EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
by and among
Bank of America Corporation
Monarch Acquisition, Inc.
and
National Processing, Inc.
Dated as of July 12, 2004
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER................................................................................ 1
Section 1.1 The Merger........................................................................... 1
Section 1.2 Closing.............................................................................. 1
Section 1.3 Effective Time....................................................................... 2
Section 1.4 Articles of Incorporation and Code of Regulations.................................... 2
Section 1.5 Directors and Officers of the Surviving Corporation.................................. 2
Section 1.6 Further Assurances................................................................... 2
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES........................... 2
Section 2.1 Effect on Capital Stock.............................................................. 2
Section 2.2 Exchange of Certificates............................................................. 3
Section 2.3 Treatment of Company Options and Other Equity Awards................................. 5
Section 2.4 Dissenters' Rights................................................................... 5
Section 2.5 Adjustments to Prevent Dilution...................................................... 6
Section 2.6 Withholding Rights................................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................................ 6
Section 3.1 Representations and Warranties of Company............................................ 6
Section 3.2 Representations and Warranties of Parent and Merger Sub.............................. 19
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS................................................. 21
Section 4.1 Conduct of Business.................................................................. 21
Section 4.2 Acquisition Proposals................................................................ 24
ARTICLE V ADDITIONAL AGREEMENTS..................................................................... 25
Section 5.1 Preparation of Proxy Statement; Shareholders Meeting................................. 25
Section 5.2 Access to Information; Confidentiality............................................... 26
Section 5.3 Reasonable Best Efforts; Cooperation................................................. 27
Section 5.4 Employee Benefits.................................................................... 28
Section 5.5 Indemnification; Directors' and Officers' Insurance.................................. 29
Section 5.6 Public Announcements................................................................. 30
Section 5.7 Section 16(b)........................................................................ 31
Section 5.8 Tax-Sharing Agreement................................................................ 31
Section 5.9 Parent Acknowledgement............................................................... 31
-i-
TABLE OF CONTENTS
(Continued)
Page
----
ARTICLE VI CONDITIONS PRECEDENT...................................................................... 31
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger........................... 31
Section 6.2 Conditions to Obligations of Parent and Merger Sub................................... 32
Section 6.3 Conditions to Obligations of the Company............................................. 33
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER......................................................... 34
Section 7.1 Termination.......................................................................... 34
Section 7.2 Effect of Termination................................................................ 35
Section 7.3 Amendment............................................................................ 35
Section 7.4 Extension; Waiver.................................................................... 35
Section 7.5 Fees and Expenses.................................................................... 35
ARTICLE VIII GENERAL PROVISIONS........................................................................ 36
Section 8.1 Nonsurvival of Representations and Warranties........................................ 36
Section 8.2 Notices.............................................................................. 36
Section 8.3 Interpretation....................................................................... 37
Section 8.4 Counterparts......................................................................... 38
Section 8.5 Entire Agreement; No Third-Party Beneficiaries....................................... 38
Section 8.6 Governing Law........................................................................ 39
Section 8.7 Assignment........................................................................... 39
Section 8.8 Consent to Jurisdiction.............................................................. 39
Section 8.9 Specific Enforcement................................................................. 39
Section 8.10 Severability......................................................................... 39
Section 8.11 Disclosure Letters................................................................... 39
Section 8.12 Parent Commitment.................................................................... 40
-ii-
TABLE OF DEFINED TERMS
TERM PAGE
- ---- ----
ABN AMRO........................................................................................................ 40
Acquisition Proposal............................................................................................ 24
affiliate....................................................................................................... 38
Agreement....................................................................................................... 1
Business........................................................................................................ 40
Certificate..................................................................................................... 3
Certificate of Merger........................................................................................... 2
Charge Card..................................................................................................... 41
Closing......................................................................................................... 1
Closing Date.................................................................................................... 2
Code............................................................................................................ 6
Company......................................................................................................... 1
Company Benefit Plans........................................................................................... 12
Company Common Stock............................................................................................ 3
Company Disclosure Letter....................................................................................... 6
Company Option.................................................................................................. 5
Company Preferred Stock......................................................................................... 8
Company Recommendation.......................................................................................... 17
Company SEC Documents........................................................................................... 10
Company Shareholder Approval.................................................................................... 17
Company Shareholders Meeting.................................................................................... 26
Company Subsidiaries............................................................................................ 7
Company Subsidiary.............................................................................................. 7
Confidentiality Agreement....................................................................................... 27
Dissenting Shareholder.......................................................................................... 5
Dissenting Shares............................................................................................... 5
Effective Time.................................................................................................. 2
Employees....................................................................................................... 29
Environmental Law............................................................................................... 18
ERISA........................................................................................................... 12
ERISA Affiliate................................................................................................. 13
Exchange Act.................................................................................................... 9
Exchange Fund................................................................................................... 3
Excluded Shares................................................................................................. 3
Federal Reserve Board........................................................................................... 9
Foreign Antitrust Laws.......................................................................................... 9
GAAP............................................................................................................ 10
Governmental Entity............................................................................................. 9
Group........................................................................................................... 15
Hazardous Substance............................................................................................. 18
HSR Act......................................................................................................... 9
Indemnified Parties............................................................................................. 30
Intellectual Property Rights.................................................................................... 17
IRS............................................................................................................. 15
knowledge....................................................................................................... 38
Liens........................................................................................................... 38
MasterCard...................................................................................................... 41
Material Adverse Effect......................................................................................... 7
Material Contract............................................................................................... 16
Merger.......................................................................................................... 1
Merger Consideration............................................................................................ 3
Merger Sub...................................................................................................... 1
Multiemployer Plan.............................................................................................. 14
Multiple Employer Plan.......................................................................................... 14
NCC............................................................................................................. 15
New Plans....................................................................................................... 29
Noncompetition Agreement........................................................................................ 31
NYSE............................................................................................................ 9
OGCL............................................................................................................ 1
Old Plans....................................................................................................... 29
Option Consideration............................................................................................ 5
Parent.......................................................................................................... 1
Parent Disclosure Letter........................................................................................ 19
Paying Agent.................................................................................................... 3
PBGC............................................................................................................ 13
Permits......................................................................................................... 11
Permitted Liens................................................................................................. 38
person.......................................................................................................... 38
Proxy Statement................................................................................................. 9
Representatives................................................................................................. 24
Restraints...................................................................................................... 32
Sarbanes-Oxley.................................................................................................. 11
SEC............................................................................................................. 6
Securities Act.................................................................................................. 9
subsidiary...................................................................................................... 38
Surviving Corporation........................................................................................... 1
Takeover Statute................................................................................................ 17
Tax............................................................................................................. 16
Tax Returns..................................................................................................... 16
Termination Date................................................................................................ 34
Termination Fee................................................................................................. 36
UAL Agreement................................................................................................... 19,33
VISA............................................................................................................ 41
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 12,
2004, by and among National Processing, Inc., an Ohio corporation (the
"Company"), Bank of America Corporation, a Delaware corporation ("Parent"), and
Monarch Acquisition, Inc., an Ohio corporation and wholly owned indirect
subsidiary of Parent ("Merger Sub").
R E C I T A L S:
A. The respective Boards of Directors of the Company and Merger Sub have
each determined that the merger of Merger Sub with and into the Company (the
"Merger") upon the terms and subject to the conditions set forth in this
Agreement is advisable, fair to and in the best interests of their respective
companies and shareholders and accordingly have agreed to effect the Merger; and
B. The Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements specified herein in
connection with the Merger and also to prescribe certain conditions to the
Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and upon the terms and subject to the conditions set forth herein,
the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. In accordance with the Ohio General Corporation
Law (the "OGCL"), Merger Sub will be merged with and into the Company at the
Effective Time and the separate corporate existence of Merger Sub will thereupon
cease. Following the Effective Time, the Company will be the surviving
corporation (the "Surviving Corporation") and will be a wholly owned subsidiary
of Parent. The Merger shall have the effects specified in the OGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of the Company
and Merger Sub will be vested in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub will become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.2 Closing. Unless otherwise mutually agreed between Parent and
the Company, the closing of the Merger (the "Closing") will take place at 10:00
a.m., Eastern Time at the offices of Jones Day, 901 Lakeside Avenue, Cleveland,
Ohio 44114, no later than the fifth business day after satisfaction or waiver
(subject to applicable law) of the conditions (excluding conditions that, by
their terms, cannot be satisfied until the Closing Date but subject to the
satisfaction or waiver of those conditions) set forth in Article VI (but no
earlier than October 15, 2004). The date on which the Closing occurs is
hereinafter referred to as the "Closing Date".
Section 1.3 Effective Time. As soon as practicable on the Closing Date or
on such later date as shall be mutually agreed to by the parties to this
Agreement, the Company and Parent will cause a certificate of merger (the
"Certificate of Merger") to be executed, acknowledged and filed with the Ohio
Secretary of State in such form as is required by the relevant provisions of the
OGCL. The Merger will become effective at such time as the Certificate of Merger
is duly filed with the Secretary of State of the State of Ohio, or at such later
time as may be agreed in writing by the Company, Parent and Merger Sub and
specified in the Certificate of Merger (the "Effective Time").
Section 1.4 Articles of Incorporation and Code of Regulations. The
articles of incorporation, including any amendments thereto set forth in the
Certificate of Merger, and code of regulations of Merger Sub, as in effect
immediately before the Effective Time, will be the articles of incorporation and
code of regulations, respectively, of the Surviving Corporation (with such
changes thereto as the parties may agree), until thereafter changed or amended
as provided therein or by applicable law.
Section 1.5 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time will be the
directors of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. The officers of the Company immediately prior to
the Effective Time will be the officers of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.6 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
capital stock of the Company, Parent or Merger Sub:
(a) Merger Sub's Common Stock. At the Effective Time, each common share,
par value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time will be converted into one fully paid and
nonassessable common share of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Owned Stock. Each common share,
without par value, of the Company (the "Company Common Stock") issued and
outstanding
2
immediately prior to the Effective Time and owned by Parent, or Merger Sub, the
Company or any Company Subsidiary (other than such shares held in a fiduciary,
collateral, custodial or similar capacity, which will be converted pursuant to
Section 2.1(c)) will automatically be canceled and retired without payment of
any consideration therefor and will cease to exist.
(c) Merger Consideration. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 2.1(b) and Dissenting Shares that are owned
by Dissenting Shareholders that have properly exercised appraisal rights
pursuant to Section 1701.85 of the OGCL (together, the "Excluded Shares")) will
automatically be converted into the right to receive $26.60, without interest,
in cash (the "Merger Consideration").
At the Effective Time, all such shares of Company Common Stock will no longer be
outstanding and will automatically be cancelled and retired and will cease to
exist and each certificate (a "Certificate") formerly representing any such
shares of Company Common Stock (other than the Excluded Shares) will cease to
have any rights with respect thereto and shall thereafter represent only the
right to receive the Merger Consideration less any required withholding Taxes
upon surrender of such Certificate in accordance with Section 2.2.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Merger Sub shall appoint
the Company's registrar and transfer agent or such other exchange agent, United
States bank or trust company as may be approved in writing by the Company (such
approval not to be unreasonably withheld or delayed) to act as paying agent (the
"Paying Agent") for the payment of the Merger Consideration. At the Effective
Time, Parent shall deposit or shall cause to be deposited with the Paying Agent,
in a separate fund established for the benefit of the holders of shares of
Company Common Stock for payment in accordance with the provisions of this
Article II through the Paying Agent (the "Exchange Fund"), cash sufficient to
pay the aggregate Merger Consideration in exchange for certificates representing
Company Common Stock outstanding immediately prior to the Effective Time (other
than Excluded Shares).
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a Certificate or Certificates whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 2.1(c), (i) a
letter of transmittal (which must specify that delivery will be effected, and
risk of loss and title to the Certificates will pass, only upon delivery of the
Certificates to the Paying Agent and will be in such form and have such other
provisions as the Company and Merger Sub may reasonably specify) and (ii)
instructions for use in surrendering the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent in accordance with the terms of such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate will be entitled to receive in exchange therefor cash
in an amount (after giving effect to any required Tax withholdings) equal to the
product of (i) the number of shares of Company Common Stock represented by such
Certificate multiplied by (ii) the Merger Consideration. The Certificate so
surrendered will forthwith be canceled. No interest will be paid or accrued on
any amount payable upon the surrender of any Certificate. If payment is to be
3
made to a person other than the person in whose name the surrendered Certificate
is registered, it will be a condition of payment that the Certificate so
surrendered will be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment, shall pay any transfer or other
Taxes required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the surrendered Certificate or establish to
the satisfaction of the Surviving Corporation that such Tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.2(b) each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration that the
holder thereof has the right to receive in respect of such Certificate pursuant
to this provision of this Article II. The Merger Consideration shall be deemed
to have been paid in full satisfaction of all rights pertaining to the Company
Common Stock represented by such Certificate.
(c) Stock Transfer Books. After the Effective Time, there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Company Common Stock that were immediately outstanding
prior to the Effective Time. If, after the Effective Time, Certificates other
than Certificates evidencing Dissenting Shares are presented to the Surviving
Corporation or the Paying Agent for any reason, they will be canceled and
exchanged for cash in the proper amount pursuant to this Article II.
(d) Investment of Exchange Fund. The Paying Agent shall invest the
Exchange Fund as directed by the Surviving Corporation; provided, that any such
investment or any such payment of earnings shall not delay the receipt by
holders of Certificates of the Merger Consideration, or otherwise impair such
holders' rights hereunder. Any interest and other income resulting from such
investment will be paid to the Surviving Corporation.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof) that remains unclaimed by
holders of Certificates for six months after the Effective Time, may at the
option of the Surviving Corporation, be delivered to the Surviving Corporation.
Any holders of Certificates (other than with respect to Excluded Shares) who
have not heretofore complied with this Article II shall thereafter look only to
the Surviving Corporation for payment of (after giving effect to any required
Tax withholdings) the Merger Consideration upon surrender of their Certificates,
without any interest thereon.
(f) No Liability. Immediately prior to the date on which any Merger
Consideration, any cash payable to the holder of a Certificate pursuant to this
Article II or any dividends or distributions payable to the holder of a
Certificate would otherwise escheat to or become the property of any
Governmental Entity, any such Merger Consideration or cash, dividends or
distributions in respect of such Certificate will become the property of the
Surviving Corporation, free and clear of all claims of interest of any Person
previously entitled thereto. None of Merger Sub, the Company, the Surviving
Corporation, Parent or the Paying Agent shall be liable to any holder of
Certificates in respect of any amount properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate has been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such
4
Certificate to be lost, stolen or destroyed and the posting by such person of a
bond in customary amount and upon such terms as the Surviving Corporation may
require as indemnity against any claim that may be made against it with respect
to such Certificate, the Paying Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration (after giving effect to
any required Tax withholding) due to such person pursuant to this Agreement. Any
affidavit of loss presented pursuant to this Article II, must be in form and
substance reasonably satisfactory to the Surviving Corporation.
Section 2.3 Treatment of Company Options and Other Equity Awards.
(a) Immediately prior to the Effective Time, each option to purchase a
share of Company Common Stock (each, a "Company Option") then outstanding shall
become fully vested and shall be converted into the right to receive, upon the
exercise thereof, an amount in cash (without interest) equal to the excess, if
any, of the Merger Consideration over the sum of (x) the exercise price per
share of the Company Common Stock under the Company Option and (y) any
applicable withholding Tax (the "Option Consideration"). Each outstanding
Company Option so converted shall, immediately following such conversion, be
cancelled and the holder thereof shall be entitled to receive, as soon as
practicable thereafter, an amount of cash (without interest) equal to the
product of (i) the total number of shares of Company Common Stock subject to
such Company Option multiplied by (ii) the Option Consideration.
(b) The compensation committee of the Board of Directors of the Company
shall use commercially reasonable efforts to make such amendments and
adjustments to or make such determinations with respect to the Company Options,
restricted shares of Company Common Stock and other equity awards as are
necessary to implement the provisions of this Section 2.3.
Section 2.4 Dissenters' Rights. Shares of Company Common Stock that have
not been voted for adoption of this Agreement and with respect to which
appraisal must have been properly demanded in accordance with Section 1701.85 of
the OGCL ("Dissenting Shares") will not be converted into the right to receive
the Merger Consideration at or after the Effective Time unless and until the
holder of such shares (a "Dissenting Shareholder") fails to perfect or
effectively withdraws or loses such holder's right to dissent from the Merger in
accordance with the OGCL. Each Dissenting Shareholder shall be entitled to
receive only the payment provided by Section 1701.85 of the OGCL with respect to
shares of Company Common Stock owned by such Dissenting Shareholder. If a holder
of Dissenting Shares so fails to perfect, effectively withdraws or otherwise
becomes ineligible for such appraisal, then, as of the Effective Time or the
occurrence of such event, whichever last occurs, each of such holder's
Dissenting Shares will cease to be a Dissenting Share and will be converted into
and represent the right to receive the Merger Consideration, without interest
and less any required withholding Taxes, upon the surrender of the Certificates
representing such shares. The Company shall give Parent prompt written notice of
any demands by Dissenting Shareholders received by the Company or the Surviving
Corporation, withdrawals of such demands, and any other instruments served on
the Company or the Surviving Corporation and any material correspondence
received by the Surviving Corporation or the Company in connection with such
demands. After the Effective Time, Parent shall conduct all negotiations and
proceedings with respect to demands for appraisal under the OGCL and the Company
will be entitled to participate in such negotiations
5
only as and to the extent requested by Parent. The Company shall not, except
with the prior written consent of Parent, make any payment with respect to any
demands for appraisal of Dissenting Shares, compromise or offer to settle or
settle any such demands or approve any withdrawal of any such demands. Any funds
paid to Dissenting Shareholders shall be paid out of the Exchange Fund to the
extent such payment is equal to or less than the Merger Consideration and, if
greater, the excess shall be paid out of the assets of the Surviving
Corporation.
Section 2.5 Adjustments to Prevent Dilution. In the event that the Company
changes the number of shares of Company Common Stock, or securities convertible
or exchangeable into or exercisable for shares of Company Common Stock, issued
and outstanding prior to the Effective Time as a result of a reclassification,
stock split (including a reverse stock split), stock dividend or distribution,
recapitalization, subdivision, or other similar transaction, the Merger
Consideration will be equitably adjusted to reflect such change.
Section 2.6 Withholding Rights. The Surviving Corporation, Parent or the
Paying Agent, as the case may be, shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any person
such amounts, if any, as it is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code, of 1986, as amended
(the "Code") or any provision of state, local or foreign Tax law. To the extent
that amounts are so withheld by the Surviving Corporation, Parent or the Paying
Agent, as the case may be, such amounts withheld shall be treated for purposes
of this Agreement as having been paid to such person in respect of which such
deduction and withholding was made by the Surviving Corporation, Parent or the
Paying Agent, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Company. Except as disclosed
in the Company SEC Documents filed with the Securities and Exchange Commission
(the "SEC") (it being understood that any matter set forth in the Company SEC
Documents shall be deemed to qualify any representation or warranty in this
Article III only to the extent that the description of such matter in the
Company SEC Documents would be reasonably inferred to be a qualification with
respect to such representation or warranty) or as otherwise set forth in the
company disclosure letter delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure Letter"), the Company
hereby represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Ohio, and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of the Company Subsidiaries is a
corporation or other legal entity duly organized, validly existing and in good
standing (with respect to jurisdictions that recognize such concept) under the
laws of the jurisdiction in which it is organized and has the requisite
corporate or other applicable entity power, as the case may be, and authority to
carry on its business as now being
6
conducted, except for those jurisdictions where the failure to be so organized,
existing or in good standing, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect on the Company.
The Company and each of the Company Subsidiaries is duly qualified or licensed
to do business and is in good standing (with respect to jurisdictions that
recognize such concept) in each jurisdiction in which the nature of its business
or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing, individually
or in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect on the Company. The Company has made available to Parent prior to
the execution of this Agreement complete and correct copies of (i) its articles
of incorporation and code of regulations, each as amended to date, and (ii) the
articles of incorporation and bylaws (or similar organizational documents) of
each of the Company Subsidiaries. As used in this Agreement, the term "Material
Adverse Effect" means a material adverse effect on the financial condition,
properties, assets, liabilities, business or results of operations of the
relevant entity and its subsidiaries, taken together as a whole, or on the
ability of the relevant entity to consummate the transactions contemplated
herein, excluding any such effect resulting from or arising out of (i) changes
or conditions generally affecting the United States economy, financial markets
or the industries in which the relevant entity operates, except to the extent
the relevant entity is materially and adversely affected in a disproportionate
manner as compared to other comparable participants in such industry, (ii) the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby or the announcement thereof, or (iii) any outbreak of major
hostilities in which the United States is involved or any act of terrorism
within the United States or directed against its facilities or citizens wherever
located.
(b) Subsidiaries. Section 3.1(b) of the Company Disclosure Letter sets
forth all the subsidiaries of the Company (each a "Company Subsidiary,"
collectively, the "Company Subsidiaries")). Except as set forth in Section
3.1(b) of the Company Disclosure Letter, all outstanding shares of capital stock
of, or other equity interests in, each Company Subsidiary (i) have been validly
issued and are fully paid and nonassessable, (ii) are free and clear of all
Liens and (iii) are free of any other restriction (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
ownership interests). Except as set forth in Section 3.1(b) of the Company
Disclosure Letter, all outstanding shares of capital stock (or equivalent equity
interests of entities other than corporations) of each of the Company
Subsidiaries are beneficially owned, directly or indirectly, by the Company, and
the Company does not, directly or indirectly, own more than 20% but less than
100% of the capital stock or other equity interest in any person.
(c) Capital Structure. The authorized capital stock of the Company
consists of 95,000,000 shares of Company Common Stock, and 5,000,000 preferred
shares, without par value (the "Company Preferred Stock"). At the close of
business on June 30, 2004: (i) 53,342,125 shares of Company Common Stock were
issued and outstanding; (ii) no shares of Company Preferred Stock were issued
and outstanding; and (iii) no shares of Company Common Stock were held in the
treasury of the Company. The Company has outstanding Company Options to acquire
2,810,392 shares of Company Common Stock. Section 3.1(c) of the Company
Disclosure Letter contains a true and complete list as of June 30, 2004 of all
outstanding Company Options, and stock awards and the number, exercise prices,
vesting schedules and expiration dates of each grant to such holders. There are
no phantom stock or
7
other contractual rights the value of which is determined in whole or in part by
the value of any capital stock of the Company. All outstanding shares of capital
stock of the Company are, and all shares that may be issued will be, when
issued, duly authorized, validly issued, fully paid and nonassessable. Except as
set forth in this Section 3.1(c) or as permitted pursuant to Section 4.1(a), (A)
there are not issued, reserved for issuance or outstanding (1) any shares of
capital stock or other voting securities of the Company or any Company
Subsidiary, (2) any securities convertible into or exchangeable or exercisable
for shares of capital stock or voting securities of the Company or any Company
Subsidiary, or (3) any warrants, calls, options, preemptive rights, rights of
first refusal or other rights to acquire from the Company or any Company
Subsidiary, and no obligation of the Company or any Company Subsidiary to issue,
any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of the
Company or any Company Subsidiary and (B) there are no outstanding obligations
of the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither the Company nor any Company
Subsidiary is a party to any voting agreement or proxy with respect to the
voting of any such securities. There are no outstanding bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities of the Company having the right to vote)
on any matter on which the Company's shareholders may vote.
(d) Authority; Noncontravention. The Company has all requisite corporate
power and authority to enter into this Agreement, and, subject to the Company
Shareholder Approval, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to the Company Shareholder Approval. This
Agreement has been duly executed and delivered by the Company, and, assuming the
due authorization, execution and delivery by Parent and Merger Sub, constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting the rights of creditors and subject to general
equity principles. The execution and delivery of this Agreement by the Company
does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement by the Company
will not, (i) conflict with the articles of incorporation or code of regulations
(or comparable organizational documents) of any of the Company or any Company
Subsidiary, (ii) result in any breach, violation or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or creation or acceleration of any obligation or right of a third
party or loss of a benefit under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any Company Subsidiary under, any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license or other
authorization applicable to any of the Company or any Company Subsidiary or
their respective properties or assets, (iii) subject to the governmental filings
and other matters referred to in the following sentence, conflict with or
violate any law applicable to the Company or any Company Subsidiary or their
respective properties or assets or any judgment, order or decree to which the
Company or any Company Subsidiary or their respective properties or assets have
been specifically identified as subject or (iv) cause the suspension or
revocation of any
8
material authorization, consent, approval or license of the Company or any
Company Subsidiary currently in effect, other than, in the case of clauses (ii)
through (iv), any such breaches, conflicts, violations, defaults, rights, losses
or Liens that, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect on the Company. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any federal, state, local or foreign
government, court or administrative, regulatory or other governmental agency,
commission or authority (each, a "Governmental Entity") is required by the
Company in connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby, except for: (A) the filing with the SEC of (y) a proxy statement
relating to the Company Shareholders Meeting (such proxy statement, as amended
or supplemented from time to time, the "Proxy Statement") and (z) such reports
under Section 13(a), 13(d), 15(d) or 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in connection with
this Agreement and the transactions contemplated hereby; (B) the filing of the
Certificate of Merger with the Secretary of State of the State of Ohio and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business and such filings with Governmental Entities
to satisfy the requirements of state securities or "blue sky" laws; (C) the
filing of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act");
(D) filings required under the antitrust and competition laws of foreign
countries ("Foreign Antitrust Laws"), which are set forth on Section 3.1(d) of
the Company Disclosure Letter; (E) filings required to be made with the New York
Stock Exchange (the "NYSE"), (F) filing applications and notices, as applicable,
with the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") under the Bank Holding Company Act of 1956, as amended, and the Federal
Reserve Act, as amended; and (G) such consents, approvals, orders,
authorizations, actions, registrations, declarations or filings the failure of
which to be made or obtained (as applicable), individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect on the
Company.
(e) SEC Reports and Financial Statements; Undisclosed Liabilities.
(i) The Company has timely filed all required reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) under the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, with the SEC since
January 1, 2001 (as such reports, schedules, forms, statements and
documents have been amended or supplemented since the time of their
filing, collectively, the "Company SEC Documents"). As of their respective
dates, or if amended or supplemented, as of the date of the last such
amendment or supplement, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents, and none
of the Company SEC Documents when filed contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. No Company
Subsidiary is required to make any filings with the SEC.
9
(ii) The consolidated financial statements of the Company included
in the Company SEC Documents filed prior to the date of this Agreement
comply as to form, as of their respective dates of filing with the SEC, in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto),
and fairly present in all material respects the consolidated financial
position of the Company and its subsidiaries as of the dates thereof and
the consolidated statements of income, cash flows and shareholders' equity
for the periods then ended (subject, in the case of interim financial
statements, to normal year-end audit adjustments consistent with past
practice), except that the interim financial statements do not contain all
of the footnote disclosures required by GAAP.
(iii) Except (A) as and to the extent disclosed in or reserved
against in such financial statements, including the notes thereto, (B) as
incurred in the ordinary course of business since the date of the most
recent balance sheet included in the financial statements, (C) as
disclosed in or reserved against in the Company SEC Documents or (D)
obligations and liabilities incurred in connection with this Agreement or
the transactions contemplated hereby, neither the Company nor any Company
Subsidiary has any obligations or liabilities of any nature (whether
accrued, absolute, contingent or otherwise) as of the date of this
Agreement that are required by GAAP to be disclosed in or reserved against
on a consolidated balance sheet of the Company or that have had or would
reasonably be expected to result in a Material Adverse Effect on the
Company.
(f) Absence of Certain Changes or Events. Except for liabilities
contemplated by this Agreement and the transactions contemplated hereby, and
except as disclosed in the Company SEC Documents, since January 1, 2004, (i) the
Company and each of the Company Subsidiaries has conducted its respective
operations only in the ordinary course of business consistent with past
practice, (ii) there has not been a Material Adverse Effect on the Company and
(iii) neither the Company nor any Company Subsidiary has taken any action that
if taken after the date of this Agreement, would violate the provisions of
Section 4.1(a).
(g) Compliance with Applicable Laws; Litigation.
(i) The operations of the Company and each Company Subsidiary
since January 1, 2003, have not been and are not being conducted in
violation of any law, regulation of any Governmental Entity or any Permit
applicable to or held by (as the case may be) the Company or any Company
Subsidiary, except where such violations, individually or in the
aggregate, would not reasonably be expected to result in a Material
Adverse Effect on the Company. Since January 1, 2003, neither the Company
nor any Company Subsidiary has received any written notice alleging any
such violation, except where such violations, individually or in the
aggregate, would not reasonably be expected to result in a Material
Adverse Effect on the Company. Neither the Company nor any Company
Subsidiary is in default under or in violation of any of the rules and
regulations
10
of VISA U.S.A., Inc., VISA International, Inc., MasterCard International,
Inc. and any successor organizations or associations, except where such
default or violation would not reasonably be expected to result in a
Material Adverse Effect on the Company.
(ii) The Company and each Company Subsidiary hold all licenses,
permits, variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of
Governmental Entities necessary for the conduct of their respective
businesses as currently conducted ("Permits"), except where the failure to
hold such Permits, individually or in the aggregate, would not reasonably
be expected to result in a Material Adverse Effect on the Company. Since
January 1, 2003, neither the Company nor any Company Subsidiary has
received written notice that any Permit will be terminated or modified or
cannot be renewed in the ordinary course of business except for such
terminations, modifications or nonrenewals as, individually or in the
aggregate, would not have or result in a Material Adverse Effect on the
Company.
(iii) As of the date of this Agreement, there is no investigation by
a Governmental Entity or litigation, arbitration, or administrative
proceeding pending against or, to the knowledge of the Company, threatened
against the Company or any Company Subsidiary as of the date of this
Agreement that, if decided adversely to such person, would reasonably be
expected to result in a Material Adverse Effect on the Company, or that
seeks to enjoin or otherwise challenges the consummation of the
transactions contemplated by this Agreement. Neither the Company nor any
Company Subsidiary is a party to or subject to the provisions of any
judgment, order, writ, injunction or decree of any Governmental Entity
which, individually or in the aggregate, would reasonably be expected to
result in a Material Adverse Effect on the Company.
(iv) A list of all pending litigation, proceedings or
investigations against the Company or any Company Subsidiary involving
amounts in excess of $100,000, is included in Section 3.1(g)(iv) of the
Company Disclosure Letter.
(v) The Company and each of its officers and directors have
complied in all material respects with (i) the applicable provisions of
the Sarbanes-Oxley Act of 2002 and the related rules and regulations
promulgated under such Act or the Exchange Act ("Sarbanes-Oxley") and (ii)
the applicable listing and corporate governance rules and regulations of
the NYSE. The Company has previously disclosed to Parent any of the
information required to be disclosed by the Company and certain of its
officers to the Company's Board of Directors or any committee thereof
pursuant to the certification requirements contained in Form 10-K and Form
10-Q under the Exchange Act. Since the enactment of Sarbanes-Oxley,
neither the Company nor any of its affiliates has made any loans to any
executive officer or director of the Company in violation of Section 402
of Sarbanes-Oxley. Section 3.1(g)(v) of the Company Disclosure Letter
lists all outstanding loans from the Company to any officer or director of
the Company.
(h) Employee Benefit Plans.
11
(i) With respect to (A) each bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, employment,
disability, death benefit, "cafeteria" benefits under Section 125 of the
Code, hospitalization, medical insurance, life insurance, severance or
other employee benefit plan, agreement or arrangement, including each
"employee benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained
by the Company or any Company Subsidiary or to which the Company or any
Company Subsidiary contributes or is obligated to contribute or with
respect to which the Company or any Company Subsidiary has any liability,
other than a plan or program operated by a Governmental Entity (such as
government-operated workers' compensation or Social Security), (B) each
change of control agreement providing benefits to any current or former
employee, officer or director of the Company or any Company Subsidiary, to
which the Company or any Company Subsidiary is a party or by which the
Company or any Company Subsidiary is bound, and (C) each plan, agreement,
program or policy providing for "fringe benefits" to employees of the
Company or any Company Subsidiary (collectively, the "Company Benefit
Plans"), no event has occurred and there exists no condition or set of
circumstances in connection with which the Company or any Company
Subsidiary would be subject to any liability that, individually or in the
aggregate, would reasonably be expected to result in a Material Adverse
Effect on the Company. Section 3.1(h) of the Company Disclosure Letter
sets forth a true and complete list of each Company Benefit Plan.
(ii) Each Company Benefit Plan and its administration is in
material compliance with its terms and all applicable laws, including
ERISA, if applicable, except for any failures that, individually or in the
aggregate, would not reasonably be expected to result in a Material
Adverse Effect on the Company. Except as provided in Section 3.1(h) of the
Company Disclosure Letter, the plan sponsor of each Company Benefit Plan
that is intended to be qualified under Section 401(a), 401(k) or
4975(e)(7) of the Code either (A) has received a favorable determination
letter from the IRS as to the qualified status of such Company Benefit
Plan or (B) has filed or will file a request with the IRS for such a
favorable determination letter within the applicable remedial amendment
period. All contributions to, and payments from, the Company Benefit Plans
that are required to have been made in accordance with such Company
Benefit Plans, ERISA or the Code have been made other than any failures
that, individually or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect on the Company. To the knowledge of
the Company and any of the Company Subsidiaries, no nonexempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) or breach of fiduciary responsibility, which would have a Material
Adverse Effect on the Company, has occurred within the three years
preceding the date of this Agreement with respect to any Company Benefit
Plan.
(iii) Neither the Company nor any trade or business, whether or not
incorporated, which, together with the Company, would be deemed to be a
"single employer" within the meaning of Section 4001(b) of ERISA or
Sections 414(b) or (c) of the Code (an "ERISA Affiliate") has incurred any
liability under Title IV of ERISA (other than for premiums pursuant to
Section 4007 of ERISA which have been timely
12
paid) or Section 4971 of the Code that has not been satisfied. No Company
Benefit Plan has within the three years preceding the date of this
Agreement, incurred an accumulated funding deficiency within the meaning
of Section 302 of ERISA or Section 412 of the Code, nor is there any
request pending before the IRS for any waiver of the minimum funding
standards of Section 302 of ERISA and Section 412 of the Code, nor has
there been any prior such request granted with respect to any Company
Benefit Plan where the minimum funding commitment has not yet been
satisfied, nor has any Lien in favor of any Company Benefit Plan arisen
under Section 412(n) of the Code or Section 302(f) of ERISA. Neither the
Company nor any ERISA Affiliate has been required to provide security to
any defined benefit pension plan pursuant to Section 401(a)(29) of the
Code that has not been released. With respect to each Company Benefit Plan
that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971
of the Code, (A) the fair market value of the assets of such Company
Benefit Plan equals or exceeds the actuarial present value of all accrued
benefits under such Company Benefit Plan (whether or not vested), based
upon the actuarial assumptions used to prepare the most recent actuarial
report for such Company Benefit Plan, (B) within the three years preceding
the date of this Agreement there has been no partial termination of any
such Company Benefit Plan that has affected the Employees of the Company
or any Company Subsidiary, and (C) none of the following events has
occurred: (x) the filing of a notice of intent to terminate, (y) the
treatment of a Company Benefit Plan amendment as a termination under
Section 4041 of ERISA or (z) the commencement of proceedings by the
Pension Benefit Guaranty Corporation (the "PBGC") to terminate a Company
Benefit Plan. There has been no "reportable event" within the meaning of
Section 4043 of ERISA and the regulations and interpretations thereunder
which required a notice to the PBGC which has not been fully and
accurately reported in a timely fashion, as required, or which, whether or
not reported, would constitute grounds for the PBGC to institute
involuntary termination proceedings with respect to any Company Benefit
Plan that is subject to Title IV of ERISA.
(iv) The Company does not have any obligation under any Company
Benefit Plan or otherwise to provide health or death benefits to or in
respect of former employees of the Company, except as specifically
required by the continuation requirements of Part 6 of Title I of ERISA or
applicable state law.
(v) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (A)
entitle any current or former employee, officer or director of the Company
or any Company Subsidiary to severance pay, unemployment compensation or
any other payment that would not have been payable if such transactions
had not been consummated, or (B) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee,
officer or director.
(vi) Neither the Company nor any Company Subsidiary is a party to
any agreement, contract or arrangement (including this Agreement) that
would result, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the
Code. No Company Benefit Plan provides for the
13
reimbursement of excise Taxes under Section 4999 of the Code or any income
Taxes under the Code.
(vii) With respect to each Company Benefit Plan, the Company has
made available to Parent a true and complete copy of: (A) each writing
constituting a current part of such Company Benefit Plan, including all
current Company Benefit Plan documents and trust agreements, and all
amendments thereto; (B) the most recent Annual Report (Form 5500 Series)
and accompanying schedules, if any; (C) the most recent annual financial
report, if any; (D) the most recent actuarial report, if any; and (E) the
most recent determination letter from the IRS, if any. Neither the Company
nor any Company Subsidiary has made an enforceable commitment to make any
new amendments to, or to adopt or approve any new, Company Benefit Plan.
There are no Company Benefit Plans that are not evidenced by the written
documents described in clause (A) above.
(viii) No Company Benefit Plan is a multiemployer plan (as defined
in Section 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a plan that
has two or more contributing sponsors at least two of whom are not under
common control, within the meaning of Section 4063 of ERISA (a "Multiple
Employer Plan"). None of the Company, the Company Subsidiaries nor any of
their respective ERISA Affiliates has, at any time during the last six
years, contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan that is subject to Title IV of ERISA.
(ix) As of the date of this Agreement, there are no pending claims
(other than claims for benefits in the ordinary course), lawsuits or
arbitrations that have been asserted or instituted, or to the Company's
knowledge, threatened against the Company Benefit Plans, any fiduciaries
thereof with respect to their duties to the Company Benefit Plans or the
assets of any of the trusts under any of the Company Benefit Plans that
could reasonably be expected to result in any material liability of the
Company or any Company Subsidiaries to the PBGC, the United States
Department of Treasury, the United States Department of Labor, any
Multiemployer Plan, any Company Benefit Plan or any participant in a
Company Benefit Plan.
(i) Taxes.
(i) The Company, each Company Subsidiary, and each consolidated,
unitary, or combined group (a "Group") of which the Company or a Company
Subsidiary has been a member, have filed all Tax Returns and reports
required to be filed by them or a request for extensions to file such
returns or reports has been timely filed, granted and has not expired, and
all such filed returns and reports are complete and accurate in all
material respects in so far as they relate to the Company or any Company
Subsidiary;
(ii) The Company and each Company Subsidiary have paid or withheld
and remitted (or the Group has paid on their behalf) all Taxes shown due
on such Tax Returns;
14
(iii) The Company and each Company Subsidiary have withheld and paid
all Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party;
(iv) There are no pending or threatened audits, examinations,
investigations or other proceedings in respect of Taxes relating to the
Company, a Company Subsidiary or any Group of which the Company or a
Company Subsidiary has been a member. There is no dispute or claim
concerning any material income Tax of any Group for any taxable period
during which the Company or any Company Subsidiary was a member. Each
deficiency resulting from any completed audit or examination relating to
any amount of Taxes by any taxing authority or any concluded litigation
has been timely paid;
(v) There are no liens for Taxes upon the assets of the Company or
any Company Subsidiary;
(vi) Neither the Company nor any Company Subsidiary has any
liability for Taxes for any person (other than the Company and the Company
Subsidiary) under Treasury Regulation Section 1.1502-6 (or any comparable
provision of state, local or foreign law);
(vii) Neither the Company, nor any Company Subsidiary, nor any Group
of which the Company or any Company Subsidiary has been a member, has
waived any statute of limitation with respect to Taxes or agreed to any
extension of time with respect to any Tax assessment or deficiency;
(viii) The Company and each Company Subsidiary have been included in
the consolidated federal income Tax Return of the affiliated group of
which National City Corporation ("NCC") is the common parent;
(ix) Neither the Company nor any Company Subsidiary has executed or
entered into with the Internal Revenue Service ("IRS"), or any taxing
authority, a closing agreement pursuant to Section 7121 of the Code, or
any similar provision of law, that will require any increase in taxable
income or alternative minimum taxable income, or any reduction in Tax
credits, for the Company or any Company Subsidiary for any taxable period
ending after the Closing Date;
(x) Neither the Company nor any Company Subsidiary has agreed to
make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method,
and there is no application pending with any taxing authority requesting
permission for any changes in any accounting method of the Company or any
Company Subsidiary that will or would reasonably cause any such entity to
include any adjustment in taxable income for any taxable period (or
portion thereof) ending after the Closing Date.
15
(xi) In the past five years, neither the Company nor any Company
Subsidiary has distributed a corporation or has been distributed in a
transaction that is reported to qualify under Code Section 355.
(xii) As used in this Agreement, "Tax" means (A) any federal, state,
local and foreign Taxes, assessments and other governmental charges,
duties, impositions and liabilities, including Taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation,
and value-added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property Taxes, together with all
interest, penalties and additions imposed with respect to such amounts,
(B) any liability for the payment of any amounts of the type described in
clause (A) as a result of being a member of an affiliated, consolidated,
combined or unitary group for any period (including any liability for
Taxes as a member of a consolidated group under Treasury Regulation
1.1502-6) and (C) any liability for the payment of any amounts of the type
described in clauses (A) or (B) as a result of any express or implied
obligation to indemnify any other person. As used in this Agreement, "Tax
Returns" means all domestic and foreign (whether national, federal, state,
provincial, local or otherwise) Tax returns and reports required to be
filed by or with respect to the Company or any Company Subsidiary.
(j) Material Contracts. Section 3.1(j) of the Company Disclosure Letter
sets forth a complete and accurate list of every contract to which the Company
or any Company Subsidiary is a party to or bound by that (i) is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K
promulgated by the SEC); or (ii) limits or restricts the Company or any Company
Subsidiary or that would, after the Effective Time, limit the Parent or any of
its affiliates, or any successor thereto, from engaging or competing in any line
of business or in any geographic area (each contract described in this Section
3.1(j), a "Material Contract"). Each Material Contract is a valid and binding
agreement of the Company or a Company Subsidiary, as the case may be, and is in
full force and effect, and neither the Company nor any Company Subsidiary, nor
to the knowledge of the Company or any Company Subsidiary, any other party
thereto, is in default or breach (or is in violation of a condition that, with
the passage of time or the giving of notice, would cause such a default) in any
respect under the terms of any such Material Contract, except for such breaches
or defaults as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on the Company. In addition,
Section 3.1(j) of the Company Disclosure Letter also includes a list of referral
agreements between the Company and any other party.
(k) Labor Matters. Neither the Company nor any Company Subsidiary is a
party to or otherwise bound by any collective bargaining agreement or other
contract with a labor union or labor organization. Neither the Company nor any
Company Subsidiary is subject to a dispute, strike, or work stoppage or
proceedings asserting that such entity has committed an unfair labor practice,
except as would not, individually or in the aggregate, be reasonably expected to
result in a Material Adverse Effect on the Company. To the knowledge of the
Company, as of the date of this Agreement, there are no organizational efforts
with respect to the formation of a collective bargaining unit presently being
made or threatened, involving employees of the Company or any Company Subsidiary
except for such formation as would not,
16
individually or in the aggregate, be reasonably expected to result in a Material
Adverse Effect on the Company.
(l) Intellectual Property. The Company and each Company Subsidiary owns
or has a valid right to use all patents, trademarks, trade names, service marks,
domain names, copyrights, and any applications and registrations therefor,
technology, trade secrets, know-how, computer software and tangible and
intangible proprietary information and materials (collectively, "Intellectual
Property Rights") as are necessary in connection with the business of the
Company and any Company Subsidiary, taken as a whole, except where the failure
to own or have a valid right to use such Intellectual Property Right would not
reasonably be expected to result in a Material Adverse Effect on the Company.
Neither the Company nor any Company Subsidiary has infringed, misappropriated or
violated in any material respect any Intellectual Property Rights of any third
party, except where such infringement, misappropriation or violation would not
reasonably be expected to result in a Material Adverse Effect on the Company. To
the knowledge of the Company, no third party infringes, misappropriates or
violates any Intellectual Property Rights owned or exclusively licensed by or to
the Company or any Company Subsidiary, except where such infringement,
misappropriation or violation would not reasonably be expected to result in a
Material Adverse Effect on the Company.
(m) Voting Requirement. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock at the Company
Shareholders Meeting to adopt this Agreement, is the only vote of the holders of
any class or series of the Company's capital stock necessary to adopt and
approve this Agreement and the Merger and the transactions contemplated hereby
(the "Company Shareholder Approval").
(n) State Takeover Statutes. The Board of Directors of the Company has
taken all necessary action so that no "fair price," "moratorium," "control share
acquisition" or other anti-takeover law (each, a "Takeover Statute") (including
the control share acquisition provisions codified in Sections 1701.831 et seq.
of the OGCL and the moratorium provision codified in the Section 1704.01 et seq.
of the OGCL) is applicable to the Merger and the other transactions contemplated
by this Agreement. The Board of Directors of the Company has (i) duly and
validly approved this Agreement, (ii) determined that the transactions
contemplated by this Agreement are advisable and in the best interests of the
Company and its shareholders, (iii) unanimously resolved to recommend to such
shareholders that they vote in favor of the Merger (the "Company
Recommendation") and (iv) taken all corporate action required to be taken by the
Board of Directors of the Company for the consummation of the transactions
contemplated by this Agreement.
(o) Brokers. Except for Morgan Stanley & Co. Incorporated, no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
(p) Fairness Opinion. The Board of Directors of the Company has received
the opinion of Morgan Stanley & Co. Incorporated, subject to the qualifications
set forth therein, to the effect that, as of the date of such opinion, the
Merger Consideration to be received by the
17
holders of shares of Company Common Stock pursuant to this Agreement is fair,
from a financial point of view, to such holders other than NCC.
(q) Environmental Matters. Except for matters that would not reasonably
be expected to result in a Material Adverse Effect on the Company: (i) the
Company and the Company Subsidiaries are in compliance with all applicable
Environmental Laws; (ii) to the knowledge of the Company, no property currently
owned or operated by the Company or any of the Company Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) is
contaminated with any Hazardous Substance, which contamination would reasonably
be expected to require remediation by the Company or any of the Company
Subsidiaries pursuant to any Environmental Law; (iii) to the knowledge of the
Company, no property formerly owned or operated by the Company or any of the
Company Subsidiaries was contaminated with any Hazardous Substance during or
prior to such period of ownership or operation, which contamination would
reasonably be expected to require remediation by the Company or any of the
Company Subsidiaries pursuant to any Environmental Law; (iv) to the knowledge of
the Company, neither the Company nor any of the Company Subsidiaries is liable
for any Hazardous Substance disposal or contamination on any third party
property; (v) neither the Company nor any of the Company Subsidiaries has
received any written notice, demand, letter, claim or request for information
alleging that the Company or any of the Company Subsidiaries may be in violation
of, or subject to, liability under any Environmental Law; (vi) neither the
Company nor any of the Company Subsidiaries is subject to any written order,
decree, injunction or indemnity with any Governmental Entity or any third party
relating to liability under any Environmental Law or relating to Hazardous
Substances; and (vii) to the knowledge of the Company, there are no other
circumstances or conditions involving the Company or any of the Company
Subsidiaries that would reasonably be expected to result in any claim,
liability, investigation, cost or restriction on the ownership, use, or transfer
of any property pursuant to any Environmental Law. As used in this Agreement,
the term "Environmental Law" means any federal, state, local or foreign statute,
law, regulation, order, decree, permit, authorization, common law or legally
binding agency requirement relating to: (i) the protection, investigation or
restoration of the environment, health, safety or natural resources, (ii) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (iii) noise, odor, indoor air, employee exposure,
wetlands, pollution, contamination or any injury or threat of injury to persons
or property relating to any Hazardous Substance. As used in this Agreement, the
term "Hazardous Substance" means (i) any substance that is listed, classified,
regulated or for which liability is imposed pursuant to any Environmental Law;
(ii) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
material or radon; and (iii) any other substance that is the subject of
regulatory action by any Governmental Entity in connection with any
Environmental Law.
(r) Employment Agreements. Except as set forth in Section 3.1(r) of the
Company Disclosure Letter, there exist no written or oral employment,
consulting, noncompetition, severance, retirement, parachute, or indemnification
agreements between the Company or any Company Subsidiary and any current or
former officer, director, employee or agent of the Company or any Company
Subsidiary. The Company has made available to Parent prior to the execution of
this Agreement true and complete signed copies of each such agreement.
18
(s) Payments Regarding NCC. Except as set forth in Section 3.1(s) of the
Company Disclosure Letter, there exists no arrangement pursuant to which any
officer or employee of NCC is, or may become entitled to any compensation from
the Company or benefit under an employment, consulting, noncompetition,
severance, retirement, parachute, or indemnification agreement or arrangement
with the Company or any other Company Benefit Plan. Except as set forth in
Section 3.1(s) of the Company Disclosure Letter, there are no, nor will there be
at the Effective Time any, amounts owing from the Company or any Company
Subsidiary to NCC or any of its Affiliates.
(t) UAL Transaction Agreements. Section 3.1(t) of the Company Disclosure
Letter contains a complete list of all agreements between the Company or any
Company Subsidiary, on the one hand, and any third party, on the other hand,
that deals with or relates to the provision of authorization, processing,
settlement, servicing, payment or other related activities with respect to debit
cards and credit cards honored by United Air Lines, Inc. (the "UAL Agreements").
Complete copies of the UAL Agreements have been made available to Parent.
Section 3.2 Representations and Warranties of Parent and Merger Sub.
Except as disclosed in the Parent SEC Documents filed with the SEC (it being
understood that any matter set forth in the Parent SEC Documents shall be deemed
to qualify any representation or warranty in this Article III only to the extent
that the description of such matter in the Parent SEC Documents would be
reasonably inferred to be a qualification with respect to such representation or
warranty) or as otherwise set forth in the parent disclosure letter delivered by
Parent to the Company prior to the execution of this Agreement (the "Parent
Disclosure Letter"), each of Parent and Merger Sub hereby represents and
warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. Parent is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, and has the requisite corporate power and authority to carry on its
business as now being conducted. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio and
has the requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Merger Sub is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing, individually
or in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect on Parent or Merger Sub. Parent has made available to the Company
prior to the execution of this Agreement complete and correct copies of its
certificate of incorporation and bylaws and the articles of incorporation and
code of regulations of Merger Sub, each as amended to date.
(b) Authority; Noncontravention. Each of Parent and Merger Sub has all
requisite corporate power and authority to enter into this Agreement, and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly executed and delivered by each of Parent
19
and Merger Sub, and, assuming the due authorization, execution and delivery by
the Company, constitutes the legal, valid and binding obligation of each of
Parent and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
generally affecting the rights of creditors and subject to general equity
principles. The execution and delivery of this Agreement by Parent and Merger
Sub does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement by Parent and
Merger Sub will not conflict with the certificate of incorporation or by-laws
(or comparable organizational documents) of Parent or Merger Sub. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any Governmental Entity is required by
Parent or Merger Sub in connection with the execution and delivery of this
Agreement by Parent or Merger Sub or the consummation by Parent and Merger Sub
of the transactions contemplated hereby, except for: (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Ohio and
appropriate documents with the relevant authorities of other states in which
Merger Sub is qualified to do business and such filings with Governmental
Entities to satisfy the requirements of state securities or "blue sky" laws;
(ii) the filing of a premerger notification and report form by Parent under the
HSR Act; (iii) any filings required under the Foreign Antitrust Laws; (iv) the
filings, reports, registrations, notices, consents, approvals or authorizations
required to be made by the NYSE and the Exchange Act; and (v) such consents,
approvals, orders, authorizations, actions, registrations, declarations or
filings the failure of which to be made or obtained (as applicable),
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect on Parent or Merger Sub.
(c) Information Supplied. None of the information supplied or to
be supplied by or on behalf of Parent or Merger Sub specifically for inclusion
or incorporation by reference in the Proxy Statement will, at the date it is
first mailed to the Company shareholders or at the time of the Company
Shareholders Meeting contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
(d) Litigation. As of the date of this Agreement, there is no
investigation by a Governmental Entity or litigation, arbitration, or
administrative proceeding pending against or, to the knowledge of Parent,
threatened against Parent or Merger Sub as of the date of this Agreement that
would reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with the consummation of the transactions
contemplated by this Agreement.
(e) Financial Capability. Parent and Merger Sub, will have
available at the Effective Time sufficient funds to enable Parent and Merger Sub
to pay in full the Merger Consideration, the Option Consideration and all fees
and expenses payable by Parent and Merger Sub in connection with this Agreement
and the transactions contemplated thereby.
(f) Brokers. Except for consultants paid for by Parent, no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub.
20
(g) Merger Sub. As of the date of this Agreement, the authorized
capital stock of Merger Sub consists of 100 shares of common stock, par value
$0.01 per share, all of which are validly issued and outstanding. All of the
outstanding capital stock of Merger Sub is and at the Effect Time will be, owned
by Parent or a direct or indirect subsidiary of Parent. Merger Sub was formed
solely for the purpose of effecting the Merger and has not engaged in any
business activities or conducted any operations other than in connection with
the Merger. Except for obligations or liabilities incurred in connection with
its incorporation or organization, and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement and the transactions
contemplated hereby and thereby, Merger Sub has not incurred, directly or
indirectly through any subsidiary, any obligations or liabilities or entered
into any agreement or arrangements with any person.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business.
(a) Conduct of Business by the Company. Except as set forth on
Section 4.1(a) of the Company Disclosure Letter, or as
otherwise contemplated by this Agreement, during the period
from the date of this Agreement to the Effective Time, the
Company shall, and shall cause the Company Subsidiaries to,
carry on their respective businesses in the ordinary course
consistent with past practice and, to the extent consistent
therewith, use reasonable best efforts to preserve intact
their current business organizations, use reasonable best
efforts to keep available the services of their current
officers and other key employees and preserve their
relationships with customers, suppliers, distributors, lessors
and other persons having business dealings with them. Without
limiting the generality of the foregoing (but subject to the
above exceptions), during the period from the date of this
Agreement to the Effective Time, the Company shall not, and
shall not permit any Company Subsidiary to, without the prior
written consent of Parent:
(i) (A) other than dividends and distributions by a direct
or indirect wholly owned Company Subsidiary to the Company or another
wholly owned Company Subsidiary, declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of its capital
stock, (B) split, combine or reclassify any of its capital stock, (C)
except pursuant to agreements entered into, or in existence on or prior to
the date of this Agreement (and previously disclosed to Parent), with
respect to the Company Stock Plans, purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of the Company
Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, or (D) enter into
any agreement with respect to the voting of its capital stock;
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, calls,
commitments, warrants or options to acquire, any such shares, voting
securities or convertible securities, other than the issuance of shares by
one Company Subsidiary to the Company or any other Company Subsidiary or
the
21
issuance of shares of Company Common Stock upon the exercise of
outstanding Company Stock Options under the Company Stock Plans or in
connection with other outstanding awards under the Company Stock Plans, in
each case, and in accordance with their present terms;
(iii) adopt or propose any amendment to its articles of
incorporation or code of regulations (or other comparable organizational
documents);
(iv) merge or consolidate the Company or any Company
Subsidiary with any other person, except for any such transactions solely
among wholly-owned Company Subsidiaries, or acquire by purchasing any
equity interest in or a portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire any
material amount of assets of any other person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business
consistent with past practice);
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets other than dispositions of properties and assets in the ordinary
course of business consistent with past practice or dispositions of such
properties and assets that, individually or in the aggregate, are not
material to the Company or any Company Subsidiary, and the granting of
Permitted Liens and Liens required under existing bank agreements;
(vi) except as required by law or as required by contracts or
plans entered into or in existence on or prior to the date of this
Agreement (and previously disclosed to Parent) and subject to Sections
4.1(a)(i) and (ii), (A) except for normal increases in salary and wages in
the ordinary course of business consistent with past practice, grant any
increase in the compensation, including, without limitation, bonuses and
incentives, or benefits payable or to become payable by the Company or any
Company Subsidiary to any current or former director, officer, employee or
consultant; (B) adopt, enter into, establish, make any new grants or award
of, or amend or otherwise increase, reprice or accelerate the payment or
vesting of the amounts, benefits or rights payable or accrued or to become
payable or accrued under any Company Benefit Plan; (C) enter into or amend
any employment, severance, change in control agreement or any similar
agreement or any collective bargaining agreement or, except as required in
accordance with the Company's severance policy in effect on the date of
this Agreement and previously provided to Parent, grant any severance or
termination pay to any officer, director, consultant or employee of the
Company or any Company Subsidiaries; (D) pay or award any pension,
retirement, allowance or other non-equity incentive awards, or other
employee or director benefit not required by any outstanding Company
Benefit Plan; (E) enter into any agreement, plan or arrangement that would
be required to be listed on Section 3.1(s) of the Company Disclosure
Letter; or (F) hire any employee at a compensation level expected to be
more than $200,000 per annum;
(vii) (A) amend, terminate, or waive any material right or
benefit under any Material Contract, other than in the ordinary course of
business, (B) enter into any contract that would have been a Material
Contract had it existed on the date of this
22
Agreement, (C) enter into any contract that would restrict or prevent,
after the Effective Time, Parent and its subsidiaries from engaging or
competing in any line of business or in any geographic area, (D) enter
into any contract that would restrict or prevent, after the Effective
Time, the Company or any of its subsidiaries from (1) engaging or
competing in any of Parent's businesses or in any geographic area or (2)
pricing, to the extent such contract contains a provision that restricts
pricing in any of Parent's businesses, and (E) enter into any contract
that is material that contains a change-of-control provision that would be
applicable to the Merger or the transactions contemplated by this
Agreement;
(viii) pay, discharge, compromise or settle any litigation or
other proceedings before a Governmental Entity for an amount in excess of
$1,000,000, individually or in the aggregate, or which would be reasonably
likely to have an adverse impact on the operations of the Company and the
Company Subsidiaries taken together as a whole;
(ix) pay, discharge, settle, compromise or satisfy any
material claims, liabilities or other obligations, other than in the
ordinary course of business consistent with past practice or in accordance
with their terms existing on the date hereof, or waive, release or assign
any material rights or claims other than in the ordinary course of
business consistent with past practice;
(x) implement or adopt any change in the accounting
principles or procedures used by it unless required by GAAP or by law;
(xi) prepare or file any Tax Return inconsistent in any
material respect with past practice or amend any Tax Returns except as
required by law or, except in the ordinary course of business and
consistent with past practice, make or rescind any express or deemed
election or settle or compromise any claim or action relating to Taxes, or
change any of its methods of accounting or of reporting income or
deductions for Tax purposes unless required by GAAP (or, if applicable
with respect to foreign subsidiaries, the relevant foreign generally
accepted accounting principles) or by law;
(xii) incur or modify any indebtedness for borrowed money or
guarantee such indebtedness of another person, or issue or sell any debt,
securities or warrants or other rights to acquire any debt security of the
Company or any Company Subsidiary; except for indebtedness for borrowed
money incurred in the ordinary course of business not to exceed $5,000,000
in the aggregate;
(xiii) make any loans, advances or capital contributions to
any other person (other than to the Company or any of its wholly owned
subsidiaries) other than in the ordinary course of business consistent
with past practice; or
(xiv) authorize, or commit or agree to take, any of the
foregoing actions; provided, however, that the limitations set forth in
this Section 4.1(a) do not apply to any transaction to which the only
parties are the Company and wholly owned subsidiaries of the Company.
23
(b) Other Actions. Except as required by law or permitted by this
Agreement, the Company and Parent shall not, and shall not permit any of their
respective subsidiaries to, voluntarily take any action that would reasonably be
expected to cause any of its representations and warranties herein to be untrue
or to result in any of the conditions to the Merger set forth in Article VI not
being satisfied.
Section 4.2 Acquisition Proposals.
(a) None of the Company, any Company Subsidiary or any of the
officers and directors of the Company or any Company Subsidiary shall, and the
Company shall cause its and the Company Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
("Representatives") retained by it or any Company Subsidiary) not to, directly
or indirectly, initiate, solicit or knowingly encourage or facilitate any
inquiries or the making of any proposal or offer with respect to (i) a merger,
reorganization, share exchange, consolidation or similar transaction involving
the Company, (ii) any purchase of an equity interest representing an amount
equal to or greater than a 5% voting or economic interest in the Company or
(iii) any purchase of assets, securities or ownership interests representing an
amount equal to or greater than 15% of the consolidated assets of the Company
and the Company Subsidiaries taken as a whole (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal").
(b) None of the Company, any of the Company Subsidiaries or any of
the officers and directors of the Company or the Company Subsidiaries shall, and
the Company shall cause its and the Company Subsidiaries' employees, agents and
Representatives not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
knowingly encourage or facilitate any effort or attempt to make or implement an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company or its Board of Directors from (i) complying
with its disclosure obligations under Rules 14d-9 and 14e-2 of the Exchange Act
with regard to an Acquisition Proposal and (ii) at any time prior to, but not
after, the time this Agreement is adopted by Company Shareholder Approval, (A)
providing information in response to a request therefor by a person who has made
an unsolicited bona fide written Acquisition Proposal that constitutes, or is
reasonably likely to result in, a transaction more favorable to the Company's
shareholders from a financial point of view than the transaction contemplated by
this Agreement, if the Board of Directors of the Company receives from the
person so requesting such information, an executed confidentiality agreement
containing provisions no more favorable to such person than those in the
Confidentiality Agreement; (B) engaging in any negotiations or discussions with
any person who has made an unsolicited bona fide written Acquisition Proposal
that constitutes, or is reasonably likely to result in, a transaction more
favorable to the Company's shareholders from a financial point of view than the
transaction contemplated by this Agreement, if the Board of Directors of the
Company receives from such person an executed confidentiality agreement
containing provisions no more favorable to such person than those in the
Confidentiality Agreement (other than standstill provisions); or (C)
recommending such an unsolicited bona fide written Acquisition Proposal to the
shareholders of the Company, if and only to the extent that, (x) in each such
case referred to in clause (A), (B) or (C) above, the Board of Directors of the
Company determines in good faith after consultation with outside legal counsel
that such action
24
is reasonably likely to be necessary in order for its directors to act in a
manner consistent with their respective fiduciary duties under applicable law,
and (y) in the case of clause (C) above, the Board of Directors of the Company
determines in good faith (after consultation with its financial advisor and
outside counsel) that such Acquisition Proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial and
regulatory aspects of the proposal, the likelihood of obtaining financing, and
the person making the proposal, and if consummated, would result in a
transaction more favorable to the Company's shareholders from a financial point
of view than the transaction contemplated by this Agreement taking into account
any change in proposal proposed by Parent and Parent shall have had written
notice of the Company's intention to take the action referred to in clause (C)
at least three business days prior to the taking of such action by the Company;
provided, however, that any more favorable Acquisition Proposal referred to in
clause (y) above must involve 50% rather than the 15% used in subsection (iii)
of the definition of Acquisition Proposal.
(c) The Company will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any person conducted
heretofore with respect to any Acquisition Proposal. The Company agrees that it
will take the necessary steps to promptly inform the individuals or entities
referred to in the first sentence of Section 4.2(a) of the obligations
undertaken in this Section 4.2. The Company agrees that it will notify Parent
promptly, but in any event within two business days if any such written
inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, it or any of its Representatives indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any proposals or offers and thereafter shall keep Parent informed
on a current basis, and, in any event, within 48 hours of any changes in the
status and terms of any such proposals or offers, including whether any such
proposal has been withdrawn or rejected. The Company also agrees to provide any
information to Parent that it is providing to another person pursuant to this
Section 4.2 at substantially the same time it provides it to such other person
and that it will promptly request each person that has heretofore executed a
confidentiality agreement in connection with its consideration of a transaction
with the Company to return all confidential information furnished prior to the
execution of this Agreement to or for the benefit of such person by or on behalf
of it or any of its Subsidiaries. The Company agrees promptly, but in any event,
within five days after the date of this Agreement, to request the return or
destruction of all information and materials provided prior to the date of this
Agreement by it, its affiliates or their respective Representatives with respect
to the consideration or making of any Acquisition Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Preparation of Proxy Statement; Shareholders Meeting.
(a) Proxy Statement. The Company shall use its reasonable best
efforts to prepare and file, as promptly as practicable after the date of this
Agreement, the Proxy Statement with the SEC and shall promptly notify Parent of
receipt of all comments of the SEC with respect to the Proxy Statement and of
any request by the SEC for any amendment or supplement
25
thereto or for additional information and shall promptly provide to Parent
copies of all correspondence between the Company and/or any of its
Representatives and the SEC with respect to the Proxy Statement. The Company
shall use its reasonable best efforts to promptly provide responses to the SEC
with respect to all comments received on the Proxy Statement and the Company
shall cause the definitive Proxy Statement to be mailed as promptly as
practicable, but in no event later than 5 business days after the date the SEC
staff advises it has no further comments thereon or that the Company may
commence mailing the Proxy Statement. Notwithstanding the foregoing, prior to
filing or mailing the Proxy Statement (or any amendment or supplement thereto)
or responding to any comments of the SEC with respect thereto, the Company (i)
shall provide Parent an opportunity to review and comment on such document or
response, (ii) shall include in such document or response all comments
reasonably proposed by Parent and (iii) shall not file or mail such document or
respond to the SEC prior to receiving Parent's approval, which approval shall
not be unreasonably withheld or delayed.
(b) The Company agrees that as to itself and each Company
Subsidiary, (x) the Proxy Statement and any amendment or supplement thereto will
comply in all material respects with the applicable provisions of the Exchange
Act and the rules and regulations promulgated thereunder by the SEC and (y) the
information supplied by or on behalf of the Company for inclusion or
incorporation by reference in the Proxy Statement shall not, on the date the
Proxy Statement is first mailed to shareholders of the Company or at the time of
the Company Shareholders Meeting, contain any untrue statement of a material
fact, or omit to state any material fact necessary in order to make the
statements made in the Proxy Statement, in light of the circumstances under
which they are made, not misleading.
(c) Company Shareholders Meeting. The Company shall, as promptly
as practicable following the date of this Agreement, convene and hold, a meeting
of its shareholders (the "Company Shareholders Meeting") in accordance with
applicable law, the Company's articles of incorporation and the Company's code
of regulations for the purpose of obtaining the Company Shareholder Approval. To
the extent necessary to act in a manner consistent with the fiduciary duties of
the Board of Directors under applicable law, the Company Recommendation shall be
included in the Proxy Statement and the Board of Directors of the Company shall
use its reasonable best efforts to solicit and obtain such Company Shareholder
Approval. In the event that subsequent to the date of this Agreement, the Board
of Directors of the Company determines after consultation with outside counsel
that it is necessary to withdraw, modify, or qualify the Company Recommendation
in a manner adverse to Parent in order to act in a manner consistent with its
fiduciary duties under applicable law, the Board of Directors may so withdraw,
modify or qualify the Company Recommendation, provided, however, unless this
Agreement is theretofore terminated, the Company shall nevertheless submit this
Agreement to the holders of shares of Company Common Stock for adoption at the
Company Shareholders Meeting.
Section 5.2 Access to Information; Confidentiality. To the extent
permitted by applicable law and subject to the Agreement, dated April 23, 2004,
between the Company and Parent (the "Confidentiality Agreement"), the Company
shall, and shall cause each Company Subsidiary to, upon reasonable notice and to
the extent permitted under applicable law and the provisions of agreements to
which the Company or a Company Subsidiary, as the case may be, is a party,
afford to Parent and its Representatives, reasonable access, during normal
business hours during the period prior to the Effective Time, to its properties,
books, contracts, commitments,
26
personnel and records and other information concerning its business, properties
and personnel as Parent may reasonably request. Parent shall hold, and shall
cause its Representatives and affiliates to hold, any nonpublic information in
accordance with the terms of the Confidentiality Agreement. Any investigation
pursuant to this Section 5.2 shall be conducted in such a manner as not to
interfere unreasonably with the conduct of the business of the Company or any
Company Subsidiary; provided, however, that the foregoing shall not require the
Company to permit any inspection, or to disclose any information, that in the
reasonable judgment of the Company would violate any of its obligations with
respect to confidentiality if the Company shall have used reasonable efforts
(which shall not include the expenditure of funds) to obtain the consent of the
third party to such disclosure.
Section 5.3 Reasonable Best Efforts; Cooperation.
(a) Reasonable Best Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement and to obtain satisfaction or waiver
of the conditions precedent to the Merger, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
and the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. The Company further agrees to,
and shall direct the Company Subsidiaries to, assist in obtaining customer and
other consents required as a result of this Agreement and the transactions
contemplated hereby. Subject to applicable law, the Company further agrees to,
and shall direct the Company Subsidiaries to, reasonably assist and cooperate
with Parent in any integration planning to take effect after consummation of the
Merger; provided that any such integration planning takes place during normal
business hours and does not unreasonably interrupt the operation of the business
of the Company or the Company Subsidiaries as presently conducted. In addition,
the Company further agrees to cooperate with Parent in connection with the
implementation and assessment of internal controls over financial reporting to
assist Parent with compliance with Section 404 of Sarbanes-Oxley and to take
such other actions reasonably requested by Parent to further compliance with
Sarbanes-Oxley and the rules and regulations promulgated thereunder by the SEC
and NYSE; provided that any such cooperation takes place during normal business
hours and does not unreasonably interrupt the operation of the business of the
Company as presently conducted. Nothing set forth in this Section 5.3(a) will
limit or affect actions permitted to be taken pursuant to Section 4.2.
(b) Compliance with HSR Act. Parent and the Company shall (i) make
the filings required of such party under the HSR Act with respect to the Merger
and the other
27
transactions contemplated by this Agreement within ten days after the date of
this Agreement, (ii) comply at the earliest practicable date with any request
under the HSR Act for additional information, documents or other materials
received by such party from the Federal Trade Commission or the Department of
Justice or any other Governmental Entity in respect of such filings or the
Merger and the other transactions contemplated by this Agreement, and (iii)
cooperate with the other party in connection with making any filing under the
HSR Act and in connection with any filings, conferences or other submissions
related to resolving any investigation or other inquiry by any such Governmental
Entity under the HSR Act with respect to the Merger and the other transactions
contemplated by this Agreement. Subject to applicable laws relating to the
exchange of information, Parent and the Company shall have the right to review
in advance, and to the extent practicable each will consult the other on, all
the information relating to Parent or the Company, as the case may be, and any
of their respective subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party and/or any Governmental Entity
in connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and Parent
shall act reasonably and as promptly as practicable. Each of Parent and the
Company will, and will cause each of their subsidiaries to, use its reasonable
best efforts to obtain (and will cooperate with each other in obtaining) the
termination of all waiting periods under the HSR Act and not to extend any
waiting period under the HSR Act. Prior to the termination of this Agreement,
each party shall be required to prosecute, cooperate in, and defend against any
litigation instituted by the Federal Trade Commission or the Department of
Justice or any other Governmental Entity which seeks to restrain or prohibit the
consummation of the Merger or which seeks to impose material limitations on the
ability of Parent, the Surviving Corporation or any of their respective
affiliates or subsidiaries to acquire, operate or hold, or to require Parent,
Surviving Corporation or any of their respective affiliates or subsidiaries to
dispose of or hold separate, any material portion of their assets or business or
the Company's assets or business after the Closing Date.
Section 5.4 Employee Benefits
(a) Parent agrees that it shall cause the Surviving Corporation to
provide compensation and benefits that are substantially comparable in the
aggregate to the benefits currently provided to similarly situated employees of
Parent or its subsidiaries, as applicable. Notwithstanding the foregoing,
nothing contained herein shall obligate Parent, the Surviving Corporation or any
affiliate of any of them to (x) maintain any particular Company compensation or
benefit plan, (y) grant or issue any equity or equity-based awards or (z) retain
the employment of any person employed by the Company or any Company Subsidiary
immediately prior to the Effective Time (the "Employees").
(b) For all purposes under the employee benefit plans of Parent
and its affiliates providing benefits to any Employees after the Effective Time
(the "New Plans"), each Employee shall receive credit for his or her service
with the Company and its affiliates before the Effective Time (including
predecessor or acquired entities or any other entities for which the Company and
its affiliates have given credit for prior service), for purposes of
eligibility, vesting and benefit accrual (but not (i) for purposes of
eligibility for subsidized early retirement benefits, (ii) for purposes of
benefit accrual under defined benefit pension plans and (iii) for any new
program for which credit for benefit accrual for service prior to the effective
date of such
28
program is not given to similarly situated employees of Parent other than the
Employees) to the same extent as such Employee was entitled, before the
Effective Time, to credit for such service under any similar or comparable
Company Benefit Plans (except to the extent such credit would result in a
duplication of accrual of benefits). In addition, and without limiting the
generality of the foregoing: (x) at the Effective Time, each Employee
immediately shall be eligible to participate, without any waiting time, in any
and all New Plans to the extent coverage under such New Plan replaces coverage
under a similar or comparable Company Benefit Plans in which such Employee
participated immediately before the Effective Time (such plans, collectively,
the "Old Plans"); and (y) for purposes of each New Plan providing medical,
dental, pharmaceutical and/or vision benefits to any Employee, Parent shall
cause all pre-existing condition exclusions and actively-at-work requirements of
such New Plan to be waived for such Employee and his or her covered dependents
to the extent such pre-existing condition exclusions and actively-at-work
requirements were inapplicable to or had been satisfied by such Employee and his
or her covered dependents immediately prior to the Effective Time under the
relevant Old Plan, and Parent shall cause any eligible expenses incurred by such
Employee and his or her covered dependents during the portion of the plan year
of the Old Plan ending on the date such Employee's participation in the
corresponding New Plan begins to be taken into account under such New Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such Employee and his or her covered dependents for
the applicable plan year as if such amounts had been paid in accordance with
such New Plan.
Section 5.5 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including any such claim, action, suit, proceeding or investigation in which any
individual who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director, officer or
employee of the Company or any of the Company Subsidiaries or who is or was
serving at the request of the Company or any of the Company Subsidiaries as a
director, officer, employee or agent of another person (the "Indemnified
Parties"), is, or is threatened to be, made a party based in whole or in part
on, or arising in whole or in part out of, or pertaining to (i) the fact that
such individual is or was a director, officer or employee of the Company or any
Company Subsidiary or (ii) this Agreement or any of the transactions
contemplated by this Agreement, whether asserted or arising before the Effective
Time or asserted within six years after the Effective Time, the parties will
cooperate and use their reasonable best efforts to defend against and respond
thereto. For a period of six years after the Effective Time, Parent will
indemnify and hold harmless, as and to the fullest extent provided by applicable
law, the articles of incorporation and code of regulations of the Company and
any agreement specifically listed in Section 5.5 of the Company Disclosure
Letter, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reimbursement for reasonable fees and
expenses incurred in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party as provided by the
articles of incorporation and code of regulations of the Company and any
agreement set forth in Section 5.5 of the Company Disclosure Letter), judgments,
fines and amounts paid in settlement in connection with any such threatened or
actual claim, action, suit, proceeding or investigation.
29
(b) Parent will use its reasonable best efforts to cause the
individuals serving as officers and directors of the Company or any of the
Company Subsidiaries immediately prior to the Effective Time to be covered for
six annual periods after the Effective Time by directors' and officers'
liability insurance not substantially less favorable to the insureds than the
policy maintained by the Company immediately prior to the Effective Time
(provided that Parent may substitute therefor policies, including so-called
"tail" policies, of at least the same coverage and amounts containing terms and
conditions that are not less advantageous than such policy) with respect to acts
or omissions occurring prior to the Effective Time that were committed by such
officers and directors in their capacity as such.
(c) The provisions of this Section 5.5 will survive the Effective
Time and are intended to be for the benefit of, and will be enforceable by, each
Indemnified Party and his or her heirs and representatives.
(d) The rights of the Indemnified Parties and their heirs and
legal representatives under this Section 5.5 shall be in addition to any rights
such Indemnified Parties may have under the articles of incorporation or code of
regulations of the Company or any Company Subsidiary, or under any other
applicable laws.
(e) The obligations of Parent and the Surviving Corporation under
this Section 5.5 shall not be terminated or modified by Parent or the Surviving
Corporation in a manner as to adversely affect any Indemnified Party to whom
this Section 5.5 applies without the consent of the affected Indemnified Party.
In the event that either Parent or the Surviving Corporation or any of their
respective successors or assigns (A) consolidates with or merges into any other
Person or (B) transfers at least 50% of its assets or property to any Person,
then and in each such case, proper provision shall be made so that the
applicable successors and assigns or transferees assume the obligations set
forth in this Section 5.5.
Section 5.6 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
announcement with respect to the transactions contemplated by this Agreement,
including the Merger. The parties will provide each other the opportunity to
review and comment upon any press release or other public announcement or
statement with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or other public
announcement or statement prior to such consultation, except as may be required
by applicable law, fiduciary duties, court process or by obligations pursuant to
any listing agreement with any national securities exchange.
30
Section 5.7 Section 16(b).
(a) Approval of Dispositions by Company's Board. Prior to the
Effective Time, the Company shall take all steps reasonably necessary to cause
the transactions contemplated hereby and any other dispositions of equity
securities of the Company (including derivative securities), in connection with
this Agreement by each individual who is subject to the reporting requirements
of Section 16(a) of the Exchange Act to be approved by Company's Board of
Directors or a committee of two or more Non-Employee Directors of the Company
(as such term is defined in Rule 16b-3 promulgated under the Exchange Act).
(b) Content of Approval. Such approval shall specify: (i) the name
of each officer or director, (ii) the number of securities to be disposed of for
each named person, and (iii) that the approval is granted for purposes of
exempting the transaction under Rule 16b-3 of the Exchange Act.
Section 5.8 Tax-Sharing Agreement. Any Tax-sharing agreement between NCC
and the Company or any Company Subsidiary will be terminated as of the Closing
Date and shall have no further effect for any taxable year (whether the current
year, a future year, or a past year).
Section 5.9 Parent Acknowledgement. Parent acknowledges that, after the
Effective Time, the Surviving Corporation and all of its subsidiaries shall
remain subject to the terms of that certain Noncompetition Agreement dated as of
July 11, 2001 by and among Affiliate Computer Services, Inc., ACS Data Entry,
Inc., ACS Business Process Solutions, Inc., ACS Business Process Solutions de
Mexico., S.A. de C.V., the Company, National Processing Company, LLC, NPC
Internacional S.A. de C.V. and NPC International (Barbados) Holdings Limited
(the "Noncompetition Agreement"). As required by Section 20 of the
Noncompetition Agreement, Parent agrees that it is bound by the provisions of
the Noncompetition Agreement but only with respect to the business, company or
assets acquired by it pursuant to the Merger and not as to any other business,
company or assets now or hereafter owned or operated by Parent or its
subsidiaries (other than, after the Effective Time, the Surviving Corporation
and all of its subsidiaries).
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. The Company Shareholder Approval shall
have been obtained in accordance with applicable law and the articles of
incorporation and code of regulations of the Company, and the Company shall
deliver evidence (i) of that approval and (ii) that holders of less than 10% of
the shares of the Company's capital stock issued and outstanding immediately
before the Closing are eligible to effectively assert their dissenters' rights
pursuant to Section 1701.85 of the OGCL.
31
(b) Governmental and Regulatory Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental Entity required of
Parent, Merger Sub, the Company or any Company Subsidiary to consummate the
Merger, the failure of which to be obtained or taken is reasonably expected to
materially impair the ability of the parties to consummate the Merger, must have
been obtained.
(c) HSR Act. The waiting period (including any extension thereof)
applicable to the consummation of the Merger under the HSR Act must have expired
or been terminated.
(d) No Injunctions or Restraints. No judgment, order, decree,
statute, law, ordinance, rule or regulation, entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the Merger;
provided, however, that each of the parties shall have used its reasonable best
efforts to prevent the entry of any such Restraints and to appeal as promptly as
possible any such Restraints that may be entered.
Section 6.2 Conditions to Obligations of Parent and Merger Sub. The
obligation of Parent to effect the Merger is further subject to satisfaction or
waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth herein must be true and correct in all
respects (without giving effect to any materiality or material adverse effect
qualifications contained therein) both when made and on and as of the Closing
Date, as though made on and as of the Closing Date (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct would not reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect on the Company.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all agreements and obligations required
to be performed by it under this Agreement at or prior to the Closing Date.
(c) Officer's Certificate. The Company must have furnished Parent
with a certificate dated the Closing Date signed on its behalf by an executive
officer to the effect that the conditions set forth in Section 6.2(a) and
Section 6.2(b) have been satisfied.
(d) Commercial Agreements. The Company shall have delivered to
Parent executed copies of each of the commercial agreements between the Company
and NCC or an affiliate of NCC identified in Section 6.2(d) of the Company
Disclosure Letter in a form reasonably satisfactory to Parent.
(e) Consents Under Agreements. The Company shall have obtained the
consent or approval of each person whose consent or approval is required under
any Material Contract to which the Company or any Company Subsidiary is a party.
(f) Settlement Arrangement for the UAL Agreement. The Parent shall
have received the releases, guarantees and other agreements set forth in
Schedule 6.2(f) of the
32
Company Disclosure Letter or otherwise reasonably requested by Parent,
containing terms satisfactory to Parent, evidencing the allocation of liability
pursuant to the UAL Agreement; provided, however, that Parent shall have used
its reasonable best efforts to satisfy this condition, but in no event shall
Parent be required to make any payment with respect thereto.
(g) Consent Regarding ABN AMRO Merchant Services, LLC. The Company
shall have obtained a waiver relinquishing the rights of ABN AMRO Merchant
Services, LLC and Michigan National Bank to purchase the Company's 70% ownership
interest in ABN AMRO Merchant Services, LLC and a waiver by all applicable
parties of any restriction against competition contained in the applicable
operating agreement affecting Parent or the Company after the Effective Time;
provided, however, that Parent shall have used its reasonable best efforts to
satisfy this condition, but in no event shall Parent be required to make any
payment with respect thereto.
(h) No Litigation. There shall be no claim, litigation,
arbitration or administrative proceeding brought by a third-party seeking any
injunction, writ, order, ruling, judgment, decision or decree or similar legal
or arbitral adjudication seeking to limit Parent's or its Subsidiaries' business
activities as a result of the consummation of the Merger or any of the
transactions contemplated by this Agreement that has not been settled on terms
satisfactory to Parent.
Section 6.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth herein must be true and correct in
all respects (without giving effect to any materiality or material adverse
effect qualifications contained therein) both when made and on and as of the
Closing Date, as though made on and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct would not reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect on Parent or Merger Sub.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
agreements and obligations required to be performed by it under this Agreement
at or prior to the Closing Date.
(c) Officer's Certificate. Each of Parent and Merger Sub must have
furnished the Company with a certificate dated the Closing Date signed on its
behalf by an executive officer to the effect that the conditions set forth in
Section 6.3(a) and Section 6.3(b) have been satisfied.
33
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination.
(a) Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after the
Company Shareholder Approval, by mutual written consent of Parent and the
Company.
(b) Termination by Parent or the Company. This Agreement may be
terminated at any time prior to the Effective Time, by action of either Parent
or the Company:
(i) if the Merger shall not have been consummated by
November 30, 2004 whether such date is before or after the Company
Shareholder Approval (the "Termination Date"); provided, however, that the
right to terminate this Agreement pursuant to this Section 7.1(b)(i) is
not available to any party whose breach of any provision of this Agreement
results in or causes the failure of the Merger to be consummated by such
time;
(ii) if the Company Shareholders Meeting (including any
adjournment or postponement thereof) shall have concluded without the
Company Shareholder Approval having been obtained; or
(iii) if any Restraint having the effect set forth in Section
6.1(d) shall be in effect and shall have become final and nonappealable;
provided, however, that the right to terminate this Agreement pursuant to
this Section 7.1(b)(iii) is not available to any party whose breach of any
provision of this Agreement results in or causes such Restraint or the
failure of such Restraint to be removed.
(c) Termination by Parent. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Shareholder Approval, by action of Parent:
(i) if any of the conditions set forth in Section 6.1 or
Section 6.2 shall have become incapable of being fulfilled at any time on
or before the Termination Date and shall not have been waived by Parent,
and Parent shall have provided the Company with written notice of its
intent to terminate this Agreement pursuant to this clause (i) at least
three business days prior to the effective date of such termination, if
the inability to fulfill the condition is not due to the failure of Parent
or Merger Sub to comply in all respects with its obligations under this
Agreement;
(ii) if the Board of Directors of the Company shall have
withdrawn, modified or qualified the Company Recommendation in a manner
adverse to Parent; or
(iii) if there shall have occurred any change, effect, event,
occurrence or state of facts that results in a Material Adverse Effect on
the Company.
34
(d) Termination by the Company. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after the Company
Shareholder Approval by the Company,
(i) if any of the conditions set forth in Section 6.1 or
Section 6.3 shall have become incapable of being fulfilled at any time on
or before the Termination Date and shall not have been waived by the
Company, and the Company shall have provided Parent with written notice of
its intent to terminate this Agreement pursuant to this clause (i) at
least three business days prior to the effective date of such termination,
if the inability to fulfill the condition is not due to the failure of the
Company to comply in all respects with its obligations under this
Agreement; or
(ii) if the Board of Directors of the Company shall have
withdrawn, modified or qualified the Company Recommendation.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement will forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Merger Sub or the Company, other than the
provisions of this Section 7.2, Section 7.5 and Article VIII, which provisions
survive such termination; provided, however, that nothing herein will relieve
any party from any liability for any willful or intentional breach by such party
of this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the parties at any
time before or after the Company Shareholder Approval; provided, however, that,
after the Company Shareholder Approval, there is not to be made any amendment
that by law requires further approval by the shareholders of the Company without
further approval of such shareholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
Section 7.4 Extension; Waiver. At any time prior to the Effective Time,
Parent and Merger Sub, on the one hand, and the Company, on the other hand, may
(a) extend the time for the performance of any of the obligations or other acts
of the other party or parties (as the case may be), (b) waive any inaccuracies
in the representations and warranties of the other party or parties (as the case
may be) contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 7.3, waive compliance by
the other party or parties (as the case may be) with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver will be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise will not
constitute a waiver of such rights.
Section 7.5 Fees and Expenses.
(a) Except as set forth in Section 7.5(b), all fees and expenses
incurred in connection with the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees and expenses,
whether or not the Merger is consummated.
35
(b) If (i) the Company shall terminate this Agreement pursuant to
Section 7.1(d)(ii), or (ii) the Company shall have failed to hold the Company
Shareholder Meeting by November 19, 2004 for the purpose of obtaining the
Company Shareholder Approval and Parent terminates the Agreement pursuant to
Section 7.1(c)(i), then the Company shall pay to Parent, by wire transfer of
immediately available funds, the amount of $50,000,000 (the "Termination Fee")
on the date of such termination.
(c) The Company and Parent acknowledge that the agreements
contained in Section 7.5(b) are an integral part of the transaction contemplated
in this Agreement, and that, without these agreements, Parent would not enter
into this Agreement; accordingly, if the Company fails to promptly pay the
Termination Fee, and, in order to obtain such payment, Parent commences a suit
that results in a judgment against the Company for any of the Termination Fee,
the Company shall pay to Parent its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest on the amount of the
Termination Fee at the prime rate of Parent in effect on the date such payment
was required to be made.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants and agreements in this Agreement will
survive the Effective Time, except the covenants and agreements contained in
Articles II and VIII and Sections 5.5 and 5.9, each of which will survive in
accordance with its terms.
Section 8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed) or sent by a nationally
recognized overnight courier service (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as is
specified by like notice):
if to the Company, to:
National Processing, Inc.
1900 East Ninth Street
Cleveland, Ohio 44114
Telecopy No.: 216-222-7084
Attention: Jon Gorney
with a copy (which shall not constitute notice) to:
Jones Day
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telecopy No.: (216) 579-0212
Attention: Lyle G. Ganske
36
if to Parent, to:
Bank of America Corporation
100 North Tryon Street
NC1-007-20-01
Charlotte, North Carolina 28255
Telecopy No.: (704) 386-0181
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Helms Mulliss & Wicker, PLLC
201 North Tryon Street
Charlotte, North Carolina 28202
Telecopy No.: (704) 343-2300
Attention: Boyd C. Campbell
if to Merger Sub, to:
Monarch Acquisition, Inc.
c/o: Bank of America Corporation
100 North Tryon Street
NC1-007-20-01
Charlotte, North Carolina 28255
Telecopy No.: (704) 386-0181
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Helms Mulliss & Wicker, PLLC
201 North Tryon Street
Charlotte, North Carolina 28202
Telecopy No.: (704) 343-2300
Attention: Boyd C. Campbell
Section 8.3 Interpretation. When a reference is made in this Agreement to
an Article, Section or Exhibit, such reference is to an Article or Section of,
or an Exhibit to, this Agreement unless otherwise indicated. The table of
contents, table of defined terms and headings contained in this Agreement are
for reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement. In the event of an ambiguity or question of
intent or interpretation, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement. No provision of this Agreement will be interpreted in favor
of, or against any of the parties hereto by reason of the extent to which any
such party or its counsel participated in the drafting thereof or by reason of
the extent to which any such provision is inconsistent with any prior draft
hereof or thereof. Whenever the words "include," "includes" or "including" are
used in this Agreement, they will be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder" and
37
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement. All terms
defined in this Agreement will have the meanings ascribed to them herein when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
statute defined or referred to herein means such statute as is from time to time
amended or supplemented, including by succession of comparable successor
statutes. For purposes of this Agreement, (a) "person" means an individual,
corporation, partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity (including its permitted
successors and assigns), (b) "knowledge" of any person that is not an individual
means the actual knowledge of such person's directors and executive officers,
(c) "affiliate" of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person, where "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of voting
securities, by contract or otherwise, (d) "Liens" means all pledges, claims,
liens, options, charges, easements, restrictions, adverse claims, covenants,
conditions of record, encroachments, encumbrances and security interests of any
kind or nature whatsoever, (e) a "subsidiary" of any person means another
person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interest of which) is owned directly or
indirectly by such first person, (f) all dollar amounts are expressed in United
States funds, and (g) "Permitted Liens" means (i) Liens for Taxes or
governmental assessments or similar obligations the payment of which is not yet
due and payable or delinquent, or for Taxes the validity of which are being
contested in good faith by appropriate proceedings, (ii) statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics, materialmen, and other
similar Liens imposed by applicable law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith, (iii)
Liens relating to deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance, and other types of social
security, and (iv) Liens securing executory obligations under any lease,
regardless of whether it constitutes an "operating lease" or a "capitalized
lease" under GAAP.
Section 8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Confidentiality Agreement (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement and (b) except
for the provisions of Section 5.5, are not intended to confer upon any person
other than the parties any rights or remedies.
38
Section 8.6 Governing Law. This Agreement is to be governed by, and
construed in accordance with, the laws of the State of Ohio, regardless of the
laws that might otherwise govern under applicable principles of conflict of laws
thereof.
Section 8.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of each other party; provided, however, that Parent may
assign Merger Sub's rights, interests and obligations, in whole or in part,
under this Agreement to Parent or any other affiliate of Parent. Any assignment
in violation of this Section 8.7 will be void and of no effect. Subject to the
preceding two sentences, this Agreement is binding upon, inures to the benefit
of, and is enforceable by, the parties and their respective successors and
assigns.
Section 8.8 Consent to Jurisdiction. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of the federal courts
located in the State of Ohio in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any other court.
Section 8.9 Specific Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. The parties accordingly agree that the parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any federal court
located in the State of Ohio, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 8.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in a mutually acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
Section 8.11 Disclosure Letters. Matters reflected in the Company
Disclosure Letter and the Parent Disclosure Letter are not necessarily limited
to matters required by this Agreement to be reflected in such Disclosure
Letters. Such additional matters may be set forth for informational purposes, do
not necessarily include other matters of a similar nature that are not required
to be reflected in such Disclosure Letters, and do not establish any standard or
definition of materiality. The Company Disclosure Letter and the Parent
Disclosure Letter have been arranged in a manner that corresponds to the
Sections of this Agreement; provided, however, that a disclosure made in any
section of the Company Disclosure Letter or the Parent
39
Disclosure Letter that is sufficient to reasonably inform the recipient of
information required to be disclosed in another section of such Disclosure
Letter to avoid a misrepresentation under a Section of this Agreement shall be
deemed, for all purposes of this Agreement, to have been made under the other
section of such Disclosure Letter. The mere listing in the Company Disclosure
Letter or the Parent Disclosure Letter, however, of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made in this Agreement (unless the representation or warranty has to do
with the existence of the document or other item itself or the mere listing of
the document or item in such Disclosure Letter otherwise reasonably informs the
recipient of an exception to the representation or warranty).
Section 8.12 Parent Commitment.
(a) If this Agreement is terminated solely as a result of the
failure of the condition set forth in Section 6.2(g) hereof, for a two-year
period beginning on the date of such termination, Parent and its affiliates
agree that they shall not enter into any agreement with ABN AMRO Bank, N.V. or
any of its affiliates (collectively, "ABN AMRO") for the purpose of conducting
the Business (as defined below).
(b) The provisions of this Section 8.12 shall not limit or
interfere with (i) the conduct by Parent and its affiliates of the Business as
that Business is conducted on the date hereof (including with ABN AMRO, but in
such case only to the extent so conducted on the date hereof), (ii) the ability
of Parent to acquire all or any part of the business, assets or operations of
ABN AMRO or (iii) Parent's ability in the future to conduct the Business alone
or in conjunction with any other third party (except as expressly limited in
Section 8.12(a)).
(c) "Business" means the business of (i) authorizing, processing,
transmitting, settling and reporting Charge Card (as defined below) transactions
for merchants, (ii) the settlement and reporting of commission payments for car
rental companies, cruise line operators, tour operators and hotels and (iii) the
collection, settlement and reporting of health-care claims between insurance
payers and health-care providers; provided, however, that "Business" shall not
include (x) authorizing Charge Card transactions by a financial institution on
behalf of its own Charge Card holders or (y) the collection or settlement of
health-care claims by a financial institution on behalf of its customers in
connection with those customers' use of their checking, savings, money market,
Automated Clearinghouse (ACH) transfers (in connection with such financial
institution's cash management function) or similar accounts with such financial
institution. "Charge Card" means (i) a valid card issued by (A) an issuing
member of MasterCard Incorporated, International ("MasterCard") or VISA U.S.A.,
Inc. ("VISA") that contains the MasterCard service mark or the VISA Blue, White
and Gold bands design service mark (or such marks as MasterCard or VISA (or
their successors) may establish from time to time), or (B) American Express,
Discover, JCB International Co., Ltd., Diners Club or Carte Blanche and (ii) any
other card payment vehicles (including, but not limited to, on-line debit and
EBT cards).
(SIGNATURES ARE ON THE FOLLOWING PAGE.)
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
BANK OF AMERICA CORPORATION
By: /s/ Rose-Marie V. Stercay
____________________________________
Name: Rose-Marie V. Stercay
Title: Senior Vice President
MONARCH ACQUISITION, INC.
By: /s/ Rose-Marie V. Stercay
_____________________________________
Name: Rose-Marie V. Stercay
Title: Vice President
NATIONAL PROCESSING, INC.
By: /s/ Jon L. Gorney
_____________________________________
Name: Jon L. Gorney
Title: Chairman and CEO