary, not specifically identifying any Transferred
Employee individually, of all reported medical claims made for the Transferred
Employees and their covered beneficiaries from January 1, 1995 through the
Closing Date (Seller agreeing to deliver such summary as soon as reasonably
practicable after the Closing Date, but in no event more than forty-five (45)
days thereafter); and all manuals and printed instructions of Seller relating
to the Acquired Assets (as hereinafter defined), other than manuals and
instructions retained by Seller to perform services under the Seller Transition
Services Agreement (as hereinafter defined), or to the operation of Seller's
Indirect Merchant Network Business ("Seller's Books and Records");
(vii) All licenses, permits, certificates and governmental
authorizations of Seller reasonably necessary for the conduct of Seller's
Indirect Merchant Network Business consistent with past practice ("Seller's
Permits"), if any, to the extent transferable;
(viii) All other personal property owned by or belonging to Seller and
held by Seller principally for nonincidental and active use in the day-to-day
operations of Seller's Indirect Merchant Network Business; and
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(ix) All rights of Seller, if any, to, and the goodwill associated
with, the "Merchants Automated Point-of-Sale Program" mark, including all
designs, art work, designs in progress and other derivations thereof.
For purposes of this Agreement, "Permitted Encumbrances" shall mean (i)
liens, security interests, deposits or pledges to secure obligations to be
expressly assumed by Newco pursuant to this Agreement; (ii) any item
specifically described in either the Seller Disclosure Memorandum, in the case
of any Acquired Asset, or the Parent Disclosure Memorandum, in the case of a
Parent Contributed Asset, as an encumbrance upon or claim against any Acquired
Asset or Parent Contributed Asset, respectively that is to survive the Closing;
(iii) with respect to any leased or licensed Acquired Asset or Parent
Contributed Asset, any rights of the lessor or licensor or any person claiming
rights through them in accordance with the terms of the lease or license, as
applicable, included in the Contracts or Parent Contracts, as applicable; (iv)
with respect to any Acquired Asset, any Assumed Liability and, with respect to
any Contributed Asset, any Newco Assumed Liability; (v) any encumbrance
otherwise specifically permitted under this Agreement; and (vi) such
encumbrances, if any (other than liens, security interests and other
encumbrances securing existing or future indebtedness of, or other extensions
of credit to, any person other than Newco), that in the aggregate do not
materially adversely detract from the value or materially adversely interfere
with the present use of any of the Acquired Assets or the Parent Contributed
Assets, as applicable.
For purposes of this Agreement, Seller Disclosure Memorandum shall mean
the written information entitled "MasterCard Disclosure Memorandum" delivered
prior to the date of this Agreement by Seller to Parent describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. For purposes of this
Agreement, Parent Disclosure Memorandum shall mean the written information
entitled "National Data Disclosure Memorandum" delivered prior to the date of
this Agreement by Parent to Seller describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made.
1.2 Excluded Assets. Seller shall not sell or contribute, Newco shall not
purchase or acquire, and the Acquired Assets shall not include:
(a) The assets of any employee benefit plan, program, policy or
arrangement maintained by or covering any employees of Seller or to which
Seller has made any contribution, including the Seller Benefit Plans (as
hereinafter defined);
(b) All Excluded Contracts;
(c) The assets and properties of Seller related to Seller's Indirect
Merchant Network Business that are disposed of after the date of this
Agreement,
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provided such disposition is permitted under and has been made in accordance
with the terms of this Agreement;
(d) Seller's corporate franchise, stock record books, corporate record
books containing minutes of meetings of directors and stockholders, tax returns
and records, books of account and ledgers, and such other records having to do
with Seller's organization or stock capitalization and any other books and
records not utilized in Seller's Indirect Merchant Network Business;
(e) Any rights that accrue or will accrue to Seller under this
Agreement;
(f) Any rights to any of Seller's insurance policies, premiums, or
proceeds from insurance coverages (except as provided in Section 10.12 hereof
);
(g) Any rights to any of Seller's claims for any federal, state, local,
or foreign tax refund relating to any period ending prior to the Closing Date;
(h) Cash and cash equivalents, bank accounts and intracompany
obligations;
(i) Subject to the provisions of Section 13.12, the "MasterCard" and
"MasterCard Automated Point-of-Sale Program" tradenames and any trademarks or
logos incorporating such tradenames and any other tradenames, trade styles,
trademarks or service marks of Seller, including any logos, designs, art work,
designs in progress and other derivatives thereof; and
(j) The assets, properties, and rights specifically listed and
described in SECTION 1.2 OF THE SELLER DISCLOSURE MEMORANDUM.
(k) All prepaid expenses of Seller's Indirect Merchant Network
Business; subject to Section 15.10, all causes of action, claims and demands of
Seller principally related to Seller's Indirect Merchant Network Business,
including without limitation, rights to returned or repossessed goods and
rights as an unpaid vendor; all security deposits and utility deposits of
Seller principally relating to Seller's Indirect Merchant Network Business; and
(l) All accounts, notes and other receivables of Seller relating to
Seller's Indirect Merchant Network Business ("Seller's Accounts Receivable").
All of the assets described in this Section 1.2 are hereinafter
collectively referred to as the "Excluded Assets."
1.3 Contribution of Assets by Parent. Subject to the terms of this
Agreement, at the Closing, Parent shall assign, transfer, convey, and deliver
to Newco, and Newco
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shall acquire and accept from Parent, all of the right, title, and interest of
Parent in and to all of the following assets, properties, contracts, and
rights, as the same shall exist at the Closing Date (the "Parent Contributed
Assets") free and clear of any and all liens, encumbrances, security interests,
options and other adverse claims whatsoever, except only for Permitted
Encumbrances:
(a) Sixty Million Dollars ($60,000,000) in immediately available funds;
(b) All of Parent's and any subsidiary's of Parent rights in, to and
under all real estate leases (including, without limitation, any assignment of
a real estate lease or sublease) to which Parent or a subsidiary of Parent is a
party and which are identified in SECTION 1.3(B) OF THE PARENT DISCLOSURE
MEMORANDUM ("Parent's Real Property Leases"), together with all of Parent's or
any such subsidiary's right, title, and interest pursuant to Parent's Real
Property Leases in the buildings, fixtures and improvements, including
construction-in-progress and appurtenances thereto located on the real property
subject to such real estate leases, and any and all assignable warranties of
third parties with respect thereto (the "Parent's Leased Real Property");
(c) Except as provided in Section 1.4, all equipment, tools, computers,
terminals, point of sale terminals, computer equipment, office equipment,
furniture, business machines, telephones and telephone systems, parts,
accessories and the like owned by Parent or Subsidiary and permanently or
normally located on Parent's Leased Real Property or owned and held by Parent
or Subsidiary principally for nonincidental and active use in the day-to-day
operations of Parent's Indirect Merchant Network Business, wherever located,
and any and all assignable warranties with respect thereto ("Parent's
Equipment");
(d) All of Parent's and Subsidiary's rights and interests under the
terms of the contracts, agreements, personal property leases, license
agreements, warranties, commitments, arrangements, credit guaranties and
purchase and sales orders to which it is a party which principally relate to
Parent's Indirect Merchant Network Business, whether oral or written, and
pursuant to which Parent or Subsidiary enjoys any right or benefit, including
the assignment of telephone numbers identified in SECTION 1.3(D) OF THE PARENT
DISCLOSURE MEMORANDUM and any agreements pursuant to which Parent or Subsidiary
has received any revenues reflected in the Parent Financial Statements (as
hereinafter defined) or will receive any revenues through the Closing Date that
would be reflected in financial statements prepared for Parent's Indirect
Merchant Network Business using the accounting principles and conventions
employed in preparing the Parent Financial Statements, together with the
rights of Parent and Subsidiary to receive income in respect of such contracts,
agreements, license agreements, warranties, commitments, arrangements
(individually, a "Parent Contract" and collectively, the "Parent Contracts"),
except (i) those Contracts identified in SECTION 1.3(D) OF THE PARENT
DISCLOSURE MEMORANDUM, (ii) Parent's or Subsidiary's lease and usage
agreements for telecommunication services, and (iii) those Parent Contracts or
rights under the Parent Contracts that relate solely to Parent Excluded Assets
or Parent Excluded Liabilities (the
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Contracts described in (i), (ii) and (iii) are hereinafter collectively
referred to as the "Parent Excluded Contracts");
(e) All goods owned and held by Parent or Subsidiary for active and
nonincidental use in Parent's Indirect Merchant Network Business wherever
located, including, without limitation, any point of sale terminals and
supplies held by Parent or Subsidiary for active and nonincidental use in the
day-to-day operations of Parent's Indirect Merchant Network Business (the
"Parent Inventory"), together, subject to Section 15.10, with all rights of
Parent or Subsidiary against suppliers of the Parent Inventory, including,
without limitation, Parent's or Subsidiary's rights under express or implied
warranties with respect to the Parent Inventory;
(f) All existing data, data bases, books, records, correspondence,
business plans and projections, records of sales, customer and vendor lists,
files and papers owned by or belonging to Parent and Subsidiary and held for
nonincidental and active use in the day-to-day operations of Parent's Indirect
Merchant Network Business (Parent and Subsidiary acknowledging that Seller
shall have the right of access for the period specified in Section 13.7(a) to
all records used or held for use in Parent's Indirect Merchant Network
Business), and, to the extent permitted under applicable law or regulation,
copies of historical personnel payroll records of each of the employees
transferred from Parent and Subsidiary to Newco belonging to and in the
possession of Parent and Subsidiary, including without limitation, employment
applications, notices of transfer, notices of rate changes, other similar
documents and any summaries of such documents regularly prepared by Parent or
Subsidiary; a summary, not specifically identifying any transferred employee
individually, of all reported medical claims made for the transferred employees
and their covered beneficiaries from January 1, 1995 through the Closing Date
(Parent and Subsidiary agreeing to deliver such summary as soon as reasonably
practicable after the Closing Date, but in no event more than forty-five (45)
days thereafter); and all manuals and printed instructions of Parent and
Subsidiary relating to the Parent Contributed Assets (as hereinafter defined),
other than manuals and instructions retained by Parent to perform services
under the Parent Services Agreement (as hereinafter defined), or to the
operation of Parent's Indirect Merchant Network Business ("Parent's Books and
Records");
(g) Except as set forth in Section 1.4(i) and SECTION 1.3(G) OF THE
PARENT DISCLOSURE MEMORANDUM, (i) all rights to and goodwill associated with
the trade names, trade styles, and service marks listed in SECTION 1.3(G)(I) OF
THE PARENT DISCLOSURE MEMORANDUM, including all designs, art work, designs in
progress and other derivatives thereof incorporating such trade names, trade
styles and service marks; (ii) all trade secrets owned by or belonging to
Parent or Subsidiary used actively and nonincidentally in the day-to-day
operations of Parent's Indirect Merchant Network Business; (iii) subject to
the rights of third-party licensors pursuant to license agreements included in
the Parent Contracts, all computer software (including documentation and
related object and, if applicable, source codes) owned by, licensed by or
belonging to Parent or Subsidiary and used actively and nonincidentally in the
day-to-day operations of Parent's Indirect Merchant Network Business; and (iv)
all confidential or proprietary information used
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actively and nonincidentally in the day-to-day operations of Parent's Indirect
Merchant Network Business and that is either owned by Parent or Subsidiary or
as to which Parent or Subsidiary has rights as licensee, including all
know-how used actively and nonincidentally in the conduct of Parent's
Indirect Merchant Network Business ("Parent's Intellectual Property"); and
(h) All licenses, permits, certificates and governmental authorizations
of Parent and Subsidiary reasonably necessary for the conduct of Parent's
Indirect Merchant Network Business consistent with past practice ("Parent's
Permits"), if any, to the extent transferable;
(i) All other personal property owned by or belonging to Parent or
Subsidiary and held by Parent or Subsidiary principally for nonincidental and
active use in the day-to-day operations of Parent's Indirect Merchant Network
Business; and
(j) The outstanding common stock of Subsidiary.
1.4 Excluded Assets. Neither Parent nor Subsidiary shall sell or
contribute, Newco shall not purchase or acquire, and the Parent Contributed
Assets shall not include:
(a) The assets of any employee benefit plan, program, policy or
arrangement maintained by or covering any employees of Parent or Subsidiary or
to which Parent and Subsidiary has made any contribution as they exist as of
the Closing Date, including the Parent Benefit Plans (as hereinafter defined);
(b) All Parent Excluded Contracts;
(c) The assets and properties of Parent or Subsidiary related to
Parent's Indirect Merchant Network Business that have been disposed of since
the date of this Agreement, provided such disposition is permitted under and
has been made in accordance with the terms of this Agreement;
(d) Parent's corporate franchise, stock record books, corporate record
books containing minutes of meetings of directors and stockholders, tax returns
and records, books of account and ledgers, and such other records having to do
with Parent's organization or stock capitalization and any other books and
records not exclusively utilized in Parent's Indirect Merchant Network Business;
(e) Any rights that accrue or will accrue to Parent under this
Agreement;
(f) Any rights to any of Parent's insurance policies, premiums, or
proceeds from insurance coverages relating to the Parent Contributed Assets
(except as provided in Section 11.12 hereof);
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(g) Any rights to any of Parent's or Subsidiary's claims for any
federal, state, local, or foreign tax refund relating to any period ending
prior to the Closing Date;
(h) Cash and cash equivalents, bank accounts and intracompany
obligations;
(i) All of Parent's tradenames, trademarks, trade styles and service
marks and any logos, designs, artwork, designs in progress and other
derivatives thereof incorporating such trade names, trade styles, trade marks
or servicemarks which are not listed in SECTION 1.3(G)(I) OF THE PARENT
DISCLOSURE MEMORANDUM;
(j) The assets, properties, and rights specifically listed and
described in SECTION 1.4 OF THE PARENT DISCLOSURE MEMORANDUM.
(k) All prepaid expenses of Subsidiary and of Parent's Indirect
Merchant Network Business; subject to Section 15.10, all causes of action,
claims and demands of Parent and Subsidiary principally related to Parent's
Indirect Merchant Network Business and Subsidiary, including without
limitation, rights to returned or repossessed goods and rights as an unpaid
vendor; all security deposits and utility deposits of Parent principally
relating to Parent's Indirect Merchant Network Business and of Subsidiary; and
(l) All accounts, notes and other receivables of Parent relating to
Parent's Indirect Merchant Network Business and of Subsidiary ("Parent's
Accounts Receivable").
All of the assets described in this Section 1.2 are hereinafter
collectively referred to as the "Parent Excluded Assets."
ARTICLE 2
ASSUMPTION OF LIABILITIES AND MISCELLANEOUS
2.1 Assumption of Seller's Liabilities. Subject to Section 2.2 hereof, as
of the Effective Time, and as partial consideration for the contribution of the
Seller Contributed Assets, Newco shall assume responsibility for the
performance and satisfaction of the following, and only the following,
liabilities of Seller relating to Seller's Indirect Merchant Network Business
(collectively, the "Assumed Liabilities" and individually, an "Assumed
Liability"): all of the executory obligations of Seller relating to Seller's
Indirect Merchant Network Business arising from and after the Closing Date
pursuant to (i) the terms of Seller's Real Property Leases identified in
SECTION 1.1(B)(I) OF THE SELLER DISCLOSURE MEMORANDUM, and (ii) the Contracts,
but excluding any obligations or liabilities arising from or relating to the
Excluded Contracts or any breach or violation of Seller's Real Property Leases
or Contracts by Seller or default under Seller's Real Property Leases or
Contracts by Seller prior to the Closing.
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2.2 Excluded Liabilities of Seller. Neither Parent nor Newco shall assume
or become liable for any debts, obligations, commitments, or liabilities of
Seller, whether known or unknown, absolute, contingent, or otherwise, whether
accrued or unaccrued and whether or not related to the Acquired Assets, except
for the Assumed Liabilities that will be assumed by Newco but not by Parent
(the obligations and liabilities of Seller not assumed by Newco or Parent are
hereinafter referred to as the "Excluded Liabilities"). Except for the Assumed
Liabilities, without limiting the generality of the preceding sentence, neither
Newco nor Parent shall assume or become liable for any obligations and
liabilities of Seller, including without limitation, the following:
(a) Any liability or obligation arising out of any collective
bargaining agreement, bonus, incentive, deferred compensation, insurance,
severance, termination, retention, change of control, employment, stock option,
stock appreciation, stock purchase, phantom stock or other equity-based,
performance, vacation, retiree benefit plan, program, agreement or arrangement
(including, without limitation, any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) sponsored, maintained, contributed to by Seller or by any trade or
business which together with Seller would be deemed a "single employee" within
the meaning of Section 4001 of ERISA for the benefit of any current or former
employee of Seller's Indirect Merchant Network Business or to which Seller
could be subject to any liability;
(b) Any liability or obligation arising out of any breach by Seller
prior to the Effective Time of any provision of any Contract or Seller's Real
Property Leases to which Seller is a party;
(c) Any liability of Seller with respect to any claim or cause of
action regardless of when made or asserted, which arises out of or in
connection with the business and operations of Seller prior to the Effective
Time (as hereinafter defined);
(d) Any liability of Seller for any actual or alleged breach of or
noncompliance with any federal, state, or local law, rule, regulation, order or
decree applicable to Seller's Indirect Merchant Network Business arising out of
the operation of Seller's Indirect Merchant Network Business prior to the
Closing Date;
(e) Any liabilities or obligations of Seller relating to the Excluded
Assets;
(f) Any liabilities or obligations of Seller relating to sales and use,
transfer, documentary, income or other taxes levied on the transfer of the
Acquired Assets;
(g) Any liability or obligation, arising prior to, or (except to the
extent such liability arises as a result of Closing on account of Newco's
failure to perform its
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obligations under Section 13.1 of this Agreement) as a result of, the Closing,
to any employee, agent, or independent contractor of Seller, whether or not
employed by Newco after the Closing, or under any benefit arrangement with
respect thereto;
(h) Any liability or obligation of Seller arising or incurred in
connection with the negotiation, preparation and execution of this Agreement
and the consummation of the transactions contemplated hereby, including without
limitation, fees and expenses of its counsel, accountants, and other experts;
(i) Any liability or obligation for all taxes, charges, fees, levies or
other assessments, net income, gross income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, social
security, unemployment, excise, estimated, severance, property or other taxes,
duties, fees, assessments or charges of any kind whatsoever, including any
interest, penalties or additional amounts attributable thereto imposed by any
federal, state, local or foreign governmental authority ("Taxes") payable by
Seller or any member of any Affiliated group (within the meaning of Section
1504(e) of the Internal Revenue Code of 1986) or any combined or consolidated
group for state or other tax purposes of which the Seller is or has been a
member, whenever incurred, for all periods through and including the period
ending immediately prior to the Effective Time, including, without limitation,
income arising as a result of the transactions contemplated herein; and
(j) Any liability or obligation of Seller for any accounts payable
relating to Seller's Indirect Merchant Network Business arising or incurred
prior to the Effective Time.
2.3 Assumption of Parent's Liabilities. Subject to Section 2.4 hereof, as
of the Effective Time and as partial consideration for the Parent Contribution,
Newco shall assume responsibility for the performance and satisfaction of the
following, and only the following, liabilities of Parent and Subsidiary
(collectively, the "Newco Assumed Liabilities" and individually, a "Newco
Assumed Liability"): all of the executory obligations of Parent and Subsidiary
arising from and after the Closing Date pursuant to (i) the terms of Parent's
Real Property Leases identified in SECTION 1.3(B) OF THE PARENT DISCLOSURE
MEMORANDUM, and (ii) the Parent Contracts, but excluding any obligations or
liabilities arising from or relating to the Parent Excluded Contracts or any
breach or violation of Parent's Real Property Leases or Parent Contracts by
Parent or default under Parent's Real Property Leases or Contracts by Parent
prior to the Closing.
2.4 Excluded Liabilities of Parent. Neither Seller nor Newco shall assume
or become liable for any debts, obligations, commitments, or liabilities of
Parent or Subsidiary, whether known or unknown, absolute, contingent, or
otherwise, whether accrued or unaccrued and whether or not related to the
Parent Contributed Assets, except for the Newco Assumed Liabilities that will
be assumed by Newco but not by Seller (the obligations and liabilities of
Parent not assumed by Newco or Seller are hereinafter referred to as the
"Parent Excluded Liabilities"). Except for the Newco Assumed
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Liabilities, without limiting the generality of the preceding sentence,
neither Newco nor Seller shall assume or become liable for any obligations and
liabilities of Parent or Subsidiary, including without limitation, the
following:
(a) Any liability or obligation arising out of any breach by Parent or
Subsidiary prior to the Effective Time of any provision of any Parent Contract
or any of Parent's Real Property Leases;
(b) Any liability of Parent or Subsidiary with respect to any claim or
cause of action regardless of when made or asserted, which arises out of or in
connection with the business and operations of Parent or Subsidiary prior to
the Effective Time (as hereinafter defined);
(c) Any liability of Parent or Subsidiary for any actual or alleged
breach of or noncompliance with any federal, state, or local law, rule,
regulation, order or decree applicable to Parent's Indirect Merchant Network
Business arising out of the operation of Parent's Indirect Merchant Network
Business prior to the Closing Date;
(d) Any liabilities or obligations of Parent relating to sales and use,
transfer, documentary, income or other taxes levied on the transfer of the
Parent Contributed Assets;
(e) Any liability or obligation of Parent or Subsidiary arising or
incurred in connection with the negotiation, preparation and execution of this
Agreement and the consummation of the transactions contemplated hereby,
including without limitation, fees and expenses of their counsel, accountants,
and other experts;
(f) Any liability or obligation, arising prior to, or as a result of,
the Closing, to any employee, agent, or independent contractor of Parent or
Subsidiary, whether or not employed by Newco after the Closing, or under any
benefit arrangement with respect thereto;
(g) Any liability or obligation for Taxes payable by Parent or
Subsidiary or any member of any Affiliated group (within the meaning of Section
1504(e) of the Internal Revenue Code of 1986) or any combined or consolidated
group for state or other tax purposes of which the Parent or Subsidiary is or
has been a member, whenever incurred, for all periods through and including the
period ending immediately prior to the Effective Time, including, without
limitation, income arising as a result of the transactions contemplated herein;
(h) Any liability or obligation of Parent or Subsidiary arising out of
(i) a failure of the fair market value of any ERISA Pension Plan (as
hereinafter defined) of Parent or Subsidiary or any entity or person in a
"controlled group" with the Parent or Subsidiary to equal or exceed the
"present value" (as hereinafter defined) of all "benefit liabilities" (as
hereinafter defined) accrued through the Closing Date by all present and
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former participants in any such ERISA Pension Plan; and (ii) an "obligation to
contribute" (as hereinafter defined) to a "multiemployer plan" (as hereinafter
defined) of Parent or Subisdiary or for any material liability incurred by
Parent under Title IV of ERISA; and
(i) Any liability or obligation of Parent or Subsidiary for any
accounts payable relating to Parent's Indirect Merchant Network Business
arising or incurred prior to the Effective Time.
2.5 Licenses, Subleases and Other Agreements. Subject to the terms of
this Agreement, at the Closing, the following actions shall be taken:
(a) If permitted under the terms thereof, Newco shall grant Seller a
non-exclusive license at Newco's cost to use the items described in Section
1.1(b)(v)(c), (b)(v)(d), and (b)(v)(e) to the extent such assets are currently
used by Seller in a business other than Seller's Indirect Merchant Network
Business;
(b) Seller shall sublease to Newco for a two-year term the real
property described in SECTION 2.5(C) OF THE SELLER DISCLOSURE MEMORANDUM
pursuant to subleases substantially in the Form of Exhibit A hereto (the "Newco
Subleases");
(c) Seller and Newco shall enter into a transition services agreement
substantially in the form of Exhibit B hereto (the "Seller Transition Services
Agreement");
(d) Parent shall loan funds to Newco or obtain other loans for Newco or
secure funds for Newco through any combination of the foregoing so that Newco
will have sufficient funds at the Closing Date to pay the Purchase Price; and
(e) Parent and Newco will enter into services agreements substantially
in the form of Exhibit C (the "Parent Services Agreement") governing the
provision (i) by Parent of certain services, including telecommunications and
general management and administrative services, and (ii) by Newco of certain
support services required by Parent.
ARTICLE 3
PAYMENT OF PURCHASE PRICE
3.1 The Purchase Price. The aggregate consideration (the "Purchase
Price") to be paid to Seller for the sale, transfer, and conveyance of the
Purchased Assets and the covenant not to compete set forth in Section 13.9
hereof shall be an amount equal to One Hundred Ten Million Dollars
($110,000,000) in immediately available funds.
3.2 Allocation of Purchase Price. The consideration paid for the covenant
not to compete set forth in Section 13.9 hereof and for the Purchased Assets
and the covenant not to compete shall be allocated among the Purchased Assets
as set forth in SECTION 3.2 OF THE SELLER DISCLOSURE MEMORANDUM. The parties
agree to be bound by such
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allocation and to report the transaction contemplated herein for federal
income tax purposes in accordance with such allocation. In furtherance of the
foregoing, the parties hereto agree to execute and deliver Internal Revenue
Service Form 8594 reflecting such allocation.
ARTICLE 4
MEMBERSHIP INTERESTS
4.1 Issuance of Membership Interests. Subject to the provisions of this
Agreement, at the Closing, Newco shall deliver (i) to Parent in exchange for
the Parent Contributed Assets a certificate representing a ninety-two and
one-half percent (92.5%) membership interest in Newco and (ii) to Seller in
exchange for the Seller Contributed Assets, a certificate representing a seven
and one-half percent (7.5%) membership interest in Newco.
4.2 Operating Agreement. Subject to the terms of this Agreement, at the
Closing, Parent and Seller will enter as the sole members of Newco into an
Operating Agreement describing the term, management, termination and other
provisions governing Newco and the authorities and duties of its members and
managers, in substantially the form of Exhibit D hereto (the "Operating
Agreement").
4.3 Payment of Transfer Expenses. Parent shall pay any sales and use,
transfer or recording, documentary, or other taxes, fees, expenses or other
charges levied on or incurred in connection with the transfer (including any
costs or expenses in connection with obtaining any consent required for such
transfer) of the Parent Contributed Assets and Seller shall pay any sales and
use, transfer or recording, documentary, or other taxes, fees, expenses or
other charges levied on or incurred in connection with the transfer (including
any costs or expenses in connection with obtaining any consent required for
such transfer) of the Acquired Assets. The parties hereto agree to cooperate
in attempting to reduce or minimize the taxes, fees and expenses to be incurred
in connection with the transactions contemplated herein, provided that neither
party shall be required to incur any out-of-pocket expense or liability in
connection with such cooperative efforts.
ARTICLE 5
PROCEDURE FOR CLOSING
5.1 Time and Place of Closing. The closing for the purchase and sale of
the Purchased Assets and the contribution of the Parent Contributed Assets and
the Seller Contributed Assets contemplated by this Agreement (the "Closing")
shall be held at the offices of Alston & Bird, One Atlantic Center, 1201 West
Peachtree Street, Atlanta, Georgia 30309, on April 1, 1996 or at such other
time and place as the parties hereto may agree (the date on which the Closing
actually occurs is hereinafter referred to as the "Closing Date"). Subject to
the consummation of the Closing on the Closing Date, the
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sale, assignment, transfer, and conveyance to Newco of the Acquired Assets and
the Parent Contributed Assets and the assumption of the Assumed Liabilities
and the Newco Assumed Liabilities will be effective as of 11:59 P.M. local
time on March 31, 1996 (the "Effective Time").
5.2 Certain Consents.
(a) If, on the Closing Date, (i) Seller has not obtained any
authorization, approval or consent (a "Consent") required to transfer, assign
or novate (a "Transfer") any of Seller's right, title or interest in or to any
of the Acquired Assets after having used commercially reasonable efforts to
obtain such Consent or an attempted Transfer of any of the Acquired Assets
would be ineffective or the failure to have such Consent would adversely affect
Seller's ability to convey any such Acquired Asset, (ii) the conditions
precedent to the Closing set forth in Article 10 nevertheless have been
satisfied, and (iii) the failure to Transfer such asset, either individually or
in the aggregate, is not reasonably likely to have a material adverse effect on
Seller's Indirect Merchant Network Business or the result of its operations as
conducted by Newco, then such Acquired Assets shall constitute "Deferred
Acquired Assets" and shall not be transferred to Newco at the Closing. After
the Closing, (a) Seller will (I) continue to use commercially reasonable
efforts to obtain the Consent and/or to remove any other impediments to the
Transfer of each Deferred Acquired Asset and will Transfer each Deferred
Acquired Asset to Newco within five (5) business days after the receipt of such
Consent and/or removal of such impediment and (II) until the Transfer with
respect to any Deferred Acquired Asset is accomplished, cooperate with Newco in
any lawful arrangement that is not unduly economically burdensome (including
performance by Seller as agent) to provide that Newco shall receive the
benefits of such Deferred Acquired Asset to the same extent as if it were
transferred to Newco at Closing, (III) until the Transfer with respect to any
Deferred Acquired Asset is accomplished, enforce, at the request and for the
account of Newco, any of Seller's rights thereto or interests therein against
any other parties thereto (including the right to terminate any such Deferred
Acquired Asset in accordance with its terms, provided that Newco pays any
cancellation or other fee due upon such termination) and (b) if and only to the
extent that Newco receives the benefits of a Deferred Acquired Asset, Newco
shall perform the obligations of Seller arising with respect to such Deferred
Acquired Asset to the extent that, by reason of consummation of the
transactions contemplated by this Agreement, Newco has control over the
resources necessary to perform such obligations or reimburse Seller for the
reasonable cost of such performance. To the extent Newco performs the
obligations of Seller with respect to any Deferred Acquired Asset, any account
receivable created on account of such performance shall be deemed when created
to be an Acquired Asset conveyed hereunder. Newco will act with reasonable
diligence and use commercially reasonable efforts to assist, and cooperate
with, Seller in obtaining such Consents and removing any such impediments to
the transfer of the Deferred Acquired Assets.
(b) If, on the Closing Date, (i) Parent has not obtained any Consent
required to Transfer any of Parent's right, title or interest in or to any of
the Parent
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Contributed Assets after having used commercially reasonable efforts to obtain
such Consent or an attempted Transfer of any of the Parent Contributed Assets
would be ineffective or the failure to have such Consent would adversely
affect Parent's ability to convey any such Parent Contributed Asset, (ii) the
conditions precedent to the Closing set forth in Article 11 nevertheless have
been satisfied, and (iii) the failure to Transfer such asset, either
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on Parent's Indirect Merchant Network Business or the result of
its operations as conducted by Newco, then such Parent Contributed Assets
shall constitute "Deferred Contributed Assets" and shall not be transferred to
Newco at the Closing. After the Closing, (a) Parent will (I) continue to use
commercially reasonable efforts to obtain the Consent and/or to remove any
other impediments to the Transfer of each Deferred Contributed Asset and will
Transfer each Deferred Contributed Asset to Newco within five (5) business
days after the receipt of such Consent and/or removal of such impediment and
(II) until the Transfer with respect to any Deferred Contributed Asset is
accomplished, cooperate with Newco in any lawful arrangement that is not unduly
economically burdensome (including performance by Parent as agent) to provide
that the Newco shall receive the benefits of such Deferred Contributed Asset to
the same extent as if it were transferred to Newco at Closing, (III) until the
Transfer with respect to any Deferred Contributed Asset is accomplished,
enforce, at the request and for the account of the Newco, any of Parent's
rights thereto or interests therein against any other parties thereto
(including the right to terminate any such Deferred Contributed Asset in
accordance with its terms, provided that Newco pays any cancellation or other
fee due upon such termination) and (b) if and only to the extent that Newco
receives the benefits of a Deferred Contributed Asset, Newco shall perform the
obligations of Parent arising with respect to such Deferred Contributed Asset
to the extent that, by reason of consummation of the transactions contemplated
by this Agreement, Newco has control over the resources necessary to perform
such obligations or reimburse Parent for the reasonable cost of such
performance. To the extent Newco performs the obligations of Parent with
respect to any Deferred Contributed Asset, any account receivable created on
account of such performance shall be deemed when created to be an Parent
Contributed Asset conveyed hereunder. Newco will act with reasonable diligence
and use commercially reasonable efforts to assist, and cooperate with, Parent
in obtaining such Consents and removing any such impediments to the transfer of
the Deferred Contributed Assets.
5.3 Further Assurances.
(a) Seller from time to time after the Closing Date, at Newco's
request, will execute, acknowledge, and deliver to Newco such other instruments
of conveyance and transfer and will take such other actions and execute and
deliver such other documents, certifications, and further assurances as Newco
may reasonably require in order to vest more effectively in Newco, or to put
Newco more fully in possession of, any of the Acquired Assets, or to better
enable Newco to complete, perform, or discharge any of the Assumed Liabilities.
Further, if either party discovers that any Contract or other asset was omitted
from the Seller Disclosure Memorandum such that it did not become an Acquired
Asset, then such party shall give notice of such fact to the other; and, if
Newco
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desires to acquire the same, Seller shall assign and convey it to Newco. To
the extent that Consent is required to Transfer any such Contract, then such
Contract shall be a Deferred Acquired Asset, and the provisions of Section
5.2 shall govern such Contract. Each of the Parties hereto will cooperate
with the other and execute and deliver to the other parties hereto such other
instruments and documents and take such other actions as may be reasonably
requested from time to time by any other party hereto as necessary to carry
out, evidence, and confirm the intended purposes of this Agreement.
(b) Parent from time to time after the Closing Date, at Newco's
request, will execute, acknowledge, and deliver to Newco such other instruments
of conveyance and transfer and will take such other actions and execute and
deliver such other documents, certifications, and further assurances as Newco
may reasonably require in order to vest more effectively in Newco, or to put
Newco more fully in possession of, any of the Parent Contributed Assets, or to
better enable Newco to complete, perform, or discharge any of the Newco Assumed
Liabilities. Further, if either party discovers that any Parent Contract or
other asset was omitted from the Parent Disclosure Memorandum such that it did
not become an Parent Contributed Asset, then such party shall give notice of
such fact to the other; and, if Newco desires to acquire the same, Parent shall
assign and convey it to Newco. To the extent that Consent is required to
Transfer any such Parent Contract, then such Parent Contract shall be a
Deferred Acquired Asset, and the provisions of Section 5.2 shall govern such
Parent Contract. Each of the Parties hereto will cooperate with the other and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence, and
confirm the intended purposes of this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Newco and Parent, jointly and severally,
that:
6.1 Organization and Qualification. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware, and has the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its assets.
6.2 Authority. Seller has full power and authority to enter into this
Agreement and each of the other agreements contemplated hereby and executed or
to be executed in connection herewith (collectively, this Agreement and such
other agreements shall be referred to hereinafter as the "Acquisition
Documents"), and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Seller of each of the
Acquisition Documents has been duly and validly authorized and approved by all
necessary corporate or other action on the part of Seller. Each of the
Acquisition Documents is or will be the legal, valid, and binding obligation of
Seller,
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enforceable against Seller in accordance with its terms, except as
enforceability may be limited by applicable equitable principles (whether
applied in an action at law or in equity) or by bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting the enforcement of creditors
rights generally, to the exercise of judicial discretion in accordance with
general equitable principles, and to equitable defenses that may be applied to
the remedy of specific performance. Neither the execution and delivery by
Seller of any of the Acquisition Documents nor, subject to obtaining the
consents and approvals described in SECTIONS 6.6, 6.7, 6.8, 6.9 and 6.15 OF THE
SELLER DISCLOSURE MEMORANDUM, the consummation by Seller of the transactions
contemplated thereby will (i) violate the Certificate of Incorporation or
Bylaws (or similar governing documents) of Seller, (ii) violate any provisions
of law or any order of any court or any governmental entity to which Seller is
subject, or by which the Acquired Assets may be bound, (iii) conflict with,
result in a breach of, or constitute a default under any indenture, mortgage,
material lease, material agreement, or other material instrument to which
Seller is a party or by which it or any of the Acquired Assets may be bound,
or (iv) result in the creation of any lien, charge, or encumbrance upon any of
the Acquired Assets, or result in the acceleration of the maturity of any
payment date of any of the Assumed Liabilities, or increase or adversely
affect the obligations of Newco under any of the Assumed Liabilities. Except
for the Assumed Liabilities and as disclosed in SECTION 6.2 OF THE SELLER
DISCLOSURE MEMORANDUM, Newco will not be subject to any material restrictions
as to the conduct of its business as of the Closing Date pursuant to any order,
contract or other agreement or obligation binding on Seller or any of Seller's
Affiliates.
6.3 Subsidiaries; Joint Ventures. No shares of any corporation or any
ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other legal entity
is included in the Acquired Assets.
6.4 Financial Statements. Attached as SECTION 6.4 OF THE SELLER
DISCLOSURE MEMORANDUM are copies of the statement of income for Seller's
Indirect Merchant Network Business for the years ended December 31, 1995, 1994
and 1993, a listing of all capital expenditures for Seller's Indirect Merchant
Network Business for such periods and a listing of the amount of accounts
receivables, reserves related thereto, and accounts payable outstanding as of
December 31, 1995, 1994 and 1993 which would have been reflected in a balance
sheet prepared for Seller's Indirect Merchant Network Business prepared as of
such dates in accordance with generally accepted accounting principles
("GAAP"), consistently applied (collectively, the "Seller Financial
Statements"). Except as described in SECTION 6.4 OF THE SELLER DISCLOSURE
MEMORANDUM, the Seller Financial Statements have been prepared from the books
and records of Seller, and present fairly in accordance with GAAP the items
presented and the results of operation of Seller's Indirect Merchant Network
Business as at and for the periods indicated. Except as set forth on SECTION
6.4 OF THE SELLER DISCLOSURE MEMORANDUM, Seller has not received any advice or
notification from its independent certified public accountants that Seller has
used any improper accounting practice that would have the effect in any
material respect of not reflecting or incorrectly reflecting in the Seller
Financial Statements any revenues or
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expenses. Except as set forth on SECTION 6.4 OF THE SELLER DISCLOSURE
MEMORANDUM, the Seller Financial Statements do not contain any items of
extraordinary income, or other income not earned in the ordinary course of
business, individually in excess of $50,000 and in the aggregate in excess of
$250,000.
6.5 Personal Property.
(a) SECTION 6.5(A) OF THE SELLER DISCLOSURE MEMORANDUM contains a
substantially true and correct list of all Seller's Equipment (excluding items
of Seller's Equipment having a value of less than $5,000 individually) as of
the date hereof that, subject to additions and deletions permitted under this
Agreement, will be included in the Acquired Assets. SECTION 6.5(A) OF THE
SELLER DISCLOSURE MEMORANDUM contains a substantially true and correct
description of all categories of equipment, tools, computers, terminals, point
of sale terminals, computer equipment, office equipment, furniture, business
machines, telephones and telephone systems, parts, accessories and other items
of personal property (excluding items of equipment and other items of personal
property having a value of less than $5,000 individually) owned or leased by
Seller and utilized to a material extent in Seller's Indirect Merchant Network
Business that will not be included in the Acquired Assets.
(b) SECTION 6.5(B) OF THE SELLER DISCLOSURE MEMORANDUM contains a
substantially true and correct list of all equipment, tools, computers,
terminals, point of sale terminals, computer equipment, office equipment,
furniture, business machines, telephones and telephone systems, parts,
accessories and other items of personal property (except miscellaneous leases
of property having a value of less than $5,000 individually) leased by Seller
that, subject to additions and deletions permitted under this Agreement, will
be included in the Acquired Assets. True and correct copies of each lease
listed in SECTION 6.5(B) OF THE SELLER DISCLOSURE MEMORANDUM and any
amendments, extensions, and renewals thereof have heretofore been furnished to
Parent. Each of the leases described in SECTION 6.5(B) OF THE SELLER
DISCLOSURE MEMORANDUM is in effect, and Seller has neither received nor sent
written notice or other written correspondence that indicates the existence of
a breach or default under any such lease, except for defaults subsequently
cured or waived prior to the date of this Agreement. No rights of Seller under
any of such leases have been assigned or otherwise transferred as security for
any obligation of Seller other than to the lessor under a lease to secure
Seller's obligations under such lease. Except as described in SECTION 6.5(B)
OF THE SELLER DISCLOSURE MEMORANDUM, all such leases are fully assignable
without the consent of any third party.
(c) All tangible properties leased or owned by Seller that will be
included in the Acquired Assets are in good condition, reasonable wear and use
excepted, and are usable in the ordinary course of business consistent with
Seller's past practices.
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6.6 Real Property; Leased Real Property.
(a) Seller does not own any real property that is used in Seller's
Indirect Merchant Network Business.
(b) SECTION 6.6 OF THE SELLER DISCLOSURE MEMORANDUM contains a true and
correct list of each parcel of Seller's Leased Real Property and a summary
description of all offices and structures located on each parcel of Seller's
Leased Real Property. SECTION 6.6 OF THE SELLER DISCLOSURE MEMORANDUM contains
a true and correct list of all of Seller's real estate leases (including,
without limitation, any assignment of a real estate lease or sublease) to which
Seller is a party that relate to property utilized to any material extent in
Seller's Indirect Merchant Network Business but which property is not
principally used in such business. Attached to SECTION 6.6 OF THE SELLER
DISCLOSURE MEMORANDUM is a true and correct copy of each lease pursuant to
which Seller leases any of Seller's Leased Real Property and any amendments,
extensions, and renewals thereof.
(c) Seller does not have in its possession any studies or reports which
indicate any defects in the design or construction of any of the improvements
on Seller's Leased Real Property purported to be leased by Seller.
6.7 Contracts.
(a) SECTION 6.7 OF THE SELLER DISCLOSURE MEMORANDUM contains a true and
correct list, and (if oral) summary description, of all Contracts (other than
Excluded Contracts) not otherwise listed in SECTIONS 6.5, 6.6, 6.8 or 6.14 OF
THE SELLER DISCLOSURE MEMORANDUM that (A) are between Seller and any customer
of Seller that relate to the provision of transaction processing services; (B)
contain any covenant not to compete in any line of business or with any other
person or entity; (C) require or could require any party thereto to pay One
Hundred Thousand Dollars ($100,000.00) or more, or (D) are between Seller and
any officer, stockholder, director, employee, or Affiliate of Seller
("Affiliate" being hereby defined as any person controlling, controlled by or
under common control with any other person) and thereof, and all modifications,
amendments, renewals, or extensions thereof. A true, correct and complete copy
of each Contract listed in SECTION 6.7 OF THE SELLER DISCLOSURE MEMORANDUM has
heretofore been furnished to Parent. Except as described in SECTION 6.7 OF THE
SELLER DISCLOSURE MEMORANDUM, all such Contracts are fully assignable without
the consent of any party. Except as described in SECTION 6.7 OF THE SELLER
DISCLOSURE MEMORANDUM, each of the Contracts entered into since January 1, 1995
(other than Excluded Contracts), was entered into in the ordinary course of
business on terms substantially consistent with Seller's practice prior
thereto.
(b) SECTION 6.7 OF THE SELLER DISCLOSURE MEMORANDUM contains a true and
correct list of all commitments for capital expenditures that have been
approved or made in connection with Seller's Indirect Merchant Network Business
prior to the date of this Agreement in excess of Fifty Thousand Dollars
($50,000.00) by Seller and that
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remain outstanding as of the date hereof and that will be included in the
Assumed Liabilities.
(c) Except as set forth in SECTION 6.7 OF THE SELLER DISCLOSURE
MEMORANDUM, each of the Contracts is in effect, and Seller has neither sent nor
received written notice or other written correspondence that indicates the
existence of a breach or default under any Contract (other than any Excluded
Contract) except for breaches subsequently waived or cured prior to the date of
this Agreement.
(d) Except as indicated in SECTION 6.7 OF THE SELLER DISCLOSURE
MEMORANDUM, Seller has neither sent nor received written notice of or a written
request for a termination, cancellation, or limitation of, or any material
amendment, modification, or change to, any Contract (other than any Excluded
Contract).
(e) Except as set forth in SECTION 6.7 OF THE SELLER DISCLOSURE
MEMORANDUM, no power of attorney given by Seller will be binding upon Newco
after the Closing Date.
6.8 Intellectual Property. Except for property included in the Excluded
Assets, SECTION 6.8 OF THE SELLER DISCLOSURE MEMORANDUM contains a
substantially true and correct list of all trademarks, trade names, telephone
numbers, computer software (except computer software with an initial purchase
price of less than $1,000) and computer databases, owned by Seller and used
principally in the day-to-day operations of Seller's Indirect Merchant Network
Business, containing a brief description of each such item of Seller's
Intellectual Property and the nature of Seller's interest therein. Except for
property included in the Excluded Assets, the Acquired Assets include and, upon
the purchase or contribution of those assets, Newco will, to the knowledge of
Seller, own or have the uncontested right to use, all know-how, copyrights, the
rights and goodwill associated with the "MAPP" mark, including all designs, art
work, designs in progress, trademarks, trade names and service marks
incorporating such mark and all foreign and domestic registrations thereof, and
all confidential or proprietary information owned by Seller and necessary for
the conduct of Seller's Indirect Merchant Network Business as presently
conducted. Except as set forth on SECTION 6.8 OF THE SELLER DISCLOSURE
MEMORANDUM, Seller has not received any written notice or other written
correspondence that indicates that the conduct of Seller's Indirect Merchant
Network Business (including without limitation, Seller's use of any of Seller's
Intellectual Property and the sale or use by Seller of its services or any
component utilized therein) infringes upon or conflicts with any intellectual
property rights claimed therein by any third party. No use in Seller's
Indirect Merchant Network Business by Seller of Seller's Intellectual Property
licensed to it violates the terms of any agreement pursuant to which it is
licensed. No claim against Seller is pending, or, to the knowledge of Seller,
threatened, that alleges that any of Seller's Intellectual Property that is
owned or licensed by Seller, or which Seller otherwise has the right to use, is
invalid or unenforceable by Seller, and Seller is not aware of any such claim
that is unasserted. Except as shown on SECTION 6.8 OF THE SELLER DISCLOSURE
MEMORANDUM, no royalties or fees will be payable by Newco after the
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Closing to anyone for use of any material item of Seller's Intellectual
Property. True, correct, and complete copies of all agreements pursuant to
which Seller has any license or right to use any of Seller's Intellectual
Property have been furnished to Parent. Except as set forth on SECTION 6.8 OF
THE SELLER DISCLOSURE MEMORANDUM, all agreements pursuant to which Seller has
any license or right to use any of Seller's Intellectual Property in Seller's
Indirect Merchant Network Business are in effect, and Seller has neither sent
nor received written notice or other written correspondence that indicates the
existence of a breach or default under any such agreement. All material items
of Seller's Intellectual Property and the material registrations, applications,
and agreements related thereto are fully assignable to Newco without the
consent of any third party except as shown on SECTION 6.8 OF THE SELLER
DISCLOSURE MEMORANDUM.
6.9 Insurance. The Acquired Assets and Seller's Indirect Merchant Network
Business are insured under various policies of general liability and other
forms of insurance ("Seller's Policies"), each of which is in effect, and
Seller has neither sent nor received notice of termination, cancellation, or
limitation of, or any material amendment, modification or change to such
policies of insurance. True, correct and complete copies of Seller's Policies
have been provided to Parent.
6.10 Environmental Matters and OSHA.
(a) As used in this Agreement, the term "Hazardous Materials" shall
mean any hazardous waste, toxic substance, friable asbestos or asbestos waste,
agricultural chemicals, petroleum or any related material and substances
defined as "hazardous substances" or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq. ("CERCLA"), the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1802, the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq.("RCRA"), and any applicable state law. Except as
set forth in SECTION 6.10 OF THE SELLER DISCLOSURE MEMORANDUM hereto, Seller,
with respect to Seller's Indirect Merchant Network Business,
(i) is in substantial compliance with all material laws, rules and
regulations relating to environmental protection;
(ii) has accurately prepared and timely filed with the appropriate
jurisdictions all material reports and filings required pursuant to any
federal, state, or local law, regulation, statute, or order relating to
environmental protection and applicable to or affecting Seller's Indirect
Merchant Network Business or the Acquired Assets;
(iii) has not entered into or been subject to any consent decree,
compliance order, or administrative order relating to environmental protection;
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(iv) has not entered into or been subject to and is not in
default under any judgment, order, writ, injunction or decree of any federal,
state, or municipal court or other governmental authority relating to
environmental protection;
(v) has obtained all permits, licenses, approvals, consents,
orders, and authorizations relating to environmental protection
("Environmental Permits"), if any, that are required under federal, state, or
local laws, rules, and regulations in connection with Seller's Indirect
Merchant Network Business or the ownership, use, or lease of the Acquired
Assets, and which, if not so obtained, would cause a material adverse effect
on the ownership, operation or disposal of Seller's Indirect Merchant Network
Business or the Acquired Assets, in each case taken as a whole; SECTION 6.10
OF THE SELLER DISCLOSURE MEMORANDUM contains a complete list and description
of such Environmental Permits;
(vi) except as described in SECTION 6.10 OF THE SELLER DISCLOSURE
MEMORANDUM, Seller is in compliance with each such Environmental Permit
(including any information provided on the applications therefor), and no
Environmental Permit restricts Seller from operating any Equipment covered by
such Environmental Permit as currently being operated;
(vii) has not (A) been notified in writing that it is
potentially liable under or (B) received any written requests for information
or other correspondence concerning the Seller's Leased Real Property as a
facility under CERCLA or any similar law.
(b) With respect to Seller's Indirect Merchant Network Business,
(i) there are no actions, suits, claims, arbitration proceedings,
or complaints pending or threatened in writing by any governmental authority,
municipality, community, citizen, or other entity, against Seller relating to
environmental protection;
(ii) there has been no disposal, release, burial, or placement
by Seller, of hazardous or toxic substances, pollutants, contaminants,
petroleum, gas products, or asbestos-containing materials (as any of such
terms may be defined under federal, state, or local law) or other Hazardous
Materials on, in, at or about any of the Seller's Leased Real Property or any
facilities used by Seller for or in connection with Seller's Indirect Merchant
Network Business that reasonably can be expected to subject Newco to damages,
costs, penalties or expenses, or recovery or remediation requirements under
any federal, state, or local law, rule, or regulation;
(iii) there are no above-ground or underground storage tanks
located on any of the Seller's Leased Real Property that are used by Seller or
as to which, to Seller's knowledge, Seller has any reporting obligation under
applicable law;
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(iv) no lien has arisen on any of the Acquired Assets under or
as a result of any federal, state, or local law, rule, or regulation relating to
environmental protection; and
(v) except as identified in SECTION 6.10 OF THE SELLER DISCLOSURE
MEMORANDUM, to the best of Seller's knowledge, no audit or other investigation
has been conducted as to environmental matters at Seller's Leased Real
Property by any private party during or, to the knowledge of Seller, prior to
the period during which Seller leased or operated such properties.
(c) Except as set forth in SECTION 6.10 OF THE SELLER DISCLOSURE
MEMORANDUM, Seller is in material compliance with all applicable laws relating
to employee health and safety related to Seller's Indirect Merchant Network
Business; and Seller has not received any written notice that past or present
conditions of the Acquired Assets violate any applicable legal requirements or
otherwise have been made the basis of any claim, citations, proceeding, or
investigation, based on or related to violations of employee health and safety
requirements.
6.11 Litigation. Except as listed and briefly described on SECTION 6.11
OF THE SELLER DISCLOSURE MEMORANDUM and except for individual claims arising in
the usual and ordinary course of business alleging damages of less than Ten
Thousand Dollars ($10,000), (i) there are no arbitrations, actions, suits or
proceedings pending against Seller with respect to Seller's Indirect Merchant
Network Business or any of the Acquired Assets, or before or by any federal,
state, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign, and Seller has not received
written notice indicating the existence of any unasserted claim, charge,
arbitration, grievance, action, suit, proceeding or investigation; and (ii)
Seller is not subject to, in default under or in violation of any order, writ,
injunction, or decree of any federal, state, or municipal court, or other
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, affecting Seller's Indirect Merchant Network Business or
the Acquired Assets. SECTION 6.11 OF THE SELLER DISCLOSURE MEMORANDUM sets
forth a summary of all adjustments and credits for claims made by customers of
Seller in connection with any services performed by Seller as part of Seller's
Indirect Merchant Network Business for the years ended December 31, 1995, 1994
and 1993.
6.12 Absence of Changes. Except as set forth in SECTION 6.12 OF THE
SELLER DISCLOSURE MEMORANDUM or except with respect to the Excluded
Liabilities, since December 31, 1995, there has not been any transaction or
occurrence in which Seller, with respect to Seller's Indirect Merchant Network
Business, has:
(a) suffered any material adverse change in the business, operations,
condition (financial or otherwise), liabilities, assets, or earnings of
Seller's Indirect Merchant Network Business nor, to the knowledge of Seller,
has there been any event which has had a material adverse effect on any of the
foregoing;
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(b) incurred any obligations or liabilities of any nature other than
items incurred in the regular and ordinary course of Seller's Indirect Merchant
Network Business, consistent with past practice, or materially increased (or
experienced any material change in the assumptions underlying or the methods of
calculating) any bad debt, contingency or other reserve, other than in the
ordinary course of Seller's Indirect Merchant Network Business consistent with
past practice;
(c) determined as collectible any of Seller's Accounts Receivable or
any portion thereof which were previously considered uncollectible, or written
off as uncollectible any of Seller's Accounts Receivable or any portion
thereof, except for write-ups and write-offs in the ordinary course of Seller's
Indirect Merchant Network Business consistent with past practice, none of which
is material in amount;
(d) except for the capital expenditure commitments described in SECTION
6.7 OF THE SELLER DISCLOSURE MEMORANDUM and except for capital expenditures of
less than Fifty Thousand Dollars ($50,000.00) made in the ordinary course of
Seller's Indirect Merchant Network Business consistent with past practice, made
any significant capital expenditure or commitment for additions to property,
plant, equipment, intangible, or capital assets or for any other purpose, other
than for emergency repairs or replacement;
(e) except in the ordinary course of Seller's Indirect Merchant Network
Business consistent with past practice sold, transferred, or leased any
properties or assets (real, personal or mixed, tangible or intangible) that
otherwise would have been included in the Acquired Assets to, or entered into
any agreement or arrangement that will be an Assumed Liability with, (i) any
stockholder, member, officer, employee, or director of Seller, or (ii) any
Affiliate of Seller;
(f) entered into any collective bargaining or labor agreement (oral and
legally binding or written), or experienced any organized slowdown, work
interruption, strike, or work stoppage;
(g) sold, transferred or otherwise disposed of any assets that would
otherwise have been included in the Acquired Assets except in the ordinary
course of Seller's Indirect Merchant Network Business, consistent with past
practice;
(h) granted or incurred any obligation for any increase in the
compensation of any officer or employee of Seller working in Seller's Indirect
Merchant Network Business (including, without limitation, any increase pursuant
to any bonus, pension, profit-sharing, retirement, or other plan or commitment)
except for raises to employees in the ordinary course of Seller's Indirect
Merchant Network Business, consistent with past practice;
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(i) made any material change in any method of accounting or accounting
principle, practice or policy;
(j) taken any other action that is neither in the ordinary course of
Seller's Indirect Merchant Network Business, consistent with past practice, nor
provided for in this Agreement that could reasonably be expected to have a
material adverse effect on Seller's Indirect Merchant Network Business; or
(k) agreed, so as to legally bind Newco after the Closing, whether in
writing or otherwise, to take any actions that if taken by Seller through the
Closing Date would have resulted in a breach of a representation or warranty
contained in this Section 6.12 and that is not otherwise permitted by this
Agreement.
6.13 Brokers and Finders. Except for Smith Barney Inc., the fees and
expenses of which shall be the sole responsibility of Seller, neither Seller
nor any affiliate of Seller has incurred any obligation or liability to any
party for any brokerage fees, agent's commissions, or finder's fees in
connection with the transactions contemplated by the Acquisition Documents.
6.14 Labor Matters. SECTION 6.14 OF THE SELLER DISCLOSURE MEMORANDUM
contains a true and correct and complete list of all present employees and
sales representatives employed or engaged by Seller in Seller's Indirect
Merchant Network Business ("Employees"), their total remuneration for the year
ended December 31, 1995, their current remuneration, targeted bonuses, and a
description of all material perquisites and fringe benefits that employees
receive or are eligible to receive. Seller, within the last three (3) years,
has not experienced any organized slowdown, work interruption, strike, or work
stoppage by those Employees. Seller is not a party to, and does not have any
obligation pursuant to, any oral and legally binding or written agreement,
collective bargaining or otherwise, with any party regarding the rates of pay
or working conditions of any of those Employees, and Seller is not obligated
under any agreement to recognize or bargain with any labor organization or
union on behalf of those Employees. To the knowledge of Seller, Seller is in
compliance with all applicable federal, state, local and foreign laws and
regulations concerning the employer-employee relationship and with all
agreements relating to the employment of the Employees, including applicable
wage and hour laws, fair employment laws, safety laws, worker compensation
statutes, unemployment laws, and social security laws. Except as described in
SECTION 6.14 OF THE SELLER DISCLOSURE MEMORANDUM, there are no pending or, to
the knowledge of Seller, threatened claims, investigations, charges, citations,
hearings, consent decrees, or litigation concerning wages, compensation,
bonuses, commissions, awards, or payroll deductions; equal employment or human
rights violations regarding race, color, religion, sex, national origin, age,
handicap, veteran's status, marital status, disability, or any other recognized
class, status, or attribute under any federal, state, local or foreign equal
employment law prohibiting discrimination; representation petitions or unfair
labor practices; grievances or arbitrations pursuant to current or expired
collective bargaining agreements; occupational safety and health; workers'
compensation; wrongful termination, negligent hiring, invasion
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of privacy or defamation; immigration or any other claim based on the
employment relationship or termination of the employment relationship, in each
instance with respect to Employees (collectively, "Labor Claims"). None of
Seller or any of its officers, directors or employees has been charged or, to
the knowledge of Seller, threatened with any Labor Claims in connection with
the Employees within the last two years. Seller is not liable for any unpaid
wages, bonuses, or commissions (other than those not yet due) or any tax,
penalty, assessment or forfeiture for failure to comply with any of the
foregoing. Except as described on SECTION 6.14 OF THE SELLER DISCLOSURE
MEMORANDUM, there is no outstanding agreement or arrangement with respect to
severance payments with respect to any employee of Seller who is engaged in
Seller's Indirect Merchant Network Business.
6.15 Governmental Approval and Consents. Except as described in SECTION
6.15 OF THE SELLER DISCLOSURE MEMORANDUM, Seller has obtained all governmental
approvals, authorizations, permits, licenses and orders required for the lawful
operation of Seller's Indirect Merchant Network Business as presently
conducted, if any. SECTION 6.15 OF THE SELLER DISCLOSURE MEMORANDUM contains a
true and correct copy of any such approval, authorization, permit, license and
order.
6.16 Taxes.
(a) Seller has timely filed, and as of the Closing Date will have
timely filed, with respect to Seller's Indirect Merchant Network Business, all
state, county, and local income, franchise, property, sales, use, unemployment,
and other tax returns in each state and jurisdiction where such returns are
required to be filed on or prior to the Closing Date, taking into account any
extensions of the filing deadlines that have been validly granted to Seller.
Seller, with respect to Seller's Indirect Merchant Network Business, has paid,
or by the Closing Date will have paid, all state, county, and local income,
franchise, property, sales, use, and all other taxes and assessments (including
penalties and interest in respect thereof, if any) that have become or are due
and payable with respect to any period ended on or prior to the Closing Date
whether shown as due and payable on such returns or not, or is contesting in
good faith such taxes and assessments, in which event Seller has disclosed the
details of such contests in SECTION 6.16 OF THE SELLER DISCLOSURE MEMORANDUM.
Attached to SECTION 6.16 OF THE SELLER DISCLOSURE MEMORANDUM are true and
correct copies of all material real estate, personal property, ad valorem, and
property tax bills of Seller for the year 1995 which have been received by
Seller prior to the date hereof, relating to the Acquired Assets.
(b) SECTION 6.16 OF THE SELLER DISCLOSURE MEMORANDUM provides a brief
description of any pending state tax disputes in which Seller, with respect to
Seller's Indirect Merchant Network Business, is alleged to be liable or in
which Seller is claiming a refund, including the nature and amount of the
controversy, the respective positions of the parties as to any amounts claimed
to be due thereunder, and the current status thereof.
(c) All taxes required to be withheld on or prior to the Closing Date
from Employees for income taxes and social security taxes have been properly
withheld
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and, if required on or prior to the Closing Date, have been deposited with the
appropriate governmental agency.
(d) Seller has received no written notice of the existence of any
pending or threatened claim or investigation by any state, local, or other
jurisdiction alleging that Seller, with respect to Seller's Indirect Merchant
Network Business, has a duty to file tax returns and pay taxes or is otherwise
subject to the taxing authority of any jurisdiction not included in SECTION
6.16 OF THE SELLER DISCLOSURE MEMORANDUM with respect to any taxes covered by
Section 12.3(a), and Seller has received no written notice or questionnaire
from any such jurisdiction since January 1. 1994 that suggests or asserts that
Seller may have a duty to file such returns and pay such taxes, or otherwise is
subject to the taxing authority of such jurisdiction.
6.17 Employee Benefit Plans.
(a) SECTION 6.17 OF THE SELLER DISCLOSURE MEMORANDUM contains a true
and complete list of all the following agreements or plans which are presently
in effect or which have within the immediately preceding two years previously
been in effect and which cover Employees, including, without limitation,
incentive, bonus, vacation and severance programs:
(i) Any employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA") or under which
Seller, with respect to Employees, has any outstanding, present or future
obligation or liability, or under which any Employee has any present or future
right to benefits which are covered by ERISA; or
(ii) Any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical, life insurance, or other
employee benefit plan, program, policy, or arrangement, which Seller maintains
or to which Seller has any outstanding present or future obligations to
contribute or make payments under, whether voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements described in subparagraph (i) or
(ii) are hereinafter collectively referred to as the "Seller Benefit Plans."
6.18 Compliance with Laws. Except as set forth in SECTION 6.18 OF THE
SELLER DISCLOSURE MEMORANDUM, Seller is not engaging in any activity or
omitting to take any action with respect to Seller's Indirect Merchant Network
Business or the Acquired Assets that is or creates a substantial violation of
any law, statute, ordinance or regulation applicable to Seller's Indirect
Merchant Network Business or to the Acquired Assets. Except as set forth on
SECTION 6.18 OF THE SELLER DISCLOSURE MEMORANDUM, Seller is in substantial
compliance with all applicable laws, regulations, and orders issued by any
court
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or governmental or administrative body or agency that are applicable to
Seller's Indirect Merchant Network Business or the Acquired Assets.
6.19 Governmental Approval and Consents. Except for any required filing
of the appropriate documents pertaining to the HSR Act (as hereinafter defined)
with the United States Federal Trade Commission and the United States
Department of Justice, and the receipt of an order of termination of any
applicable waiting period therefrom, no consent, approval, or authorization of
or declaration, filing, or registration with any governmental or regulatory
authority is required in connection with the execution, delivery, and
performance of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby.
6.20 Adequacy of Acquired Assets. The Acquired Assets, in conjunction
with the Seller Sublease and the services to be provided pursuant to the
Transition Services Agreement include all rights, properties, interests in
properties and assets currently owned or leased by Seller and reasonably
necessary to permit Newco to carry on Seller's Indirect Merchant Network
Business in all material respects as presently conducted by Seller.
6.21 Title to Assets. Seller will have on the Closing Date, good, valid
and marketable title to the Acquired Assets, whether tangible or intangible,
that are not licensed or leased to Seller, being conveyed by it to Newco
hereunder, free and clear of all liens, claims, charges, encumbrances and
security interests of any kind or nature other than Permitted Encumbrances.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Seller as follows:
7.1 Organization and Qualification. Each of Parent and Subsidiary is a
corporation duly organized, validly existing, and in good standing under the
laws of the its state of incorporation. Newco is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Georgia. Each of Parent, Subsidiary and Newco has the corporate power
and authority to conduct its business as now conducted and to own, lease and
operate its assets.
7.2 Authority. Each of Parent and Newco, has full power and authority to
enter into this Agreement and each of the other Acquisition Documents to which
Parent and/or Newco is or is to be a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Parent and, Newco of each of the Acquisition Documents to which Parent and/or
Newco is or will be a party have been, duly and validly authorized and approved
by all necessary corporate or other action on the part of Parent and Newco.
Each of the Acquisition Documents to which
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Parent and/or Newco is or will be a party is or will be, the legal, valid and
binding obligation of Parent and Newco, respectively, enforceable against such
person in accordance with its terms, except as enforceability may be limited by
applicable equitable principles (whether applied in an action at law or in
equity) or by bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting the enforcement of creditors rights generally, to the exercise
of judicial discretion in accordance with general equitable principles, and to
equitable defenses that may be applied to the remedy of specific performance.
Neither the execution and delivery by Parent and Newco of any of the
Acquisition Documents to which Parent and/or Newco is or will be a party nor,
subject to obtaining the consents and approvals described in SECTIONS 7.5(B),
7.6, 7.7, 7.8 AND 7.14 OF THE PARENT DISCLOSURE MEMORANDUM, the consummation by
Parent or Newco of the transactions contemplated hereby or thereby will (i)
violate the Certificate of Incorporation or Bylaws(or similar governing
documents) of Parent or Newco, as applicable, (ii) violate any provisions of
law or any order of any court or any governmental unit to which Parent or Newco
is subject, or by which the Parent Contributed Assets are bound, or (iii)
conflict with, result in a breach of, or constitute a default under any
indenture, mortgage, lease, agreement, or other instrument to which Parent or
Newco is a party or by which any of the Parent Contributed Assets are bound, or
(iv) result in the creation of any lien, charge, or encumbrance upon any of the
Parent Contributed Assets, or result in the acceleration of the maturity of any
payment date of any of the Newco Assumed Liabilities, or increase or adversely
affect the obligations of Newco under any of the Newco Assumed Liabilities.
Except for the Newco Assumed Liabilities and as disclosed in SECTION 7.2 OF THE
PARENT DISCLOSURE MEMORANDUM, Newco will not be subject to any material
restriction as to the conduct of its business as of the Closing Date pursuant
to any order, contract or other agreement or obligation binding on Parent or
any of Parent's Affiliates (other than Newco).
7.3 Subsidiaries; Joint Ventures. Except for Subsidiary, no shares of any
corporation or any ownership or other investment interest, either of record,
beneficially or equitably, in any association, partnership, joint venture or
other legal entity is included in the Parent Contributed Assets.
7.4 Financial Statements. Attached as SECTION 7.4 OF THE PARENT
DISCLOSURE MEMORANDUM are copies of the statement of income for Parent's
Indirect Merchant Network Business for the years ended May 31, 1995, 1994 and
1993 and for the seven months ended December 31, 1995, a listing of all capital
expenditures for Parent's Indirect Merchant Network Business for such periods
and a listing of the amount of accounts receivables, reserves related thereto,
and accounts payable outstanding as of May 31, 1995, 1994 and 1993, and as of
December 31, 1995, which would have been reflected in a balance sheet prepared
for Parent's Indirect Merchant Network Business prepared as of such dates in
accordance with GAAP, consistently applied (collectively, the "Parent Financial
Statements"). Except as described in SECTION 7.4 OF THE PARENT DISCLOSURE
MEMORANDUM, the Parent Financial Statements have been prepared from the books
and records of Parent, and present fairly in accordance with GAAP the items
presented and the results of operation of Parent's Indirect Merchant Network
Business as at and for the
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periods indicated. Except as set forth in SECTION 7.4 OF THE PARENT
DISCLOSURE MEMORANDUM, Parent has not received any advice or notification from
its independent certified public accountants that Parent has used any improper
accounting practice that would have the effect in any material respect of not
reflecting or incorrectly reflecting in the Parent Financial Statements any
revenues or expenses. Except as set forth in SECTION 7.4 OF THE PARENT
DISCLOSURE MEMORANDUM, the Parent Financial Statements do not contain any items
of extraordinary income, or other income not earned in the ordinary course of
business, individually in excess of $50,000 and in the aggregate in excess of
$250,000.
7.5 Personal Property.
(a) SECTION 7.5(A) OF THE PARENT DISCLOSURE MEMORANDUM contains a
substantially true and correct list of all Parent's Equipment (excluding items
of Parent's Equipment having a value of less than $5,000 individually) as of
the date hereof, subject to additions or deletions permitted under this
Agreement, that will be included in the Parent Contributed Assets. SECTION
7.5(A) OF THE PARENT DISCLOSURE MEMORANDUM contains a substantially true and
correct description of all categories of equipment, tools, computers,
terminals, point of sale terminals, computer equipment, office equipment,
furniture, business machines, telephones and telephone systems, parts,
accessories and other items of personal property (excluding items of equipment
and other items of personal property having a value of less than $5,000
individually) owned or leased by Parent or Subsidiary and utilized to a
material extent in Parent's Indirect Merchant Network Business that will not be
included in the Parent Contributed Assets.
(b) SECTION 7.5(B) OF THE PARENT DISCLOSURE MEMORANDUM contains a
substantially true and correct list of all equipment, tools, computers,
terminals, points of sale terminals, computer equipment, office equipment,
furniture, business machines, telephones and telephone systems, parts and
accessories and other items of personal property (except miscellaneous leases
of property having a value of less than $5,000 individually) leased by Parent
or Subsidiary that, subject to additions and deletions permitted under this
Agreement, will be included in the Parent Contributed Assets. True and correct
copies of each lease listed in SECTION 7.5(B) OF THE PARENT DISCLOSURE
MEMORANDUM and any amendments, extensions, and renewals thereof have heretofore
been furnished to Seller. Each of the leases described in SECTION 7.5(B) OF
THE PARENT DISCLOSURE MEMORANDUM is in effect, and neither Parent nor
Subsidiary has received or sent written notice or other written correspondence
indicating that a breach or default exists under any such lease, except for
defaults subsequently cured or waived prior to the date of this Agreement. No
rights of Parent or Subsidiary under any of such leases have been assigned or
otherwise transferred as security for any obligation of Parent or Subsidiary
other than to the lessor under a lease to secure Parent's or Subsidiary's
obligations under such lease. Except as described in SECTION 7.5(B) OF THE
PARENT DISCLOSURE MEMORANDUM, all such leases are fully assignable without the
consent of any third party.
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(c) All tangible properties leased or owned by Parent or Subsidiary
that will be included in the Parent Contributed Assets are in good condition,
reasonable wear and use excepted, and are usable in the ordinary course of
business consistent with Parent's past practices.
7.6 Real Property; Leased Real Property.
(a) Neither Parent nor Subsidiary own any real property that is
principally used in Parent's Indirect Merchant Network Business.
(b) SECTION 7.6 OF THE PARENT DISCLOSURE MEMORANDUM contains a true and
correct list of each parcel of Parent's Leased Real Property and a summary
description of all offices and structures located on each parcel of Parent's
Leased Real Property. SECTION 7.6 OF THE PARENT DISCLOSURE MEMORANDUM contains
a true and correct list of all of Parent's and Subsidiary's real estate leases
(including, without limitation, any assignment of a real estate lease or
sublease) to which Parent or Subsidiary is a party that relate to property
utilized to any material extent in Parent's Indirect Merchant Network Business
but which property is not principally utilized in such business. Attached to
SECTION 7.6 OF THE PARENT DISCLOSURE MEMORANDUM is a true and correct copy of
each lease pursuant to which Parent or Subsidiary leases any of Parent's Leased
Real Property and any amendments, extensions, and renewals thereof.
(c) Neither Parent nor Subsidiary has in its possession any studies or
reports which indicate any defects in the design or construction of any of the
improvements on Parent's Leased Real Property purported to be leased by Parent
or Subsidiary.
7.7 Contracts.
(a) SECTION 7.7 OF THE PARENT DISCLOSURE MEMORANDUM contains a true and
correct list, and (if oral) description, of all Parent Contracts (other than
Parent Excluded Contracts) not otherwise listed in SECTIONS 7.5, 7.6, 7.8 or
7.14 OF THE PARENT DISCLOSURE MEMORANDUM that (i) are between Parent or
Subsidiary and any party that provides for the provision of transaction
processing services, (ii) contain any covenant not to compete in any line of
business or with any other person or entity, (iii) require or could require any
party thereto to pay One Hundred Thousand Dollars ($100,000.00) or more, or
(iv) are between Parent or Subsidiary and any officer, stockholder, director,
employee, or Affiliate of Parent or Subsidiary, and all modifications,
amendments, renewals, or extensions thereof. A true, correct and complete copy
of each Parent Contract listed in SECTION 7.7 OF THE PARENT DISCLOSURE
MEMORANDUM has heretofore been furnished to Seller. Except as described in
SECTION 7.7 OF THE PARENT DISCLOSURE MEMORANDUM, all such Parent Contracts are
fully assignable without the consent of any party. Except as described in
SECTION 7.7 OF THE PARENT DISCLOSURE MEMORANDUM, each of the Parent Contracts
entered into since January 1, 1995 (other than Parent Excluded Contracts), was
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entered into in the ordinary course of business on terms substantially
consistent with Parent's practice prior thereto.
(b) SECTION 7.7 OF THE PARENT DISCLOSURE MEMORANDUM contains a true and
correct list of all commitments for capital expenditures that have been
approved or made in connection with Parent's Indirect Merchant Network Business
prior to the date of this Agreement in excess of Seventy-Five Thousand Dollars
($75,000.00) by Parent or Subsidiary and that remain outstanding as of the date
hereof and that will be included in the Newco Assumed Liabilities.
(c) Except as set forth in SECTION 7.7 OF THE PARENT DISCLOSURE
MEMORANDUM, each of the Parent Contracts is in effect, and neither Parent nor
Subsidiary has sent or received written notice or other written correspondence
that indicates the existence of a breach or default under any Parent Contract
(other than Parent Excluded Contracts) except for breaches subsequently waived
or cured prior to the date of this Agreement.
(d) Except as indicated in SECTION 7.7 OF THE PARENT DISCLOSURE
MEMORANDUM, neither Parent nor Subsidiary has sent or received written notice
of or a written request for a termination, cancellation, or limitation of, or
any material amendment, modification, or change to any Parent Contract (other
than Parent Excluded Contracts).
(e) Except as set forth in SECTION 7.7 OF THE PARENT DISCLOSURE
MEMORANDUM, no power of attorney given by Parent or Subsidiary will be binding
upon Newco after the Closing Date.
7.8 Intellectual Property. Except for property included in the Parent
Excluded Assets, SECTION 7.8 OF THE PARENT DISCLOSURE MEMORANDUM contains a
substantially true and correct list of all trademarks, trade names, telephone
numbers, computer software (except computer software with an initial purchase
price of less than $1,000) and computer databases, owned by Parent or
Subsidiary and used principally in the day-to-day operation of Parent's
Indirect Merchant Network Business, containing a brief description of each such
item of Parent's Intellectual Property and the nature of Parent's or
Subsidiary's interest therein. Except for property included in the Parent
Excluded Assets, the Parent Contributed Assets include and, upon the
contribution of those assets, Newco will, to the knowledge of Parent, own or
have the uncontested right to use, all know-how, copyrights, the rights and
goodwill associated with the marks listed in SECTION 1.3(F) OF THE PARENT
DISCLOSURE MEMORANDUM, including all designs, art work, designs in progress,
trademarks, trade names and service marks incorporating such mark and all
foreign and domestic registrations thereof, if any, and all confidential or
proprietary information owned by Parent or Subsidiary and necessary for the
conduct of Parent's Indirect Merchant Network Business as presently conducted.
Except as set forth on SECTION 7.8 OF THE PARENT DISCLOSURE MEMORANDUM, neither
Parent nor Subsidiary has received any written notice or other written
correspondence that indicates that the conduct
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of Parent's Indirect Merchant Network Business (including without
limitation, Parent's or Subsidiary's use of any of Parent's Intellectual
Property and the sale or use by either Parent or Subsidiary of its services or
any component utilized therein) infringes upon or conflicts with any
intellectual property rights claimed therein by any third party. No use in
Parent's Indirect Merchant Network Business by Parent or Subsidiary of Parent's
Intellectual Property licensed to it violates the terms of any agreement
pursuant to which it is licensed. No claim against Parent or Subsidiary is
pending, or, to the knowledge of Parent or Subsidiary, threatened, that alleges
that any of Parent's Intellectual Property that is owned or licensed by Parent
or Subsidiary, or which Parent or Subsidiary otherwise has the right to use, is
invalid or unenforceable by Parent or Subsidiary, and neither Parent nor
Subsidiary is aware of any such claim that is unasserted. Except as shown on
SECTION 7.8 OF THE PARENT DISCLOSURE MEMORANDUM, no royalties or fees will be
payable by Newco after the Closing to anyone for use of any material item of
Parent's Intellectual Property. True, correct, and complete copies of all
agreements pursuant to which Parent or Subsidiary has any license or right to
use any of Parent's Intellectual Property have been furnished to Seller.
Except as set forth on SECTION 7.8 OF THE PARENT DISCLOSURE MEMORANDUM, all
agreements pursuant to which Parent or Subsidiary has any license or right to
use any of Parent's Intellectual Property in Parent's Indirect Merchant Network
Business are in effect, and neither Parent nor Subsidiary has sent or received
written notice that indicates the existence of a breach or default under any
such agreement. All material items of Parent's Intellectual Property and the
material registrations, applications, and agreements related thereto are fully
assignable to Newco without the consent of any third party except as shown on
SECTION 7.8 OF THE PARENT DISCLOSURE MEMORANDUM.
7.9 Insurance. The Parent Contributed Assets and Parent's Indirect
Merchant Network Business are insured under various policies of general
liability and other forms of insurance ("Parent's Policies"), each of which is
in effect, and neither Parent nor Subsidiary has sent or received notice of
termination, cancellation, or limitation of, or any material amendment,
modification or change to such policies of insurance. True, correct and
complete copies of Parent's Policies have been provided to Seller.
7.10 Environmental Matters and OSHA.
(a) Except as set forth in SECTION 7.10 OF THE PARENT DISCLOSURE
MEMORANDUM hereto, Parent and Subsidiary, with respect to Parent's Indirect
Merchant Network Business,
(i) are in substantial compliance with all material laws, rules
and regulations relating to environmental protection;
(ii) have accurately prepared and timely filed with the
appropriate jurisdictions all material reports and filings required pursuant
to any federal, state, or local law, regulation, statute, or order relating to
environmental protection and applicable to or affecting Parent's Indirect
Merchant Network Business or the Parent Contributed Assets to be filed by
either of them;
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(iii) have not entered into or been subject to any consent decree,
compliance order, or administrative order relating to environmental protection;
(iv) have not entered into or been subject to and are not in
default under any judgment, order, writ, injunction or decree of any federal,
state, or municipal court or other governmental authority relating to
environmental protection;
(v) have obtained all Environmental Permits, if any, that are
required under federal, state, or local laws, rules, and regulations in
connection with Parent's Indirect Merchant Network Business or the ownership,
use, or lease of the Parent Contributed Assets, and which, if not so obtained,
would cause a material adverse effect on the ownership, operation or disposal
of Parent's Indirect Merchant Network Business or the Parent Contributed
Assets, in each case taken as a whole; SECTION 7.10 OF THE PARENT DISCLOSURE
MEMORANDUM contains a complete list and description of such Environmental
Permits;
(vi) except as described in SECTION 7.10 OF THE PARENT DISCLOSURE
MEMORANDUM, each of Parent and Subsidiary is in compliance with each such
applicable Environmental Permit (including any information provided on the
applications therefor), and no Environmental Permit restricts Parent or
Subsidiary from operating any of Parent's Equipment covered by such
Environmental Permit as currently being operated;
(vii) have not (A) been notified in writing that either of them is
potentially liable under or (B) received any written requests for information
or other correspondence concerning the Parent's Leased Real Property as a
facility under CERCLA or any similar law.
(b) With respect to Parent's Indirect Merchant Network Business,
(i) there are no actions, suits, claims, arbitration proceedings, or
complaints pending or, threatened in writing by any governmental authority,
municipality, community, citizen, or other entity, against Parent or Subsidiary
relating to environmental protection;
(ii) there has been no disposal, release, burial, or placement by
Parent of hazardous or toxic substances, pollutants, contaminants, petroleum,
gas products, or asbestos-containing materials (as any of such terms may be
defined under federal, state, or local law) or other Hazardous Materials on,
in, at or about any of the Parent's Leased Real Property or any facilities
used by Parent or Subsidiary for or in connection with Parent's Indirect
Merchant Network Business that reasonably can be expected to subject Newco to
damages, costs, penalties or expenses, or recovery or remediation requirements
under any federal, state, or local law, rule, or regulation;
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(iii) there are no above-ground or underground storage tanks
located on any of the Parent's Leased Real Property that are used by Parent or
Subsidiary or as to which, to Parent's or Subsidiary's knowledge, Parent or
Subsidiary has any reporting obligation under applicable law;
(iv) no lien has arisen on any of the Parent Contributed Assets
under or as a result of any federal, state, or local law, rule, or regulation
relating to environmental protection; and
(v) except as identified in SECTION 7.10 OF THE PARENT DISCLOSURE
MEMORANDUM, to the best of Parent's and Subsidiary's knowledge, no audit or
other investigation has been conducted as to environmental matters at Parent's
Leased Real Property by any private party during or, to the knowledge of Parent
and Subsidiary, prior to the period during which Parent or Subsidiary leased or
operated such properties.
(c) Except as set forth in SECTION 7.10 OF THE PARENT DISCLOSURE
MEMORANDUM, each of Parent and Subsidiary is in material compliance with all
applicable laws relating to employee health and safety related to Parent's
Indirect Merchant Network Business; and neither Parent nor Subsidiary has
received any written notice that past or present conditions of the Parent
Contributed Assets violate any applicable legal requirements or otherwise have
been made the basis of any claim, citations, proceeding, or investigation,
based on or related to violations of employee health and safety requirements.
7.11 Litigation. Except as listed and briefly described on SECTION 7.11
OF THE PARENT DISCLOSURE MEMORANDUM and except for individual claims arising in
the usual and ordinary course of business alleging damages of less than Ten
Thousand Dollars ($10,000), (i) there are no arbitrations, actions, suits or
proceedings pending against Parent or Subsidiary with respect to Parent's
Indirect Merchant Network Business or any of the Parent Contributed Assets, or
before or by any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign, and
neither Parent nor Subsidiary has received written notice indicating the
existence of any unasserted claim, charge, arbitration, grievance, action,
suit, proceeding or investigation; and (ii) neither Parent, Newco or Subsidiary
is subject to, in default under or in violation of any order, writ, injunction,
or decree of any federal, state, or municipal court, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting Parent's Indirect Merchant Network Business or the Parent
Contributed Assets. SECTION 7.11 OF THE PARENT DISCLOSURE MEMORANDUM sets
forth a summary of all adjustments and credits for claims made by customers of
Parent or Subsidiary in connection with any services performed by Parent or
Subsidiary as part of Parent's Indirect Merchant Network Business for the
years ended May 31, 1995 and 1994 and the seven months ended December 31, 1995.
7.12 Absence of Changes. Except as set forth in SECTION 7.12 OF THE
PARENT DISCLOSURE MEMORANDUM or except with respect to the Parent Excluded
Liabilities, since
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December 31, 1995, there has not been any transaction or occurrence in which
Parent or Subsidiary, with respect to Parent's Indirect Merchant Network
Business, has
(a) suffered any material adverse change in the business, operations,
condition (financial or otherwise), liabilities, assets, or earnings of
Parent's Indirect Merchant Network Business nor, to the knowledge of Parent or
Subsidiary, has there been any event which has had a material adverse effect on
any of the foregoing;
(b) incurred any obligations or liabilities of any nature other than
items incurred in the regular and ordinary course of Parent's Indirect Merchant
Network Business, consistent with past practice, or materially increased (or
experienced any material change in the assumptions underlying or the methods of
calculating) any bad debt, contingency or other reserve, other than in the
ordinary course of Parent's Indirect Merchant Network Business consistent with
past practice;
(c) determined as collectible any of Parent's Accounts Receivable or
any portion thereof which were previously considered uncollectible, or written
off as uncollectible any of Parent's Accounts Receivable or any portion
thereof, except for write-ups, and write-offs in the ordinary course of
Parent's Indirect Merchant Network Business consistent with past practice, none
of which is material in amount;
(d) except for the capital expenditure commitments described in SECTION
7.8 OF THE PARENT DISCLOSURE MEMORANDUM and except for capital expenditures of
less than One Hundred Fifty Thousand Dollars ($150,000.00) made in the ordinary
course of Parent's Indirect Merchant Network Business consistent with past
practice, made any significant capital expenditure or commitment for additions
to property, plant, equipment, intangible, or capital assets or for any other
purpose, other than for emergency repairs or replacement;
(e) except in the ordinary course of Parent's Indirect Merchant Network
Business consistent with past practice sold, transferred, or leased any
properties or assets (real, personal or mixed, tangible or intangible) that
otherwise would have been included in the Parent Contributed Assets to, or
entered into any agreement or arrangement that will be a Newco Assumed
Liability with, (i) any stockholder, member, officer, employee, or director of
Parent or Subsidiary, or (ii) any Affiliate of Parent or Subsidiary;
(f) entered into any collective bargaining or labor agreement (oral and
legally binding or written), or experienced any organized slowdown, work
interruption, strike, or work stoppage;
(g) sold, transferred or otherwise disposed of any assets that would
otherwise have been included in the Parent Contributed Assets except in the
ordinary course of Parent's Indirect Merchant Network Business, consistent with
past practice;
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(h) made any material change in any method of accounting or accounting
principle, practice or policy;
(i) taken any other action that is neither in the ordinary course of
Parent's Indirect Merchant Network Business, consistent with past practice, nor
provided for in this Agreement that could reasonably be expected to have a
material adverse effect on Parent's Indirect Merchant Network Business; or
(j) agreed, so as to legally bind Newco after the Closing, whether in
writing or otherwise, to take any actions that if taken by Parent or Subsidiary
through the Closing Date would have resulted in a breach of a representation or
warranty contained in this Section 7.12 and that is not otherwise permitted by
this Agreement.
7.13 Brokers and Finders. Except for Lazard, Freres & Co. LLC, the fees
and expenses of which shall be the sole responsibility of Parent, neither
Parent nor any affiliate of Parent has incurred any obligation or liability to
any party for any brokerage fees, agent's commissions, or finder's fees in
connection with the transactions contemplated by the Acquisition Documents.
7.14 Labor Matters. Neither Parent nor Subsidiary, within the last three
(3) years, has experienced any organized slowdown, work interruption, strike,
or work stoppage by any of the present employees and sales representatives
employed or engaged by Parent or Subsidiary in Parent's Indirect Merchant
Network Business ("Parent's Employees"). Neither Parent nor Subsidiary is a
party to, and neither has any obligation pursuant to, any oral and legally
binding or written agreement, collective bargaining or otherwise, with any
party regarding the rates of pay or working conditions of any of Parent's
Employees, and neither Parent nor Subsidiary is obligated under any agreement
to recognize or bargain with any labor organization or union on behalf of
Parent's Employees. To the knowledge of Parent, Parent and Subsidiary are in
compliance with all applicable federal, state, local and foreign laws and
regulations concerning the employer-employee relationship and with all
agreements relating to the employment of Parent's Employees, including
applicable wage and hour laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws, and social security laws. Except as
described on SECTION 7.14 OF THE PARENT DISCLOSURE MEMORANDUM, there are no
pending or, to the knowledge of Parent or Subsidiary, threatened Labor Claims.
None of Parent, Subsidiary or any of their officers, directors, or employees has
been charged or, to the knowledge of Parent or Subsidiary, threatened with any
Labor Claims in connection with Parent's Employees within the last two years.
Neither Parent nor Subsidiary is liable for any unpaid wages, bonuses, or
commissions (other than those not yet due) or any tax, penalty, assessment or
forfeiture for failure to comply with any of the foregoing. Except as
described in SECTION 7.14 OF THE PARENT DISCLOSURE MEMORANDUM, there is no
outstanding agreement or arrangement with respect to severance payments with
respect to any employee of Parent or Subsidiary who is engaged in Parent's
Indirect Merchant Network Business.
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7.15 Governmental Approval and Consents. Except as described in SECTION
7.15 OF THE PARENT DISCLOSURE MEMORANDUM, Parent and Subsidiary have obtained
all governmental approvals, authorizations, permits, licenses and orders
required for the lawful operation of Parent's Indirect Merchant Network
Business as presently conducted, if any. SECTION 7.15 OF THE PARENT DISCLOSURE
MEMORANDUM contains a true and correct copy of each such approval,
authorization, permit, license and order.
7.16 Taxes.
(a) Parent and Subsidiary have timely filed, and as of the Closing
Date will have timely filed with respect to Parent's Indirect Merchant Network
Business, all state, county, and local income, franchise, property, sales, use,
unemployment, and other tax returns in each state and jurisdiction where such
returns are required to be filed on or prior to the Closing Date, taking into
account any extensions of the filing deadlines that have been validly granted
to Parent or Subsidiary. Parent and Subsidiary, with respect to Parent's
Indirect Merchant Network Business, have paid, or by the Closing Date will have
paid, all state, county, and local income, franchise, property, sales, use, and
all other taxes and assessments (including penalties and interest in respect
thereof, if any) that have become or are due and payable with respect to any
period ended on or prior to the Closing Date whether shown as due and payable
on such returns or not, or is contesting in good faith such taxes and
assessments, in which event Parent has disclosed the details of such contests
in SECTION 7.16 OF THE PARENT DISCLOSURE MEMORANDUM. Attached to SECTION 7.16
OF THE PARENT DISCLOSURE MEMORANDUM are true and correct copies of all material
real estate, personal property, ad valorem, and property tax bills of Parent
and Subsidiary for the year 1995 which have been received by Parent or
Subsidiary prior to the date hereof, relating to the Parent Contributed Assets.
(b) SECTION 7.16 OF THE PARENT DISCLOSURE MEMORANDUM provides a brief
description of any pending federal and state tax disputes in which either
Parent or Subsidiary, with respect to Parent's Indirect Merchant Network
Business, is alleged to be liable or in which Parent or Subsidiary is claiming
a refund, including the nature and amount of the controversy, the respective
positions of the parties as to any amounts claimed to be due thereunder, and
the current status thereof.
(c) All taxes required to be withheld on or prior to the Closing Date
from employees of Parent and Subsidiary for income taxes and social security
taxes have been properly withheld and, if required on or prior to the Closing
Date, have been deposited with the appropriate governmental agency.
(d) Neither Parent nor Subsidiary has received written notice of the
existence of any pending or threatened claim or investigation by any state,
local, or other jurisdiction alleging that Parent or Subsidiary, with respect
to Parent's Indirect Merchant Network Business, has a duty to file tax returns
and pay taxes or is otherwise subject to the taxing authority of any
jurisdiction not included in SECTION 7.16 OF THE PARENT DISCLOSURE MEMORANDUM
with respect to any taxes covered by Section 12.3(a), and
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neither Parent nor Subsidiary has received written notice or questionnaire
from any such jurisdiction since January 1, 1994, that suggests or asserts
that Parent or Subsidiary may have a duty to file such returns and pay such
taxes, or otherwise is subject to the taxing authority of such jurisdiction.
7.17 Employee Benefit Plans.
(a) SECTION 7.17 OF THE PARENT DISCLOSURE MEMORANDUM contains a true
and complete list of all the following agreements or plans which are presently
in effect or which have within the immediately preceding two years previously
been in effect and which cover Parent's Employees, including, without
limitation, incentive, bonus, vacation and severance programs:
(i) Any employee benefit plan as defined in ERISA or under which
Parent or Subsidiary, with respect to Parent's Employees, has any outstanding,
present or future obligation or liability, or under which any of Parent's
Employees has any present or future right to benefits which are covered by
ERISA; or
(ii) Any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical, life insurance, or other
employee benefit plan, program, policy, or arrangement, which Parent or
Subsidiary maintains or to which Parent or Subsidiary has any outstanding
present or future obligations to contribute or make payments under, whether
voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements described in subparagraph (i) or
(ii) are hereinafter collectively referred to as the "Parent Benefit Plans."
7.18 Compliance with Laws. Except as set forth on SECTION 7.18 OF THE
PARENT DISCLOSURE MEMORANDUM, neither Parent nor Subsidiary is engaging in any
activity or omitting to take any action with respect to Parent's Indirect
Merchant Network Business or the Parent Contributed Assets that is or creates a
substantial violation of any law, statute, ordinance or regulation applicable
to Parent's Indirect Merchant Network Business or to the Parent Contributed
Assets. Except as set forth on SECTION 7.18 OF THE PARENT DISCLOSURE
MEMORANDUM, each of Parent and Subsidiary is in substantial compliance with
all applicable laws, regulations, and orders issued by any court or
governmental or administrative body or agency that are applicable to Parent's
Indirect Merchant Network Business or the Parent Contributed Assets.
7.19 Governmental Approval and Consents. Except for any required filing
of the appropriate documents pertaining to the HSR Act (as hereinafter defined)
with the United States Federal Trade Commission and the United States
Department of Justice, and the receipt of an order of termination of any
applicable waiting period therefrom, no consent, approval, or authorization of
or declaration, filing, or registration with any governmental or regulatory
authority is required in connection with the execution,
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delivery, and performance of this Agreement by Parent or the consummation by
Parent of the transactions contemplated hereby.
7.20 Adequacy of Acquired Assets. The Parent Contributed Assets, in
conjunction with the services to be provided pursuant to the Parent Services
Agreement, include all rights, properties, interests in properties and assets
currently owned or leased by Parent and Subsidiary and reasonably necessary to
permit Newco to carry on Parent's Indirect Merchant Network Business in all
material respects as presently conducted by Parent and Subsidiary.
7.21 Title to Assets. Parent will have on the Closing Date, good, valid
and marketable title to the Parent Contributed Assets, whether tangible or
intangible, that are not licensed or leased to Parent or Subsidiary, being
conveyed by it to Newco hereunder, free and clear of all liens, claims,
charges, encumbrances and security interests of any kind or nature other than
Permitted Encumbrances.
ARTICLE 8
COVENANTS OF SELLER
From the date hereof, Seller covenants and agrees with Parent and Newco,
jointly and severally, as follows:
8.1 Conduct of Business Prior to Closing. From the date hereof to the
Closing Date, and except to the extent that Parent shall otherwise consent in
writing, Seller shall, with respect to Seller's Indirect Merchant Network
Business:
(a) operate Seller's Indirect Merchant Network Business substantially
as previously operated and only in the regular and ordinary course;
(b) not sell or otherwise dispose of any real or personal property or
asset that would have been an Acquired Asset hereunder, except in the ordinary
course of Seller's Indirect Merchant Network Business consistent with past
practices;
(c) use commercially reasonable efforts to (i) maintain the Acquired
Assets in their present order and condition, reasonable wear and use excepted,
(ii) deliver the Acquired Assets to Newco on the Closing Date in such
condition, and (iii) maintain all policies of insurance covering such Acquired
Assets in amounts and on terms substantially equivalent to those in effect on
the date hereof;
(d) take commercially reasonable steps to maintain Seller's
Intellectual Property and other intangible assets of Seller's Indirect Merchant
Network Business consistent with prior practice;
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(e) pay all accounts payable of Seller's Indirect Merchant Network
Business substantially in accordance with past practice and collect all
accounts receivable substantially in accordance with past practice, but not
less than in accordance with commercially reasonable business practices;
(f) comply in all material respects with all laws applicable to the
conduct of Seller's Indirect Merchant Network Business; and
(g) maintain the Books and Records of Seller's Indirect Merchant
Network Business on a basis consistent with past practices and prepare and file
all foreign, federal, state, and local tax returns and amendments thereto
required to be filed by Seller after taking into account any extensions of time
granted by such taxing authorities.
8.2 Notification of Changes. Between the date hereof and the Closing
Date, Seller shall promptly notify Parent in writing of any material adverse
change in the financial condition of Seller's Indirect Merchant Network
Business, any damage or loss of a material nature with respect to any of the
Acquired Assets, or the institution of legal, administrative, or other
proceedings against Seller with respect to any of the Acquired Assets or which,
if determined adversely, might materially hinder the performance of Seller's
obligations hereunder.
8.3 Other Transactions.
Until the sixtieth (60th) day following the date hereof, Seller shall
deal exclusively and in good faith with Parent and Newco with regard to the
sale of the Acquired Assets to Newco and will not, and will direct officers,
directors, financial advisors, accountants, agents, and counsel not to (i)
solicit submission of proposals or offers from any persons other than Parent
and Newco relating to any acquisition or purchase, directly or indirectly, of
all or any material part of the Acquired Assets, the sale or issuance of any
capital stock of any corporation formed by Seller or any affiliate of Seller to
which any material part of the assets utilized in Seller's Indirect Merchant
Network Business may be contributed, or any merger or consolidation of any
corporation formed by Seller or any affiliate of Seller to which any material
part of the assets utilized in Seller's Indirect Merchant Network Business may
be contributed (each, an "Acquisition Proposal"), (ii) participate in any
discussions or negotiations regarding, or furnish any non-public information to
any other persons regarding Seller's Indirect Merchant Network Business other
than Parent and Newco and their representatives or otherwise cooperate in any
way or assist, facilitate, or encourage any Acquisition Proposal by any persons
other than Parent and Newco, (iii) enter into any agreement or understanding,
whether in writing or, if legally binding, oral, that would have the effect of
preventing the consummation of the transactions contemplated by this Agreement.
If, notwithstanding the foregoing, Seller or its Affiliates or representatives
or agents should receive any Acquisition Proposal or any inquiry regarding such
proposal from a third party, such persons shall promptly inform Parent and its
counsel thereof of the proposal and the terms thereof.
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8.4 Additional Reports. From the date hereof through the Closing Date
(but not more frequently than monthly), Seller will make available to Parent
true and correct copies of all internal management and control reports
(including aging of accounts receivables, listings of accounts payable, and
inventory control reports) and financial statements related principally to
Seller's Indirect Merchant Network Business and routinely furnished to
management of Seller.
8.5 Conditions Precedent. From the date hereof through the Closing Date,
Seller shall use its commercially reasonable efforts to satisfy the conditions
enumerated in Article 10 hereof.
8.6 Preparation of Financial Statements. Seller shall, at Seller's
expense, provide Parent with all such financial statements of Seller's Indirect
Merchant Network Business as Parent reasonably may require in connection with
the filing of current reports on Form 8-K with the Securities and Exchange
Commission, in such form and with such consents as may be necessary under the
rules and regulations applicable to current reports on Form 8-K.
ARTICLE 9
COVENANTS OF PARENT
From the date hereof, Parent covenants and agrees with Seller, as follows:
9.1 Conduct of Business Prior to Closing. From the date hereof to the
Closing Date, and except to the extent that Seller shall otherwise consent in
writing, Parent shall, with respect to Parent's Indirect Merchant Network
Business:
(a) operate Parent's Indirect Merchant Network Business substantially
as previously operated and only in the regular and ordinary course;
(b) not sell or otherwise dispose of any real or personal property or
asset that would have been a Purchaser Contributed Asset hereunder, except in
the ordinary course of Parent's Indirect Merchant Network Business consistent
with past practices;
(c) use commercially reasonable efforts to (i) maintain the Parent
Contributed Assets in their present order and condition, reasonable wear and
use excepted, (ii) deliver the Parent Contributed Assets to Newco on the
Closing Date in such condition, and (iii) maintain all policies of insurance
covering such Parent Contributed Assets in amounts and on terms substantially
equivalent to those in effect on the date hereof;
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(d) take commercially reasonable steps to maintain Parent's
Intellectual Property and other intangible assets of Parent's Indirect Merchant
Network Business consistent with prior practice;
(e) pay all accounts payable of Parent's Indirect Merchant Network
Business substantially in accordance with past practice and collect all
accounts receivable substantially in accordance with past practice, but not
less than in accordance with commercially reasonable business practices;
(f) comply in all material respects with all laws applicable to the
conduct of Parent's Indirect Merchant Network Business; and
(g) maintain the Books and Records of Parent's Indirect Merchant
Network Business on a basis consistent with past practices and prepare and file
all foreign, federal, state, and local tax returns and amendments thereto
required to be filed by Parent after taking into account any extensions of time
granted by such taxing authorities.
9.2 Notification of Changes. Between the date hereof and the Closing
Date, Parent shall promptly notify Parent in writing of any material adverse
change in the financial condition of Parent's Indirect Merchant Network
Business, any damage or loss of a material nature with respect to any of the
Parent Contributed Assets, or the institution of other proceedings against
Parent with respect to any of the Parent Contributed Assets or which, if
determined adversely, might materially hinder the performance of Parent's
obligations hereunder.
9.3 Additional Reports. From the date hereof through the Closing Date
(but not more frequently than monthly), Parent will make available to Seller
true and correct copies of all internal management and control reports
(including aging of accounts receivables, listings of accounts payable, and
inventory control reports) and financial statements related principally to
Parent's Indirect Merchant Network Business and furnished routinely to
management of Parent.
9.4 Conditions Precedent. From the date hereof through the Closing Date,
Parent shall use its commercially reasonable efforts to satisfy the conditions
enumerated in Article 11 hereof.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND NEWCO
The obligation of Parent and Newco to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each of the following conditions all or any of
which may be waived in writing, in whole or in part, by Parent:
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10.1 Certificate Regarding Schedules and Representations and Warranties.
The representations and warranties made by Seller in Article 6 shall be true
and correct in all material respects on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date (except that such representations and
warranties may be untrue or incorrect as a result of actions or transactions of
Seller made with the prior written consent of Parent), except to the extent
such representations and warranties expressly relate to an earlier date in
which case such representations and warranties shall remain true and correct in
all material respects on and as of such earlier date; and Parent and Newco
shall have received a certificate, dated as of the Closing Date, executed by an
authorized officer of Seller to such effect. For purposes of this Section 10.1
only, in determining whether the condition to closing set forth herein has been
met, a representation or warranty shall be deemed true and correct in all
material respects notwithstanding a breach thereof if such breach does not
cause or would not reasonably be expected to cause a material adverse effect on
Seller's Indirect Merchant Network Business, provided, however, if (i) the
damages from the breach can be cured by money damages and (ii) the breach would
not materially interfere with the provision of services by Newco to its
customers, and (iii) if the amount of losses for which Newco would be entitled
to receive indemnification pursuant to Section 15.2 (assuming for this purpose,
that the transaction had closed and the provisions of Article 15 were
applicable) (x) can reasonably be determined prior to the Closing Date and the
amount of such losses are paid to Newco on or prior to the Closing Date (less
the Basket Amount described in Section 15.9, if applicable), or (y) cannot
reasonably be determined prior the Closing Date but are not reasonably likely
to exceed $20 million in the aggregate and the Seller confirms in writing that
it is obligated pursuant to the terms of Article 15 to pay Newco the amount of
such losses (less the Basket Amount described in Section 15.9, if applicable),
then, and only in such event, the amounts paid or payable pursuant to Article
15 shall be taken into account in making the determination whether the breach
causes or would reasonably be expected to cause a material adverse effect on
Seller's Indirect Merchant Network Business.
10.2 Compliance by Seller. Seller shall have duly performed in all
material respects all of the covenants and agreements contained in this
Agreement to be performed by it on or prior to the Closing Date, and Parent and
Newco shall have received a certificate, dated as of the Closing Date, executed
by an authorized officer of Seller to such effect.
10.3 No Injunction; Etc. No legislation, order or injunction shall be in
effect which enjoins, restrains, or prohibits Parent or Newco in respect of the
consummation of the transactions contemplated hereby, or enjoins or restricts
the operation of all or a material portion of the Acquired Assets in the manner
contemplated by this Agreement, which, in the reasonable judgment of Parent,
would make it inadvisable to consummate the transactions contemplated by this
Agreement.
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10.4 Consents. Subject to the provisions of Section 5.2, Newco shall have
received a true and correct copy of each material consent and waiver that is
(a) required for the assignment of the Contracts, Seller's Permits, Seller's
Intellectual Property, and other agreements and assets, including, without
limitation, the consents to assignment of the Contracts listed in SECTION 10.4
OF THE SELLER DISCLOSURE MEMORANDUM and (b) otherwise required for the
execution, delivery, and performance of this Agreement by Seller. All
authorizations, orders, or approvals of any governmental commission, board or
other regulatory body required for Newco's operation of Seller's Indirect
Merchant Network Business after Closing or for the consummation of the
transactions contemplated hereby shall have been obtained. Parent and Newco
shall have received a certificate, dated as of the Closing Date, executed by an
authorized officer of Seller to the foregoing effect, and Parent and Newco
shall be reasonably satisfied with the terms, conditions, and restrictions of
and obligations under each such authorization, order, or approval.
10.5 Incumbency. Parent and Newco shall have received certificates of
incumbency of Seller executed by a Secretary or Assistant Secretary of Seller
listing the officers of Seller authorized to execute each Acquisition Document
to which Seller is a party and the instruments of transfer on behalf of Seller
and certifying the authority of each such officer to execute the agreements,
documents, and instruments on behalf of Seller in connection with the
consummation of the transactions contemplated herein.
10.6 Certified Resolutions. Parent and Newco shall have received a
certificate of the Secretary or Assistant Secretary of Seller containing a true
and correct copy of the resolutions duly adopted by the Board of Directors of
Seller approving the transactions contemplated by this Agreement and the other
Acquisition Documents to which Seller is or will be a party and authorizing the
negotiation, execution and delivery of each Acquisition Document to which
Seller is or will be a party by the duly authorized officers of Seller. The
Secretary or Assistant Secretary of Seller shall also certify that such
resolutions have not been rescinded, revoked, modified, or otherwise affected
and remain in full force and effect.
10.7 Release of Certain Liens. Parent shall have received evidence
reasonably satisfactory to it that all liens and encumbrances against the
Acquired Assets, other than Permitted Encumbrances, of which it notifies Seller
within fifteen (15) business days after the date hereof have been or will be
released or terminated prior to or as of the Closing.
10.8 No Adverse Change. Except as otherwise described in Section 10.8 of
Seller's Disclosure Memorandum, there shall not have been any material adverse
change in the Acquired Assets or Seller's Indirect Merchant Network Business,
taken as a whole, since December 31, 1995, and Parent shall have received a
certificate, dated as of the Closing Date, executed by an authorized officer of
Seller to such effect.
10.9 Instruments of Transfer. Seller shall have delivered to Newco such
warranty deeds, bills of sale, motor vehicle titles, endorsements, assignments,
licenses, and other good and sufficient instruments of conveyance and transfer
and any other
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instruments in form and substance reasonably satisfactory to counsel to Parent
reasonably necessary to vest in Newco all of Seller's rights, title, and
interest with respect to the Acquired Assets, free and clear of all liens,
charges, encumbrances, pledges, or claims of any nature except for Permitted
Encumbrances.
10.10 Opinion of Counsel for Seller. Parent and Newco shall have received
the written legal opinion of counsel to Seller, in form reasonably satisfactory
to Parent and its counsel, as to the matters specified in Exhibit E hereto
10.11 Leased Real Property Certificates. Newco shall have received prior
to Closing in form and substance reasonably satisfactory to Parent, landlord's
consent to lease assignments for all Seller's Leased Real Property.
10.12 Condition of Acquired Assets. On the Closing Date, all of the
Acquired Assets shall be in substantially the same condition as at the close of
business on the date hereof, except for ordinary use and wear thereof and
changes occurring in the ordinary course of business or expressly permitted by
this Agreement between the date hereof and the Closing Date, and Parent and
Newco shall have received a certificate dated as of the Closing Date, executed
by an authorized officer of Seller, to such effect; provided, however, if on
or prior to the Closing Date any of the Acquired Assets shall have suffered
loss or damage on account of fire, flood, accident, act of war, civil
commotion, or any other cause or event beyond the reasonable power and control
of Seller (whether or not similar to the foregoing) and Seller has maintained
in full force and effect the Seller's Policies then the obligations of Newco
and Parent to consummate the transactions provided for in this Agreement shall
not be excused and at the Closing Seller shall assign to Newco all the right
to be paid the full amount of all insurance proceeds, if any, paid or payable
to Seller, in respect of such loss (such amounts of insurance proceeds being
included as Acquired Assets).
10.13 Hart-Scott-Rodino. All applicable waiting periods, if any, under
the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), shall have expired or been terminated.
10.14 Subleases. Seller shall have executed and delivered the Newco
Subleases substantially in the form attached hereto as Exhibit A.
10.15 Seller Transition Services Agreement. Seller shall have executed
and delivered the Seller Transition Services Agreement.
10.16 Operating Agreement. Seller shall have executed and delivered the
Operating Agreement.
10.17 Assumption of Contracts and Leases. Seller shall have executed and
delivered an assignment and assumption agreement substantially in the form
attached hereto as Exhibit F (the "Assignment and Assumption Agreement").
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ARTICLE 11
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions, all or any of which may be waived in
writing, in whole or in part, by Seller:
11.1 Certificate Regarding Schedules and Representations and Warranties.
The representations and warranties made by Parent in Article 7 shall be true
and correct in all material respects on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date (except that such representations and
warranties may be untrue or incorrect as a result of actions or transactions
of Parent made with the prior written consent of Seller), except to the extent
such representations and warranties expressly relate to an earlier date in
which case such representations and warranties shall remain true and correct
in all material respects on and as of such earlier date; and Seller shall have
received a certificate, dated the Closing Date, executed by an authorized
officer of Parent to such effect. For purposes of this Section 11.1 only, in
determining whether the condition to closing set forth herein has been met, a
representation or warranty shall be deemed true and correct in all material
respect notwithstanding a breach thereof if such breach does not cause or
would not reasonably be expected to cause a material adverse effect on
Parent's Indirect Merchant Network Business, provided, however, if (i) the
damages from the breach can be cured by money damages and (ii) the breach
would not materially interfere with the provision of services by Newco to its
customers, and (iii) if the amount of losses for which Newco would be entitled
to receive indemnification pursuant to Section 15.3 (assuming for this purpose,
that the transaction had closed and the provisions of Article 15 were
applicable) (x) can reasonably be determined prior to the Closing Date
and the amount of such losses are paid to Newco on or prior to the Closing Date
(less the Basket Amount described in Section 15.9, if applicable), or (y)
cannot reasonably be determined prior the Closing Date but are not reasonably
likely to exceed $20 million in the aggregate and the Parent confirms in
writing that it is obligated pursuant and subject to the terms of Article 15 to
pay Newco the amount of such losses (less the Basket Amount described in
Section 15.9, if applicable), then, and only in such event, the amounts paid or
payable pursuant to Article 15 shall be taken into account in making the
determination whether the breach causes or would reasonably be expected to
cause a material adverse effect on Parent's Indirect Merchant Network Business.
11.2 Compliance by Parent and Newco. Each of Parent and Newco shall have
duly performed in all material respects all of the covenants and agreements
contained in this Agreement to be performed by them on or prior to the Closing
Date, and Seller shall have received a certificate, dated as of the Closing
Date, executed by an authorized officer of Parent and a Manager of Newco to
such effect.
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11.3 Certified Resolutions. Seller shall have received from Parent and
Newco certificates of the Secretary of Parent and a Manager of Newco,
respectively, containing true and correct copies of resolutions duly adopted by
the Board of Directors of Parent and the Managers of Newco approving the
transactions contemplated by this Agreement and the other Acquisition Documents
to which Parent or Newco is a party and authorizing the negotiation, execution
and delivery of each Acquisition Document to which Parent or Newco is or will
be a party by the duly authorized officers or managers of Parent and Newco,
respectively. The Secretary or Assistant Secretary of Parent and a Manager of
Newco, respectively, shall also certify that such resolutions have not been
rescinded, revoked, modified, or otherwise affected and remain in full force
and effect.
11.4 Consents. Subject to the provision of Section 5.2, Seller shall have
received a true and correct copy of each material consent and waiver that is
(a) required for the assignment of the Parent Contracts, Parent's Permits,
Parent's Intellectual Property, and other agreements and assets and (b)
otherwise required for the execution, delivery, and performance of this
Agreement by Parent. All authorizations, orders, or approvals of any
governmental commission, board or other regulatory body required for Newco's
operation of Parent's Indirect Merchant Network Business after Closing or for
the consummation of the transactions contemplated hereby shall have been
obtained. Seller shall have received a certificate, dated as of the Closing
Date, executed by an authorized officer of Parent to the foregoing effect, and
Seller shall be reasonably satisfied with the terms, conditions, and
restrictions of and obligations under each such authorization, order, or
approval.
11.5 No Injunction; Etc. No legislation, order or injunction shall be in
effect which enjoins, restrains, or prohibits Seller in respect of the
consummation of the transactions contemplated hereby, or restricts or enjoins
the operation of all or a material portion of the Parent Contributed Assets,
which, in the reasonable judgment of Seller, would make it inadvisable to
consummate in the manner contemplated by this Agreement the transactions
contemplated by this Agreement.
11.6 Incumbency. Seller shall have received certificates of incumbency of
Parent executed by its Secretary or Assistant Secretary and a certificate of
Newco executed by a Manager listing the officers of Parent and the Managers of
Newco, respectively, authorized to execute each Acquisition Document to which
Parent or Newco is a party and certifying the authority of each such officer or
manager to execute the agreements, documents, and instruments on behalf of
Parent or Newco in connection with the consummation of the transactions
contemplated herein.
11.7 Opinion of Parent's Counsel. Seller shall have received the written
legal opinion of Alston & Bird and Parent's General Counsel, in form reasonably
satisfactory to Seller and its counsel, as to matters specified in Exhibit G
hereto, which opinion may be based upon and incorporate the 1992 edition of the
Interpretive Standards applicable to Legal Opinions to Third Parties in
Corporate Transactions adopted by the Legal Opinion
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Committee of the Corporate and Banking Law Section of the State Bar of Georgia,
which Interpretive Standards shall be attached to the Opinion.
11.8 Release of Certain Liens. Seller shall have received evidence
satisfactory to it that all liens and encumbrances against the Parent
Contributed Assets other than Permitted Encumbrances of which it notifies
Parent within fifteen (15) business days after the date hereof have been or
will be released or terminated prior to or as of the Closing.
11.9 Instruments of Transfer. Parent shall have delivered to Seller such
warranty deeds, bills of sale, motor vehicle titles, endorsements, assignments,
licenses, and other good and sufficient instruments of conveyance and transfer
and any other instruments in form and substance reasonably satisfactory to
counsel to Seller reasonably necessary to vest in Newco all of Parent's right,
title, and interest with respect to the Parent Contributed Assets, free and
clear of all liens, charges, encumbrances, pledges, or claims of any nature
except for Permitted Encumbrances.
11.10 Leased Real Property Certificates. Seller shall have received prior
to Closing in form and substance reasonably satisfactory to Seller, landlord's
consent to lease assignments for all Parent's Leased Real Property.
11.12 Condition of Acquired Assets. On the Closing Date, all of the
Parent Contributed Assets shall be in substantially the same condition as at
the close of business on the date hereof, except for ordinary use and wear
thereof and changes occurring in the ordinary course of business or expressly
permitted by this Agreement between the date hereof and the Closing Date, and
Seller shall have received a certificate dated as of the Closing Date, executed
by an authorized officer of Parent, to such effect; provided, however, if on or
prior to the Closing Date any of the Parent Contributed Assets shall have
suffered loss or damage on account of fire, flood, accident, act of war, civil
commotion, or any other cause or event beyond the reasonable power and control
of Parent (whether or not similar to the foregoing) and Parent has maintained
in full force and effect the Parent Policies then the obligations of Seller to
consummate the transactions provided for in this Agreement shall not be excused
and at the Closing Parent shall assign to Newco all the right to be paid the
full amount of all insurance proceeds, if any, paid or payable to Parent, in
respect of such loss (such amount of insurance proceeds being included as
Parent Contributed Assets).
11.13 No Adverse Change. Except as described in SECTION 11.13 OF THE
PARENT DISCLOSURE MEMORANDUM, there shall not have been any material adverse
change in the Parent Contributed Assets or Parent's Indirect Merchant Network
Business, taken as a whole, since December 31, 1995, and Seller shall have
received a certificate, dated as of the Closing Date, executed by an authorized
officer of Parent to such effect.
11.14 Hart-Scott-Rodino. All applicable waiting periods under the HSR
Act, if any, shall have expired or been terminated.
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11.15 Seller Transition Services Agreement and Registration Rights
Agreement. Newco shall have executed and delivered the Seller Transition
Services Agreement and Registration Rights Agreement substantially in the form
of Exhibit H hereto.
11.16 Operating Agreement and Parent Services Agreement. Parent shall
have executed and delivered the Operating Agreement and Parent Services
Agreement.
11.17 Offers of Employment. Newco shall have made offers of employment to
the Transferred Employees as provided in Article 13, and an officer of Newco
shall have executed and delivered to Seller a certificate to such effect.
11.18 Assumption of Contracts and Leases. Parent and Newco shall have
executed and delivered an assignment and assumption agreement substantially in
the form attached hereto as Exhibit I (the "Newco Assignment and Assumption
Agreement").
ARTICLE 12
MUTUAL COVENANTS
12.1 Governmental Filings. Parent, Newco and Seller, to the extent
legally required, shall prepare or file within five (5) business days after the
date hereof, and diligently prosecute at the earliest practicable time after
the date hereof, the notifications and filings required pursuant to the HSR Act
in order to effect the transactions contemplated by this Agreement.
12.2 Further Mutual Covenants. Parent, Newco and Seller shall each take
all actions contemplated by this Agreement, shall act in good faith with regard
to all matters hereunder and, subject to the right of a party to terminate this
Agreement pursuant to Article 14 hereof, do all things reasonably necessary to
effect the consummation of the transactions contemplated by this Agreement.
Except as otherwise provided in this Agreement, Parent, Newco and Seller shall
each refrain from knowingly taking or failing to take any action which would
render any of the representations or warranties contained in Articles 6 or 7 of
this Agreement in any material respect inaccurate as of the Closing Date. Each
party shall promptly notify the other parties after learning of any action,
suit, or proceeding that shall be instituted or threatened against such party
to restrain, prohibit, or otherwise challenge the legality of any transaction
contemplated by this Agreement.
12.3 Prorations.
(a) Utility Charges, Rental Charges, Equipment Charges, Real Property
Taxes, Personal Property Taxes, and Service Contracts including, without
limitation, accruals or prepayments thereof (all as individually defined below
and collectively called the "Proration Items"), shall be prorated directly
between Seller and Newco and between Parent and Newco as provided in this
Section 12.3.
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(b) For purposes of this Section 12.3, the capitalized terms set forth
below shall have the following meanings:
(i) "Utility Charges" shall mean water, sewer, electricity, gas and
other utility charges, if any, applicable to the Seller's Leased Real Property
or Parent's Leased Real Property, as applicable;
(ii) "Rental Charges" shall mean common area maintenance charges,
merchant association dues, insurance reimbursement and rental charges payable
or receivable and other payments or receipts (other than Real Property Taxes)
applicable to the Seller's Leased Real Property or Parent's Leased Real
Property, as applicable;
(iii) "Equipment Charges" shall mean rental charges payable or
receivable and other payments or receipts applicable to the equipment of
Seller's Indirect Merchant Network Business or Parent's Indirect Merchant
Network Business, as applicable;
(iv) "Real Property Taxes" shall mean ad valorem taxes imposed
upon the Seller's Leased Real Property or Parent's Leased Real Property, as
applicable, general assessments imposed with respect to the Seller's Leased
Real Property or Parent's Leased Real Property, as applicable, and special
assessments upon the Seller's Leased Real Property or Parent's Leased Real
Property, as applicable, whether payable in full or by installments prior to
the Closing Date; and
(v) "Personal Property Taxes" shall mean ad valorem taxes imposed
upon the Acquired Assets other than the Seller's Leased Real Property or upon
the Parent Contributed Assets other than Parent's Leased Real Property, as
applicable.
(c) As soon as practicable after the Closing Date, all Utility Charges,
Rental Charges, Equipment Charges, Real Property Taxes, Personal Property
Taxes, and Service Contracts (including amounts owed or paid pursuant to
transferable state licenses applicable to the Acquired Assets or the Parent
Contributed Assets and transferred to Newco hereunder) shall be apportioned to
the Effective Time, and Seller, Parent and Newco will examine all relevant
books and records as of the Effective Time in order to make the determination
of the apportionments, which determinations shall be calculated in accordance
with past practices. Payments in respect thereof shall be made to the
appropriate party by check within thirty (30) days after such determination,
except that payments for Real Property Taxes and Personal Property Taxes shall
initially be determined based on the previous year's taxes and shall later be
adjusted to reflect the current year's taxes when the tax bills are finally
rendered. The parties shall fully cooperate to avoid, to the extent legally
possible, the payment of duplicate Personal Property Taxes, and each party
shall furnish, at the request of the other, proof of payment of any Personal
Property Taxes or other documentation which is a prerequisite to avoiding
payment of a duplicate tax.
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(d) In the event that any party (the "Payor") pays a Proration Item
for which another party (the "Payee") is obligated in whole or in part under
this Section 12.3, the Payor shall present to the Payee evidence of payment and
a statement setting forth the Payee's proportionate share of such Proration
Item, and the Payee shall promptly pay such share to the Payor. In the event
any party (the "Recipient") receives payments of a Proration Item to which
another party (the "Beneficiary") is entitled in whole or in part under this
Agreement, the Recipient shall promptly pay such share to the Beneficiary.
(e) In the event there exist as of the Closing Date any pending
appeals of ad valorem tax assessments with regard to any Acquired Assets or
Parent Contributed Assets, the continued prosecution and/or settlement of such
appeals shall be subject to the direction and control of Newco with respect to
assessments for the year within which the Closing occurs.
12.4 Access and Information. From the date hereof to the Closing Date and
during normal business hours, Seller shall afford to Parent and Newco, their
counsel, accountants, and other representatives, reasonable access upon
reasonable notice to the offices, properties, books, contracts, commitments,
records, vendors, and customers of Seller with respect to Seller's Indirect
Merchant Network Business and shall furnish such persons with all information
(including financial and operating data) concerning Seller's Indirect Merchant
Network Business and the Acquired Assets as they reasonably may request.
Seller shall use commercially reasonable efforts to assist Parent and Newco,
their counsel, accountants, and other representatives in their examination.
Parent and Newco shall, and shall use their best efforts to cause their
counsel, accountants, and representatives to, hold in strict confidence all
information so obtained from Seller.
12.5 Confidentiality. Parent and Seller each agree that (i) all
information regarding either of them (the "Disclosing Party"), including any
subsidiaries of the Disclosing Party, which is or has been furnished to the
other (an "Evaluating Party") by the Disclosing Party or any of the Disclosing
Party's Representatives (as hereinafter defined) in connection with the
Evaluating Party's consideration and review of the transactions contemplated
hereby (the "Transaction") (such information, together with notes, memoranda,
summaries, analyses, compilations and other writings relating thereto or based
thereon prepared by the Evaluating Party or its Representatives being referred
to herein as the "Evaluation Material") will be kept strictly confidential.
The term "Evaluation Material" does not include information which becomes
generally available to the public through no wrongful act of the Evaluating
Party or its Representatives; which was publicly and generally available prior
to the date hereof; which is or was independently developed by the Evaluating
Party without any reference to the Evaluation Material; or which was or becomes
available to the Evaluating Party or any of its Representatives on a
non-confidential basis from a source other than the Disclosing Party or its
Representatives, provided that neither the Evaluating Party or its
Representatives is aware that such source is under an obligation (whether
contractual, legal or fiduciary) to the Disclosing Party to keep such
information confidential. The term Representatives means the respective
party's directors, officers, employees, legal and financial advisors,
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accountants and other agents and representatives, as the case may be, and in
the case of Parent, includes any bank or other financial institution or
institutional investor who is considering providing financing to Parent or
Newco in connection with the Transaction. If either the Seller or Parent is
requested in any judicial or administrative proceeding or by any governmental
or regulatory authority to disclose any Evaluation Material regarding the
other, such party will give the Disclosing Party prompt notice of such request
so that the Disclosing Party may seek an appropriate protective order. Seller
and Parent agree to cooperate with the other in obtaining such an order. If
in the absence of a protective order Parent or Seller is nonetheless compelled
to disclose the Evaluation Material regarding the other, such party may make
such disclosure without liability hereunder, provided that such party gives the
other party written notice of the information to be disclosed as far in advance
of its disclosure as is practicable and, upon the Disclosing Party's request
and at the Disclosing Party's expense, use commercially reasonable efforts to
obtain reasonable assurances that confidential treatment will be accorded to
such information. If this Agreement is terminated prior to the Closing, each
party shall promptly return or certify the destruction of all Evaluation
Material and copies thereof, and all work papers containing confidential
information received from each other party. Newco and Parent's obligations
under this provision with respect to confidential information about the
Acquired Assets shall terminate upon the closing of the transactions
contemplated hereby.
ARTICLE 13
POST CLOSING MATTERS
13.1 Employment of Employees.
(a) Newco shall make offers of employment no later than the business
day prior to the Closing Date, to be effective on the Closing Date, to all of
Seller's employees identified in SECTION 6.14 OF THE SELLER DISCLOSURE
MEMORANDUM ("Employees") other than: Employees who are Not Actively Employed
by Seller on the Closing Date for any reason whatsoever, including but not
limited to a leave of absence or prior termination of employment (an Employee
shall be considered "Not Actively Employed" if the Employee did not report to
work with Seller for a period of at least six consecutive business days which
includes the Closing Date (excluding vacation time). Newco's offer of
employment may be conditioned upon an Employee reporting to work as soon as
practicable after the Closing Date.
Employees who are Not Actively Employed by Seller on the Closing Date due
to maternity leave, workers' compensation leave, Family Medical Leave Act of
1993 leave or leave under a similar state statute, and any other medical leave
or permitted leave of absence, who present themselves for work upon completion
of the leave with a written physician's statement acceptable to Newco that the
individual is fit to perform his or her job, shall be offered immediate
employment by Newco subject to the same requirements as stated in this
Paragraph 13.1(a) for offers to other Employees of Seller.
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Employees who accept the offer of employment made by Newco shall be
referred to as "Transferred Employees." Notwithstanding any other provision of
this Agreement to the contrary, the wage and salary rate paid by Newco or
Parent, and the bonus opportunity (including the basis for determining the
extent to which a bonus will be paid and the amount of the potential bonus),
applicable to any Transferred Employee from the Closing Date through December
31, 1996 shall not be less that the wage and salary rate earned by such
Transferred Employee from Seller, and the bonus opportunity in effect,
respectively, as of the Closing Date; provided, however, that Seller shall be
responsible for the ratable portion of any bonus for a Transferred Employee
through the Closing Date and Newco shall be responsible for the ratable
portion of any bonus after the Closing Date through December 31, 1996.
(b) Notwithstanding any possible inferences to the contrary, none of
Seller, Parent or Newco intends for this Article 13 to create any rights or
obligations except as between the parties hereto, and no past, present or
future employees of Seller, Parent or Newco shall be treated as third-party
beneficiaries of this Article 13.
(c) Seller shall be responsible for the payment of all wages,
commissions, severance pay, accrued vacation and sick pay to Transferred
Employees of Seller that are earned or accrued but not yet paid through the
Closing Date and for any Employees of Seller who are not Transferred Employees,
up to and including the date Seller terminates the employment of such
Employees. Except for obligations specifically assumed by Newco hereunder,
Seller shall be responsible for the payment of any amounts due to its Employees
(including the Transferred Employees) pursuant to the Seller Benefit Plans as a
result of the employment of its Employees, provided that in determining bonuses
and other similar payments due to Transferred Employees for any period ended on
or prior to the Effective Time, Seller shall, if payment thereof will occur
after the Effective Time, waive any requirement that such Employees be
Employees of Seller on the date such bonuses or other similar payments are
paid. Seller shall be responsible for reporting all employee-related costs and
liabilities of Transferred Employees accruing prior to the Closing Date,
whether payable on or after the Closing Date. Seller is responsible for all
incurred but unreported or unpaid medical claims made, occurring or arising
prior to the Effective Time and for the cost associated with any hospital
confinement that commences prior to the Effective Time. Effective on the
Closing Date, Seller shall, and hereby does, release all Transferred Employees
from any employment and/or confidentiality agreement previously entered into
between Seller and such Transferred Employees to the extent (but only to the
extent) necessary for Newco to operate Seller's Indirect Merchant Network
Business in substantially the same manner as operated by Seller prior to the
Closing Date.
(d) Newco shall become responsible for all costs and liabilities
attributable to Transferred Employees accruing at and after the Effective Time;
provided, however, that Newco shall not be responsible for any liabilities
arising under the Seller Benefit Plans except as specified in Sections 13.3 and
13.4.
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13.2 Seller's Benefit Plans. Except for obligations specifically assumed
by Newco under this Agreement, Newco shall assume no responsibility with regard
to any Seller Benefit Plans. To the extent necessary, Seller may continue to
communicate with the Transferred Employees regarding their rights and
entitlement to any benefits under the Seller Benefit Plans in connection with
the transactions contemplated hereby, subject to Newco's prior approval, which
shall not be unreasonably withheld, and the parties shall cooperate with each
other in the administration of all applicable employee benefit plans and
programs.
13.3 Vacation Pay. Parent and Newco agree to give each Transferred
Employee credit for prior years of service with Seller for purposes of
calculating vacation pay that may be received pursuant to the vacation pay
policy of Newco as may be in effect from time to time after the Closing, and
will waive any eligibility requirements of such policy with respect to
Transferred Employees. At the election of Newco, Newco shall either (i)
provide each Transferred Employee with the number of vacation days to which the
applicable Transferred Employee would be entitled for the year ended December
31, 1996 (less any vacation days previously taken) under Seller's vacation
policy in excess of the number of days for such year to which such Transferred
Employee would be entitled under Newco's vacation policy as of the Closing
Date, or (ii) include the value of such differences in vacation days in the
payments to be made pursuant to Section 13.4(g).
13.4 Newco's Benefit Plans.
(a) Under Newco's employee benefit plans and programs (including any
employee benefit plans of Parent which are made available to Newco's
employees), each Transferred Employee shall receive credit for prior years of
service with Seller for all purposes of such plans (except for purposes of
benefits accrued under a defined benefit plan) and shall be entitled to
participate in any such Newco employee benefit plans without the application of
any applicable waiting periods. Newco and Parent shall also permit the
Transferred Employees and their eligible dependents to participate in their
applicable group medical plans and will cause such group medical plans to (i)
recognize all out-of-pocket expenses of each Transferred Employee recognized
from and after January 1, 1996 and prior to the Closing Date under Seller's
applicable group medical plans for purposes of determining each such
Transferred Employee's deductible and co-payment expenses for the year ended
December 31, 1996 under Newco's and Parent's applicable group medical plans and
(ii) waive any provisions that would exclude coverage of a pre-existing
condition of any Transferred Employee or any of the Transferred Employee's
dependents or beneficiaries to the extent that, as of the Closing Date, any
such condition was not subject to exclusion under Seller's applicable group
medical plan.
(b) As soon as practicable following the Closing, Seller shall cause
the trustee ("Seller's Trustee") of the MasterCard Savings Plan ("Seller's
Retirement Plan"), to transfer to the trustee of Parent's 401(k) Plan
("Parent's Trustee") cash equal to the vested account balance (as of the day of
the transfer) of each Transferred Employee in Seller's
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Retirement Plan. The cash to be transferred shall not include the value of the
account balances of any Transferred Employees who become eligible for and elect
to receive a distribution (including a direct rollover described in Internal
Revenue Code Section 401(a)(31)) from the Seller's Retirement Plan prior to the
date of transfer to Parent's 401(k) Plan. As of the Closing Date, Seller shall
vest Transferred Employees in the non-vested portion of their account balances
in Seller's Retirement Plan.
(c) Seller represents that Seller's Retirement Plan permits or will
permit the transfer of assets and liabilities described in Sections 13.4(b)
above. To the extent required by law, Newco and Parent agree to provide for
the transfer of assets described in Section 13.4(b) above in Parent's 401(k)
Plan. Parent's 401(k) Plan shall comply, without limitation, with Section
411(d)(6) of the Code with respect to accrued benefits represented by the
assets transferred from the Seller's Retirement Plan.
(d) Neither Parent, Newco or Parent's Trustee shall be liable for
benefits to the Transferred Employees attributable to assets that are not
transferred from Seller's Trustee to Parent's Trustee. Similarly, neither
Seller nor Seller's Trustee shall be liable for benefits to the Transferred
Employees attributable to assets that are transferred from Seller's Trustee to
Parent's Trustee. Parent shall indemnify the Seller (as if Seller was Newco
for such purpose) in accordance with Section 15.3 of this Agreement against
Losses suffered by Seller that are attributable to the failure of Parent's
401(k) Plan and trust to qualify under Code Section 401(a). Similarly, Seller
shall indemnify the Parent (as if Parent was Newco for such purpose) and Newco
in accordance with Section 15.2 of this Agreement against Losses suffered by
Parent that are attributable to the failure of Seller's Retirement Plan and
trust to qualify under Code Section 401(a).
(e) Prior to the transfer of assets from Seller's Retirement Plan to
Parent's 401(k) Plan: (i) Parent shall provide to Seller written assurances
that the Parent's 401(k) Plan satisfies the requirements of Code Section 401(a)
and 401(k) and (ii) Seller shall provide to Parent written assurances that the
Seller's Retirement Plan satisfies the requirements of Code Section 401(a) and
401(k).
(f) Seller, Parent and Newco shall, in connection with the transfer
described in this Section 13.4, cooperate in making all appropriate filings
required under the Code and ERISA and the regulations thereunder and in all
other ways cooperate in completing the transfer of assets and liabilities, and
shall further cooperate to ensure that the transfers described in this Section
13.4 satisfy the applicable requirements of Sections 401(a)(12), 401(k) and
414(l) of the Code and the regulations thereunder.
(g) No later than 120 days following the Closing Date, Parent and
Seller shall jointly engage William M. Mercer Incorporated, or such other
benefits consultant as is mutually acceptable to Seller and Parent, to value by
December 1, 1996, the Parent and other benefits (on a per-employee basis) that
will be applicable to Transferred Employees employed by Newco through December
31, 1996. No later than December 1, 1996, William M. Mercer Incorporated, or
such other benefit consultant as
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was engaged to value Newco's benefits pursuant to the preceding sentence, shall
undertake a similar evaluation of Seller's benefits that would have applied to
each Transferred Employee had the Transferred Employee remained in the employ
of the Seller. Newco shall, no later than March 31, 1997, make a single cash
payment (a "Benefits Equalization Payment") to each Transferred Employee (i)
employed by Newco at the time of the payment and (ii) each Transferred Employee
terminated by Newco without cause after December 31, 1996 and before the date
of the payment, in each case, equal to the excess, if any, of the value (for
the period beginning on the Closing Date through December 31, 1996) of Seller's
benefits which would have applied to such Transferred Employee in excess of the
value of Newco's benefits for such Transferred Employee for such period.
(h) Newco shall offer Transferred Employees relocation benefits under
the same terms and conditions as under the relocation benefit program of
Seller, provided that Seller, for the duration of such program, shall be
responsible for paying any and all costs of providing such relocation benefits.
(i) Newco shall provide severance benefits to Transferred Employees
whose employment is involuntarily terminated by Newco through December 31, 1996
substantially similar to the Seller's Severance Policy described in SECTION
6.17 OF THE SELLER DISCLOSURE MEMORANDUM as in effect on the date hereof.
Except as provided in the foregoing sentence, following the Closing Date Newco
shall adopt a severance program applicable to all employees in its sole
discretion and, as of January 1, 1997, all employees of Newco, including
Transferred Employees, shall be subject to such policy as in effect from time
to time.
13.5 Non-Solicitation. Until the expiration of thirty-six (36) months
after the month in which the Closing Date occurs, Seller shall not directly or
indirectly solicit or offer employment to any Transferred Employee who is then
an employee of Newco or who has terminated such employment without the consent
of Newco within ninety (90) days of such solicitation or offer, and neither
Parent nor Newco shall directly or indirectly solicit or offer employment to
any person who, after the Closing Date, is then an employee of Seller or who
has terminated such employment without the consent of Seller within ninety (90)
days of such solicitation or offer.
13.6 Discharge of Business Obligations. From and after the Closing Date,
Seller shall pay and discharge, in accordance with past practice but not less
than on a timely basis, all obligations and liabilities incurred by it prior to
the Effective Time in respect of Seller's Indirect Merchant Network Business,
its operations or the assets and properties used therein (except for
liabilities and obligations expressly assumed by Newco hereunder), including
without limitation any liabilities or obligations to employees and clients of
Seller. From and after the Closing Date, Parent shall pay and discharge, in
accordance with past practice but not less than on a timely basis, all
obligations and liabilities incurred by it prior to the Effective Time in
respect of Parent's Indirect Merchant Network Business, its operations or the
assets and properties used therein (except for
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liabilities and obligations expressly assumed by Newco hereunder). Likewise,
from and after the Closing Date, Newco shall pay and discharge, in accordance
with the past practice of Seller's Indirect Merchant Network Business but not
less than on a timely basis, all obligations and liabilities expressly assumed
by Newco hereunder.
13.7 Maintenance of Books and Records.
(a) Each of Seller, Parent and Newco shall preserve until the seventh
anniversary of the Closing Date all Books and Records possessed or to be
possessed by such party relating to any of the assets, liabilities or business
of Seller's Indirect Merchant Network Business prior to the Closing Date.
Seller shall give Newco written notice of any Books and Records discovered by
Seller that were not transferred to Newco. After the Closing Date, where there
is a legitimate purpose, each party shall provide the other with access, upon
prior reasonable request specifying the need therefor, during regular business
hours, to (i) the officers and employees of such party and (ii) the books of
account and records of such party, but, in each case, only to the extent
relating to Seller's Indirect Merchant Network Business prior to the Closing
Date, and the other party and its representatives shall have the right to make
copies of such books and records; provided, however, the foregoing right of
access shall not be exercisable in such a manner as to interfere unreasonably
with the normal operations and business of such party; and further, provided,
as to so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party, its affiliates,
officers, directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes
generally known to competitors of such party, through sources other than the
requesting party, its affiliates or its officers, directors or representatives.
Notwithstanding the provisions of this Section 13.7(a), such records may be
destroyed by a party if such party sends to the other parties written notice of
its intent to destroy records, specifying with particularity the contents of
the records to be destroyed; provided, however, that neither party shall give
the other written notice of its intent to destroy records, if such records are
at such time legally required to be maintained. Records with respect to which
such notice is given may then be destroyed after the 30th day after such notice
is given, unless another party objects to the destruction in which case the
party seeking to destroy the records shall deliver such records to the
objecting party.
(b) Newco shall fully cooperate with Seller in the preparation and
filing of all tax filings relating to the period ending prior to the Closing
Date. Newco also shall make available to Seller such information as may be
reasonably required by Seller in connection with audits or otherwise for the
proper payment of taxes for which Seller is responsible or in connection with
any claims for refunds of such taxes. Newco shall provide within a reasonable
time after the receipt of a written request all information contained in its
files necessary for the preparation by Seller of a Form W-2 for the calendar
year in which the Closing occurs for each Transferred Employee.
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13.8 Payments Received. Seller and Newco agree that after the Closing
they will hold and will promptly transfer and deliver to the proper recipient
thereof, from time to time as and when received by them, any cash, checks with
appropriate endorsements (using their best efforts not to convert such checks
into cash), or other property that they may receive on or after the Closing
which properly belongs to the other party, including without limitation, any
insurance proceeds, and will account to the other for all such receipts. From
and after the Closing, Newco shall have the right and authority to endorse
without recourse the name of Seller on any check or draft for payment of money
received by Newco on account of the Acquired Assets transferred to Newco
hereunder.
13.9 Covenants Not to Compete; Confidentiality.
(a) Seller agrees, as consideration for the consummation of the
transactions contemplated herein and for the payment to be made pursuant to
Section 3.1(a) hereof, for a period commencing on the Closing Date and ending
four (4) years after the date Seller ceases to be the beneficial owner of any
equity interest in Newco or any successor thereto, Seller (i) will not, either
directly or indirectly (including through any Affiliate), own, manage, control
or operate or participate in the ownership, management, operation or control
of, any business whether in corporate proprietorship or partnership form or
otherwise, which is engaged in the Business of Newco (as hereinafter defined)
as conducted as of the Closing Date (a "Competitive Activity") in the United
States (the "Territory"); (ii) will not engage in a Competitive Activity at any
place in the Territory directly or indirectly (including through an
Affiliate), whether individually, in partnership, jointly, or in conjunction
with, or on behalf of, any person, firm, partnership, corporation, or
unincorporated association or entity of any kind; and (iii) will not, directly
or indirectly (including through an Affiliate), whether individually, in
partnership, jointly, or in conjunction with, or on behalf of, any person,
firm, partnership, corporation, or unincorporated association or entity of any
kind, solicit or accept any Business of Newco from any bank or other
association or institution that acts as a depository or processor of any
transactions utilizing credit cards, debit cards or similar cards on behalf of
merchants. As used herein, the "Business of Newco" means (i) Merchant
generated electronic authorization and data capture and transaction processing
for Credit Cards both directly from Merchant point-of-sale terminals and from a
Merchant's host/controller, (ii) front end processing and back office support,
and (iii) the provision of corporate cash management and information services
both directly to corporations and indirectly through financial institutions,
including bank account balance and deposit reporting, institutional wire
transfer, financial electronic data interchange as a separate product and
electronic tax payment and filing services; provided, however, that Seller
shall not be deemed to be violating the covenants contained herein if it
engages in any of the activities set forth in (iii) above and these services
are reasonably required to be provided in order to support the issuance,
acceptance and utilization of credit, debit, corporate, purchase and other
card-related products on behalf of Seller's membership and not as a separate
product or service. If at any time the provisions of this Section 13.9 are in
effect Seller desires to engage in an activity that is or may be prohibited by
this Section 13.9, and Seller reasonably believes that such activity would not
compete with the Business of Newco,
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Seller may seek approval for such activity from Newco, and Newco agrees not to
unreasonably withhold such approval.
(b) Seller acknowledges that it has information in respect of Seller's
Indirect Merchant Network Business and financing of Seller's Indirect Merchant
Network Business and its dealings, transactions, affairs, plans and proposals,
some of which information is confidential and important to Seller's Indirect
Merchant Network Business. In this Section 13.9 such confidential and
important information is called "Newco Confidential Information" and includes,
without limitation, confidential or secret information relating to the trade
secrets, know-how, ideas, business methods, finances, prices, business plans,
marketing plans, development plans, manpower plans, sales targets, sales
statistics, customer lists, customer relationships, computer systems and
computer software of Seller's Indirect Merchant Network Business. Seller
further acknowledges that the disclosure of Newco Confidential Information
(whether directly or indirectly) to actual or potential competitors of Seller's
Indirect Merchant Network Business could place Newco at a competitive
disadvantage and could do damage (whether financial or otherwise) to Newco's
business. Seller shall not during the period commencing on the Closing Date
and terminating on the fifth anniversary of the Closing Date (i) disclose to
any person except to those authorized by Parent or Newco to know any Newco
Confidential Information; or (ii) through failure to exercise reasonable care
and diligence cause or permit any unauthorized disclosure of any Newco
Confidential Information; provided, however, that these restrictions shall
cease to apply to information which (otherwise than through the default of
Seller) becomes available to the public generally; provided, further, that
nothing herein shall prevent Seller or its Affiliates from using Seller
Confidential Information in the normal conduct of carrying out their own
business, Seller agreeing that they shall not be entitled to use any Newco
Confidential Information in a manner that would breach subsection (a) of this
Section 13.9; and provided further that none of the restrictions contained in
this Section 13.9 shall be binding on any of the members of Seller provided
that such members did not obtain such Newco Confidential Information pursuant
to a breach by Seller of its obligations hereunder.
(c) Parent and Newco acknowledge that each of them has or will have,
through the Transferred Employees, information in respect of the business of
Seller other than Seller's Indirect Merchant Network Business and financing of
the business of Seller other than Seller's Indirect Merchant Network Business
and its dealings, transactions, affairs, plans and proposals, certain of which
information is confidential and important to the business of Seller. In this
Section 13.9 such confidential and important information is called "Seller
Confidential Information" and includes, without limitation, confidential or
secret information relating to the trade secrets, know-how, ideas, business
methods, finances, prices, business plans, marketing plans, development plans,
manpower plans, sales targets, sales statistics, customer lists, customer
relationships, computer systems and computer software of the business of Seller
other than Seller's Indirect Merchant Network Business. Parent and Newco
further acknowledge that the disclosure of Seller Confidential Information
(whether directly or indirectly) to actual or potential competitors of the
business of Seller other than Seller's Indirect Merchant Network Business
could
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place Seller at a competitive disadvantage and could do damage (whether
financial or otherwise) to Seller's business other than Seller's Indirect
Merchant Network Business. Parent and Newco shall not during the period
commencing on the Closing Date and terminating on the fifth anniversary of the
Closing Date (i) disclose to any person except to those authorized by Seller to
know any Seller Confidential Information; or (ii) through failure to exercise
reasonable care and diligence cause or permit any unauthorized disclosure of
any Seller Confidential Information; provided, however, that these restrictions
shall cease to apply to information which (otherwise than through the default
of Parent or Newco) becomes available to the public generally; provided,
further, that nothing herein shall prevent Parent, Newco or its Affiliates from
using Seller Confidential Information in the normal conduct of carrying out
their own business.
(d) To the extent that Seller desires to provide after the Closing a
new service to one or more of its members in Canada or Mexico and such new
service would be competitive with the Business of Newco if such new service was
provided in the United States, Seller will give Newco notice thereof and an
opportunity to be considered to provide such service to Seller's member or
members on terms satisfactory to Seller (unless the applicable Seller member or
members specifically request that Newco not be given such notice of
opportunity); provided, however, that in no event will Seller be required to
give such notice or opportunity if it would delay the implementation of such
service; and provided further that the foregoing right of Newco to notice and
opportunity shall not apply with respect to the provision of any future service
in development by Seller as of the Closing. The undertakings in this Section
13.9(d) shall expire when the covenant not to compete in Section 13.9(a)
expires.
(e) The parties hereto specifically acknowledge and agree that the
remedy at law for any breach of the foregoing will be inadequate and that the
aggrieved party, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damage. In the event that the provisions of this Section 13.9
should ever be deemed to exceed limitations provided by applicable law, then
the parties hereto agree that such provisions shall be reformed to set forth
the maximum limitations permitted; provided, however, nothing in this Section
13.9 shall prevent Seller or any affiliate of Seller from (i) acquiring all or
a portion of the stock or assets of a public company which is engaged in a
Competitive Activity if the revenues from such Competing Activity comprise
less than 5% of the total revenues of such public company or the business
represented by such assets; or (ii) acquiring less than a 2% ownership interest
in a company which is engaged in a Competitive Activity.
13.10 Cooperation. Seller, Parent and Newco shall cooperate with each
other in all reasonable respects in connection with the defense or prosecution
of any claim included within any Assumed Liability or Excluded Liability or any
Acquired Asset or Excluded Asset, as the case may be, including making
available records relating to such claim and furnishing, without expense,
management employees of the party as may be reasonably necessary for the
preparation of the defense of any such claim or for testimony as a
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witness in any proceeding relating to such claim; provided, however, that the
foregoing right to cooperation shall not be exercisable by one party in such a
manner as to interfere unreasonably with the normal operations and business of
the other party.
13.11 Delivery of Documents. Subject to the terms and conditions hereof,
each of Seller, Parent, and Newco, as applicable, shall execute and deliver the
Seller Transition Services Agreement, the Registration Rights Agreement, the
Operating Agreement, the Parent Services Agreement, the Assignment and
Assumption Agreeement, the Newco Assignment and Assumption Agreement and the
subleases contemplated in this Agreement.
13.12 Cooperation and Marketing.
(a) Newco shall have the right to utilize the description "A Limited
Liability Company of National Data Corporation and MasterCard International
Incorporated" on Newco's corporate stationery until such time as Seller ceases
to own an equity interest in Newco; provided, however, that after notice to
Newco, Seller shall have the right to terminate Newco's right to utilize
Seller's name on Newco's corporate stationary if Newco commits a breach (as
defined in SECTION 13.12(A) OF THE SELLER DISCLOSURE MEMORANDUM) of any of the
performance standards set forth in SECTION 13.12(A) OF THE SELLER DISCLOSURE
MEMORANDUM.
(b) Provided that Newco shall have registered as a member service
provider ("MSP"), (i) Newco shall retain all rights afforded to MSP's, and (ii)
in the event Seller grants more extensive rights to use the Seller's name than
that granted to MSP's in general, Newco shall receive the same more extensive
rights to use the Seller's name.
(c) Disposition of Existing Materials Containing Seller's Name or
Mark. Newco shall have the right to use four (4) categories of materials in
which the Seller's name and associated marks (other than the MAPP mark
included in the Acquired Assets) are included, as follows:
(i) Marketing Materials. Newco shall have the right to use
existing sales and marketing materials until the earlier to occur of ninety
(90) days or reorder, at which time all remaining MAPP/Seller materials shall
be returned to Seller for subsequent destruction.
(ii) User Manuals. Consistent with subparagraph (i) above and
based upon existing inventory considerations, Newco shall have the right to
use existing user manuals until the earlier to occur of one hundred eighty
(180) days or reorder, at which time all MAPP/Seller materials shall be
replaced by Newco and all existing inventory shall be returned to Seller for
subsequent destruction.
(iii) Software. Newco shall have the right to use the MAPP-PC
and MAPP On-line software products in which the Seller logo is embedded as of
the
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Closing Date until such time as new software products (including upgrades of
software products shipped to existing users) are shipped by Newco. After the
Closing Date, new software shall be modified to eliminate references to Seller
or its marks.
(iv) Terminals. The parties agree that the Seller acceptance mark
displays (located together with Visa, Novus and Amex mark displays) at the
point-of-sale at Merchant are addressed under the Seller's bylaws and rules.
With respect to the MAPP and Seller marks located on the faceplate of
point-of-sale terminals which are designed and defined by acquiring banks and
visible only to the merchant, it is agreed that (i) upon the earlier to occur
of one hundred eighty (180) days or reorder by Newco, all new faceplates shall
be printed without the Seller name or any Seller mark (other than the MAPP mark
which is included in the Acquired Assets); and (ii) as point-of-sale terminals
are replaced or redeployed, Newco shall use its best efforts to remove the
Seller's marks (other than the MAPP mark which is included in the Acquired
Assets) from such terminals.
(d) Future Marketing and Promotional Affiliation. Seller agrees to
support Newco in future marketing and promotion affiliation activities,
including, without limitation, as follows:
Activity Frequency/Specifics
- -------- -------------------
Periodic mutually approved press releases One per quarter
Joint trade show appearances Two per year
Sales referral program Seller shall
provide references
to members
requesting credit
card acquirer
processing services
(e) Except as expressly provided in this Agreement, neither Parent nor
Newco shall acquire or have the right to use Seller's name or any mark of
Seller (other than the MAPP mark included in the Acquired Assets) following
the Closing.
ARTICLE 14
TERMINATION
14.1 Termination. This Agreement may be terminated:
(a) by the mutual consent of Parent and Seller;
(b) by Parent if any condition in Article 10 becomes impossible of
performance or has not been satisfied in full or previously waived by Parent in
writing at or prior to the Closing Date;
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(c) by Seller if any condition in Article 11 becomes impossible of
performance or has not been satisfied in full or previously waived by Seller in
writing at or prior to the Closing Date;
(d) by either party if the Closing has not occurred on or prior to May
31, 1996.
14.2 Effect of Termination. In the event of the termination and
abandonment hereof pursuant to the provisions of Section 14.1(a) hereof, this
Agreement shall become void and have no effect, without any liability on the
part of any of the parties hereto or their directors, or officers or
stockholders in respect of this Agreement, except that the provisions of this
Section 14.2, 12.5 and 16.1 of this Agreement shall survive any such
termination. If Parent terminates this Agreement pursuant to Section 14.1(b)
or 14.1(f), or Seller terminates this Agreement pursuant to Section 14.1(c) or
14.1(f) and such termination is the result of the representations and
warranties of a non-terminating party being incorrect when made or thereafter
or the breach by a non-terminating party of a covenant or agreement hereunder,
then the party terminating this Agreement shall have such rights and remedies
against the other party hereto with respect to the condition giving rise to
such termination as are provided by law or in equity.
ARTICLE 15
INDEMNIFICATION
15.1 Definitions.
For the purposes of this Article:
(a) "Indemnification Claim" shall mean a claim for indemnification
hereunder.
(b) "Indemnitee" shall mean Newco.
(c) "Indemnitor" shall mean Seller with respect to Section 15.2 and
Parent with respect to Section 15.3.
(d) "Losses" shall mean any and all losses, damages, liabilities,
costs, and expenses of a direct (as opposed to an indirect or consequential)
nature, including without limitation, interest, penalties, cost of
investigation and defense, and reasonable attorneys' and other professional
fees and expenses, but excluding any punitive damages.
(e) "Third Party Claim" shall mean any claim, suit or proceeding
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against Indemnitee by a person or entity other
than an Indemnitor and
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which, if prosecuted successfully, would result in a Loss for which Indemnitee
is entitled to indemnification hereunder.
15.2 Agreement of Seller to Indemnify.
In consideration of the purchase and sale contemplated by this
Agreement, and $10.00 in hand paid, the receipt and sufficiency of which are
hereby acknowledged, subject to the terms and conditions of this Article, Seller
agrees to indemnify, defend, and hold harmless the Indemnitee from, against,
for, and in respect of any and all Losses asserted against, or paid, suffered
or incurred by, the Indemnitee and resulting from, based upon, or arising out
of:
(a) the inaccuracy, untruth, or incompleteness of any representation
or warranty of Indemnitor contained in or made in this Agreement or in any
certificate delivered by Indemnitor at the Closing pursuant to the requirements
of this Agreement.;
(b) a breach of or failure to perform any covenant or agreement of
Indemnitor made in this Agreement or any of the Acquisition Documents; and
(c) any Excluded Liability.
15.3 Agreement of Parent to Indemnify. In consideration of the purchase
and sale contemplated by this Agreement, and $10.00 in hand paid, the receipt
and sufficiency of which are hereby acknowledged, subject to the terms and
conditions of this Article, Parent agrees to indemnify, defend and hold
harmless Indemnitees from, against, for and in respect of any and all Losses
asserted against, or paid, suffered or incurred by, an Indemnitee and resulting
from, based upon, or arising out of:
(a) the inaccuracy, untruth, or incompleteness of any representation
or warranty of Parent contained in or made in this Agreement or in any
certificate delivered by Indemnitor at the Closing pursuant to the
requirements of this Agreement;
(b) the breach or failure to perform any covenant or agreement of
Indemnitor made in this Agreement or any of the Acquisition Documents;
(c) any Parent Excluded Liability;
(d) (i) any failure of any employee benefit plan of Parent to which
Seller or any employee benefit plan of Seller transfers any assets that
purports to be a "qualified plan" for purposes of the Internal Revenue Code of
1986, as amended, to be so qualified or (ii) the administration, maintenance,
funding or funding status of any employee benefit plan in which employees of
Parent who were Transferred Employees participate;
(e) any failure of any Parent Benefit Plan, or the administration
thereof, to comply with ERISA, the Code (including without limitation all
provisions compliance
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with which is required for any intended favorable tax treatment) or other
applicable law as of the Closing Date; and
(f) any pension, welfare or other benefit plan which liability or Loss
arises under ERISA or the Code as of the Closing Date solely by virtue of Newco
becoming a member of a "controlled group" with Parent as of such date.
15.4 Procedures for Indemnification.
(a) An Indemnification Claim shall be made by an Indemnitee by prompt
delivery of a written notice to the Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in Section 15.5 hereof shall be observed by the Indemnitee
and the Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, the Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to so object within such thirty-day period shall constitute a final and
binding acceptance of the Indemnification Claim by the Indemnitor, and the
Indemnification Claim shall be paid in accordance with subsection (d) hereof.
If an objection is timely interposed by the Indemnitor and the dispute is not
resolved by such Indemnitee and the Indemnitor within fifteen (15) days from
the date the Indemnitee receives such objection, such dispute shall be resolved
by arbitration as provided in Section 16.13 of this Agreement.
(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between the Indemnitor and the Indemnitee or by an
arbitration award or by any other final adjudication, the Indemnitor shall pay
the amount of such Indemnification Claim within ten (10) days of the date such
amount is determined.
15.5 Third Party Claims. The obligations and liabilities of the parties
hereunder with respect to a Third Party Claim shall be subject to the following
terms and conditions:
(a) The Indemnitee shall give the Indemnitor written notice of the
commencement or institution of or, if earlier, the written assertion of any
claim or other written notice of an intention to assert a Third Party Claim
promptly after receipt by the Indemnitee of notice thereof, and the Indemnitor
may, except as set forth in subsections (b) and (c) of this Section 15.5,
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to the Indemnitee. The failure of the
Indemnitee to notify the Indemnitor of such claim promptly shall not relieve
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the Indemnitor of any liability that it may have with respect to such claim
except to the extent the Indemnitor is prejudiced or adversely affected by such
failure. The assumption of the defense, compromise and settlement of any such
Third Party Claim by the Indemnitor shall be an acknowledgment of the
obligation of the Indemnitor to indemnify the Indemnitee with respect to such
claim hereunder. If the Indemnitee desires to participate in, but not control,
any such defense, compromise and settlement, it may do so at its sole cost and
expense. If, however, the Indemnitor fails or refuses to undertake the defense
of such Third Party Claim within thirty (30) days after written notice of such
claim has been given to the Indemnitor by the Indemnitee, the Indemnitee shall
have the right to undertake the defense, compromise and settlement of such
claim with counsel of its own choosing; provided that the Indemnitee may take
such action in the defense of such action pending receipt of notice from the
Indemnitor of its agreement or refusal to undertake the defense of such Third
Party Claim as is deemed by the Indemnitee to be reasonably required under the
circumstances. In the circumstances described in the preceding sentence, the
Indemnitee shall, promptly upon its assumption of the defense of such claim,
make an Indemnification Claim as specified in Section 15.4 which shall be
deemed an Indemnification Claim that is not a Third Party Claim for the
purposes of the procedures set forth herein.
(b) If, in the reasonable opinion of the Indemnitee, any Third Party
Claim or the litigation or resolution thereof involves an issue or matter which
could have a material adverse effect on the business, operations, assets,
properties or prospects of the Indemnitee (including, without limitation, the
administration of the tax returns and responsibilities under the tax laws of
the Indemnitee), which material adverse effect cannot be adequately compensated
by payments of money hereunder, then the Indemnitee shall have the right to
control the defense, compromise and settlement of such Third Party Claim
undertaken by the Indemnitor, and the costs and expenses of the Indemnitee in
connection therewith shall be included as part of the indemnification
obligations of the Indemnitor hereunder. If the Indemnitee shall elect to
exercise such right, the Indemnitor shall have the right to participate in, but
not control, the defense, compromise and settlement of such Third Party Claim
at its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of the Indemnitor under this Article shall be made without the prior
written consent by or on behalf of the Indemnitor, which consent shall not be
unreasonably withheld or delayed. Consent shall be presumed in the case of
settlements of $20,000 or less where the Indemnitor has not responded within
five (5) business days of notice of a proposed settlement. If the Indemnitor
assumes the defense of such a Third Party Claim, (a) no compromise or
settlement thereof may be effected by the Indemnitor without the Indemnitee's
consent unless (i) there is no finding or admission of any violation of law or
any violation of the rights of any person and no effect on any other claim that
may be made against the Indemnitee, (ii) the sole relief provided is monetary
damages that are paid in full by the Indemnitor, and (iii) the compromise or
settlement includes, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the Indemnitee of a release, in form and substance
reasonably satisfactory to the Indemnitee, from all liability
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in respect of such Third Party Claim, and (b) the Indemnitee shall have no
liability with respect to any compromise or settlement thereof effected
without its consent. Except in circumstances described in the immediately
preceding sentence in which the Indemnitor may effect a compromise or
settlement without the consent of the Indemnitee, if there is a dispute
between the Indemnitor and the Indemnitee concerning whether a Third Party
Claim should be settled, compromised or contested, then it shall be settled,
compromised or contested in accordance with the next succeeding paragraph;
provided, however, that the Indemnitee shall neither (A) be required to refrain
from paying or satisfying any obligation that has matured by court judgment or
decree, unless appeal is taken thereafter and proper appeal bond is posted by
the Indemnitor, nor (B) shall the Indemnitee be required to refrain from
paying or satisfying any Third Party Claim after and to the extent such Third
Party Claim has resulted in (I) an unstayed injunction or other equitable
relief against the Indemnitee or (II) in the imposition of a lien upon any of
the properties or assets then held by the Indemnitee (unless such claim shall
have been discharged or enforcement thereof stayed by filing of a legally
permitted bond by the Indemnitor at its sole cost and expense) or (III) in a
material breach or default in a material lease, license or other contract by
which the Indemnitee is bound.
Subject to the immediately preceding paragraph, in the event that the
Indemnitor, on the one hand, or the Indemnitee, on the other hand, has reached
a good faith, bona fide settlement agreement or compromise, subject only to
approval hereunder, with any claimant regarding a matter which may be the
subject of indemnification hereunder and which it desires to settle on the
basis of such agreement or compromise, such party who desires to so settle or
compromise shall notify the other party in writing of its desire setting forth
the terms of such settlement or compromise (the "Notice of Settlement"). The
Third Party Claim may be settled or compromised on the basis set forth in the
Notice of Settlement unless within twenty (20) days after the receipt of the
Notice of Settlement the party who issued the Notice of Settlement receives a
notice from the other party of its desire to continue to contest the matter
(the "Notice to Contest") and, in such case:
(i) Should the Indemnitee deliver a Notice to Contest, the
claim shall be so contested and the liability of the Indemnifying Party shall
be limited as provided in subsection (iii) below.
(ii) If the settlement or compromise could result in a claim for
indemnification being made against the Indemnifying Party and if the
Indemnifying Party delivers the Notice to Contest, the claim shall be so
contested and the liability of the Indemnitee shall be limited as provided in
subsection (iii) below.
(iii) If a matter is contested as provided in subsections (i)
or (ii) above and is later adjudicated, settled, compromised or otherwise
disposed of and such adjudication, compromise, settlement or disposition
results in a liability, loss, damage or injury in excess of the amount for
which one party desired previously to settle the matter, then the liability of
such party shall be limited to such lesser proposed settlement amount and the
party contesting the matter shall be solely responsible for the amount in
excess of
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such lesser proposed settlement and without regard to any limitations on the
Indemnitor's obligation to indemnify set forth in this Article 15.
For an Indemnifying Party's Notice to Contest to be effective, it must also
state that the Indemnifying Party acknowledges and agrees that it shall be
obligated to indemnify the Indemnitee for any amount in excess of the lesser
proposed settlement amount as described in subsection (iii) above. Except for
such obligation for the excess of the lesser proposed settlement amount
acknowledged in a Notice to Contest, the giving of or failure to give a Notice
to Contest by any party shall not be construed or implied as an acknowledgment
by such party of an obligation for indemnification under this Article 15.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to
any such claim or action, shall provide access to the counsel, accountants and
other representatives of each party during normal business hours to all
properties, personnel, books, tax records, contracts, commitments and all other
business records of such other party and will furnish to such other party
copies of all such documents as may reasonably be requested (certified, if
requested).
15.6 Remedies. Following the Closing, the rights and remedies of the
Indemnitees under this Article 15 are and shall be the exclusive remedies
available to any party for any misrepresentation under Article 6 or Article 7
or any breach of any representation or warranty set forth in Article 6 or
Article 7 of this Agreement.
15.7 Survival. All representations, warranties and agreements contained
in this Agreement or in any certificate delivered pursuant to this Agreement
shall survive the Closing notwithstanding any investigation conducted with
respect thereto or any knowledge acquired as to the accuracy or inaccuracy of
any such representation or warranty.
15.8 Time Limitations. The Indemnitor shall have no liability under (i)
Section 15.2(a) with respect to the breach of any representation or warranty
contained in Article 6, unless on or before the second anniversary of the
Closing Date the Indemnitor is given notice asserting an Indemnification Claim
with respect thereto; or (ii) Section 15.3(a) with respect to the breach of
any representation or warranty contained in Article 7, unless on or before the
second anniversary of the Closing Date the Indemnitor is given notice asserting
an Indemnification Claim with respect thereto. An Indemnification Claim based
upon the failure of the Indemnitor to perform the covenants and agreements to
be performed by them hereunder pursuant to Section 5.2, 5.3, 12.5, 13.1, 13.2,
13.3, 13.4, 13.5, 13.6, 13.7, 13.8, 13.9, 13.10 or 13.12 or based upon Section
15.2(c), 15.3(c), 15.3(d), 15.3(e) or 15.3(f) hereof may be made at any time;
and the Indemnitor shall have no liability based upon the failure of the
Indemnitor to perform any other covenant or agreement to be performed by them
hereunder unless on or before the second anniversary of the Closing
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Date the Indemnitor is given notice asserting an Indemnification Claim with
respect thereto.
15.9 Amount Limitations. Neither Seller nor Parent shall have any
obligation to indemnify the Indemnitees under Section 15.2(a) or 15.3(a),
respectively, with respect to the breach of any representation or warranty
until the aggregate Losses of the Indemnitees with respect to breaches of the
representations and warranties exceeds Five Hundred Thousand Dollars
($500,000)(the "Basket Amount"), at which time the Indemnitees may make claims
for all Losses in excess of the Basket Amount. The Indemnitees shall not be
entitled to recover from Seller or Parent on account of such Losses any amount
in excess of Fifty Million Dollars ($50,000,000).
15.10 Subrogation. Upon payment in full of any Indemnification Claim,
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, the Indemnitors
shall be subrogated to the extent of such payment to the rights of the
Indemnitee against any person or entity with respect to the subject matter of
such Indemnification Claim or Third Party Claim.
15.11 Tax Neutralization.
(a) In the event an Indemnification Claim hereunder results in a tax
benefit to the Indemnitee, the Indemnitor shall be entitled to a credit against
any liability thereunder in the amount by which (i) the present value of the
federal and state income taxes of the Indemnitee shall be reduced by reason of
any deduction allowed the Indemnitee for any payment, settlement or
satisfaction of such Indemnification Claim, exceeds (ii) the present value of
the federal and state income taxes payable by the Indemnitee from the
Indemnitor by reason of any payment under this Article 15.
(b) In the event an Indemnification Claim hereunder results in a tax
burden to the Indemnitee, the Indemnitor shall reimburse the Indemnitee for any
additional tax liability incurred thereunder in the amount by which (i) the
present value of the federal and state income taxes of the Indemnitee shall be
increased by reason of any payment, settlement or satisfaction of such
Indemnification Claim being deemed income, is less than (ii) the present value
of the federal and state income taxes payable by the Indemnitee from the
Indemnitor by reason of any payment under this Article 15.
ARTICLE 16
GENERAL PROVISIONS
16.1 Fees and Expenses. Except as otherwise specifically provided in this
Agreement, Seller and Parent shall pay their respective fees and expenses in
connection with the transactions contemplated by this Agreement.
Notwithstanding anything to the contrary set forth herein, Seller and Parent
each agree to pay one-half (1/2) of the filing fees payable for all required
filings under the HSR Act with respect to the transactions contemplated
hereunder. Seller shall not pay any Excluded Liabilities or any fees or
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expenses incurred by Seller in connection with the transactions contemplated by
this Agreement using the Acquired Assets or any portion thereof, and if prior
to the Effective Time a portion of the Acquired Assets is used by Seller to pay
any Excluded Liabilities, or any of such fees and expenses, Seller shall
reimburse Parent by the amount of Acquired Assets so used and the amount of
such reimbursement shall be deemed an Acquired Asset.
16.2 Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be delivered (a) in person or by
courier, (b) mailed by first class registered or certified mail, or (c)
delivered by facsimile transmission, as follows:
(a) If to Seller:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: William I. Jacobs
Executive Vice President
Telephone: (914) 249-5200
Telecopier: (914) 249-5475
with a copy (which shall not constitute notice) to:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: Robert E. Norton, Jr.
General Counsel
Telephone: (914) 249-5301
Telecopier: (914) 249-4262
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with a copy (which shall not constitute notice) to:
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attention: John A. Healy, Esq.
Telephone: (212) 878-8281
Telecopier: (212) 878-8375
(b) If to Parent or Newco:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: Mr. Robert A. Yellowlees
Chief Executive Officer
Telephone: (404) 728-2000
Telecopier: (404) 728-3509
with a copy (which shall not constitute notice) to:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: E. Michael Ingram, Esq.
General Counsel
Telephone: (404) 728-2504
Telecopier: (404) 728-2551
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: B. Harvey Hill, Jr., Esq.
Telephone: (404) 881-7446
Telecopier: (404) 881-7777
or to such other address as the parties hereto may designate in writing to the
other in accordance with this Section 15.2. Any party may change the address
to which notices are to be sent by giving written notice of such change of
address to the other parties in the
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manner above provided for giving notice. If delivered personally or by courier,
the date on which the notice, request, instruction or document is delivered
shall be the date on which such delivery is made and if delivered by facsimile
transmission or mail as aforesaid, the date on which such notice, request,
instruction or document is received shall be the date of delivery.
16.3 Assignment; Binding Effect. Except as provided in this Section 15.3,
prior to the Closing, this Agreement shall not be assignable by either of the
parties hereto without the written consent of the other; provided, however,
that after the Closing, Parent or Seller may assign its interest in this
Agreement to any person or entity without the consent of Seller, in the case of
an assignment by Parent, or of Parent, in the case of an assignment by Seller;
provided that, in the event of any such assignment, the assignee assumes the
obligations of the assignor hereunder and that no such assignment shall serve
to release the assignor from its obligations hereunder; provided, further, that
in the event of any such assignment, if any consent to such assignment is
required, then the assigning party shall be responsible for obtaining such
consent and the non-assigning party will have no obligation to assist in any
way in obtaining such consent.
16.4 No Benefit to Others. The representations, warranties, covenants,
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article 15 hereof, the Indemnitees and their
heirs, executors, administrators, legal representatives, successors and
assigns, and they shall not be construed as conferring any rights on any other
persons.
16.5 Headings, Gender, and "Person." All section headings contained in
this Agreement are for convenience of reference only, do not form a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as
the context requires. Any reference to a "person" herein shall include an
individual, firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other entity.
16.6 Counterparts. This Agreement may be executed in two (2) or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
16.7 Integration of Agreement. This Agreement (together with all exhibits
hereto) supersedes all prior agreements, oral and written, between the parties
hereto with respect to the subject matter hereof. Neither this Agreement, nor
any provision hereof, may be changed, waived, discharged, supplemented, or
terminated orally, but only by an agreement in writing signed by the party
against which the enforcement of such change, waiver, discharge, or termination
is sought.
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16.8 Time of Essence. Time is of the essence in this Agreement.
16.9 Governing Law. This Agreement shall be construed under the laws of
the State of Georgia, without regard to any applicable conflicts of laws
provisions.
16.10 Partial Invalidity. Whenever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable
law, but in case any one or more of the provisions contained herein shall, for
any reason, be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
16.11 Investigation. No inspection, preparation, or compilation of
information or the Seller or Parent Disclosure Memoranda, or audit or
investigation of the properties, financial condition, or other matters
relating to Seller or Parent conducted by or on behalf of the other party
hereto shall in any way limit, affect, or impair the ability of Parent or
Seller, as the case may be, to rely upon the representations, warranties,
covenants, and agreements of the other party set forth herein. Any disclosure
made in one Section of the Seller or Parent Disclosure Memoranda shall not be
deemed made in any other Section, unless appropriate cross-referencing is made.
The covenants and representations and warranties of the parties hereto shall
survive the Closing and the execution and delivery of all instruments of
conveyance for the periods set forth in Section 15.7. Parent, Newco and Seller
acknowledge that each such party is relying solely on its own independent
investigation of the Acquired Assets, in the case of Parent and Newco, and the
Parent Contributed Assets, in the case of Seller, and the representations and
warranties of Seller and Parent expressly set forth in this Agreement and that,
except as expressly set forth in this Agreement, there are no representations
or warranties of any kind, express or implied, being made by Seller with
respect to Seller's Indirect Merchant Network Business or the Acquired Assets
or being made by Parent or Newco with respect to Parent's Indirect Merchant
Network Business or the Parent Contributed Assets.
16.12 Public Announcements. Prior to the Closing, Parent and Seller shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any of the
transactions contemplated hereby; provided, that nothing in this Section 16.12
shall be deemed to prohibit any party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such party's
disclosure obligations imposed by law or regulation or by any regulatory
authority, including the Securities and Exchange Commission and the New York
Stock Exchange.
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16.13 Arbitration.
(a) Location and Governing Rules. Except for any dispute or claim
alleging a breach by either party of the provisions of Section 13.9 or with
respect to any default under Seller's or Parent's Real Property Leases any
dispute arising out of or in connection with this Agreement or any of the other
Acquisition Documents, including any question regarding its existence, validity
or termination, shall be referred to and finally resolved by arbitration in
Washington, D.C. under the Rules of Commercial Arbitration (the "Rules") of the
American Arbitration Association (the "AAA"), which Rules are deemed to be
incorporated by reference into this Section 16.13. Judgment upon the award
rendered by the arbitrators in any such arbitration may be entered in any court
having jurisdiction thereof. Except as the arbitrators may otherwise award or
assess the expenses of any such arbitration and except as otherwise provided in
this Agreement, each party shall bear its own costs and expenses, including the
expense of its counsel. The parties agree that service of any notice in the
course of any such arbitration at their respective addresses for notice and in
the manner provided in Section 16.2 of this Agreement shall be valid and
sufficient notice for purposes of such arbitration.
(b) Selection of Arbitrators. In any arbitration pursuant to this
Section 16.13 the award shall be rendered by a majority of the members of a
board of arbitration consisting of three members. One arbitrator shall be
appointed by Seller and one arbitrator shall be appointed by Parent within
sixty (60) days after the commencement of the arbitration proceeding. The
third arbitrator shall be appointed by mutual agreement of the two arbitrators
selected by Parent and Seller and shall be experienced in corporate contractual
matters relating to transactions of the nature contemplated by this Agreement.
In the event of the failure of said two arbitrators to agree as to the third
arbitrator within sixty (60) days after the appointment of the last of the two
arbitrators, the third arbitrator shall be appointed by the Washington, D.C.
office of the AAA in accordance with its then-existing rules. Notwithstanding
the foregoing, in the event that either party shall fail to appoint the
arbitrator it is required to appoint within the specified time period, such
arbitrator and the third arbitrator shall be appointed by the Washington, D.C.
office of the AAA in accordance with its then-existing rules. For purposes of
this Section 16.13, the commencement of the arbitration proceeding shall be
deemed to be the date upon which a written demand for arbitration is received
by the Washington, D.C. office of the AAA from one of the parties.
16.14 Waiver. No waiver by Parent or Newco, on the one hand, or Seller,
on the other hand, of any of the requirements hereof or of any of its or their
rights hereunder shall release the other party(ies) from full performance of
its remaining obligations stated herein and no failure to exercise or delay in
exercising on the part of any of the parties hereto any right thereof nor shall
any single or partial exercise of any right power or privilege preclude any
other or further exercise thereof or the exercise of any other right power or
privilege.
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16.15 Partnership. Nothing in this Agreement shall constitute or be
deemed to constitute a partnership or agency between any of the parties hereto
and none of them shall have any authority to bind the others in any way
whatsoever other than as contemplated or provided for in this Agreement.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf by its duly authorized officer, all as of the day and
year first above written.
PARENT:
NATIONAL DATA CORPORATION
By: /s/ E. Michael Ingram
--------------------------------
Name: E. Michael Ingram
-------------------------
Title: Senior Vice President
------------------------
SELLER:
MASTERCARD INTERNATIONAL INCORPORATED
By: /s/ William I Jacobs
---------------------------------
Name: William I Jacobs
--------------------------
Title: Executive Vice President
-------------------------
90
POS ACQUISITION COMPANY LLC
By: National Data Corporation, a
Member
By: /s/ E. Michael Ingram
---------------------------
Name: E. Michael Ingram
-------------------------
Title: Senior Vice President
-------------------------
91
EXHIBITS TO ASSET PURCHASE AND
CONTRIBUTION AGREEMENT
EXHIBIT LETTER EXHIBIT NAME
- -------------- ------------
Exhibit A Form of Newco Sublease
Exhibit B Form of Seller Transition Services Agreement
Exhibit C Form of Parent Services Agreement
Exhibit D Superceded by Amendment
Exhibit E Form of Opinion of Counsel to Seller
Exhibit F Form of Assignment and Assumption Agreement
Exhibit G Superceded by Amendment
Exhibit H Form of Registration Rights Agreement
Exhibit I Form of Newco Assignment and Assumption Agreement
92
EXHIBIT A
FORM OF NEWCO SUBLEASE
The attached form of sublease is to be used for Seller's office space at
12115 Lackland Road. A similar form of sublease will be used with respect to
Seller's other locations to be subleased, appropriately adjusted to provide
terms applicable to such location, provided that all amounts payable to Seller
with respect to each subleased location shall be on the basis of the pro rata
portion of the base rent and other costs payable to the lessor of each location
under the terms of Seller's leases as such leases exist as of the commencement
date of such subleases. The exhibits to each sublease reflecting the space to
be subleased will be attached at Closing and include the space principally
utilized or reasonably necessary for the conduct of Seller's Indirect Merchant
Network Business at each respective subleased location.
93
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT ("Sublease") is made this ___ day of _______, 1996
between [President], a Delaware corporation ("Sublandlord"), and [Ambassador],
a ________________ ("Subtenant").
RECITALS:
WHEREAS, The Citadel, a Texas limited partnership, as Landlord ("Prime
Landlord") and Sublandlord, as Tenant did enter into a certain Lease (together
with any certain amendments or modifications thereof, the "Prime Lease"), dated
September 1, 1987, for the lease by Sublandlord of certain space (the
"Sublandlord's Premises") more particularly described in the Prime Lease and
located in Prime Landlord's building (the "Building") known as 12115 Lackland
Road, St. Louis, Missouri. Sublandlord and Subtenant desire to enter into this
Sublease, pursuant to which Subtenant will lease from Sublandlord, and
Sublandlord will lease to Subtenant, a portion of Sublandlord's Premises.
NOW THEREFORE, for and in consideration of the mutual covenants and
obligations:
1. SUBLEASED PREMISES. Sublandlord does hereby lease to Subtenant, and
Subtenant leases and rents from Sublandlord, those certain portions of the ____
floors of the Building consisting of a total of ____ rentable square feet all
as shown outlined on the floor plans collectively attached hereto as Exhibit
A(1)-( ) (the "Subleased Premises"). The Subleased Premises are being leased
by Sublandlord to Subtenant in their condition existing on the date hereof "AS
IS", and Sublandlord shall not be obligated to construct any demising walls or
make any improvements whatsoever with regard to the Subleased Premises.
Subtenant shall be obligated to construct any demising walls necessary on the
Subleased Premises at its own expense and cost.
2. TERM. The term of this Sublease shall commence on the date first above
written (the "Commencement Date") and shall end on the last day of the month in
which the second anniversary of the Commencement Date occurs. Subtenant may
cancel this Sublease at any time upon ninety (90) days' notice to Sublandlord.
3. Rent. Subtenant shall pay to Sublandlord a monthly base rent (the
"Base Rent") equal to Subtenant's Share of rent, additional rent and other
obligations of Sublandlord payable to the Prime Landlord under the Prime Lease,
with respect to each month during the term of this Sublease, prorating such
obligations as may be required to the term of this Sublease, and adjusting such
amounts, from time-to-time as they may be adjusted between Prime Landlord and
Sublandlord under the Prime Lease, all without offset, deduction or abatement,
except as otherwise expressly provided for herein. The Base Rent shall be
payable by Subtenant to Sublandlord in advance on or before the first day of
each calendar month during the term of this Sublease with appropriate
prorations
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for partial months. The Base Rent, together with any and all other amounts
from time to time due under this Sublease from Subtenant to Sublandlord,
is hereinafter referred to collectively as the "Rent".
If Subtenant fails to pay any installment of the Rent, within five (5)
business days following Subtenant's receipt of notice of Sublandlord's
nonreceipt of such payment to help defray the additional cost to Sublandlord
for processing such late payments, Subtenant shall pay, upon receipt of a
written notice from Sublandlord, to Sublandlord, a late charge of four percent
(4%) of such amount plus interest from and after the due date of such rent
computed at a rate of eighteen percent (18%) per annum for the number of days
from the due date until the unpaid amount plus the late charge has been paid in
full.
4. RELATIONSHIP TO PRIME LEASE. This Sublease and Subtenant's rights
hereunder are expressly subject to and subordinate to the Prime Lease.
Subtenant shall not allow any action or omission of Subtenant, its employees,
agents, contractors or affiliates, to place Sublandlord in default or at risk
of being declared in default under the Prime Lease. Sublandlord shall not
allow any action or omission of Sublandlord, its employees, agents, contractors
or affiliates to place either Sublandlord or Subtenant in default under the
Prime Lease.
5. USE. The Subleased Premises shall be used and occupied by Subtenant as
office space for the purpose of conducting computer data operations and for
related uses specifically permitted under the Prime Lease and for no other
purposes. Subtenant will not occupy or use, nor permit to be occupied or used,
any portion of the Subleased Premises for any business or purpose which is
unlawful in part or in whole or deemed to be disreputable in any manner, or
extra hazardous on account of fire, nor permit anything to be done which is not
in compliance with the foregoing and which will increase the rate of fire
insurance on the Sublandlord's Premises or the Building, and if, by reasons of
acts of Subtenant inconsistent with the foregoing, there shall be any increase
in the rate of insurance on the Sublandlord's Premises or the Building or its
contents created by Subtenant's acts or conduct of business, Subtenant shall
pay the amount of such increase on demand.
6. REQUIREMENTS OF LAW. Subtenant at its sole expense shall comply with
all laws, orders and regulations of federal, state, county and municipal
authorities and with any direction of any public officer or officers, pursuant
to law. Notwithstanding the foregoing, Subtenant shall not be required to
comply with applicable law if such compliance would necessitate improvements or
changes being made to the Subleased Premises and such improvements or changes
are required to be made by all other tenants of the Building, provided the
cause for such improvements or changes is not related to Subtenant's specific
manner and use of the Subleased Premises, in such case, Sublandlord shall make
such improvements and changes to the Subleased Premises or use Sublandlord's
reasonable efforts to cause the Prime Landlord to do so, provided
that Subtenant shall have no obligation to pay rent at any time that the
Subleased Premises
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become substantially unusable for Subtenant's normal operations as a result of
such lack of compliance unless caused by Subtenant.
7. SERVICES AND REPAIRS. (a) Under the Prime Lease, Prime Landlord has
agreed to furnish certain services to Sublandlord's Premises. The times and
days on which such services shall be provided are set forth in such Prime Lease
and any attachment thereto. Sublandlord shall use reasonable efforts not to
block the provisions of such services to Subtenant and to cause Prime Landlord
to provide those services which Prime Landlord provides to Sublandlord, but
failure to any extent to furnish or any stoppage of these defined services,
resulting from causes beyond control of Sublandlord or from any cause not the
fault of Sublandlord, shall not render Sublandlord liable in any respect for
damages to person, property or business, nor be construed as an eviction of
Subtenant or work an abatement of rent, nor relieve Subtenant from fulfillment
of any covenant or agreement hereof except payment of Rent if the Subleased
Premises become substantially unusable for Subtenant's normal business
operations as a result of such lack of service and as a result thereof
Sublandlord is relieved of its obligation to pay Rent under the Prime Lease.
Notwithstanding anything to the contrary herein, Subtenant shall be entitled to
a pro rata share of any rent abatement received by Sublandlord from Prime
Landlord in accordance with Paragraph 5(a) of the Prime Lease. Subtenant shall
pay to Sublandlord within twenty (20) days such charges as Sublandlord may
reasonably prescribe based on a reasonable portion of Prime Landlord's charges
and Sublandlord's costs for any electric service requested by Subtenant and
supplied by Sublandlord or Prime Landlord, for heat or air conditioning service
for times other than as set forth in the Prime Lease or for computers and other
electrical equipment or other electric service deemed by Prime Landlord not to
be standard.
(b) Under Paragraph 5(b) of the Prime Lease, Prime Landlord has agreed to
keep and maintain in good condition the structural portion of the Building and
the roof, floors (except carpeting), elevator pits and load bearing walls
except in case of any damage caused by any act or negligence of Sublandlord,
its employees, agents, invitees, subtenants, assignees, licensees or
contractors, and to be responsible for repairing any damages (structural or
otherwise) caused by any act or negligence of Prime Landlord, its employees,
agents or contractors. Sublandlord shall use reasonable efforts to cause Prime
Landlord to provide above defined services to Subtenant. Provided Sublandlord
has used reasonable efforts to cause Prime Landlord to provide such services,
Sublandlord shall have no responsibility for the foregoing obligations of Prime
Landlord and shall have no liability if such services have not been provided,
but Subtenant shall have no obligation to pay Rent at any time that the
Subleased Premises become substantially unusable for Subtenant's normal
business operations as a result of such lack of repair provided that during
such period Sublandlord is relieved of its obligation to pay Rent under the
Prime Lease.
8. SUBTENANT'S REPAIRS AND ALTERATIONS. (a) Subtenant shall not in any
manner deface, damage or injure the Subleased Premises or the Building, and
shall pay the cost of repairing any damage or injury done to the Subleased
Premises or the
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Building or any part thereof by Subtenant or Subtenant's agents, employees,
contractors, customers or invited guests. Subtenant shall during the term of
this Sublease take good care of the Subleased Premises and keep them free from
waste of any kind. Subtenant shall keep the Subleased Premises in good
condition and make all necessary repairs, subject to Sublandlord's and Prime
Landlord's obligations under Paragraph 7(b) hereof. At the expiration or
earlier termination of this Sublease, Subtenant shall deliver to Sublandlord the
Subleased Premises with all improvements thereon in good repair and condition,
reasonable wear and tear, casualty and condemnation excepted. Subtenant shall
not make or allow to be made any alterations, additions or improvements in or to
the Subleased Premises without the prior written consent of Sublandlord which
consent unless the consent of the Prime Landlord is required, as hereinafter
contemplated, shall not be unreasonably withheld, conditioned or delayed if the
aggregate cost of restoration of all changes and alterations to be made by such
tenant under this Sublease shall not exceed $50,000.00 or if the aggregate cost
of restoration shall exceed such amount, such consent shall not be unreasonably
withheld, condition or delayed other than the agreement of Subtenant to pay such
excess amount of restoration cost may be imposed as a condition to such
approval. Any such work shall be done at Subtenant's sole expense and without
the creation of mechanics' or materialmen's liens. If such alterations,
additions or improvements would require Prime Landlord's written consent prior
to their performance by Sublandlord under the Prime Lease, then Sublandlord may
at its sole discretion withhold its consent to Subtenant's performance of such
alterations, additions or improvements, until receipt of Prime Landlord's
written consent, provided, however that Sublandlord shall use reasonable and
timely efforts to obtain Prime Landlord's written consent for such alterations,
additions or improvements. Notwithstanding the foregoing, for structural
alterations, additions, or improvements, Sublandlord shall respond promptly to
Subtenant's request and may attach reasonable conditions to its consent
(including, but not limited to, removal of the alteration, addition or
improvement and restoration to its original state at termination or expiration
of the Sublease). If a lien is placed against the Sublandlord's Premises or the
Building by reason of action by Subtenant, Subtenant shall post a proper bond in
or deposit with a title company or other escrow agent, an amount sufficient to
cover all amounts due under said lien within twenty (20) days. At the
termination or expiration of this Sublease, unless Subtenant is to remove
structural alterations, additions or improvements erected by Subtenant and
restore the Subleased Premises to their original condition as a prior condition
to Sublandlord's consent above, such alterations, additions and improvements
shall be delivered to Sublandlord with the Subleased Premises. All furniture
and moveable trade fixtures installed by Subtenant may be removed by Subtenant
at the termination of this Sublease if Subtenant so elects, and shall be removed
if Sublandlord or Prime Landlord so elects. All such removals and restoration
shall be accomplished in a good workerlike manner so as not to damage the
Building.
9. ASSIGNMENT AND SUBLETTING. Subtenant may not assign this Sublease, nor
allow same to be assigned by operation of law or otherwise, nor sublet the
Subleased Premises or any part thereof without the prior written consent of
Sublandlord which consent shall be at the absolute discretion of Sublandlord
and subject to any
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condition Sublandlord elects to impose and without the prior written consent of
Prime Landlord which consent shall be subject to Prime Landlord's rights under
the Prime Lease, provided that if Subtenant wishes to sublet a reasonably
contiguous portion of the Subleased Premises of more than 5,000 square feet so
that following such subletting the unsublet Subleased Premises shall constitute
at least 5,000 square feet, Sublandlord will not unreasonably withhold, delay or
condition its consent to such subletting provided that Subtenant has given
Sublandlord not less than twenty (20) days' notice of such subletting, during
which time Sublandlord may elect, by notice to Subtenant to cancel this Sublease
with respect to the space proposed to be sublet, and in such event, the Rent
shall thereafter be adjusted based on the portion of the Subleased Premises then
remaining.
10. MAINTENANCE. Subtenant, at its sole expense, shall maintain the
Subleased Premises in a clean and healthful condition, and subject to Paragraph
6 comply with all laws, ordinances, orders, rules and regulations (state,
federal, municipal, and other agencies or bodies having any jurisdiction
thereof) with reference to use, condition, or occupancy of the Subleased
Premises. Sublandlord shall maintain those portions of Sublandlord's Premises
outside the Subleased Premises in a clean and healthful condition and subject
to Paragraph 6 comply with all laws, ordinances, orders, rules and regulations
(state, federal, municipal, and other agencies or bodies have jurisdiction
thereof) with reference to use, condition, or occupancy of said portions of the
Sublandlord's Premises and the Building in accordance with the Prime Lease.
11. INDEMNITY. Neither party shall be liable for, and the other party
will indemnify and save harmless said party from, any and all fines, suits,
claims, costs, expenses, demands, and actions of any kind (including reasonable
attorney's fees) by reason of any negligence, misconduct, or any breach,
violation, or non-performance of any covenant hereof on the part of the other
party or its agents, employees, and/or invitees. Neither party shall be liable
or responsible for any loss or damage to any property or person occasioned by
theft, fire, act of God, public enemy, injunction, riot, strike, insurrection,
war, court order, requisition or order of governmental body or authority or
other matter beyond such party's reasonable control, or for any damage or
inconvenience which may arise through repair or alteration of any part of the
Building, or failure to make repairs, or from any cause whatever except such
party's negligent act or omission, or willful misconduct or intentional breach
of this Sublease. This Paragraph shall not preclude one party from seeking
reimbursement from the other for work or monies expended which is the
responsibility of the other party. This Paragraph shall survive termination or
expiration of this Sublease.
12. RULES AND REGULATIONS. Subtenant and Subtenant's agents, employees,
and invitees, shall comply fully with all requirements of the Rules and
Regulations ("Rules and Regulations") of the Building, if any. Subtenant
acknowledges that if pursuant to the Prime Lease, Prime Landlord may change
such Rules and Regulations or amend them from time to time, then upon receipt
thereof, Sublandlord shall deliver copies of all changes, and amendments
thereto, to Subtenant, and Subtenant shall comply therewith.
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13. INSPECTION. Sublandlord and Prime Landlord, or their officers,
agents, and representatives, may enter into and upon any and all parts of the
Subleased Premises upon one (1) day's notice at all reasonable hours to inspect
same or clean or make repairs or alterations or additions as Sublandlord shall
reasonably deem necessary or as Prime Landlord may be entitled to under the
Prime Lease, except that in cases of emergency the right to enter shall not be
subject to any notice or time restrictions.
14. CONDUCT OF BUSINESS. Subtenant shall conduct its business, and
control its agents, employees, contractors, customers and invited guests in
such a manner as not to unreasonably interfere with, annoy or disturb other
tenants or Sublandlord or Prime Landlord in the management of the Building.
Sublandlord will conduct its business, and control its agents, employees,
contractors, customers and invited guests in such a manner as not to
unreasonably interfere with, annoy or disturb Subtenant's normal business
activities.
15. CONDEMNATION. If the Subleased Premises shall be taken or condemned
in whole or substantial part for public purposes, this Sublease shall
terminate.
In the event of a partial condemnation, either Sublandlord or Subtenant
may elect, in its sole discretion, by notice to the other to terminate this
Sublease provided that if this Sublease shall not terminate, there shall be an
abatement of the Rent, on a square footage basis, to the extent and degree that
the Subleased Premises may no longer be utilized by Subtenant as a result of
the Condemnation.
If any part of the Subleased Premises shall be so taken and this Sublease
shall not be terminated under the provisions of this Paragraph, then
Sublandlord shall use reasonable efforts to cause Prime Landlord to perform
restoration, at Prime Landlord's own cost and expense, of the remaining portion
of the Subleased Premises to the extent necessary to render it reasonably
suitable for the purposes for which it was leased. Sublandlord shall have no
responsibility to perform such restoration or liability in connection thereto
but, to the extent that Sublandlord is relieved of its obligation to pay rent
pursuant to the Prime Lease, Subtenant shall have no obligation to pay Rent at
any time the Subleased Premises become substantially unusable for Subtenant's
normal business operations as a result of such condemnation.
16. FIRE & OTHER CASUALTY. If the Building should be totally or partially
destroyed by fire, tornado or other casualty, either Sublandlord or Subtenant
may, in its sole discretion, terminate this Sublease by notice to the other,
given within ninety (90) days of such casualty or, if Prime Landlord
terminates the Prime Lease pursuant thereto, this Sublease shall terminate.
If this Sublease is not so terminated, Subtenant acknowledges that Prime
Landlord is required under the Prime Lease to rebuild and repair Sublandlord's
Premises. Sublandlord shall have no responsibility for such rebuilding and
repair but, to the extent that Sublandlord is relieved of its obligation to
pay rent pursuant to the Prime Lease, Subtenant shall have no obligation to
pay Rent at any time the
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Subleased Premises become substantially unusable for Subtenant's normal business
operations as a result of such casualty.
Sublandlord and Subtenant shall each look first to any insurance in its
favor before making any claim against the other party for recovery for loss or
damage resulting from fire or other casualty and to the extent that such
insurance is in force and collectible and to the extent permitted by law.
Sublandlord and Subtenant each hereby releases and waives all right of recovery
against the other or any one claiming through or under each of them by way of
subrogation or otherwise. The foregoing release and waiver shall be in force
only if both releasors' insurance policies contain a clause providing for such
a release or waiver shall not invalidate such insurance. If such coverage is
available for a reasonable additional premium each party shall pay such
additional premium under its policy. Subtenant acknowledges that Sublandlord
will not carry insurance on Subtenant's furniture and/or furnishings or any
fixtures or equipment improvements or appurtenances removable by Subtenant and
agrees that Sublandlord will not be obligated to repair any damage or replace
the same. Throughout the term of this Sublease, Sublandlord shall carry
insurance on the leasehold improvements within the Subleased Premises to the
extent of the coverage as of the date of this Sublease.
Subtenant shall carry and maintain (a) public liability insurance in the
amount of at least $1,000,000 and (b) property damage insurance in the amount
of at least $500,000.
17. HOLDING OVER. Should Subtenant, or any of its successors in interest,
hold over the Subleased Premises, or any part thereof, after the expiration of
the term of this Sublease or after the termination of this Sublease by
Sublandlord as a result of a default by Subtenant, unless otherwise agreed in
writing, such holding over shall constitute and be construed as a tenancy at
will only, at 150% of the Base Rent paid for the last month of the term of this
Sublease for that portion of the Subleased Premises held over. If the holding
over continues for more than 180 days after notice given by Sublandlord to
Subtenant to vacate such space held over, the Base Rent shall be two (2) times
the above described Base Rent paid for that portion of the Subleased Premises
held over. The inclusion of the preceding sentence shall not be construed as
Sublandlord's consent for Subtenant to hold over, nor require any notice from
Sublandlord to terminate Subtenant's tenancy, except as specifically provided
for herein, it being agreed that unless otherwise specifically agreed,
Sublandlord shall be entitled to immediate possession of the Subleased Premises
upon any termination of this Sublease. Furthermore, in the event that such
holding over shall result in additional obligations or liability on the part of
Sublandlord to Prime Landlord, then Subtenant shall be responsible for such
additional obligations or liability and shall promptly satisfy such obligations
or liability on behalf of Sublandlord.
18. TAXES ON SUBTENANT'S PROPERTY. Subtenant shall be liable for all
taxes levied or assessed against personal property, furniture or fixtures of
Subtenant situated in the Subleased Premises. If any such taxes for which
Subtenant is liable are levied or assessed against Sublandlord or Prime
Landlord or Sublandlord's or Prime Landlord's property and if Sublandlord or
Prime Landlord elects to pay the same or if the
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assessed value of Sublandlord's or Prime Landlord's property is increased by
inclusion of personal property, furniture or fixtures placed by Subtenant in the
Subleased Premises, and Sublandlord or Prime Landlord elects to pay the taxes
based on such increase, Subtenant shall pay to the Sublandlord or Prime
Landlord, as applicable, within fifteen (15) days after written notice that part
of such taxes for such Subtenant is primarily liable hereunder.
19. EVENTS OF DEFAULT. The occurrence of any one or more of the following
shall be deemed events of default by Subtenant under this Sublease.
(a) Subtenant shall fail to pay any installment of the Base Rent or
additional rent hereby reserved or late charge and such failure shall continue
for ten (10) days after notice by Sublandlord of its non-receipt of such Rent.
(b) Subtenant shall fail to comply with any material term, provision, or
covenant of this Sublease, other than one payment of the Rent, and shall not
have cured such failure within twenty (20) days or such further period if it is
of such a nature that it cannot be reasonably cured within such twenty (20) day
period after written notice thereof to Subtenant.
(c) Subtenant shall make a statutory and/or common law assignment for the
benefit of creditors.
(d) Subtenant shall file a petition under any section or chapter of the
Bankruptcy Code, as amended, or under any similar liquidation, reorganization,
insolvency, dissolution or arrangement law or statute of the United States or
any State thereof; or Subtenant shall be adjudged bankrupt or insolvent in
proceedings filed against Subtenant thereunder and such adjudication shall not
be vacated, set aside or dismissed within sixty (60) days or stayed within five
(5) working days.
(e) A receiver, Trustee, custodian or similar official shall be appointed
for all or substantially all of the assets of Subtenant and such receivership
shall not be terminated or stayed within the time permitted by law.
(f) Subtenant shall have commenced a judicial and/or non-judicial
corporate dissolution proceeding.
20. REMEDIES. On the occurrence of any event of default specified in
Paragraph 19 hereof, which is not cured within five (5) business days of
Subtenant's receipt of subsequent notice from Sublandlord that the respective
cure periods in Paragraph 19 have expired, without Subtenant's curing, or if
applicable, commencing diligent efforts to cure the same, Sublandlord shall
have the option to pursue any one or more of the following remedies without any
notice or demand whatsoever:
(a) Terminate this Sublease in which event Subtenant shall immediately
surrender the Subleased Premises to Sublandlord, and if Subtenant fails to do
so,
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Sublandlord may, without prejudice to any other remedy which it may have
for possession or arrearages in rent, enter upon and take possession and expel
or remove Subtenant and any other person who may be occupying the Subleased
Premises or any part thereof, by force if necessary, without being liable for
prosecution or any claim of damages thereof; and Subtenant agrees to pay to
Sublandlord or demand the amount of all loss and damage which Sublandlord may
suffer by reason of such termination, whether through inability to relet the
Subleased Premises or satisfactory terms or otherwise, said loss and damage to
include all damages to which Sublandlord is entitled at law arising from
Subtenant's breach and the termination of this Sublease.
(b) Enter upon the Subleased Premises by reasonable force if necessary
without being liable for prosecution or any claim for damages therefor, and do
whatever Subtenant is obligated to do under the terms of this Sublease; and
Subtenant agrees to reimburse Sublandlord on demand for any reasonable expenses
which Sublandlord may incur in thus effecting compliance with Subtenant's
obligations under this Sublease, and Subtenant further agrees that Sublandlord
shall not be liable for any damages resulting to the Subtenant for such action.
Pursuit any of the foregoing remedies shall not preclude pursuit of any of
the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver
of any rent due to Sublandlord hereunder or of any damages occurring to
Sublandlord by reason of the violation of any of the terms, provisions and
covenants herein contained. Sublandlord's acceptance of rent following an
event of default hereunder shall not be construed as Sublandlord's waiver of
such event of default. No waiver by Sublandlord of any violation or breach of
any of the terms, provisions and covenants herein contained shall be deemed or
construed to constitute a waiver of any other violation or breach of any of the
terms, provisions, and covenants herein contained. Forbearance by Sublandlord
to enforce one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such default. None
of the foregoing shall diminish or eliminate Sublandlord's obligation to
mitigate damages to the extent such obligation exists under the laws of the
state in which the Subleased Premises are located.
21. SURRENDER OF PREMISES. No act or thing done by Sublandlord or its
agents during the term hereby granted shall be deemed an acceptance of a
surrender of the Subleased Premises, and no agreement to accept a surrender of
the Subleased Premises shall be valid unless the same be made in writing and
subscribed by Sublandlord.
22. ATTORNEY'S FEES. If it should be necessary or proper for either
Sublandlord or Subtenant to bring any action under this Sublease to recover
any amount payable hereunder, or for the enforcement of any of Sublandlord's or
Subtenant's rights hereunder, the party prevailing completely on all issues
shall have the right to recover in any such case a reasonable attorney's fee.
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23. RECEIPTS FROM ASSIGNEE OR SUBTENANT. The receipt by Sublandlord or
Prime Landlord of rent from any assignee, subtenant or occupant of the
Subleased Premises shall not be deemed a waiver of the covenant in this
Sublease contained against assignment and subletting or an acceptance of the
assignee, subtenant or occupant as tenant or a release of Subtenant from the
further observance or performance by Subtenant of the covenants in this
Sublease contained, on the part of Subtenant to be observed and performed. No
provision of this Sublease shall be deemed to have been waived by the parties
unless such waiver be in writing signed by said party.
24. QUIET ENJOYMENT; SUBLANDLORD'S REPRESENTATIONS. Subtenant, upon the
payment of the rentals and performance of the covenants on Subtenant's part to
be performed hereunder, shall and may peaceably and quietly have, hold and
enjoy the Subleased Premises during the term hereof and any extensions thereof,
free from interference or disturbance from Sublandlord, but subject to the
terms and conditions of this Sublease and the Prime Lease. Notwithstanding
anything to the contrary, Sublandlord shall not be liable for any interference
or disturbance from other tenants or third persons, nor such Subtenant be
released from any of the obligations of this Sublease because of such
interference or disturbance, unless such results from a third party claiming
through Sublandlord or Sublandlord fails to enforce diligently its rights to
cause such interference or disturbance to cease; provided that, to the extent
that Sublandlord is relieved of its obligation to pay rent pursuant to the
Prime Lease, Subtenant shall not be obligated to pay Rent at any time the
Subleased Premises become substantially unusable for Subtenant's normal
business operations as a result of any such disturbance of Subtenant's
possession of the Subleased Premises.
If Sublandlord shall fail to comply with any material term, provision, or
covenant of this Sublease, Subtenant may give notice to Sublandlord to correct
such default. Sublandlord shall have the right to correct or remedy such
default before Subtenant may take any action under this Sublease by reason of
such default. If such default shall continue for forty-five (45) days after
such written notice, or such further period as may be reasonably required to
cure such default if it is of such a nature that it cannot reasonably be cured
within such forty-five (45) day period, the Rent shall be abated on a
square footage basis during the period the Subleased Premises or a part thereof
is unfit for occupancy.
Sublandlord represents and warrants to Subtenant that:
(a) Sublandlord has heretofore provided Subtenant with a copy of the Prime
Lease and all amendments and modifications thereof;
(b) there has been no assignment of Sublandlord's interest therein or
sublease of the Subleased Premises, other than pursuant to this Sublease;
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(c) Sublandlord is fully authorized to enter into this Sublease and no
consent from any third party (except Prime Landlord) is required to authorize
Sublandlord to enter into this Sublease; and
(d) to the best knowledge of Michael Manchisi, Vice President - Global
Operations Administration of Sublandlord, (i) there is no current major dispute
or litigation between Sublandlord and Landlord with respect to the Prime Lease,
(ii) no material default of the Landlord or Sublandlord currently exists under
the Prime Lease, and (iii) Sublandlord has received no any written notice of
any material problem regarding the compliance of the Subleased Premises with
local and federal codes, statutes and laws, including without limitation the
Americans with Disabilities Act and environmental laws.
Sublandlord shall hold Subtenant harmless from and against any costs,
damage or liability to Subtenant arising out of Sublandlord's default or
failure to comply with the Prime Lease or any provision of law compliance with
which is required by the Prime Lease.
25. OTHER AGREEMENTS. Subtenant agrees that it accepts this Sublease
subject to and subordinate to any mortgage or deed of trust now or any time
constituting a lien or charge upon the Subleased Premises, the Sublandlord's
Premises and the Building.
26. NOTICES. Each provision of this Sublease, or of any applicable
governmental laws, ordinances, regulations, and other requirements with
reference to the sending, mailing, or delivery of any notice, or with reference
to the making of any payment by Subtenant to Sublandlord, shall be deemed to be
complied with when and if the following steps are taken:
(a) All Rent and other payments required to be made by Subtenant to
Sublandlord hereunder shall be payable to Sublandlord at the address
hereinbelow set forth, or at such other address as Sublandlord may specify from
time to time by written notice delivered in accordance herewith;
(b) Except as otherwise expressly provided herein, any notice or documents
required to be delivered hereunder shall be deemed to be delivered when
actually hand-delivered or delivered by air express or surface courier,
received (unless deliberately refused) after deposit in the United States mail,
postage prepaid, certified mail (with return receipt requested), addressed to
the parties hereto at the respective addresses set out below, or at such other
address as they have theretofore specified by written notice delivered in
accordance herewith:
Sublandlord:
[President]
12115 Lackland Road
St. Louis, Missouri 63146
Attention: Sr. Vice-President, Operations
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With a copy to:
[President]
Attention: General Counsel
Fax No: _____________________
Subtenant:
[Ambassador]
_____________________________
_____________________________
_____________________________
Attention:___________________
Fax No.:_____________________
A copy of any notice given to Sublandlord or Subtenant shall be sent by
telefax at the time of dispatch of such notice.
27. NO BROKERS. Each party hereby represents and warrants to each other
that no real estate or leasing broker or agent has been employed, retained or
involved in this transaction, and each party hereby agrees to indemnify and
hold the other harmless from and against any liabilities and claims for
commissions and fees due or claimed to be due by any party claiming to have
dealt with the indemnifying party in connection with this Sublease.
28. FORCE MAJEURE. Whenever a period of time is herein prescribed for
action to be taken by, or any obligation is required of, Sublandlord or
Subtenant, other than the payment of money owed hereunder (unless payment is
not due as a result of any force majeure), neither Sublandlord nor Subtenant
shall be liable or responsible for, and there shall be excluded from the
computation for any such period of time, any delays in performance due to
computation for any such period of time, any delays in performance due to
strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations, or restrictions, or any other causes of
any kind whatsoever which are beyond the control of said party. This
Paragraph shall apply only to the extent the party has taken reasonable steps
to avoid the force majeure and, once it occurs, diligently seeks to overcome
it. Any force majeure occurrence will not extend the term of this Sublease.
29. SEPARABILITY. If any clause or provision of this Sublease is illegal,
invalid or unenforceable under present or future laws effective during the term
of this Sublease, the remainder of this Sublease shall not be affected thereby
and in lieu of each clause or provision of this Sublease that is illegal,
invalid or unenforceable, there shall be deemed added as a part of this
Sublease a clause or provision as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and be legal, valid, and
enforceable.
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30. AMENDMENTS; BINDING EFFECT. This Sublease may not be altered,
changed, or amended, except by instrument in writing signed by both parties
hereto. The terms, provisions, covenants and conditions contained in this
Sublease shall apply to, inure to the benefit of, and be binding upon the
parties hereto, and upon their respective successors in interest and legal
representatives, except as otherwise herein expressly provided. This Sublease
shall not be binding upon either party until it is signed and delivered by such
party.
31. GENDER. Words of any gender used in this Sublease shall be held and
construed to include any other gender, and words in the singular number shall
be held to include the plural, unless the contest otherwise requires.
32. CAPTIONS. The captions contained in this Sublease are for convenience
of reference only, and in no way limit or enlarge the terms and conditions of
this Sublease.
33. MEMORANDUM. Subtenant agrees that it shall not record any memorandum
or instrument with respect to this Sublease without the prior written consent
of Sublandlord and Prime Landlord.
34. GOVERNING LAW. This Sublease shall be construed in accordance with
the law of the state in which the Subleased Premises are situate.
35. PARKING. To the extent Sublandlord has rights to parking under the
Prime Lease or by other agreement with the Prime Landlord, Subtenant shall,
without additional cost, be entitled to a portion of such parking privileges
based on its share of the Sublandlord's Premises.
36. LICENSED AREAS. Also shown on Exhibit A(1) - ( ) are certain
portions of the Building (the "Licensed Areas") of which Sublandlord is tenant
under the Prime Lease, which Sublandlord hereby licenses to Subtenant to use,
on a non-exclusive basis, to provide ingress and egress to the Subleases
Premises, access to fire exits and emergency facilities and for bathrooms and
access thereto. Subtenant's use of the Licensed Areas shall be limited to
those uses ancillary to its occupancy of the Subleased Premises and for no
other purpose and shall be exercised in a manner which shall (a) not
unreasonably interfere with Sublandlord's use of such areas, (b) be in
compliance with all laws, orders and regulations of federal, state, county and
municipal authorities and with any directions of any public officer or officers
pursuant to law, (c) be in compliance with Prime Landlord's Rules and
Regulations and (d) be in compliance with such other reasonable rules and
regulations as Sublandlord shall prescribe from time to time and give notice of
to Subtenant. The license for the Licensed Areas shall be and extend through
the term of this Sublease as the same may be shortened or terminated pursuant
hereto. Subtenant's obligations to insure and indemnify Sublandlord with
respect to the Subleased Premises shall also extend to the Licensed Areas. A
violation by Subtenant of any provision of this License shall constitute a
violation of this Sublease.
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37. SUBTENANT'S SHARE. Whenever a calculation shall be required or
permitted of subtenant's share (referred to in this Sublease as "Subtenant's
Share") of Sublandlord's Premises or Sublandlord's costs, such calculation
shall be made by using as the numerator the area of the Subleased Premises and
as the denominator the area of the Sublandlord's Premises diminished by the
area of the Licensed Areas.
IN WITNESS WHEREOF, the parties have executed this Sublease on the dates
set forth below and this Sublease shall be effective as of the latter of such
dates.
SUBLANDLORD:
[President]
By:
---------------------------------
Title:
-------------------------
By:
---------------------------------
Title:
-------------------------
[Affix Corporate Seal]
SUBTENANT:
[Ambassador]
By:
---------------------------------
Title:
-------------------------
By:
---------------------------------
Title:
-------------------------
[Affix Corporate Seal]
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107
LANDLORD'S CONSENT TO SUBLEASE AGREEMENT
THE CITADEL, a Texas limited partnership, as Landlord ("Landlord") under
that certain Lease (the "Prime Lease") dated _________________ between said
Landlord and _____________________________, a _________________ corporation
("Sublandlord"), as Tenant, as said Prime Lease may have heretofore been
modified and amended, does hereby consent to the within and foregoing Sublease
of a portion of the premises leased under the Prime Lease by Sublandlord, as
Sublandlord, to NEWCO, INC. a Georgia corporation, as Subtenant ("NEWCO") under
the foregoing Sublease ("Sublease").
IN WITNESS WHEREOF, Landlord has hereunto caused the foregoing Consent
Agreement to be executed under its hand and seal, this ___ day of
__________________, 1996.
THE CITADEL, a Texas limited partnership
By:
-------------------------------------
-------------------------------------
Its General Partner
By:
----------------------------------
Title:
------------------------
By:
-----------------------------------
Title
----------------------------
[Affix Corporate Seal]
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108
EXHIBIT B
FORM OF SELLER TRANSITION SERVICES AGREEMENT
109
EXHIBIT B
MASTERCARD
TRANSITION SERVICES AGREEMENT
THIS MASTERCARD TRANSITION SERVICES AGREEMENT (this "Agreement") is made
as of March 31, 1996, by and between MASTERCARD INTERNATIONAL INCORPORATED, a
Delaware corporation ("MasterCard"), and POS ACQUISITION COMPANY LLC, a Georgia
limited liability company (the "Company").
WHEREAS, National Data Corporation, the Company and MasterCard have
entered into that certain Asset Purchase and Contribution Agreement (the
"Purchase Agreement"), dated as of February 22, 1996, pursuant to which
MasterCard has agreed to transfer and the Company has agreed to acquire certain
assets and undertakings relating to MasterCard's Indirect Merchant Network
Business, as defined in the Purchase Agreement (the "Business"), and
WHEREAS, MasterCard and the Company each desires to make certain
arrangements for the provision of certain services (as more fully described
below) by MasterCard to the Company in connection with the operation of the
Business after Closing (as defined in the Purchase Agreement); and
WHEREAS, all capitalized terms used but not defined herein shall have the
same meaning as set forth in the Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used herein and in the Schedules hereto, the following terms have the
following respective meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"AFFILIATE" means with respect to MasterCard or the Company any entity
controlling, controlled by or under common control with MasterCard or the
Company, respectively.
110
"AGREEMENT" means this Transition Services Agreement and Schedule 2.1
attached hereto, as the same may be supplemented, amended or modified from time
to time.
"APPLICABLE LAW" means all applicable provisions of constitutions,
statutes, laws, rules, regulations and orders of all Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means any federal, state, county, local, foreign
or other governmental or public agency, instrumentality, commission, authority,
board or body.
"PRIME RATE" means a rate of interest equal to the prime rate of interest
announced by Citibank, N.A. at its principal office in New York, New York as
its "prime rate.
"TAXES" means all forms of taxation, whether of the United States or
elsewhere and whether imposed by a local, municipal, state, federal, foreign or
other body or instrumentality, and shall include any related interest and
penalties imposed by any taxing authority.
"TERM" is defined in Section 5.1.
ARTICLE 2
SERVICES TO BE PROVIDED
2.1 SERVICES. The parties agree that, subject to the terms and conditions
of this Agreement, MasterCard shall provide to the Company the services
described on SCHEDULE 2.1 hereto in connection with the Company's operation of
the Business from and after the Closing Date (the "Initial Services").
MasterCard shall provide the Initial Services and any Supplemental Services (as
hereinafter defined) substantially in the same manner, at the same level and
quantity, with the same quality of performance, and at and from the same
locations, as such Services have been provided to the Business prior to the
Closing.
2.2 THE COMPANY'S COOPERATION. The Company shall cooperate fully and
provide such assistance as is reasonably required for MasterCard to provide the
Services.
2.3 ADDITIONAL SERVICES. MasterCard and the Company agree that obtaining
the services required for the transition of the Business from MasterCard to the
Company are important to a smooth transition. Therefore, to the extent that
any services required by the Company in connection with the transition
associated with the Excluded Contracts or Excluded Assets or otherwise required
to operate the Business in substantially the same manner as previously
conducted by MasterCard are not included in the Initial Services, the Company
may request such services hereunder, and MasterCard will make a
reasonable effort to perform such transition services (the "Supplemental
Services") (the Initial
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Services and the Supplemental Services, if any, are hereinafter collectively
referred to as the "Services").
ARTICLE 3
ADEQUATE STAFF AND FACILITIES
MasterCard shall use commercially reasonable efforts, during the Term of
this Agreement, to maintain adequate staff, support services and facilities as
may be necessary to perform its responsibilities under this Agreement, in
keeping with the standards of accuracy and promptness observed by MasterCard in
providing the Services with respect to its own business.
ARTICLE 4
PRICE AND PAYMENT TERMS
4.1 PRICE FOR SERVICES. The price to be paid by the Company for each
Initial Service (the "Initial Service Cost") shall initially be as set forth on
Schedule 2.1, and thereafter as the parties shall mutually agree. With respect
to any Supplemental Services provided pursuant to Section 2.3 of this
Agreement, the cost (the "Supplemental Service Cost") shall be the lesser of:
(a) MasterCard's actual direct cost of providing such Service (provided that
such formula shall not include any amounts for depreciation, amortization,
overhead, support services, profit, cost of capital, or other indirect costs);
or (b) if MasterCard were to continue to own the Business after Closing, the
amount that MasterCard would allocate as an intercompany charge to the Business
division for such Service, applying the same formula for computing such
intercompany charge that MasterCard has used consistent with prior practices as
reflected in MasterCard's financial statements referred to in the Purchase
Agreement.
4.2 PAYMENT. The Initial Service Cost and the Supplemental Service Cost,
if any (collectively, "Service Cost"), will be paid as follows:
(a) Monthly Invoices. After the end of each month during the Term,
MasterCard will provide to the Company an invoice for each Service showing the
Service Cost therefor for such month just ended. Upon request, MasterCard will
provide the Company with such supporting documentation as may be reasonably
requested by the Company. Subject to the procedures for dispute set forth
below, the Company shall pay the amount shown on each such invoice within ten
(10) days after receipt thereof by means of a company check. The Service Cost
for any Service that is provided for only part of a month shall be
appropriately prorated.
(b) Disputes. In the event that the Company disagrees with any invoice
submitted by MasterCard as required by subsection (a) immediately above, the
Company shall promptly notify MasterCard of such disagreement following the
Company's
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determination of the disagreement. The parties shall then cooperate
to resolve the dispute, with MasterCard providing the Company with such
supporting documentation relating to the calculation of the Service Cost as the
Company may reasonably request. If the parties do not resolve the dispute
within twenty (20) days after MasterCard's receipt of the Company's dispute
notice, either party can submit the dispute to arbitration, in accordance with
Article 6 hereof.
(c) Other Documents. MasterCard shall provide to the Company upon
reasonable request any reports or summaries relating to the Service Costs,
which the Company may need for preparing financial statements, tax returns or
otherwise.
4.3 INTEREST ON LATE PAYMENTS. Any monthly payment of the Service Cost
that is not paid on or before the tenth (10th) day of the calendar month in
which it is due shall bear interest from such due date until the date paid at
the lesser of (a) an annual simple interest rate equal to Prime Rate plus 2%,
or (b) the maximum amount permitted by Applicable Law.
4.4 TAXES. Any transaction, excise, sales or similar Tax imposed on or
measured by the rendering of a Service shall be the responsibility of the
Company. All other Taxes associated with a Service shall be paid by
MasterCard; provided, however, that each party shall be responsible for its own
income Taxes.
ARTICLE 5
TERM AND TERMINATION
5.1 TERM. This Agreement shall commence on the Closing Date and, unless
sooner terminated in accordance with Section 5.2 below, shall continue in
effect for a term (the "Term") expiring on the third (3rd) anniversary of the
Closing Date.
5.2 TERMINATION.
(a) By the Company. The Company shall be entitled to terminate this
Agreement at any time, in whole or in part with respect to any or all of the
Services, by providing thirty (30) days' written notice to MasterCard.
(b) By MasterCard. MasterCard shall not be entitled to terminate this
Agreement, except in the event that the Company is in material breach of this
Agreement and such breach remains uncured for more than 30 days after notice
thereof has been provided by MasterCard to the Company; provided, that if such
breach is not capable of being cured within 30 days of such notice, and if the
Company, upon receipt of such notice, promptly commences and diligently pursues
the cure to completion as soon as reasonably possible, then such 30-day period
shall be extended for the period of time which is reasonably necessary to cure
the breach.
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5.3 EFFECT OF TERMINATION. Upon termination of this Agreement, all rights
and obligations of each party hereunder shall cease as of the date of the
termination, and any amounts owed by either party pursuant to this Agreement
shall be paid in full. In addition, upon any termination of this Agreement,
MasterCard shall promptly return to the Company any property of the Company
used in connection with the provision of the Services. Notwithstanding the
foregoing, the termination of this Agreement pursuant to any of the provisions
hereof shall be without prejudice to any rights, or diminution of any
obligation or liability of either party, that may have accrued prior to the
effective date of such termination. In addition, the provisions of Article 7
and Section 8.1 shall survive the termination of this Agreement.
ARTICLE 6
DISPUTE RESOLUTION PROCEDURE
Any controversy or claim arising out of or relating to this Agreement, the
breach hereof, or coverage of this arbitration provision, which is not settled
by MasterCard and the Company, shall be settled by arbitration in accordance
with the procedures therefor set forth in the Purchase Agreement.
ARTICLE 7
INDEMNIFICATION
7.1 LIMITATION OF LIABILITY. Except to the extent provided in Sections
7.2 and 7.3 hereof, nothing in this Agreement is intended to impose upon
MasterCard, and MasterCard does not intend to assume in this Agreement, any of
the risks associated with operation of the Business, including, without
limitation, product or service quality and liability therefor, except to the
extent MasterCard is providing the services associated with such product or
service quality and then subject to the provisions in Section 7.2. Except as
provided elsewhere in this Agreement, neither party shall have any liability to
the other party for any costs, damages, expenses, liabilities or losses
incurred by such other party in connection with this Agreement or the
performance of either party's obligations hereunder, whether such claim of
liability arises in an action at law or in equity, and whether such claim
sounds in contract or tort or otherwise.
7.2 INDEMNIFICATION BY MASTERCARD. Subject to the provisions of Section
7.4, MasterCard hereby agrees to indemnify and hold harmless the Company, its
Affiliates, and their respective directors, officers, employees, successors and
assigns (collectively, "Agents"), from and against any and all claims, demands,
causes of action and lawsuits ("Claims") (including Claims against the Company,
its Affiliates or their respective Agents by MasterCard, its Affiliates or their
respective Agents, or any third party), and liabilities, penalties, judgments,
losses, injuries, damages, costs, fees and expenses (including, without
limitation, costs of defense, settlement, and reasonable attorneys' fees and
expenses relating to matters or actions arising under this Agreement)
("Damages"),
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suffered or incurred by the Company, its Affiliates or their respective Agents,
arising out of or resulting from any material breach of this Agreement by
MasterCard or the fraud, negligence or willful misconduct of MasterCard in
connection with the performance of its obligations under this Agreement.
7.3 INDEMNIFICATION BY THE COMPANY. Subject to the provisions of Section
7.4, the Company hereby agrees to indemnify and hold harmless MasterCard, its
Affiliates, and their respective Agents from and against any and all Claims
(including Claims against MasterCard, its Affiliates or their respective Agents
by the Company, its Affiliates or their respective Agents, or any third party)
and Damages suffered or incurred by MasterCard, its Affiliates or their
respective Agents, arising out of any material breach of this Agreement by the
Company or resulting from the provision of Services under this Agreement, other
than any and all Claims or Damages arising out of or resulting from any
material breach of this Agreement by MasterCard or the fraud, negligence or
willful misconduct of MasterCard in connection with the performance of its
obligations under this Agreement.
7.4 INDEMNIFICATION PROCEDURES.
(a) In the event that, from and after the Closing Date, a third party
asserts a Claim against MasterCard, its Affiliates or their respective Agents
(the "MasterCard Indemnitees"), or the Company, its Affiliates or their
respective Agents (the "Company Indemnitees"), with respect to any matter to
which the indemnities set forth in this Article 7 apply (a "Third Party Claim"),
the MasterCard Indemnitee or the Company Indemnitee, as the case may be, against
whom the Third Party Claim is asserted (the "Indemnified Party") shall give the
Company or MasterCard, as the case may be (the "Indemnifying Party"), prompt
notice of such Third Party Claim. The Indemnifying Party, at its own expense,
shall have the right to undertake the defense of such Third Party Claim by
retaining counsel of its own choosing (after giving notice of such retention of
counsel to the Indemnified Party), which counsel shall be reasonably
satisfactory to the Indemnified Party. If an expense or cost is found to be
associated with an Indemnified Party's failure to give timely notice to the
Indemnifying Party, the Indemnified Party shall pay such expense or cost;
provided, that in agreeing to pay such expense or cost the Indemnified Party
shall not be deemed in any way to have waived its right to indemnification
hereunder, net of any such expense or cost. In the event that a party from whom
indemnification is sought chooses not to undertake the defense of any Third
Party Claim asserted (and hereby agrees to provide written notice of such
decision to the other party), and the party seeking indemnification does
undertake the defense of such Third Party Claim, and the party from whom
indemnification is sought is subsequently held to be liable for such Third Party
Claim, the party from whom indemnification is sought agrees that it will fully
indemnify the party seeking indemnification for the Damages it may owe to such
party in connection with such Third Party Claim, including, without limitation,
attorneys fees and other expenses related to the defense of such Third Party
Claim which are incurred by the party seeking indemnification.
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(b) Notwithstanding anything to the contrary in this Section 7.4, if there
is a reasonable probability in the Indemnified Party's judgment that a Third
Party Claim may materially and adversely affect the Indemnified Party other
than as a result of money damages ("Non-Monetary Claims"), the Indemnified
Party will have the right to defend or co-defend (in each case, at the
Indemnified Party's expense), compromise or settle such Non-Monetary Claim to
the extent it relates to the Indemnified Party or the Indemnified Party's
business; provided that if the Indemnifying Party does not consent in writing
to any such settlement or compromise (which consent shall not be unreasonably
withheld, conditioned or delayed) the settlement or compromise shall be at the
Indemnified Party's expense.
(c) The Indemnifying Party will provide each Indemnified Party with access
to all records and documents of the Indemnifying Party relating to any Third
Party Claim. The Indemnified Party will provide the Indemnifying Party with
access to all records and documents of the Indemnified Party relating to any
Third Party Claim.
(d) Notwithstanding any other provision of this Agreement, the liability
of an Indemnifying Party under this Agreement shall be limited to the direct
damages (which the Company and MasterCard agree shall also include lost profits
only with respect to any Claim arising out of or resulting from any material
breach of this Agreement or fraud or willful misconduct in connection with the
performance of this Agreement) of the Indemnified Party and shall not otherwise
include incidental, consequential, indirect, special, punitive, exemplary or
other similar damages awarded as such directly to such party, other than
compensatory damages. In calculating any amount of actual damages to be paid
by MasterCard or the Company as set forth in this Article 7, the amount of such
damages shall be reduced by all net tax benefits and other reimbursements
credited to or received by the other party, relating to such damages.
ARTICLE 8
MISCELLANEOUS
8.1 CONFIDENTIALITY.
(a) Each party agrees not to use, copy or disclose the trade secrets and
confidential information of the other party, except as permitted by this
Agreement. Each party shall treat the other's confidential and secret
information with at least that degree of care it uses with respect to its own
such information. Each party will give access to the other party's confidential
information only to such of its personnel and representatives as have a need to
such access for the purpose of providing the services hereunder, and to no other
person whatsoever. The requirements herein contained with respect to
non-disclosure and non-use and protection of each party's trade secrets and
confidential information shall permanently survive termination of any other
provisions of this Agreement. If either party is ordered by a court or
Governmental Authority of competent jurisdiction to disclose trade secrets or
confidential information, or if it is served with or
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otherwise becomes aware of a motion or similar request that such an order be
issued, then such party will not be liable to the other party for disclosure of
trade secrets or confidential information required by such order if the
disclosing party complies with the following requirements: (1) if an already
issued order calls for immediate disclosure, then the disclosing party promptly
moves for or otherwise requests a stay of such order to permit the other party
to respond; (2) the disclosing party promptly notifies the other party of the
motion or order; and (3) the disclosing party does not oppose a motion or
similar request by the other party for an order protecting the confidentiality
of the trade secrets and confidential information including joining or agreeing
to (or non-opposition to) a motion for leave to intervene by such other party.
(b) The term "trade secrets" means information related to a party (1)
which derives economic value, actual or potential, from not being generally
known to or readily ascertainable by other persons who can obtain economic
value from its disclosure or use, and (2) which is the subject of efforts by
said party that are reasonable under the circumstances to maintain its secrecy.
(c) The term "confidential information" means information that is
confidential to the business of a party and is not a trade secret; provided,
however, that confidential information does not include information which is or
becomes generally known to the public without any breach by a party of its
duties to the other party. Assuming that the foregoing criteria are met,
confidential information also includes information which has been disclosed to
a party and which such party is obligated to treat as confidential.
8.2 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by any
party hereto without the prior written consent of the other party, which
consent shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, the Company may assign or otherwise transfer all
of its rights and/or obligations hereunder to any Affiliate of the Company or
to any entity or entities, or any assignee of such entity or entities, which
acquires, by purchase, operation or law or otherwise, all or a substantial
portion of the assets of the Business.
8.3 GOVERNING LAW. The construction, validity and enforceability of this
Agreement shall be governed by the internal laws of the State of Georgia,
without regard to the conflict of laws principles thereof.
8.4 NOTICES.
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(a) If to MasterCard:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attn: William I. Jacobs
Executive Vice President
Telephone: (914) 249-5200
Telecopier: (914) 249-5475
with a copy (which shall not constitute notice) to:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: Robert E. Norton, Jr.
General Counsel
Telephone: (914) 249-5301
Telecopier: (914) 249-4262
with a copy (which shall not constitute notice) to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attn: John A. Healy, Esq.
Telephone: (212) 878-8000
Telecopier: (212) 878-8375
(b) If to National Data:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attn: Mr. Robert A. Yellowlees
Chief Executive Officer
Telephone: (404) 728-2000
Telecopier: (404) 728-3509
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with a copy (which shall not constitute notice) to:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attn: E. Michael Ingram, Esq.
General Counsel
Telephone: (404) 728-2504
Telecopier: (404) 728-2551
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: B. Harvey Hill, Jr., Esq.
Telephone: (404) 881-7446
Telecopier: (404) 881-7777
8.5 NO WAIVER. The failure of either party at any time to require
performance by the other party of any provision of this Agreement shall in no
way affect the right of such party to require performance of that provision.
Any waiver by either party of any breach of any provision of this Agreement
shall not be construed as a waiver of any continuing or succeeding breach of
such provision, a waiver of the provision itself or a waiver of any right under
this Agreement.
8.6 SEVERABILITY. All provisions of this Agreement are severable and any
provision which may be prohibited by law shall be ineffective to the extent of
such prohibition without invalidating the remaining provisions of this
Agreement; provided, that if the provisions of Article 7 or any part thereof
are prohibited by law or otherwise declared to be unenforceable, then the
parties agree to negotiate in good faith amendments to this Agreement that will
carry into effect the intention of the parties at the time this Agreement was
entered into, taking into account the reasonable needs of the parties for
effective indemnification arrangements and the cost of the services being
provided hereunder.
8.7 ENTIRE AGREEMENT; MODIFICATIONS AND AMENDMENTS. This Agreement
(including Schedule 2.1 hereto), the Purchase Agreement, and any other
agreements executed and delivered by the parties contemporaneously herewith
constitute the entire agreement between the parties concerning the subject
matter thereof. No prior representations, inducements, promises or agreements,
oral or otherwise, between the parties with reference thereto will be of any
force or effect. Each party represents and warrants that, in entering into and
performing its obligations under this Agreement, it does not and will not
rely on any promise, inducement or representation allegedly made by or
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on behalf of the other party with respect to the subject matter hereof, nor on
any course of dealings or custom and usage in the trade, except as such promise,
inducement or representation may be expressly set forth herein. No modification
or amendment to this Agreement will be valid or binding unless reduced to
writing and duly executed by the party or parties to be bound thereby.
8.8 INDEPENDENT CONTRACTOR STATUS. MasterCard shall be deemed to be an
independent contractor to the Company. Nothing contained in this Agreement
shall create or be deemed to create the relationship of employer and employee,
and no party to this Agreement shall, by reason hereof, be deemed to be a
partner or a joint venturer of any other party hereto in the conduct of their
respective businesses and/or the conduct of the activities contemplated by this
Agreement. Except as specifically and explicitly provided in this Agreement,
and subject to and in accordance with the provisions hereof, no party to this
Agreement is now, shall become, or shall be deemed to be an agent or
representative of any other party hereto with respect to the subject matter
hereof. Except as herein explicitly and specifically provided, neither party
shall have any authority or authorization, of any nature whatsoever, to speak
for or bind the other party to this Agreement with respect to the subject
matter hereof.
8.9 BINDING EFFECTS; BENEFITS. This Agreement will be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
Nothing contained in this Agreement, express or implied, is intended to confer
upon any person other than the parties to it and their respective successors
and permitted assigns any rights or remedies under or by reason of this
Agreement.
8.10 SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not in any way control the meaning or
interpretation of this Agreement.
8.11 FORCE MAJEURE. MasterCard shall be excused from performing the
Services under this Agreement and shall have no liability to the Company for
any period it is prevented from performing the Services, in whole or in part,
as a result of delays caused by an act of God, war, civil disturbance, court
order, labor dispute, or other cause beyond its reasonable control, including
failures or fluctuations in electrical power, heat, light, or
telecommunications, and such nonperformance shall not be a default under, or
grounds for termination of, this Agreement.
8.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against either party, whether
under any rule of construction or otherwise. Neither party hereto shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and their lawyers and shall be construed
and interpreted according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
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8.13 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall constitute an
original, but all such counterparts shall together constitute one and the same
instrument.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
MASTERCARD INTERNATIONAL
INCORPORATED
By:
--------------------------
Name:
------------------------
Title:
-----------------------
POS ACQUISITION COMPANY LLC
By:
--------------------------
Name:
------------------------
Title:
-----------------------
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EXHIBIT C
FORM OF PARENT SERVICES AGREEMENT
123
EXHIBIT C
POS
SERVICE AGREEMENT
THIS POS SERVICE AGREEMENT ("Agreement") dated as of_____________, 1996 is
between POS ACQUISITION COMPANY LLC, a Georgia limited liability company, (the
"Company") and NATIONAL DATA CORPORATION, a Delaware corporation ("NDC").
WHEREAS, NDC, MasterCard International Incorporated, a Delaware
corporation, and the Company have entered into an Asset Purchase and
Contribution Agreement dated as of February 22, 1996 (the "Purchase
Agreement"). Each capitalized term used herein but not defined herein shall
have the meaning given it in the Purchase Agreement.
WHEREAS, the Purchase Agreement provides that it shall be a condition to
the consummation of the transaction provided for therein that the Company and
NDC enter into this Agreement;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein, the Company and NDC agree as follows:
TERMS AND CONDITIONS
1. NEWCO SERVICES: According to the terms of this Agreement, the
Company will furnish NDC and its Affiliates with the data processing
services described in Exhibits A-1 through A-3, Service Description,
attached hereto and incorporated herein by reference. Additional requested
Services, if available, will be furnished to NDC under the general terms
and conditions of this Agreement and in accordance with pricing as set
forth in Paragraph 2, below. Any such additional Services will be as
described in additional Exhibits A to this Agreement, each of which shall
be signed by both parties hereto. Any Exhibit A may contain terms
different than those contained in this Agreement, and in such event the
terms of each such Exhibit A shall control with respect to the Services
described in such Exhibit A.
2. CHARGES: Charges for the Services shall be as set forth in
Exhibits B-1 through B-3, Service Pricing Schedules. Pricing for
additional Services shall be as set forth in additional Exhibits B
to this Agreement, each of which shall be signed by both parties
hereto. The amount of usage of Services to be paid for by NDC
shall be that amount recorded by the Company's computer system.
Charges for requested Services for which there is no published
rate shall, in the absence of prior written agreement, be at a
reasonable rate as determined by the Company. In addition, NDC
will be charged an amount equal to any taxes, however designated,
levied or based on any of the above referred to charges or
Services, including State
124
and local taxes paid or payable by the Company, excluding any
federal, State or local taxes based on the Company's net income.
The Company will bill NDC monthly for all charges incurred by NDC,
including any authorized charges incurred by the Company on NDC's behalf
for NDC's use of the Services as provided for in this Agreement. NDC
agrees to pay the Company upon receipt of each monthly invoice, and
agrees further to pay a one percent (1%) per month service charge on all
invoices that are not paid within thirty (30) days following such
receipt. All payments shall be made in United States Dollars. In the
event that any invoice is not timely paid as provided herein, the Company
may, in addition to any other right or remedy which it may have under
this Agreement or at law, terminate this Agreement and NDC's use of the
Services if NDC does not effect payment in full within ten (10) days of
the Company's written demand therefor. NDC agrees to reimburse the
Company for all costs and expenses, including reasonable attorney's fees,
incurred by the Company in enforcing collection of any moneys due it
under this Agreement.
3. TERM AND TERMINATION:
a. This Agreement shall remain in full force and effect
for an initial term of five (5) years, beginning upon the
effective date set forth above, and shall be automatically
extended for successive one (1) year periods on the same
terms and conditions expressed herein, or as may be amended,
unless either party gives the other party written notice of
termination at least thirty (30) days prior to the expiration
of the initial term or any extensions or renewals thereof.
Termination of this Agreement shall not terminate NDC's
obligation to pay the Company for all services performed
under the Agreement prior to discontinuance of performance by
the Company due to termination.
b. Except as provided in Paragraph 2 above, in the event
that either party hereto fails in the performance of its
obligations hereunder or breaches the terms or conditions
hereof, the other party may, at its option, give written
notice to the party which has failed to perform or has
breached this Agreement of its intention to terminate this
Agreement unless such breach or failure in performance is
remedied within thirty (30) days of such notice. Failure to
remedy such a breach shall make this Agreement terminable, at
the option of the aggrieved party, at the end of such thirty
(30) day period unless notification is withdrawn.
4. CHANGE OF CHARGES: The Company shall have the right to
change the prices for any of the services at any time on or after the
first year's anniversary date of this Agreement upon not less than
sixty (60) days prior written notice to NDC. Such new price shall
be guaranteed to remain at the same level for a period of one (1)
year from the effective date of such change.
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Notwithstanding the above requirements, the Company shall have the right
to increase the fees and charges paid by NDC to offset any increase in
rates charged by any communications common carriers utilized by the
Company in the provision of Services hereunder. Any such increase shall
become effective on the same day as the increase in rates charged by the
communications common carrier becomes effective.
Further notwithstanding the above requirements, the Company shall have
the right to increase such fees and charges to offset any increase to the
Company in the costs of providing the Services hereunder if any change in
the rules, regulations or operating procedures of any Credit Card sponsor
organization, service supplier or any cognizant Federal, State or local
governmental agency or regulatory authority results in such cost
increase. Any such increase shall become effective as of the date on
which the Company notifies NDC of such increase.
5. USE OF THE SERVICES: NDC agrees to utilize the Services in
accordance with this Agreement, its exhibits, and the Company's
reasonable Service instructions and specifications and to provide
the Company with the necessary data in the proper format to enable
the Company to properly furnish the services.
6. LIMITATION OF LIABILITY:
a. The Company shall not be liable for failure to provide
the Services if such failure is due to any cause or condition
beyond its reasonable control. Such causes or conditions
shall include but shall not be limited to, acts of God or of
the public enemy, acts of the Government in either its
sovereign or contractual capacity, fires, floods, epidemics,
quarantine restrictions, strikes, shortages of labor or
materials, freight embargoes, unusually severe weather,
electrical power failures, or other similar causes beyond the
Company's control and the Company shall have no liability for
losses, expenses or damages, ordinary, special or
consequential resulting directly or indirectly from such
causes. If the Company's failure to provide the Services is
caused by the default of a subcontractor, and if such default
arises out of causes beyond the control of both the Company
and the subcontractor, the Company shall not be liable unless
the supplies or Services to be furnished by the subcontractor
were obtainable from other sources in sufficient time to
permit the Company to fulfill its obligations hereunder.
b. The Company agrees to use its best efforts at all
times to provide prompt and efficient services; however, the
Company makes no warranties or representations regarding the
Services except as specifically stated in this Paragraph 6.b.
The Company shall use due care in processing all work
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submitted to it by NDC and agrees that it will, at its
expense, correct any errors which are due solely to
malfunction of the Company's computers, operating systems or
programs, or errors by the Company's employees or agents.
Correction shall be limited to rerunning of the job or jobs
and/or recreating of data or program files. The Company
shall not be responsible in any manner for errors or failures
of or errors in proprietary systems and programs other than
those of the Company, nor shall the company be liable for
errors or failures of NDC'S software or operational systems.
THIS WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER
WARRANTIES, AND SUBSCRIBER HEREBY WAIVES ALL OTHER
WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
USE FOR A PARTICULAR PURPOSE. Should there be any failure in
performance or errors or omissions with respect to the
information being transmitted, the Company's liability shall
be limited to using its best efforts to correct such failure
in performance or errors or omissions. In no event, except
as specifically set forth herein, shall the Company be liable
to NDC or any third parties (including NDC's customers) for
any claim, loss or damage, ordinary, special or
consequential, or otherwise, even if the Company has been
advised of the possibility of such damage.
Due to the nature of the services being performed by the Company,
it is agreed that in no event will the Company be liable for any
claim, loss, liability, correction, cost, damage or expense caused
by the Company's performance or failure to perform hereunder which
is not reported by NDC within one hundred twenty (120) days of
such failure to perform.
c. NDC shall indemnify and hold harmless the company from
and against any and all loss, damage, or expense or claims of
damage or liability, ("claims") asserted against the Company
by third parties arising out of the performance of services
under this agreement or from information provided to the
Company by NDC or NDC's customers, or arising out of the use
of such information when furnished by the Company to NDC's
customers or to other third persons at NDC's request, or to
officers, employees and agents of NDC; provided, however,
that such indemnity obligation does not apply in cases where
such claims arise primarily from the negligence or
intentional misconduct of the Company.
d. Liability of the Company in any and all categories and
for any and all causes arising out of this agreement shall,
in the aggregate, not exceed six (6) month's average billing
to NDC taken over the twelve (12)
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months preceding the month in which the damage or injury is
alleged to have occurred, but if this agreement has not been in
effect for twelve (12) months preceding such date, then over such
fewer number of preceding months that this agreement has been in
effect.
7. PROPRIETARY INFORMATION:
a. All proprietary information disclosed by either party
to the other in connection with this Agreement shall be
identified as such in writing if not already identified as
such herein, and shall be protected by the recipient party
from disclosure to others. All software, data, or other
intellectual property provided by the Company under this
Agreement is hereby identified as proprietary to the Company
and may not be copied or used in any way other than as
specifically authorized in this Agreement. Any software or
data furnished by NDC to the Company in connection with this
Agreement is identified as proprietary to NDC, but may be
used as required by the terms of this Agreement and retained
by the Company until performance under this Agreement is
completed or until this agreement is terminated, whichever
occurs first, at which time such information and all copies
thereof shall be returned to NDC upon request.
b. The Company and NDC acknowledge that all proprietary
information disclosed by either party to the other party for
the purpose of work, or which comes to the attention of one
of the parties, its employees, officers, and agents during
the course of such work, constitutes a valuable asset.
Therefore, the Company and NDC agree to hold such information
in confidence and shall not, except in the performance of the
duties under this agreement or with the express prior written
consent of the other party, disclose or permit access to any
such information to any person, firm or corporation other
than persons, firms or corporations authorized by that party,
and the company and ndc shall cause their officers,
employees, agents, and representatives to take such action as
shall be necessary or advisable to preserve and protect the
confidentiality of such information.
c. The Company's and NDC's obligations and agreements
under this paragraph shall not apply to any information
supplied that:
(1) was known to either party prior to the disclosure
by the other, or
(2) is or becomes generally available to the public other
than by breach of this agreement, or
(3) otherwise becomes lawfully available on a
nonconfidential basis from a third party who is not under
an obligation of confidence to either party.
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8. MISCELLANEOUS:
a. This Agreement shall be construed in all respects
under the laws of the state of georgia without reference to
conflicts of laws provisions.
b. This Agreement contains the full understanding of the
parties with respect to the subject matter hereof, and no
waiver, alteration or modification of any of the provisions
hereof shall be binding unless in writing and signed by
officers of both parties. In the event NDC issues a purchase
order or memorandum or other instrument covering the services
herein offered and provided, it is hereby specifically agreed
and understood that such purchase order or memorandum or
instrument is for ndc's internal purposes only and any and
all terms and conditions contained therein, whether printed
or written, shall be of no force or effect.
c. If any part of this agreement shall be held to be void
or unenforceable, such part will be treated as severable,
leaving valid the remainder of this agreement notwithstanding
the part or parts found to be void or unenforceable.
d. Except as otherwise provided in this agreement,
notices required to be given pursuant to this agreement shall
be effective when received, and shall be sufficient if given
in writing, hand delivered, sent by telegraph or first class
united states mail, postage prepaid and addressed to the
appropriate party at the address set forth on the signature
page hereof.
The parties hereto may change the name and address of the person
to whom all notices or other documents required under this
Agreement must be sent at any time by giving written notice to the
other party.
e. Neither party to this Agreement may assign its rights or
obligations under this Agreement without the express written consent
of the other party, except that the obligations of the Company under
this Agreement may be provided or fulfilled by any parent,
subsidiary, affiliate, successor corporation or subcontractor of the
Company so long as the Company assumes full responsibility for such
obligations.
[SIGNATURES CONTINUED ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and to be effective as of the date
first set forth above.
POS ACQUISITION COMPANY LLC NATIONAL DATA
CORPORATION
By: By:
-------------------------------- -----------------------------
- -----------------------------------
Title: Title:
----------------------------- --------------------------
- -----------------------------------
Date: Date:
----------------------------- --------------------------
- -----------------------------------
Address: Address:
- ----------------------------------- --------------------------------
- -----------------------------------
- ----------------------------------- --------------------------------
- -----------------------------------
- ----------------------------------- --------------------------------
- -----------------------------------
Attn: Attn:
------------------------------ ---------------------------
- -----------------------------------
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EXHIBIT C
NDC SERVICES AGREEMENT
THIS NDC SERVICES AGREEMENT (this "Agreement") is made as of March 31,
1996, by and between NATIONAL DATA CORPORATION, a Delaware corporation ("NDC"),
and POS ACQUISITION COMPANY LLC, a Georgia limited liability company (the
"Company").
WHEREAS, NDC, MasterCard International Incorporated and the Company have
entered into that certain Asset Purchase and Contribution Agreement (the
"Purchase Agreement"), dated as of February 22, 1996, pursuant to which NDC has
agreed to transfer and the Company has agreed to acquire certain assets and
undertakings relating to NDC's indirect merchant network business, as defined
in the Purchase Agreement (the "Business"), and
WHEREAS, NDC and the Company each desires to make certain arrangements for
the provision of certain services (as more fully described below) by NDC to the
Company in connection with the operation of the Business after Closing (as
defined in the Purchase Agreement); and
WHEREAS, all capitalized terms used but not defined herein shall have the
same meaning as set forth in the Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used herein and in the Exhibits hereto, the following terms have the
following respective meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"AFFILIATE" means with respect to NDC or the Company any entity
controlling, controlled by or under common control with NDC or the Company,
respectively.
131
"AGREEMENT" means this NDC Services Agreement and Exhibits A-1 through A-7
and B-1 through B-7 attached hereto, as the same may be supplemented, amended
or modified from time to time.
"TAXES" means all forms of taxation, whether of the United States or
elsewhere and whether imposed by a local, municipal, state, federal, foreign or
other body or instrumentality, and shall include any related interest and
penalties imposed by any taxing authority.
"TERM" is defined in Section 5.1.
ARTICLE 2
SERVICES TO BE PROVIDED
2.1 SERVICES. The parties agree that, subject to the terms and conditions
of this Agreement, NDC shall provide to the Company the services described on
Exhibits A-1 through A-7 hereto in connection with the Company's operation of
the Business from and after the Closing Date (the "Services"). NDC shall
provide the Services substantially in the same manner, at the same level and
quantity, with the same quality of performance, and at and from the same
locations, as such Services have been provided to the Business prior to the
Closing.
2.2 THE COMPANY'S COOPERATION. The Company shall cooperate fully and
provide such assistance as is reasonably required for NDC to provide the
Services.
ARTICLE 3
ADEQUATE STAFF AND FACILITIES
NDC shall use commercially reasonable efforts, during the Term of this
Agreement, to maintain adequate staff, support services and facilities as may
be necessary to perform its responsibilities under this Agreement, in keeping
with the standards of accuracy and promptness observed by NDC in providing the
Services with respect to its own business.
ARTICLE 4
PRICE AND PAYMENT TERMS
4.1 PRICE FOR SERVICES. The price to be paid by the Company for each
Service (the "Service Cost") shall initially be as set forth on Exhibits B-1
through B-7 hereto, and thereafter as the parties shall mutually agree.
4.2 PAYMENT. The Service Cost will be paid as follows:
(a) Monthly Invoices. After the end of each month during the Term, NDC
will provide to the Company an invoice for each Service showing the Service
Cost
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therefor for such month just ended. Upon request, NDC will provide the Company
with such supporting documentation as may be reasonably requested by the
Company. Subject to the procedures for dispute set forth below, the Company
shall pay the amount shown on each such invoice within ten (10) days after
receipt thereof by means of a company check. The Service Cost for any Service
that is provided for only part of a month shall be appropriately prorated.
(b) Disputes. In the event that the Company disagrees with any invoice
submitted by NDC as required by subsection (a) immediately above, the Company
shall promptly notify NDC of such disagreement following the Company's
determination of the disagreement. The parties shall then cooperate to resolve
the dispute, with NDC providing the Company with such supporting documentation
relating to the calculation of the Service Cost as the Company may reasonably
request. If the parties do not resolve the dispute within twenty (20) days
after NDC's receipt of the Company's dispute notice, either party can submit
the dispute to arbitration, in accordance with Article 6 hereof.
(c) Other Documents. NDC shall provide to the Company upon reasonable
request any reports or summaries relating to the Service Costs, which the
Company may need for preparing financial statements, tax returns or otherwise.
4.3 TAXES. Any transaction, excise, sales or similar Tax imposed on or
measured by the rendering of a Service shall be the responsibility of the
Company. All other Taxes associated with a Service shall be paid by NDC;
provided, however, that each party shall be responsible for its own income
Taxes.
ARTICLE 5
TERM AND TERMINATION
5.1 TERM. This Agreement shall commence on the Closing Date and, unless
sooner terminated in accordance with Section 5.2 below or any of Exhibits A-1
through A-7 hereto, shall continue in effect for a term (the "Term") expiring
on the third (3rd) anniversary of the Closing Date.
5.2 TERMINATION.
(a) By the Company. The Company shall be entitled to terminate this
Agreement at any time, in whole or in part with respect to any or all of the
Services, by providing thirty (30) days' written notice to NDC.
(b) By NDC. NDC shall not be entitled to terminate this Agreement,
except in the event that the Company is in material breach of this Agreement
and such breach remains uncured for more than 30 days after notice thereof has
been provided by NDC to the Company; provided, that if such breach is not
capable of being cured within 30 days of such notice, and if the Company, upon
receipt of such notice, promptly commences and diligently pursues the cure to
completion as soon as reasonably possible,
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then such 30-day period shall be extended for the period of time which is
reasonably necessary to cure the breach.
5.3 EFFECT OF TERMINATION. Upon termination of this Agreement, all rights
and obligations of each party hereunder shall cease as of the date of the
termination, and any amounts owed by either party pursuant to this Agreement
shall be paid in full. In addition, upon any termination of this Agreement,
NDC shall promptly return to the Company any property of the Company used in
connection with the provision of the Services. Notwithstanding the foregoing,
the termination of this Agreement pursuant to any of the provisions hereof
shall be without prejudice to any rights, or diminution of any obligation or
liability of either party, that may have accrued prior to the effective date of
such termination. In addition, the provisions of Article 7 and Section 8.1
shall survive the termination of this Agreement.
ARTICLE 6
DISPUTE RESOLUTION PROCEDURE
Any controversy or claim arising out of or relating to this Agreement, the
breach hereof, or coverage of this arbitration provision, which is not settled
by NDC and the Company, shall be settled by arbitration in accordance with the
procedures therefor set forth in the Purchase Agreement.
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ARTICLE 7
INDEMNIFICATION
7.1 LIMITATION OF LIABILITY. Except to the extent provided in Sections
7.2 and 7.3 hereof, nothing in this Agreement is intended to impose upon NDC,
and NDC does not intend to assume in this Agreement, any of the risks
associated with operation of the Business, including, without limitation,
product or service quality and liability therefor, except to the extent NDC is
providing the services associated with such product or service quality and then
subject to the provisions in Section 7.2. Except as provided elsewhere in this
Agreement, neither party shall have any liability to the other party for any
costs, damages, expenses, liabilities or losses incurred by such other party in
connection with this Agreement or the performance of either party's obligations
hereunder, whether such claim of liability arises in an action at law or in
equity, and whether such claim sounds in contract or tort or otherwise.
7.2 INDEMNIFICATION BY NDC. Subject to the provisions of Section 7.4, NDC
hereby agrees to indemnify and hold harmless the Company, its Affiliates, and
their respective directors, officers, employees, successors and assigns
(collectively, "Agents"), from and against any and all claims, demands, causes
of action and lawsuits ("Claims") (including Claims against the Company, its
Affiliates or their respective Agents by NDC, its Affiliates or their
respective Agents, or any third party), and liabilities, penalties, judgments,
losses, injuries, damages, costs, fees and expenses (including, without
limitation, costs of defense, settlement, and reasonable attorneys' fees and
expenses relating to matters or actions arising under this Agreement)
("Damages"), suffered or incurred by the Company, its Affiliates or their
respective Agents, arising out of or resulting from:
(a) any material breach of this Agreement by NDC;
(b) the fraud, negligence or willful misconduct of NDC in connection with
the performance of its obligations under this Agreement;
(c) any failure of any NDC Benefit Plan (provided that, for these purposes
"NDC Benefit Plan" shall include, without limitation, any agreement or plan
which is otherwise an NDC Benefit Plan but is maintained in the future, rather
than presently or within the immediately preceding two years) or, solely to the
extent administered by NDC, Company Benefit Plan (as defined below), or the
administration thereof, to comply with the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), the Internal Revenue Code of 1986, as
amended (the "Code") (including without limitation all provisions compliance
with which is required for any intended favorable tax treatment) or other
applicable law other than as a result of the failure of the Company to comply
with its obligations under the terms of the NDC Benefit Plans, Company Benefit
Plans, ERISA or the Code; provided that, for these purposes "Company Benefit
Plans" shall mean the following agreements or plans which cover the Company's
employees (including without
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limitation agreements and plans maintained by NDC), including incentive bonus,
vacation and severance programs
(i) any employee benefit plan as defined in ERISA or under which the
Company, with respect to the Company's Employees, has any outstanding, present
or future obligation or liability, or under which any of the Company's
Employees has any present or future right to benefits which are covered by
ERISA; or
(ii) any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical, life insurance, or other
employee benefit plan, program, policy, or arrangement, which the Company
maintains or to which the Company has any outstanding present or future
obligations to contribute or make payments under, whether voluntary,
contingent, or otherwise; and
(d) any pension, welfare or other benefit plan which Damages arise under
ERISA or the Code solely by virtue of the Company being in a "controlled group"
with NDC at any relevant time.
7.3 INDEMNIFICATION BY THE COMPANY. Subject to the provisions of Section
7.4, the Company hereby agrees to indemnify and hold harmless NDC, its
Affiliates, and their respective Agents from and against any and all Claims
(including Claims against NDC, its Affiliates or their respective Agents by the
Company, its Affiliates or their respective Agents, or any third party) and
Damages suffered or incurred by NDC, its Affiliates or their respective Agents,
arising out of any material breach of this Agreement by the Company or
resulting from the provision of Services under this Agreement other than any
and all Claims or Damages arising out of or resulting from any material breach
of this Agreement by NDC or the fraud, negligence or willful misconduct of NDC
in connection with the performance of its obligations under this Agreement.
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136
7.4 INDEMNIFICATION PROCEDURES.
(a) In the event that, from and after the Closing Date, a third party
asserts a Claim against NDC, its Affiliates (other than the Company) or their
respective Agents (the "NDC Indemnitees"), or the Company, its Affiliates
(other than NDC) or their respective Agents (the "Company Indemnitees"), with
respect to any matter to which the indemnities set forth in this Article 7
apply (a "Third Party Claim"), the NDC Indemnitee or the Company Indemnitee, as
the case may be, against whom the Third Party Claim is asserted (the
"Indemnified Party") shall give the Company or NDC, as the case may be (the
"Indemnifying Party"), prompt notice of such Third Party Claim. The
Indemnifying Party, at its own expense, shall have the right to undertake the
defense of such Third Party Claim by retaining counsel of its own choosing
(after giving notice of such retention of counsel to the Indemnified Party),
which counsel shall be reasonably satisfactory to the Indemnified Party. If an
expense or cost is found to be associated with an Indemnified Party's failure
to give timely notice to the Indemnifying Party, the Indemnified Party shall
pay such expense or cost; provided, that in agreeing to pay such expense or
cost the Indemnified Party shall not be deemed in any way to have waived its
right to indemnification hereunder, net of any such expense or cost. In the
event that a party from whom indemnification is sought chooses not to undertake
the defense of any Third Party Claim asserted (and hereby agrees to provide
written notice of such decision to the other party), and the party seeking
indemnification does undertake the defense of such Third Party Claim, and the
party from whom indemnification is sought is subsequently held to be liable for
such Third Party Claim, the party from whom indemnification is sought agrees
that it will fully indemnify the party seeking indemnification for the Damages
it may owe to such party in connection with such Third Party Claim, including,
without limitation, attorneys fees and other expenses related to the defense of
such Third Party Claim which are incurred by the party seeking indemnification.
(b) Notwithstanding anything to the contrary in this Section 7.4, if
there is a reasonable probability in the Indemnified Party's judgment that a
Third Party Claim may materially and adversely affect the Indemnified Party
other than as a result of money damages ("Non-Monetary Claims"), the Indemnified
Party will have the right to defend or co-defend (in each case, at the
Indemnified Party's expense), compromise or settle such Non-Monetary Claim to
the extent it relates to the Indemnified Party or the Indemnified Party's
business; provided that if the Indemnifying Party does not consent in writing
to any such settlement or compromise (which consent shall not be unreasonably
withheld, conditioned or delayed) the settlement or compromise shall be at the
Indemnified Party's expense.
(c) The Indemnifying Party will provide each Indemnified Party with
access to all records and documents of the Indemnifying Party relating to any
Third Party Claim. The Indemnified Party will provide the Indemnifying Party
with access to all records and documents of the Indemnified Party relating to
any Third Party Claim.
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(d) Notwithstanding any other provision of this Agreement, the
liability of an Indemnifying Party under this Agreement shall be limited to the
direct damages (which the Company and NDC agree shall also include lost profits
only with respect to any Claim arising out of or resulting from any material
breach of this Agreement or fraud or willful misconduct in connection with the
performance of this Agreement) of the Indemnified Party and shall not otherwise
include incidental, consequential, indirect, special, punitive, exemplary or
other similar damages awarded as such directly to such party, other than
compensatory damages. In calculating any amount of actual damages to be paid
by NDC or the Company as set forth in this Article 7, the amount of such
damages shall be reduced by all net tax benefits and other reimbursements
credited to or received by the other party, relating to such damages.
ARTICLE 8
MISCELLANEOUS
8.1 CONFIDENTIALITY.
(a) Each party agrees not to use, copy or disclose the trade secrets
and confidential information of the other party, except as permitted by this
Agreement. Each party shall treat the other's confidential and secret
information with at least that degree of care it uses with respect to its own
such information. Each party will give access to the other party's
confidential information only to such of its personnel and representatives as
have a need to such access for the purpose of providing the services hereunder,
and to no other person whatsoever. The requirements herein contained with
respect to non-disclosure and non-use and protection of each party's trade
secrets and confidential information shall permanently survive termination of
any other provisions of this Agreement. If either party is ordered by a court
or Governmental Authority of competent jurisdiction to disclose trade secrets
or confidential information, or if it is served with or otherwise becomes aware
of a motion or similar request that such an order be issued, then such party
will not be liable to the other party for disclosure of trade secrets or
confidential information required by such order if the disclosing party
complies with the following requirements: (1) if an already issued order calls
for immediate disclosure, then the disclosing party promptly moves for or
otherwise requests a stay of such order to permit the other party to respond;
(2) the disclosing party promptly notifies the other party of the motion or
order; and (3) the disclosing party does not oppose a motion or similar request
by the other party for an order protecting the confidentiality of the trade
secrets and confidential information including joining or agreeing to (or
non-opposition to) a motion for leave to intervene by such other party.
(b) The term "trade secrets" means information related to a party (1)
which derives economic value, actual or potential, from not being generally
known to or readily ascertainable by other persons who can obtain economic
value from its disclosure or use, and (2) which is the subject of efforts by
said party that are reasonable under the circumstances to maintain its secrecy.
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(c) The term "confidential information" means information that is
confidential to the business of a party and is not a trade secret; provided,
however, that confidential information does not include information which is or
becomes generally known to the public without any breach by a party of its
duties to the other party. Assuming that the foregoing criteria are met,
confidential information also includes information which has been disclosed to
a party and which such party is obligated to treat as confidential.
8.2 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by any
party hereto without the prior written consent of the other party, which
consent shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, the Company may assign or otherwise transfer all
of its rights and/or obligations hereunder to any Affiliate of the Company or
to any entity or entities, or any assignee of such entity or entities, which
acquires, by purchase, operation or law or otherwise, all or a substantial
portion of the assets of the Business.
8.3 GOVERNING LAW. The construction, validity and enforceability of this
Agreement shall be governed by the internal laws of the State of Georgia,
without regard to the conflict of laws principles thereof.
8.4 NOTICES.
(a) If to the Company:
POS Acquisition Company LLC
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: Mr. Robert A. Yellowlees
Chief Executive Officer
Telephone: (404) 728-2000
Telecopier: (404) 728-3509
with a copy (which shall not constitute notice) to:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: E. Michael Ingram, Esq.
General Counsel
Telephone: (404) 728-2504
Telecopier: (404) 728-2551
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139
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: B. Harvey Hill, Jr., Esq.
Telephone: (404) 881-7446
Telecopier: (404) 881-7777
(b) If to National Data:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attn: Mr. Robert A. Yellowlees
Chief Executive Officer
Telephone: (404) 728-2000
Telecopier: (404) 728-3509
with a copy (which shall not constitute notice) to:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attn: E. Michael Ingram, Esq.
General Counsel
Telephone: (404) 728-2504
Telecopier: (404) 728-2551
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: B. Harvey Hill, Jr., Esq.
Telephone: (404) 881-7446
Telecopier: (404) 881-7777
8.5 NO WAIVER. The failure of either party at any time to require
performance by the other party of any provision of this Agreement shall in no
way affect the right of such party to require performance of that provision.
Any waiver by either party of any breach of any provision of this Agreement
shall not be construed as a waiver of any
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140
continuing or succeeding breach of such provision, a waiver of the provision
itself or a waiver of any right under this Agreement.
8.6 SEVERABILITY. All provisions of this Agreement are severable and any
provision which may be prohibited by law shall be ineffective to the extent of
such prohibition without invalidating the remaining provisions of this
Agreement; provided, that if the provisions of Article 7 or any part thereof
are prohibited by law or otherwise declared to be unenforceable, then the
parties agree to negotiate in good faith amendments to this Agreement that will
carry into effect the intention of the parties at the time this Agreement was
entered into, taking into account the reasonable needs of the parties for
effective indemnification arrangements and the cost of the services being
provided hereunder.
8.7 ENTIRE AGREEMENT; MODIFICATIONS AND AMENDMENTS. This Agreement
(including Exhibits A-1 through A-7 and B-1 through B-7 hereto), the Purchase
Agreement, and any other agreements executed and delivered by the parties
contemporaneously herewith constitute the entire agreement between the parties
concerning the subject matter thereof. No prior representations, inducements,
promises or agreements, oral or otherwise, between the parties with reference
thereto will be of any force or effect. Each party represents and warrants
that, in entering into and performing its obligations under this Agreement, it
does not and will not rely on any promise, inducement or representation
allegedly made by or on behalf of the other party with respect to the subject
matter hereof, nor on any course of dealings or custom and usage in the trade,
except as such promise, inducement or representation may be expressly set forth
herein. No modification or amendment to this Agreement will be valid or
binding unless such amendment or modification is not prohibited by the terms of
the Operating Agreement and is reduced to writing and duly executed by the
party or parties to be bound thereby.
8.8 INDEPENDENT CONTRACTOR STATUS. NDC shall be deemed to be an
independent contractor to the Company. Nothing contained in this Agreement
shall create or be deemed to create the relationship of employer and employee,
and no party to this Agreement shall, by reason hereof, be deemed to be a
partner or a joint venturer of any other party hereto in the conduct of their
respective businesses and/or the conduct of the activities contemplated by this
Agreement. Except as specifically and explicitly provided in this Agreement,
and subject to and in accordance with the provisions hereof, no party to this
Agreement is now, shall become, or shall be deemed to be an agent or
representative of any other party hereto with respect to the subject matter
hereof. Except as herein explicitly and specifically provided, neither party
shall have any authority or authorization, of any nature whatsoever, to speak
for or bind the other party to this Agreement with respect to the subject
matter hereof.
8.9 BINDING EFFECTS; BENEFITS. This Agreement will be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
Nothing contained in this Agreement, express or implied, is intended to confer
upon any person
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other than the parties to it and their respective successors and permitted
assigns any rights or remedies under or by reason of this Agreement.
8.10 SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not in any way control the meaning or
interpretation of this Agreement.
8.11 FORCE MAJEURE. NDC shall be excused from performing the Services
under this Agreement and shall have no liability to the Company for any period
it is prevented from performing the Services, in whole or in part, as a result
of delays caused by an act of God, war, civil disturbance, court order, labor
dispute, or other cause beyond its reasonable control, including failures or
fluctuations in electrical power, heat, light, or telecommunications, and such
nonperformance shall not be a default under, or grounds for termination of,
this Agreement.
8.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against either party, whether
under any rule of construction or otherwise. Neither party hereto shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and their lawyers and shall be construed
and interpreted according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
8.13 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall constitute an
original, but all such counterparts shall together constitute one and the same
instrument.
[SIGNATURES ON NEXT PAGE]
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142
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
NATIONAL DATA CORPORATION
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
POS ACQUISITION COMPANY LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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143
EXHIBIT D
FORM OF OPERATING AGREEMENT
SUPERCEDED BY AMENDMENT
144
EXHIBIT E
FORM OF OPINION OF COUNSEL TO SELLER
145
EXHIBIT E
[FORM OF MASTERCARD LEGAL OPINION]
[Capitalized terms used and not otherwise defined in this Opinion Letter shall
have the meanings assigned to such terms in the Accord or the Purchase
Agreement.]
(1) The Company is existing and in good standing under the laws of the
State of Delaware.
(2) The Company has the corporate power to execute and deliver the
Acquisition Documents, to perform its obligations under the Acquisition
Documents and to own and use the Acquired Assets.
(3) The Company has duly authorized the execution and delivery of the
Acquisition Documents and all performance by the Company under the Acquisition
Documents and has duly executed and delivered the Acquisition Documents.
(4) No consent, approval, authorization or other action by, or filing
with, any governmental authority of the United States or the State of Delaware
is required for Company's execution and delivery of the Acquisition Documents
and consummation of the Transaction.
146
EXHIBIT F
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
147
EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (the "Agreement") is made as of
the 31st day of March, 1996, by and between MasterCard International
Incorporated, a Delaware corporation ("Seller"), and POS Acquisition Company
LLC, a Georgia limited liability company ("Newco"). Capitalized terms used but
not defined herein have the respective meanings ascribed to such terms in the
Purchase Agreement (as defined below).
WHEREAS, pursuant to that certain Asset Purchase and Contribution
Agreement dated as of February 21, 1996 (the "Purchase Agreement") by and among
Seller, Newco and National Data Corporation, a Delaware corporation ("Parent"),
Seller has agreed to sell and assign the Purchased Assets to Newco and to
contribute the Seller Contributed Assets to Newco, and Newco has agreed to
purchase from Seller the Purchased Assets; and
WHEREAS, as partial consideration for the contribution of the Seller
Contributed Assets, Newco has agreed to assume the Assumed Liabilities; and
WHEREAS, the parties hereto desire to execute this Agreement to further
evidence the assignment by Seller and assumption by Newco;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment. Seller hereby sells, assigns, transfers and conveys to
Newco, its successors and assigns, all of the Purchased Assets and all of the
Seller Contributed Assets, including, without limitation, all Seller's Real
Property Leases, Contracts (other than Excluded Contracts), Seller's Permits,
commitments and undertakings which constitute a portion of the Purchased Assets
and the Seller Contributed Assets (all of the foregoing Seller's Real Property
Leases, Contracts (other than Excluded Contracts), Seller's Permits,
commitments and undertakings being collectively hereinafter referred to as the
"Assigned Agreements").
2. Assumption of Assumed Liabilities. Newco hereby assumes and undertakes
to pay, perform and discharge the Assumed Liabilities.
3. No Other Liabilities Assumed. Except for the Assumed Liabilities,
Newco shall not be responsible for, does not assume, and shall not pay or
perform any obligations or liabilities of Seller, whether known or unknown,
fixed or contingent.
4. Assignability of Assigned Agreements. To the extent that any of the
Assigned Agreements are not assignable without the consent of another party and
such consent has not been obtained on or prior to the Closing Date, this
Agreement shall not constitute an assignment or attempted assignment if such
assignment or attempted
148
assignment would constitute a breach thereof. Any obligation of Seller under
the Purchase Agreement to effect the transfer of any Assigned Agreement to
Newco shall not be terminated or abridged by this provision.
5. Cooperation. Seller agrees to cooperate with Newco in obtaining any
consents or waivers of third parties necessary to transfer to Newco all
property, rights and benefits in and under the Assigned Agreements.
6. Further Assurances. At any time and from time to time after the date
hereof, at the request of Newco, and without further consideration, Seller
shall execute and deliver such other instruments of sale, assignment, transfer
or conveyance confirmation and take such other action as Newco may reasonably
request as necessary or desirable in order to more effectively transfer, convey
and assign to Newco the Purchased Assets and the Seller Contributed Assets.
7. Amendments. No amendment, modification, or waiver of any provision of
this Agreement shall be valid or binding unless in writing and signed by each
of the parties hereto.
8. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, without regard to the
conflicts of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written
MASTERCARD INTERNATIONAL INCORPORATED
By:
-------------------------------
Name:
Title:
POS ACQUISITION COMPANY LLC
By:
-------------------------------
Name:
Title:
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EXHIBIT G
FORM OF OPINION OF COUNSEL TO PARENT
SUPERCEDED BY AMENDMENT
150
EXHIBIT H
FORM OF REGISTRATION RIGHTS AGREEMENT
151
EXHIBIT H
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of this 31st day of March, 1996, among POS ACQUISITION COMPANY LLC, a
Georgia limited liability company (the "Company"), and MASTERCARD INTERNATIONAL
INCORPORATEDMASTERCARD, a Delaware corporation ("MasterCard");
W I T N E S S E T H:
WHEREAS, MasterCard and National Data Corporation, a Delaware corporation
("NDC"), jointly formed the Company pursuant to that certain Asset Purchase and
Contribution Agreement dated as of February 22, 1996 (the "Purchase Agreement")
by contributing certain of the assets utilized in their respective businesses
and having the Company assume certain of the liabilities of their respective
businesses;
WHEREAS, NDC and MasterCard have respective ownership interests (the
"Membership Interests") in the Company of ninety-two and one-half percent
(92.5%) and seven and one-half percent (7.5%);
WHEREAS, pursuant to the Company's Operating Agreement dated as of March
31, 1996 by and between MasterCard and NDC, the Membership Interests may be
converted into shares of stock (the "Shares") upon a Conversion (as defined in
the Operating Agreement), or the Membership Interests may be converted into or
exchanged for other equity securities ("Other Securities"), in connection with
a business combination or other extraordinary transaction with respect to the
Company; and
WHEREAS, it is in the best interests of the Company and MasterCard that
certain aspects of their relationship be regulated and that certain
registration rights be granted to MasterCard;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
(a) "Affiliate" means, as to any Person, any other Person which, directly
or indirectly, controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") means
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of securities, or
partnership or other ownership interests, by contract or otherwise).
152
(b) "Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Atlanta, Georgia or New York, New York are authorized
by law to close.
(c) "Commission" means the Securities and Exchange Commission and any
successor commission or agency having similar powers.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(e) "Holders" means MasterCard and its successors, transferees and
assigns, and any combination of them, and the term "Holder" shall mean any such
person.
(f) "IPO" means (i) a public offering of any class of equity securities of
the Issuer that is effected through a firm commitment underwriting and pursuant
to a registration statement declared effective under the Securities Act (any
such offering will be deemed to have occurred for purposes of this Agreement on
the date of the first closing at which the Issuer receives payment for the
securities offered and sold thereby); (ii) any transaction which results in any
class of equity securities of the Issuer being publicly traded in an
established market and (iii) any transaction as a result of which the Issuer
becomes subject (by law or by contract) to periodic reporting obligations under
the Exchange Act.
(g) "Issuer" means the Company and any successor entity, including without
limitation any issuer of Shares or Other Securities.
(h) "Minimum Registration Amount" means that number of Registrable
Securities which represent not less than 30% of the Registrable Securities then
outstanding.
(i) "NASD" means the National Association of Securities Dealers, Inc..
(j) "Operating Agreement" means that certain Operating Agreement by and
between MasterCard and Ambassador dated as of March 31, 1996.
(k) "Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts and other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
(l) "Registrable Securities" means the Membership Interests, the Shares
and the Other Securities that are beneficially owned from time to time by a
Holder or Holders.. As to any particular Registrable Securities, once issued
such securities shall cease to be Registrable Securities (i) when a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall
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have been disposed of in accordance with such registration statement,
(ii) when they shall have been distributed to the public pursuant to Rule 144
(or any successor provision) or may be distributed to the public without
registration pursuant to Rule 144(k) (or any successor provision) under the
Securities Act, (iii) when they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Issuer and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, (iv) when they shall have ceased to be
outstanding.
(m) "Registration Expenses" means all expenses incident to the Issuer's
performance of or compliance with Sections 3.1 and 3.3, including, without
limitation, all printing expenses, messenger, telephone, duplication, word
processing and delivery expenses incurred by the Issuer, the fees and
disbursements of counsel for the Issuer and of its independent public
accountants, and the fees and expenses incurred in connection with the listing
of the securities to be registered on any securities exchange, but not
including such holders' proportionate share of underwriting discounts and
commissions, applicable transfer taxes, all registration and filing fees, all
fees and expenses of complying with securities or blue sky laws, fees and other
expenses associated with filings with the NASD and the fees and disbursements
of counsel retained by such holders.
(n) "Securities Act" means the Securities Act of 1933, as amended.
ARTICLE II
RESTRICTIONS ON TRANSFER
2.1. General Restrictions.
(a) Prior to any proposed transfer of any Registrable Securities (other
than under the circumstances described in Article III hereof), the Holder
thereof shall give written notice to the Issuer of its intention to effect such
transfer. Each such notice shall describe the manner of the proposed transfer
and, if requested by the Issuer, shall be accompanied by an opinion of counsel
reasonably satisfactory to the Issuer (it being agreed that Rogers & Wells
shall be acceptable to render such opinion) to the effect that the proposed
transfer may be effected without registration under the Securities Act,
whereupon such Holder shall be entitled to transfer the Registrable Securities
in accordance with the terms of its notice. Each certificate or instrument
transferred as above provided shall bear the legend set forth in Section
2.1(b), except that such certificate or instrument shall not bear such legend
if (i) such transfer is in accordance with the provisions of Rule 144 under the
Securities Act (or any other rule permitting public sale without registration
under the Securities Act) or (ii) the opinion of counsel referred to above is
to the further effect that the transferee and any subsequent transferee would
be entitled to transfer such Registrable Securities in a public sale without
registration under the Securities Act.
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(b) Except as provided in Section 2.1(a) and (c), each certificate
evidencing Registrable Securities issued to any Holder shall bear a legend in
substantially the following form:
PURCHASERS OF THESE SECURITIES WILL BE REQUIRED TO BEAR THE RISK OF THEIR
INVESTMENTS FOR AN INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT
BEEN REGISTERED (i) UNDER ANY STATE SECURITIES LAW (THE "STATE ACT"), OR
(ii) UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"FEDERAL ACT"), AND NEITHER THE SECURITIES NOR ANY PART THEREOF MAY BE
SOLD, EXCHANGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER EACH APPLICABLE STATE ACT OR IN A
TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER SUCH STATE ACT OR FOR
WHICH SUCH REGISTRATION OTHERWISE IS NOT REQUIRED, AND (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE FEDERAL ACT OR IN A
TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE FEDERAL ACT OR
FOR WHICH SUCH REGISTRATION OTHERWISE IS NOT REQUIRED.
(c) In the event that any Registrable Securities shall cease to be subject
to the restrictions on transfer set forth in this Agreement, the Issuer shall,
upon the written request of the Holder thereof, issue to such Holder a new
certificate evidencing such Registrable Securities without the legend required
by Section 2.1(b) hereof endorsed thereon.
ARTICLE III
REGISTRATION RIGHTS
Section 3.1 Registration on Request of Holders.
(a) The Holders shall have the right, at any time following the end of the
eleventh month after an IPO, by written notice (the "Demand Notice") given to
the Issuer, to request the Issuer to register under and in accordance with the
provisions of the Securities Act all or any portion of the Registrable
Securities designated by such Holders, provided that the number of securities
to be registered are not less than the Minimum Registration Amount. Upon
receipt of any such Demand Notice, the Company shall promptly notify all other
Holders of the receipt of such Demand Notice and allow them the opportunity to
include Registrable Shares held by them in the proposed registration by
submitting their own Demand Notice. Notwithstanding the foregoing, the
following limitations shall be applicable to any such requested registration:
(i) The right to participate in the requested registration shall be
determined in accordance with Section 3.1(d) and (e) hereof.
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(ii) The Issuer shall be entitled on two occasions during each
Demand Period (as defined in Section 3.1(b)) to postpone the filing of
any registration statement otherwise required to be prepared and filed by
the Issuer pursuant to this Section 3.1 for a reasonable period of time,
but not in excess of 90 days (a "Delay Period"), if any executive officer
of the Issuer determines in good faith that in such executive officer's
reasonable judgment the registration and distribution of the Registrable
Securities covered or to be covered by such registration statement would
materially interfere with any pending or contemplated material public
offering of equity securities by the Issuer or would require premature
disclosure by the Issuer of any material corporate development (including
potential material business combination and merger and acquisition
transactions) affecting the Issuer and the Issuer promptly gives the
Holders written notice of such determination, containing a general
statement of the reasons for such postponement and an approximation of
the period of the anticipated delay; provided, however, that (i) the
aggregate number of days include in all Delay Periods during any Demand
Period (as defined in Section 3.1(b)) shall not exceed the aggregate of
(x) 90 days minus (y) the number of days occuring during all Hold Back
Periods (as defined in Section 3.3) (other than any Hold Back Period with
respect to an offering in which the Holders had the opportunity to
participate and in which the Holders were able to sell at least 50% of
the Registrable Securities that the Holders requested be included in such
Registration Statement) during the Demand Period, and (ii) a period of at
least 90 days shall elapse between the termination of any Delay Period or
Hold Back Period and the commencement of the next succeeding Delay Period
(regardless of whether the commencement of such succeeding Delay Period
occurs during the same Demand Period as the preceding Delay Period). If
the Issuer shall so postpone the filing of a registration statement, the
Holders of Registrable Securities to be registered shall have the right
to withdraw the request for registration by giving written notice from
the Holders of a majority of the Registrable Securities that were to be
registered to the Issuer (x) within 30 days after receipt of the notice
of postponement or, if earlier, (y) the date such Delay Period is
terminated (and, in the event of such withdrawal, such request shall not
be counted for purposes of determining the number of requests for
registration to which the Holders of Registrable Securities are entitled
pursuant to this Section 3.1). The Issuer shall not be entitled to
initiate a Delay Period pursuant to Section 3.1 unless it shall (A)
concurrently prohibit sales by other security holders of the Issuer under
registration statements covering securities held by such other security
holders and (B) in accordance with the Issuer's policies from time to
time in effect, prohibit purchases and sales in the open market by
officers and directors (and persons holding equivalent positions) of the
Issuer.
(iii) Holders of a majority in number of the Registrable Securities
to be included in a registration statement pursuant to this Section 3.1
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 the Issuer revoking such request. The Holders who
revoke such request shall reimburse the Issuer for all its
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out-of-pocket expenses incurred in the preparation, filing and processing
of the registration statement through the date of revocation; provided,
however, that, if such revocation was based on the Issuer's failure to
comply in any material respect with its obligations under this Agreement,
such reimbursement shall not be required. In the event the Holder revokes
such request for registration and such revocation was not based upon the
Issuer's failure to comply in any material respect with the obligations
hereunder, the Holders whose Registrable Securities were to be included
in such registration may not submit a Demand Request for 180 days after
such revocation.
(b) Except as otherwise provided in this Agreement, the Issuer shall be
obligated to register Registrable Securities pursuant to this Section 3.1 on
three occasions only; provided that (i) the Issuer shall only be obligated to
effect one registration of Registrable Securities pursuant to this Section 3.1
during each 12 month period commencing following the end of the eleventh month
after an IPO (each such period referred to as "Demand Period"); and (ii) such
obligation shall not be deemed satisfied if (x) the registration statement
does not become effective because of a material adverse change in the Issuer;
(y) such registration statement does become effective and the method of
disposition is an underwritten public offering and any of the Registrable
Securities included in such registration are not sold after execution of an
underwriting agreement with respect thereto because the obligations of any
underwriter to purchase any Registrable Securities are excused for any reason
other than default or consent by a Holder; or (iii) the number of Registrable
Securities to be sold is reduced by greater than 15 percent pursuant to Section
3.1(d) or (e).
(c) Subject to Section 3.1(a)(ii), from the date of receipt of a Demand
Notice from the Holders pursuant to Section 3.1(a) until the completion of the
period of distribution of the registration contemplated therein not to exceed
the period determined in accordance with Section 3.5(b), the Issuer will not
file with the Commission any other registration statement with respect to its
equity securities, whether for its own account or that of other security
holders, provided that the Issuer shall not be prohibited from filing any
registration statements on Forms S-4 or S-8 or any successor form. Except for
a period of 120 days from receipt of a Demand Notice from the Holders (or from
the end of any Delay Period if such Demand Notice has not been withdrawn or
revoked during such Delay Period) with respect to a requested registration
which provides for offers and sales of Registrable Securities on a continuous
or delayed basis pursuant to Rule 415 under the Securities Act (or any
successor provision), the restriction on the filing of a registration statement
by the Issuer set forth in this Section 3.1(c) shall not apply.The Issuer shall
be entitled to include in any registration statement referred to in this
Section 3.1 shares of its capital stock to be sold by the Issuer for its own
account or by other stockholders of the Issuer pursuant to other registration
rights agreements, provided the registration statement relates to an
underwritten public offering and in the opinion of the managing underwriter
such inclusion would not adversely affect the marketing of the securities to be
sold by the Holders of Registrable Securities.
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(d) Notwithstanding anything to the contrary in this Section 3.1, the
amount of Registrable Securities to be included in an underwritten public
offering may be reduced if and to the extent the managing underwriter shall be
of the opinion that such inclusion would adversely affect the marketing of the
Registrable Securities to be sold in such underwritten public offering
including the price at which such Registrable Securities will be sold. If such
a determination is made, (i) the number of shares to be included by the Issuer
and the number of shares to be included by stockholders other than the Holders
shall be reduced first; and then (ii) the number of Registrable Securities to
be sold shall be reduced as provided in Section 3.1(e).
(e) If a requested registration pursuant to this Section 3.1 involves an
underwritten public offering and the number of Registrable Securities requested
to be included in such registration is required to be reduced as described in
Section 3.1(d), then the Issuer will reduce the number of Registrable
Securities requested to be included by each Holder pro rata in the proportion
that the percentage of Restricted Shares requested by that Holder to be
included bears to the total number of Registrable Securities requested to be
included in that registration; provided, however, that the Holders requesting
registration may agree among themselves a different priority.
(f) If any requested registration pursuant to this Section 3.1 is in the
form of an underwritten public offering, the Holders of a majority in number of
the Registrable Securities to be included in the offering shall be entitled,
after consultation with the Issuer, to select the manager or co-managers that
will administer the offering.
3.2. Incidental Registration. If the Issuer at any time proposes to
register any of its equity securities under the Securities Act (other than
pursuant to a registration statement on Forms S-4 or S-8, or any successor
forms), whether or not for sale for its own account, and the registration form
to be used may be used for the registration of Registrable Securities, it shall
at such time give each Holder of Registrable Securities prompt written notice
of its intentions and, upon the written request of any such Holder made within
twenty (20) days after the receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by such Holder
and the intended method of disposition thereof), the Issuer shall use its
commercially reasonable efforts to effect the registration under the Securities
Act of all Registrable Securities which the Issuer has been so requested to
register by the Holders thereof, to the extent required to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, provided that:
(a) if, at any time after 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, the Issuer shall
determine for any reason not to register such securities, the Issuer may, at
its election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith);
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(b) if such registration shall be in connection with the Issuer's initial
underwritten public offering (the "Initial Offering"), the Holders shall only
be entitled to request registration of up to the number of Registrable
Securities equal to one-half of the number of Registrable Securities (the
"Maximum Number") which Maximum Number shall be reduced by the number of
Registrable Securities previously sold pursuant to exercise of the Put Right
(as defined in the Operating Agreement) ; and further provided, that if the
managing underwriter advises the Issuer that, in its view, the registration and
distribution of the number of equity securities of the Issuer (including the
Registrable Securities) which the Issuer, the Holders, and all other persons
intend to include in such registration exceeds the largest number of equity
securities which can be sold without materially adversely affecting the
marketing of the securities to be sold in such underwritten public offering
(including the price at which such securities may be sold)(the "Maximum
Offering Size"), the Issuer shall include in such registration, in the
following priority, up to the Maximum Offering Size: (i) first, the number of
Registrable Securities proposed to be sold by the Holders , which shall have
priority in being included in such registration, (ii) second, all securities
proposed to be sold by the Issuerthe ), and (iii) third, the number of shares
proposed to be sold by all other security holders; and
(c) if such registration shall be in connection with an underwritten
public offering other than the Initial Offering and the managing underwriter
advises the Issuer that, in its view, the registration and distribution of the
number of equity securities of the Issuer (including the Registrable
Securities) which the Issuer, the Holders, and all other persons intend to
include in such registration exceeds the Maximum Offering Size, the Issuer
shall include in such registration, in the following priority, up to the
Maximum Offering Size: (i) first, all securities being sold by the Issuer,
which shall have priority in being included in such registration, (ii) second,
all securities proposed to be sold by the Holders and all security holders
other than Ambassador pro rata in proportion to the number of shares proposed
to be sold by them (or based on the proposed offering price of the total number
of securities included in such underwritten public offering requested to be
included by them if shares of common stock are not being offered), and (iii)
third, the securities proposed to be sold by Ambassador.
3.3. Holdback Agreements.
(a) If requested by the managing underwriter in connection with any
underwritten public offering by the Issuer, each Holder of Registrable
Securities, if requested by the managing underwriter of such public offering,
will agree not to effect any public sale or distribution under the Securities
Act, of any Registrable Securities, and not to effect any such public sale or
distribution of any other equity security of the Issuer or other security
convertible into or exchangeable or exercisable for any equity security of the
Issuer (in each case, other than as part of such public offering) during the
five (5) Business Days prior to, and during the 120-day period (or such longer
period as requested by the underwriters and agreed to by the Holders) which
begins on the effective date of such registration statement (each such period
being referred to in this Agreement as a "Hold
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Back Period"), provided that (i) Ambassador and the executive officers and
directors of the Issuer shall be bound by the same selling restrictions as are
applied to the Holders and the managing underwriter will not grant waiver of
such restrictions to any other Person unless waivers on substantially the same
terms are granted to the Holders; and (ii) each Holder of Registrable
Securities shall receive written notice of such registration at least two (2)
Business Days prior to the anticipated beginning of the five (5) day period
referred to above.
(b) The Issuer shall not effect any public sale or distribution of any of
its equity securities or of any security convertible into or exchangeable or
exercisable for any equity security of the Issuer (other than any such sale or
distribution of such securities in connection with any merger or consolidation
by the Issuer or any subsidiary of the Issuer or the acquisition by the Issuer
or a subsidiary of the Issuer of the capital stock or substantially all the
assets of any other person or in connection with an employee stock ownership or
other benefit plan) during the five (5) Business Days prior to the effective
date of such registration statement.
3.4 Designation of Underwriter. In the case of any registration pursuant
to the provisions of Section 3.2 hereof which is proposed to be effected
pursuant to a firm commitment underwriting, the Issuer shall select the
managing underwriter after consultation with MasterCard, and all Holders of
Registrable Securities participating in the registration shall sell their
Registrable Securities only pursuant to such underwriting.
3.5. Registration Procedures. If and whenever the Issuer is required to
use its commercially reasonable efforts to effect the registration of any
Registrable Securities under the Act, the Issuer shall:
(a) promptly, and in any event within 30 days, prepare and file with the
Commission a registration statement with respect to such securities, make all
required filings with the NASD and use commercially reasonable efforts to cause
such registration statement to become effective as promptly as practicable
thereafter;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement until such time as all of
such securities have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof set forth in such registration
statement, but in no event for a period of more than six months after such
registration statement becomes effective; provided, however, that in the case
of a registration statement on Form S-3 (or any successor form) which the
Holders shall have requested providing for offers and sales of Registrable
Securities on a continuous or delayed basis pursuant to Rule 415 under the
Securities Act (or any successor provision), the Issuer's obligations under
this paragraph 3.5(b) shall not be subject to the foregoing six month
limitation;
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(c) furnish to the Holders and to counsel (if any) selected by Holders of
a majority in number of the Registrable Securities covered by such registration
statement for review and comment (but not approval of the Holders or their
counsel except with respect to any statement in the registration statement
which relates to the Holder) copies of all documents proposed to be filed with
the Commission in connection with such registration;
(d) furnish to each Holder of the securities being sold such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits, except that the Issuer
shall not be obligated to furnish any Holder with more than two copies of such
exhibits), such number of copies of the prospectus included in such
registration statement (including such preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Act, and such other
documents, as such Holder may reasonably request in order to facilitate the
disposition of the securities owned by such selling Holder;
(e) use its commercially reasonable efforts to register or qualify such
securities covered by such registration statement under such other securities
or blue sky laws of such jurisdictions as each seller of the Registrable
Securities shall reasonably request, and do any and all other acts and things
which may be necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such seller,
except that the Issuer shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction wherein
it is not so qualified, or to consent to service of process in any such
jurisdiction other than process served in connection with alleged violations by
the Issuer of the securities laws of such jurisdiction;
(f) notify the Holders of any Registrable Securities covered by such
registration statement promptly and (if requested) confirm such notice in
writing, (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to such registration statement or
any post-effective amendment, when the same has become effective, (ii) of any
request by the Commission for amendments or supplements to such registration
statement or the related prospectus or for additional information regarding
such Holders, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation
of any proceedings for that purpose, (iv) of the receipt by the Issuer of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (v) of the happening of any event that requires the making of any
changes in such registration statement, prospectus or documents incorporated or
deemed to be incorporated therein by reference so that they will not contain
any 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;
(g) otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security
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holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, but not more than eighteen
(18) months, beginning with the first month after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Act;
(h) use its commercially reasonable efforts to list such securities on any
stock market on which the Shares are then listed, if such securities are not
already so listed and if such listing is then permitted under the rules of such
exchange, and to provide a transfer agent and registrar for such Registrable
Securities not later than the effective date of such registration statement.
(i) if such registration is with respect to an underwritten offering
undertaken pursuant to Section 3.1, take all appropriate and commercially
reasonable actions requested by the Holders of a majority of the Registrable
Securities being sold in connection therewith (including those reasonably
requested by the managing underwriters) in order to expedite or facilitate the
disposition of such Registrable Securities;
(j) if such offering is in connection with an underwritten public offering
(i) use commercially reasonable efforts to obtain opinions of counsel to the
Issuer and updates thereof (which opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters and their counsel) as
to the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such counsel
and underwriters and have such opinions addressed to each selling Holder of
Registrable Securities, (ii) use commercially reasonable efforts to obtain
"cold comfort" letters and updates thereof from the independent certified
public accountants of the Issuer (and, if necessary, any other independent
certified public accountants of any subsidiary of the Issuer or of any business
acquired by the Issuer for which financial statements and financial data are,
or are required to be, included in the registration statement), addressed to
each selling Holder of Registrable Securities covered by the registration
statement (unless such accountants shall be prohibited from so addressing such
letters by applicable standards of the accounting profession) and each of the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
underwritten offerings, (iii) if requested, provide indemnification provisions
and procedures substantially to the effect set forth in Section 3.7 hereof with
respect to all parties to be indemnified pursuant to said Section (the above
shall be done at each closing under such underwriting or similar agreement, or
as and to the extent required thereunder).
For purposes of paragraph (b) of this Section 3.5, (i) the period of
distribution of securities in an underwritten public offering shall be deemed
to extend until the later of the date each underwriter has completed the
distribution of all securities purchased by it and the termination of the
period in which prospectuses must be delivered under Rule 174 of the Securities
Act, and (ii) the period of distribution of securities in any other
registration shall be deemed to extend until the earlier of the sale of all
securities covered thereby and one hundred twenty (120) days after the
effective date thereof; provided, however, in the
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case of a registration statement on Form S-3 (or any successor provision) which
the Holders shall have requested providing for offers and sales pursuant to
Rule 415 under the Securities Act (or any successor provision), the Issuer
shall comply with its obligations under Section 5(b) until the Registrable
Securities covered by such registration statement have been disposed of, but
no more than a period of one year following the filing of such registration
statement, it being understood and agreed that the Issuer may suspend its
obligations to amend or supplement such registration statement for reasonable
periods of time not to exceed 90 days from time to time (a "Suspension
Period") if any executive officer of the Issuer determines in good faith that
such amendment or supplement would require disclosure of any material corporate
development affecting the Issuer and the Issuer promptly gives notice to the
Holders of the Registrable Securities included in such Registration Statement
of such determination. The one year period during which the Issuer is obligated
to maintain such registration statement shall be extended for the duration of
any Suspension Period.
The Issuer may require each Holder of any securities as to which any
registration is being effected to furnish to the Issuer such information
regarding such Holder and the distribution of such securities as the Issuer may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such Holder agrees to furnish promptly to the
Issuer all information required to be disclosed in order to make the
information previously furnished to the Issuer by such Holder not materially
misleading.
In connection with each registration pursuant to Section 3.1 or 3.2 hereof
covering an underwritten public offering, the Issuer and each selling Holder
agrees to enter into a written agreement with the managing underwriter selected
in the manner herein provided in such form and containing such provisions as
are customary in the securities business for such an arrangement between major
underwriters and companies of the Issuer's size and investment stature and
selling security holders, provided that such agreement shall not contain any
such provision applicable to the Issuer or any Holder which is inconsistent
with the provisions hereof.
By acquisition of Registrable Securities, each Holder of such Registrable
Securities shall be deemed to have agreed that upon receipt of any notice from
the Issuer of the happening of any event of the kind described in Section
3.5(f) hereof, such Holder shall promptly discontinue such Holder's disposition
of Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.5(f) hereof. If
so directed by the Issuer, each Holder of Registrable Securities shall deliver
to the Issuer (at the Issuer's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Issuer shall give any such notice, the period mentioned in Section
3.5(b) shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each seller of any Registrable Securities covered by such registration
statement shall
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have received the copies of the supplemented or amended prospectus contemplated
by Section 3.5(f).
3.6. Expenses. Except as otherwise expressly provided in this Agreement,
the Issuer shall pay all Registration Expenses in connection with each
registration of Registrable Securities.
3.7. Indemnification by the Issuer. The Issuer shall indemnify and hold
harmless each Holder of Registrable Securities, each person who controls such
Holder of Registrable Securities within the meaning of either Section 15 of the
Act or Section 20(a) of the Exchange Act and the officers, directors, employees
and agents of each such Holder and control Person (each such Person being
sometimes hereinafter referred to as an "Indemnified Holder") from and against
all losses, claims, damages, liabilities, costs (including costs of preparation
and attorneys' fees) and expenses (including expenses of investigation)
(collectively, "Losses") arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, except insofar
as such losses, claims, damages, liabilities or expenses arise out of or are
based upon any such untrue statement or omission or allegation thereof based
upon information relating to such Indemnified Holder and furnished in writing
to the Issuer by such Indemnified Holder expressly for use therein. This
indemnity shall be in addition to any liability which the Issuer may otherwise
have.
If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against an Indemnified Holder in respect
of which indemnity may be sought from the Issuer, such Indemnified Holder shall
promptly notify the Issuer in writing, and the Issuer shall, at its expense,
assume the defense thereof, including the employment of counsel satisfactory to
such Indemnified Holder and the payment of all expenses. The failure so to
notify the Issuer shall not relieve the Issuer from any obligation or liability
except to the extent (but only to the extent) that it shall finally be
determined by a court of competent jurisdiction (which determination is not
subject to appeal) that the Issuer has been materially prejudiced by such
failure. Such Indemnified Holder shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Holder unless (i) the Issuer has agreed to pay such fees and expenses or (ii)
the Issuer shall have failed promptly to assume the defense of such action
or proceeding or has failed to employ counsel satisfactory to such Indemnified
Holder or (iii) the named parties to any such action or proceeding (including
any impleaded parties) include both such Indemnified Holder and the Issuer or
an Affiliate of the Issuer, and there may be one or more defenses available to
such Indemnified Holder which are additional to, or in conflict with, those
available to the Issuer or such Affiliate (in which case, if such Indemnified
Holder notifies the Issuer in writing that it elects to employ separate counsel
at the expense of the Issuer, the Issuer shall have the right to approve such
counsel (and
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such approval may not be unreasonably withheld) and the Issuer shall not have
the right to assume the defense of such action or proceeding on behalf of such
Indemnified Holder, it being understood, however, that the Issuer shall not,
in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such Indemnified
Holder. The Issuer shall not be liable for any settlement of any such action
or proceeding effected without its written consent, but if settled with its
written consent, or if there be a final judgment for the plaintiff in any such
action or proceeding, the Issuer agrees to indemnify and hold harmless such
Indemnified Holders from and against any loss or liability by reason of such
settlement or judgment. Whether or not such defense is assumed by the Issuer,
no Indemnified Holder shall be subject to any liability for any settlement made
without its consent (but such consent shall not be unreasonably withheld). The
Issuer shall not consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to each Indemnified Holder of a release, in form and
substance satisfactory to the Indemnified Holder, from all liability in respect
of such proceeding for which such Indemnified Holder would be entitled to
indemnification hereunder (whether or not any Indemnified Holder is a party
thereto).
3.8. Indemnification by Holders of Registrable Securities. Each Holder of
Registrable Securities agrees (severally but not jointly) to indemnify and hold
harmless the Issuer, its directors and officers and each Person, if any, who
controls the Issuer within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Issuer to such Holders, but only to the extentthat such Losses arise
from information relating to such Holder furnished in writing by such holder
expressly for use in any registration statement or prospectus, or any amendment
or supplement thereto, or any preliminary prospectus. In case any action or
proceeding shall be brought against the Issuer or its directors or officers or
any such controlling person, in respect of which indemnity may be sought
against a Holder of Registrable Securities, such Holder shall have the rights
and duties given to the Issuer and the Issuer or its directors or officers or
such controlling person shall have the rights and duties given to each Holder
by the preceding paragraph.
3.9. Contribution. If the indemnification provided for in this Article
III is unavailable to or insufficient to hold harmless an indemnified party
under Section 3.7 or Section 3.8 hereof (other than by reason of exceptions or
other limitations provided in those Sections) in respect of any Losses referred
to therein, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative benefits
received by the Issuer on the one hand and the Holders on the other hand from
their sale of Registrable Securities or if such allocation is not permitted by
applicable law, the relative fault of the Issuer on the one hand and of the
Indemnified Holder on the other in connection with the statements or omissions
which resulted in such losses, claims,
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damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of the Issuer on the one hand and of the
Indemnified Holder on the other 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 Issuer or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 3.7, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Issuer and each Holder of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this Section 3.9 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
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.
3.10. Participation in Public Offering. No Holder may participate in any
public offering under Section 3.2 unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements complying with the requirements set forth in Section 3.5,
including provisions for indemnification of underwriters and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and this Agreement.
3.11. Other Indemnification. Indemnification similar to that specified
herein (with appropriate modifications) shall be given by the Issuer and each
Holder of Registrable Securities with respect to any required registration or
other qualification of securities under any state law or regulation or
governmental authority other than the Securities Act.
3.12 Public Reports. If the Issuer shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Issuer thereafter shall use its commercially reasonable efforts to file the
reports required to be filed by it under the Exchange Act on a timely basis.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants and covenants to each Holder as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite action and will not violate
any provision of law, any order of any court or other agency of government, the
Articles of Organization or Operating Agreement, or any provision of any
indenture, agreement or other instrument to which it or any of its properties
or assets is bound, or conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of the Company.
(b) This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms.
(c) Neither the Company nor any successor Issuer will consummate a
Conversion or other transaction resulting in the issuance of Shares or Other
Securities unless and until proper provision shall have been made for the
assumption and performance by the successor Issuer of all the Company's and
Issuer's obligations under this Agreement.
ARTICLE V
MISCELLANEOUS
5.1. Headings. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
any provisions thereof.
5.3. No Inconsistent Agreements. The Issuer will not hereafter enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement. The
Issuer has not previously entered into any continuing agreement with respect to
any of its debt or equity securities granting any registration rights to any
person.
5.4. Remedies. The Issuer acknowledges and agrees that in the event of
any breach of this agreement by it, the Holders would be irreparably harmed and
could not be made whole by monetary damages. The Issuer accordingly agrees (a)
to waive the defense in any action for specific performance that a remedy at
law would be adequate, and (b) that the Holders, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
compel specific performance of this Agreement.
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5.5. Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein, and there are no restrictions, promises,
representations, warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
herein or therein. This Agreement supersedes all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.
5.6. Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be delivered (a) in person or by
courier, (b) mailed by first class registered or certified mail, or (c)
delivered by facsimile transmission, as follows:
(a) If to MasterCard:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: William I. Jacobs
Executive Vice President
Telephone: (914) 249-5200
Telecopier: (914) 249-5475
with a copy (which shall not constitute notice) to:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: Robert E. Norton, Jr.
General Counsel
Telephone: (914) 249-5301
Telecopier: (914) 249-4262
with a copy (which shall not constitute notice) to:
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attention: John A. Healy, Esq.
Telephone: (212) 878-8281
Telecopier: (212) 878-8375
(b) If to the Issuer:
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POS Acquisition Company LLC
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: Mr. Robert A. Yellowlees
Chief Executive Officer
Telephone: (404) 728-2000
Telecopier: (404) 728-3509
with a copy (which shall not constitute notice) to:
POS Acquisition Company LLC
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: E. Michael Ingram, Esq.
Telephone: (404) 728-2504
Telecopier: (404) 728-2551
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: B. Harvey Hill, Jr., Esq.
Telephone: (404) 881-7446
Telecopier: (404) 881-7777
or to such other address as the parties hereto may designate in writing to the
other in accordance with this Section 5.6. Any party may change the address to
which notices are to be sent by giving written notice of such change of address
to the other parties in the manner above provided for giving notice. If
delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery
is made and if delivered by facsimile transmission or mail as aforesaid, the
date on which such notice, request, instruction or document is received shall
be the date of delivery.
5.7. Applicable Law. The laws of the State of Georgia shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under applicable principles of
conflicts of laws.
5.8. Severability. The invalidity or unenforceability of any provisions
of this Agreement in any jurisdiction shall not affect the validity, legality
or enforceability of the
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remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
5.9. Successors, Assigns, Transferees. The provisions of this Agreement
shall be binding upon and accrue to the benefit of the parties hereto and their
respective heirs, successors, and assigns. Without limiting the generality of
the foregoing, the registration rights conferred herein on the Holders of the
Registrable Securities shall inure to the benefit of any and all subsequent
Holders from time to time of the Registrable Securities, unless otherwise
agreed to by such subsequent Holders; provided that such subsequent Holders
promptly provide the Issuer with their names and addresses.
5.10. 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.
5.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.
5.12. 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.
5.13. Recapitalization, etc. In the event that any capital stock or other
securities are issued in respect of, in exchange for, or in substitution of,
any Registrable Securities by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Issuer, appropriate adjustment shall be made in the provisions
of this Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights of the Holders under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HOLDER:MASTERCARD
MASTERCARD INTERNATIONAL
INCORPORATED:MASTERCARD
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
THE COMPANY:
POS ACQUISITION COMPANY LLC
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
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EXHIBIT I
FORM OF NEWCO ASSIGNMENT AND ASSUMPTION AGREEMENT
172
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (the "Agreement") is made as of
the 31st day of March, 1996, by and between National Data Corporation, a
Delaware corporation ("Parent"), and POS Acquisition Company LLC, a Georgia
limited liability company ("Newco"). Capitalized terms used but not defined
herein have the respective meanings ascribed to such terms in the Purchase
Agreement (as defined below).
WHEREAS, pursuant to that certain Asset Purchase and Contribution
Agreement dated as of February 22, 1996 (the "Purchase Agreement") by and among
Parent, Newco and MasterCard International Incorporated, a Delaware
corporation, Parent has agreed to contribute the Parent Contributed Assets to
Newco; and
WHEREAS, as partial consideration for the contribution of the Parent
Contributed Assets, Newco has agreed to assume the Newco Assumed Liabilities;
and
WHEREAS, the parties hereto desire to execute this Agreement to further
evidence the assignment by Parent and assumption by Newco;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment. Parent hereby assigns, transfers and conveys to Newco, its
successors and assigns, all of the Parent Contributed Assets, including,
without limitation, all Parent's Real Property Leases, Parent Contracts (other
than Parent Excluded Contracts), commitments and undertakings which constitute
a portion of the Parent Contributed Assets (all of the foregoing Parent's Real
Property Leases, Parent Contracts (other than Parent Excluded Contracts),
commitments and undertakings being collectively hereinafter referred to as the
"Assigned Agreements").
2. Assumption of Assumed Liabilities. Newco hereby assumes and undertakes
to pay, perform and discharge the Newco Assumed Liabilities.
3. No Other Liabilities Assumed. Except for the Newco Assumed
Liabilities, Newco shall not be responsible for, does not assume, and shall not
pay or perform any obligations or liabilities of Parent, whether known or
unknown, fixed or contingent.
4. Assignability of Assigned Agreements. To the extent that any of the
Assigned Agreements are not assignable without the consent of another party and
such consent has not been obtained on or prior to the Closing Date, this
Agreement shall not constitute an assignment or attempted assignment if such
assignment or attempted assignment would constitute a breach thereof. Any
obligation of Parent under the Purchase Agreement to effect
173
the transfer of any Assigned Agreement to Newco shall not be terminated or
abridged by this provision.
5. Cooperation. Parent agrees to cooperate with Newco in obtaining any
consents or waivers of third parties necessary to transfer to Newco all
property, rights and benefits in and under the Assigned Agreements.
6. Further Assurances. At any time and from time to time after the date
hereof, at the request of Newco, and without further consideration, Parent
shall execute and deliver such other instruments of assignment, transfer or
conveyance confirmation and take such other action as Newco may reasonably
request as necessary or desirable in order to more effectively transfer, convey
and assign to Newco the Parent Contributed Assets.
7. Amendments. No amendment, modification, or waiver of any provision of
this Agreement shall be valid or binding unless in writing and signed by each
of the parties hereto.
8. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, without regard to the
conflicts of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NATIONAL DATA CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
POS ACQUISITION COMPANY LLC
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
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