EXHIBIT 99(A)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
FIRST DATA CORPORATION
FB MERGING CORPORATION
AND
PAYMENTECH, INC.
DATED AS OF MARCH 22, 1999
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
Page
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ARTICLE I
THE MERGER ............................................................ 2
Section 1.1 Contributions of Cash and Shares to Holdco ............... 2
Section 1.2 The Merger ............................................... 2
Section 1.3 Effective Time ........................................... 3
Section 1.4 Effects of the Merger .................................... 3
Section 1.5 Charter and By-laws; Directors and Officers............... 3
Section 1.6 Conversion of Securities.................................. 3
Section 1.7 Exchange of Certificates.................................. 4
Section 1.8 Further Assurances........................................ 6
Section 1.9 Closing................................................... 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................ 7
Section 2.1 Organization.............................................. 7
Section 2.2 Authority................................................. 7
Section 2.3 Consents and Approvals; No Violations..................... 7
Section 2.4 Information Supplied...................................... 9
Section 2.5 Financing................................................. 9
Section 2.6 Ownership of the Company's Capital Stock.................. 9
Section 2.7 Brokers................................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................... 9
Section 3.1 Organization, Standing and Power.......................... 9
Section 3.2 Subsidiaries.............................................. 10
Section 3.3 Capital Structure......................................... 10
Section 3.4 Authority................................................. 11
Section 3.5 Consents and Approvals; No Violation...................... 11
Section 3.6 SEC Documents and Other Reports........................... 12
Section 3.7 Information Supplied...................................... 13
Section 3.8 Absence of Certain Changes or Events...................... 13
Section 3.9 Permits and Compliance.................................... 14
Section 3.10 Tax Matters............................................... 15
Section 3.11 Actions and Proceedings................................... 15
Section 3.12 Certain Agreements........................................ 16
Section 3.13 ERISA..................................................... 16
Section 3.14 Liabilities; Services..................................... 18
Section 3.15 Labor Matters............................................. 19
Section 3.16 Intellectual Property; Software; Year 2000................ 19
Section 3.17 Title to and Sufficiency of Assets........................ 20
Section 3.18 Required Vote of Company Stockholders..................... 20
Section 3.19 Environmental Matters..................................... 20
Section 3.20 Customers and Employees................................... 21
Section 3.21 Insurance................................................. 22
Section 3.22 Transactions with Affiliates.............................. 22
Section 3.23 Brokers................................................... 23
Section 3.24 State Takeover Statute.................................... 23
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS.............................. 23
Section 4.1 Conduct of Business Pending the Merger.................... 23
Section 4.2 No Solicitation........................................... 26
Section 4.3 Third Party Standstill Agreements......................... 28
ARTICLE V
ADDITIONAL AGREEMENTS.................................................. 28
Section 5.1 Stockholder Meeting....................................... 28
Section 5.2 Access to Information..................................... 29
Section 5.3 Costs and Expenses; Termination Fee....................... 29
Section 5.4 Stock Options............................................. 30
Section 5.5 Reasonable Best Efforts................................... 31
Section 5.6 Public Announcements...................................... 32
Section 5.7 State Takeover Laws....................................... 32
Section 5.8 Indemnification; Directors and Officers Insurance......... 32
Section 5.9 Notification of Certain Matters........................... 33
Section 5.10 Certain Litigation........................................ 33
Section 5.11 Revolving Credit Agreement................................ 33
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER..................................... 34
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger.................................................... 34
Section 6.2 Additional Conditions to Obligations of Parent and
Merger Sub................................................ 34
Section 6.3 Additional Conditions to Obligation of the Company........ 35
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER...................................... 36
Section 7.1 Termination............................................... 36
Section 7.2 Effect of Termination..................................... 37
Section 7.3 Amendment................................................. 37
Section 7.4 Extension; Waiver......................................... 37
ARTICLE VIII
GENERAL PROVISIONS..................................................... 38
Section 8.1 Non-Survival of Representations, Warranties and
Agreements................................................ 38
Section 8.2 Notices................................................... 38
Section 8.3 Interpretation; Definitions............................... 39
Section 8.4 Counterparts.............................................. 42
Section 8.5 Entire Agreement; No Third-Party Beneficiaries............ 42
Section 8.6 Governing Law............................................. 42
Section 8.7 Assignment................................................ 43
Section 8.8 Severability.............................................. 43
Section 8.9 Enforcement of this Agreement............................. 43
43
EXHIBITS
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Exhibit A Stockholder Agreement
Exhibit B Contribution Agreement
Exhibit C Amendments to Certificate of Incorporation of the Company
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 22, 1999 (this
"Agreement"), among First Data Corporation, a Delaware corporation ("Parent"),
FB Merging Corporation, a Delaware corporation ("Merger Sub") and a wholly-owned
subsidiary of FDC Offer Corporation, which in turn is a Delaware corporation
("Holdco") and a wholly-owned subsidiary of Parent, and Paymentech, Inc., a
Delaware corporation (the "Company") (Merger Sub and the Company being
hereinafter collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, BANK ONE CORPORATION, a Delaware corporation ("Bank One"),
through its wholly-owned subsidiary First USA Financial, Inc., a Delaware
corporation ("First USA"), owns an aggregate of 19,979,081 shares of Common
Stock, par value $.01 per share, of the Company (the "Company Common Stock";
shares of Company Common Stock being hereinafter referred to as the "Shares");
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved and declared advisable this Agreement and the
transactions contemplated hereby, including the merger of Merger Sub into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
herein, whereby each issued and outstanding Share not owned directly or
indirectly by Parent, Bank One, the Company or any of their Subsidiaries
(including, without limitation, Merger Sub) (other than such Shares held by
Parent, Bank One, the Company or any of their Subsidiaries in a fiduciary,
collateral, custodial or similar capacity which will be converted) will be
converted into the right to receive from the Surviving Corporation (as
hereinafter defined) in cash, without interest $25.50 per Share (the "Merger
Consideration") and the respective Boards of
Directors of Merger Sub and the Company have approved and declared advisable
this Agreement;
WHEREAS, in order to induce Parent and Merger Sub to enter into this
Agreement, concurrently herewith Parent, Holdco, Merger Sub, Bank One and First
USA are entering into a Stockholder Agreement dated as of the date hereof (the
"Stockholder Agreement") in the form of the attached Exhibit A whereby, among
other things, First USA has agreed to contribute to Holdco the Shares it owns in
exchange for shares of capital stock of Holdco and to vote in favor of the
adoption of this Agreement;
WHEREAS, pursuant to the Stockholder Agreement, Parent has agreed to
contribute to Holdco sufficient cash to pay the aggregate Merger Consideration
in accordance with Section 1.6 in exchange for shares of capital stock of
Holdco, and each of Parent and First USA has agreed to cause Holdco to
contribute to Merger Sub all of the Shares it receives from First USA and all of
the cash it receives from Parent pursuant to the Stockholder Agreement; and
WHEREAS, Parent has entered into a Contribution Agreement dated as of
the date hereof (the "Contribution Agreement") with Bank One in the form of the
attached Exhibit B which provides, among other things, that following the Merger
Parent and Bank One, through Holdco, will cause substantially all of the assets
and liabilities and business of the Company, as the Surviving Corporation (as
hereinafter defined), to be contributed to Bank One Payment Services, L.L.C., a
Delaware limited liability company and an alliance between wholly-owned
subsidiaries of Parent and Bank One (the "Alliance"), in exchange for the
issuance to the Surviving Corporation of a membership interest in the Alliance.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Contributions of Cash and Shares to Holdco. Pursuant to
the Stockholder Agreement, immediately prior to the transfers referred to in the
last sentence of this Section 1.1, Parent will contribute to Holdco cash in the
amount necessary for the payment of the aggregate Merger Consideration pursuant
to Section 1.6, and simultaneously therewith First USA will contribute to Holdco
all of the Shares it owns
(other than such Shares held in a fiduciary, collateral, custodial or similar
capacity), in each case in exchange for shares of common stock of Holdco. At
that time each of Parent, Bank One and First USA will execute that certain
stockholder agreement relating to the governance of Holdco and the Company.
Immediately following such transfers and immediately prior to the Effective Time
each of Parent and First USA will cause Holdco to contribute to Merger Sub all
of the Shares it receives from First USA and all of the cash it receives from
Parent in exchange for shares of capital stock of Merger Sub (in an amount to be
agreed upon between Parent and First USA).
Section 1.2 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), Merger Sub shall be merged into the Company
at the Effective Time (as hereinafter defined). Following the Merger, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Merger Sub and the
Company in accordance with the DGCL. Notwithstanding anything to the contrary
herein, at the joint election of Parent and Bank One, any direct or indirect
jointly-owned Subsidiary (as hereinafter defined) of Parent and Bank One may be
substituted for Merger Sub as a constituent corporation in the Merger. In such
event, the parties agree to execute an appropriate amendment to this Agreement,
in form and substance reasonably satisfactory to Parent, Bank One and the
Company, in order to reflect such substitution; provided, however, that no such
substitution shall (i) alter or change the amount or kind of consideration to be
received by the holders of Shares in the Merger or (ii) materially delay receipt
of any approval referred to in this Agreement or the consummation of the
transactions contemplated hereby.
Section 1.3 Effective Time. The Merger shall become effective when a
certificate of merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the DGCL, is filed with the Secretary of State of the
State of Delaware, or at such other time as Merger Sub and the Company shall
agree and as specified in the Certificate of Merger. When used in this
Agreement, the term "Effective Time"
shall mean the later of the date and time at which the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware or such later
time established by the Certificate of Merger. The filing of the Certificate of
Merger shall be made prior to or on the date of the Closing (as hereinafter
defined).
Section 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL.
Section 1.5 Charter and By-laws; Directors and Officers. (a) At the
Effective Time, the Certificate of Incorporation of the Company, as amended (the
"Company Charter"), as further amended to read in its entirety as indicated on
the attached Exhibit C, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law. At the Effective Time, the By-laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by the Company Charter.
(b) The directors of Merger Sub at the Effective Time of the Merger
shall be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. The officers of the Company at the Effective Time
of the Merger shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 1.6 Conversion of Securities. As of the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any securities of the Constituent Corporations:
(a) Capital Stock of Merger Sub. Each issued and outstanding share
of common stock of Merger Sub shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
(b) Treasury Shares, Parent Owned Shares, Bank One Shares. All Shares
that are held in the treasury of the Company or by any wholly-
owned Subsidiary of the Company and any Shares owned by Parent, Bank One or
Merger Sub or by any wholly-owned Subsidiary of Parent or Bank One (other than
such Shares held in a fiduciary, collateral, custodial or similar capacity)
shall be canceled and no capital stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Conversion of Shares. Each Share issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 1.6(b) and other than Dissenting Shares (as hereinafter
defined)) shall be converted into the right to receive from the Surviving
Corporation the Merger Consideration. All such Shares, when so converted, shall
no longer be outstanding and shall automatically be canceled and retired and
each holder of a certificate representing any such Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration, less any applicable withholding taxes, upon surrender of the
Certificate (as hereinafter defined) that formerly evidenced such Shares in the
manner provided in Section 1.7.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding Shares held by a
person (a "Dissenting Stockholder") who has not voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly in writing
appraisal for such Shares in accordance with Section 262 of the DGCL and
otherwise complies with all of the provisions of the DGCL concerning the right
of holders of Shares to require appraisal of their Shares ("Dissenting Shares")
shall not be converted into or represent the right to receive the Merger
Consideration, unless such stockholder fails to perfect or withdraws or loses
its right to appraisal. Such stockholders shall be entitled to receive payment
of the appraised value of such Shares held by them in accordance with the
provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon
be deemed to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the Merger Consideration, without any
interest or dividends thereon, upon surrender of the Certificate or Certificates
that formerly evidenced such Shares in the manner provided in Section 1.7. The
Company shall give Parent and Bank One (i) prompt notice of any demands for
payment received by the Company, withdrawals of such demands and any other
instruments served pursuant to the DGCL and received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demand for appraisal under the DGCL. The Company shall not,
without the prior written consent of Parent and Bank One, voluntarily make any
payment with respect to, or settle, offer to settle or otherwise negotiate, any
such demands.
Section 1.7 Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate First Chicago Trust Company of New York
(or such other person or persons as shall be reasonably acceptable to Parent,
Bank One and the Company) to act as paying agent in the Merger (the "Paying
Agent"), and at the Effective Time, Merger Sub shall make available to the
Paying Agent cash in the amount necessary for the payment of the Merger
Consideration upon surrender of certificates representing Shares as part of the
Merger pursuant to this Section 1.7. Any and all interest earned on funds made
available to the Paying Agent pursuant to this Agreement shall be paid over to
Parent.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 1.6, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 1.7, each Certificate (other
than Certificates representing Dissenting Shares) shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 1.6. No interest will be paid or will accrue on the cash payable upon
the surrender of any Certificate. Parent or the Paying Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement such amounts as Parent or the Paying Agent is required to deduct and
withhold with respect to the making of such payment under the Code (as
hereinafter defined) or under any provisions of state, local or foreign tax law.
To the extent that amounts are so withheld by Parent or the Paying Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the person in respect of which such deduction or withholding was
made by the Parent or the Paying Agent and any such amounts deducted or withheld
shall be promptly and timely paid by Parent or the Paying Agent to the
appropriate taxing authority.
(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this
Article I shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates. At the
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason, they
shall be canceled and exchanged as provided in this Article I.
(d) Termination of Payment Fund. Any portion of the funds made
available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of Shares who have
not theretofore complied with this Article I and the instructions set forth in
the letter of transmittal mailed to such holders after the Effective Time shall
thereafter look only to Parent for payment of the Merger Consideration to which
they are entitled, without interest or dividends.
(e) No Liability. None of Parent, Holdco, Merger Sub, the Company or
the Paying Agent shall be liable to any person in respect of any cash delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to seven
years after the Effective Time (or immediately prior to such earlier date on
which any payment pursuant to this Article I would otherwise escheat to or
become the property of any Governmental Entity (as hereinafter defined)), the
cash payment in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interests of any person previously entitled thereto.
(f) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent or the Paying Agent, the posting by such person of a
bond, in such reasonable amount as Parent or the Paying Agent may direct as
indemnity against any claim that may be made
against them with respect to such Certificate, the Paying Agent will pay in
exchange for such lost, stolen or destroyed Certificate the amount of cash to
which the holders thereof are entitled pursuant to Section 1.6.
Section 1.8 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets
of either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.9 Closing. The closing of the Merger (the "Closing") and
all actions specified in this Agreement to occur at the Closing shall take place
at the offices of Sidley & Austin, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, at 10:00 a.m., local time, no later than the second business day
following the day on which the last of the conditions set forth in Article VI
shall have been fulfilled or waived (if permissible) or at such other time and
place as Parent and the Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
Section 2.1 Organization. Each of Parent, Holdco and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now being conducted
except where the failure to be so organized, existing or in good standing or to
have such power or authority would not, individually or in the aggregate, have a
Material Adverse Effect on Parent.
Section 2.2 Authority. On or prior to the date of this Agreement,
the Boards of Directors of Parent and Merger Sub have declared the Merger
advisable and the Board of Directors of Merger Sub has approved this Agreement
in accordance with the DGCL. Each of Parent and Merger Sub has all requisite
power and authority to execute and deliver this Agreement, the Stockholder
Agreement and the Contribution Agreement, and each of Parent and Merger Sub has
all requisite corporate power and authority to consummate the transactions
contemplated hereby and thereby, as applicable. The execution, delivery and
performance by Parent and Merger Sub of this Agreement, the Stockholder
Agreement and the Contribution Agreement, as applicable, and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action (including Board action) on the part of Parent
and Merger Sub and no other corporate proceedings on the part of Parent or
Merger Sub or their respective Boards of Directors are necessary to authorize
and approve this Agreement (or the Stockholder Agreement or Contribution
Agreement, as applicable) or to consummate the transactions contemplated hereby
and thereby, as applicable, other than, in the case of this Agreement, the
filing of the Certificate of Merger as required by the DGCL. Each of the
Agreement, the Stockholder Agreement and the Contribution Agreement has been
duly executed and delivered by Parent, Holdco and Merger Sub, as applicable, and
(assuming the valid authorization, execution and delivery of this Agreement by
the Company, the valid authorization, execution and delivery of the Stockholder
Agreement by Bank One and First USA, the valid authorization, execution and
delivery of the Contribution Agreement by Bank One and the validity and binding
effect hereof and thereof on the Company and Bank One and First USA, as
applicable) this Agreement, the Stockholder Agreement and the Contribution
Agreement constitute the valid and binding obligation of each of Parent, Holdco
and Merger Sub that is a party thereto, enforceable against them
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally, and by general equitable
principles (regardless of whether such enforcement is considered in a proceeding
in equity or at law).
Section 2.3 Consents and Approvals; No Violations. Assuming that all
consents, approvals, authorizations and other actions described in this Section
2.3 have been obtained and all filings and obligations described in this Section
2.3 have been made, the execution and delivery of this Agreement, the
Stockholder Agreement and the Contribution Agreement do not, and the
consummation of the transactions contemplated hereby and thereby and compliance
with the provisions hereof and thereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any obligation or
result in the loss of a material benefit under, or result in the creation of any
Lien (as hereinafter defined) upon any of the properties or assets of Parent or
any of its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or the By-Laws of Parent, each as amended to date, (ii) any
provision of the comparable charter or organization documents of any of Parent's
Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (iii) or (iv), any such violations, defaults,
rights or Liens that, individually or in the aggregate, would not have a
Material Adverse Effect on Parent, materially impair the ability of Parent,
Holdco or Merger Sub to perform their respective obligations hereunder or under
the Stockholder Agreement or prevent or materially delay the consummation of any
of the transactions contemplated hereby or thereby. No filing or registration
with, or authorization, consent or approval of, any domestic (federal and
state), foreign or supranational court, commission, governmental body,
regulatory agency, authority or tribunal (each, a "Governmental Entity"), Card
Association or other Person is required by or with respect to Parent or any of
its Subsidiaries in connection with the execution and
delivery of this Agreement or the Stockholder Agreement by Parent, Holdco or
Merger Sub or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement or the Stockholder Agreement, except
(i) in connection, or in compliance, with the provisions of the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
Exchange Act, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its Subsidiaries is
qualified to do business, (iii) such filings and consents as may be required
under any environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or by the
transactions contemplated by this Agreement, the Stockholder Agreement or the
Contribution Agreement, (iv) such filings, authorizations, orders and approvals
as may be required by state takeover laws (the "State Takeover Approvals"), (v)
applicable requirements, if any, of state securities or "blue sky" laws ("Blue
Sky Laws"), (vi) as may be required under foreign laws, (vii) such filings,
authorizations and approvals under the Change in Bank Control Act, (viii) such
filings, authorizations and approvals under Sections 7-1-701 through 7-1-716 and
7-8-3 through 7-8-20 of the Utah code (collectively, the "Utah Statute"), (ix)
such filings, authorizations and approvals under Section 4 of the Bank Holding
Company Act, and (x) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on Parent,
materially impair the ability of Parent, Holdco or Merger Sub to perform its
obligations hereunder or under the Stockholder Agreement or the Contribution
Agreement or prevent or materially delay the consummation of any of the
transactions contemplated hereby or thereby.
Section 2.4 Information Supplied. None of the information supplied or
to be supplied by Parent, Holdco, or Merger Sub specifically for inclusion or
incorporation by reference in (i) a Rule 13e-3 Transaction Statement pursuant to
Rule 13e-3 (the "Schedule 13e-3") under the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder, the
"Exchange Act"), or (ii) the proxy
statement (together with any amendments or supplements thereto, the "Proxy
Statement") relating to the adoption of this Agreement and approval of the
Merger by the holders of a majority of the outstanding Shares, which majority
shall, unless otherwise agreed by the Company, Parent and Bank One, include not
less than 662/3% of the outstanding Shares not owned directly or indirectly by
Bank One, Parent or their respective Affiliated Persons or associates including,
without limitation, Holdco and Merger Sub (the "Company Stockholder Approval"),
will (a) in the case of the Schedule 13e-3, at the time the Schedule 13e-3 is
filed with the Securities and Exchange Commission ("SEC") or (b) in the case of
the Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholder Meeting (as hereinafter
defined), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
Section 2.5 Financing. Parent has sufficient funds available for it
to pay the aggregate Merger Consideration.
Section 2.6 Ownership of the Company's Capital Stock. Except for
Shares held in a fiduciary or similar capacity, as of the date hereof, none of
Parent, Holdco, Merger Sub or any Subsidiary of Parent (i) beneficially owns (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, or (ii)
is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of the capital
stock of the Company.
Section 2.7 Brokers. No broker, investment banker, financial advisor
or other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co., the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent, Holdco or Merger Sub.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company and each of
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power or authority would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. The Company and each
of its Subsidiaries are duly qualified to do business, and are in good standing,
in each jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification necessary,
except where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or materially delay the
consummation of the Merger.
Section 3.2 Subsidiaries. Section 3.2 of the letter dated the date
hereof and delivered on the date hereof by the Company to Parent, which relates
to this Agreement and is designated therein as the Company Letter (the "Company
Letter") lists each Subsidiary of the Company. All of the outstanding shares of
capital stock of each such Subsidiary that is a corporation have been validly
issued and are fully paid and nonassessable. Except as set forth in Section 3.2
of the Company Letter, all of the outstanding shares of capital stock of each
Subsidiary of the Company are owned by the Company, by another Subsidiary of the
Company or by the Company and another Subsidiary of the Company, free and clear
of any and all mortgages, liens, encumbrances, charges, claims, restrictions,
pledges, security interest or impositions (collectively, "Liens") and free and
clear of all options, rights of first refusal, agreements or limitations on
voting rights of any nature whatsoever. Except as set forth in Section 3.2 of
the Company Letter and except for the capital stock of its Subsidiaries, the
Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, joint venture, limited
liability company or other entity which is material to the business or financial
position of the Company.
Section 3.3 Capital Structure. The authorized capital stock of the
Company consists of 200,000,000 Shares and 10,000,000 shares of Preferred Stock,
par value $.01 per share ("Company Preferred Stock"). At the close of business
on January 30, 1999:
(i) 36,360,377 Shares were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive rights;
(ii) No shares of Company Preferred Stock were issued and
outstanding;
(iii) No Shares were held in the treasury of the Company or by
Subsidiaries of the Company;
(iv) 6,500,000 Shares were reserved for issuance in the
aggregate upon the exercise of outstanding stock options issued under the
Company's 1996 Amended and Restated Stock Option Plan, (the "Company Stock
Option Plan");
(v) 400,000 Shares were reserved for issuance in the aggregate
pursuant to the Company's Employee Stock Purchase Plan (the "Company Stock
Purchase Plan"); and
(vi) 500,000 Shares were reserved for issuance in the aggregate
pursuant to the Company's 1996 Restricted Stock Plan (the "Company Restricted
Stock Plan").
Section 3.3 of the Company Letter contains a correct and complete list as
of the date of this Agreement of each outstanding option to purchase shares of
Company Common Stock issued under the Company Stock Option Plan (collectively,
the "Company Stock Options"), including the holder, date of grant, exercise
price and number of shares of Company Common Stock subject thereto and whether
the option is vested and exercisable. Except for the Company Stock Options, the
Company Stock Option Plan, the Company Stock Purchase Plan and the Company
Restricted Stock Plan, there are no options, warrants, calls, rights or
agreements to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of the Company or any of its Subsidiaries or obligating
the Company or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right or agreement. Except as set forth in Section 3.3 of
the Company Letter, there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or any capital stock of or any equity
interests in any of the Company's Subsidiaries. The Company does not have any
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or convertible into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter.
Section 3.4 Authority. On or prior to the date of this Agreement, the
Board of Directors of the Company has unanimously
approved and declared the Merger Agreement advisable, approved this Agreement
and the transactions contemplated hereby, including the Merger, in accordance
with the DGCL, resolved to recommend the acceptance of the approval of this
Agreement and the Merger by the Company's stockholders and directed that this
Agreement be submitted to the Company's stockholders for approval.
The Company has all requisite corporate power and authority to enter into this
Agreement and, subject to approval by the stockholders of the Company of this
Agreement and the Merger, to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
(including Board action) on the part of the Company, and no other corporate
proceedings on the part of the Company or its Board of Directors are necessary
to authorize and approve this Agreement or to consummate the transactions
contemplated hereby, other than (x) approval and adoption of this Agreement by
the stockholders of the Company and (y) the filing of the Certificate of Merger
as required by the DGCL. This Agreement has been duly executed and delivered by
the Company and (assuming the valid authorization, execution and delivery of
this Agreement by Parent and Merger Sub and the validity and binding effect of
this Agreement on Parent and Merger Sub) constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally, and by general equitable principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
Section 3.5 Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this Section
3.5 have been obtained and all filings and obligations described in this Section
3.5 have been made, the execution, delivery or performance of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not,
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or result in the loss of a material benefit
under, or result in the creation of any Lien, upon any of the properties or
assets of the Company or any of its Subsidiaries under, any provision of (i) the
Company Charter or the By-laws of the Company, (ii) any provision of the
comparable charter or organization documents of any of the Company's
Subsidiaries, (iii) except as set forth in Section 3.5 of the Company Letter,
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license (including any
of the Company Merchant Contracts) applicable to the Company or any of its
Subsidiaries or (iv) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its Subsidiaries or any of
their respective properties or assets (including any of the Company Merchant
Contracts), other than, in the case of clauses (iii) or (iv), any such
violations, defaults, rights, or Liens that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company, materially impair the
ability of the Company to perform its obligations hereunder or prevent or
materially delay the consummation of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or approval
of, any Governmental Entity, Card Association or any other Person is required by
or with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or is necessary for the
consummation of the Merger, except (i) in connection, or in compliance, with the
provisions of the HSR Act and the Exchange Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company or any of its Subsidiaries is qualified to do business, (iii) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or by the transactions contemplated by this
Agreement, (iv) such filings, authorizations, orders and approvals as may be
required to obtain the State Takeover Approvals, (v) applicable
requirements, if any, of Blue Sky Laws or the New York Stock Exchange, (vi) as
may be required under foreign laws, (vii) such filings, authorizations and
approvals under the Change in Bank Control Act, (viii) such filings,
authorizations and approvals under the Utah Statute, (ix) such filings,
authorizations and approvals under Section 4 of the Bank Holding Company Act,
and (x) such other consents, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not, individually
or in the aggregate, have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or
prevent or materially delay the consummation of any of the transactions
contemplated hereby.
Section 3.6 SEC Documents and Other Reports. The Company has filed
all required documents (including proxy statements) with the SEC since June 29,
1997 (as such documents have been amended since the time of their filing and
prior to the date hereof, the "Company SEC Documents"). As of their respective
dates or, if amended, as of the date of the last such amendment, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and, at the respective times they were filed or, if amended,
as of the date of the last such amendment, none of the Company SEC Documents,
including the financial statements of the Company and the notes thereto,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
consolidated financial statements (including, in each case, any notes thereto)
of the Company included in the Company SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with United States GAAP (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented the consolidated financial
position of the Company and its consolidated Subsidiaries as at the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein none of which were or will be material in amount
or effect). Except as disclosed in the Company SEC Documents or as required by
GAAP, the Company has not, since June 29, 1997, made any change in the
accounting practices or policies applied in the preparation of financial
statements.
Section 3.7 Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Proxy Statement or (ii) the Schedule 13e-3 will (a) in the
case of the Schedule 13e-3, at the time the Schedule 13e-3 is filed with the
SEC, or (b) in the case of the Proxy Statement, at the time the Proxy Statement
is first mailed to the Company's stockholders or at the time of the Stockholder
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act, except that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Parent or Merger Sub
specifically for inclusion or incorporation by reference therein.
Section 3.8 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed with the SEC prior to the date of this
Agreement or as set forth in Section 3.8 of the Company Letter, since June 30,
1998, the Company and its Subsidiaries have conducted their respective business
in all material respects only in the ordinary course and (A) the Company and
its Subsidiaries have not incurred any liability or obligation (indirect,
direct or contingent) that would result in a Material Adverse Effect on the
Company, or entered into any material oral or written agreement or other
transaction that is not in the ordinary course of business or that would result
in a Material Adverse Effect on the Company,
(B) the Company and its Subsidiaries have not sustained any loss or interference
with their business or properties from fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance) that has had a Material Adverse
Effect on the Company, (C) there has been no change in the capital stock of the
Company except for the issuance of shares of the Company Common Stock pursuant
to Company Stock Options, the Company Stock Purchase Plan or the Company
Restricted Stock Plan and no dividend or distribution of any kind declared, paid
or made by the Company on any class of its stock, (D) there has not been (v) any
adoption of a new Company Plan (as hereinafter defined), (w) any amendment to a
Company Plan materially increasing benefits thereunder, (x) any granting by the
Company or any of its Subsidiaries to any executive officer or other key
employee of the Company or any of its Subsidiaries of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the Company SEC
Documents, (y) any granting by the Company or any of its Subsidiaries to any
such executive officer or other key employee of any increase in severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Company SEC Documents or (z) any entry by
the Company or any of its Subsidiaries into any employment, severance or
termination agreement with any such executive officer or other key employee, (E)
there has not been any material changes in the amount or terms of the
indebtedness of the Company and its Subsidiaries from that described in the
Company SEC Documents filed prior to the date hereof, (F) any revaluation by the
Company of any of material assets and (G) no Material Adverse Effect on the
Company has occurred.
Section 3.9 Permits and Compliance. Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity or Card Association necessary
for the Company or any of its Subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being conducted (the
"Company Permits"), except where the failure to have
any of the Company Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger, and no suspension or cancellation of any of the
Company Permits is pending or, to the knowledge of the Company, threatened,
except where the suspension or cancellation of any of the Company Permits would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Merger. Neither
the Company nor any of its Subsidiaries nor, for purposes of clause (D), any of
the Company's or any of its Subsidiary's independent sales organizations, is in
violation of (A) its charter, by-laws or other organizational documents, (B) any
law, ordinance, administrative or governmental rule or regulation, (C) any
order, decree or judgment of any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries or (D) any applicable Card Association
rules, by-laws or regulations, except in the case of clauses (A), (B), (C) and
(D), for any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger. Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or in Section 3.9 of the Company
Letter, there are no contracts or agreements of the Company or its Subsidiaries
(including the Company Merchant Contracts) having terms or conditions which
would have a Material Adverse Effect on the Company or having covenants that
purport to bind any stockholder or any Affiliated Person (as hereinafter
defined) of any stockholder of the Company after the Effective Time. Except as
set forth in the Company SEC Documents filed prior to the date of this Agreement
or in Section 3.9 of the Company Letter, no event of default or event that, but
for the giving of notice or the lapse of time or both, would constitute an event
of default exists or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any indenture, mortgage, loan
agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease,
contractual license or other agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any such Subsidiary is
bound or to which any of the properties, assets or operations of the Company or
any such Subsidiary is subject, other than any defaults that, individually or in
the aggregate,
would not have a Material Adverse Effect on the Company.
Section 3.10 Tax Matters. Except as set forth in Section 3.10 of the
Company Letter, (i) the Company and each of its Subsidiaries have timely filed
all federal, and all material state, local, foreign and provincial, Tax Returns
(as hereinafter defined) required to have been filed (giving effect to all
applicable extensions), and such Tax Returns are correct and complete, except to
the extent that any failure to so file or any failure to be correct and complete
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company; (ii) all material Taxes (as hereinafter defined) shown to be due on
such Tax Returns and all material Taxes for which no return was filed (x) have
been timely paid or extensions for payment have been properly obtained, (y) are
being timely and properly contested or (z) have been reserved for in the
financial statements of the Company (in accordance with GAAP); (iii) neither the
Company nor any of its Subsidiaries has waived any statute of limitations in
respect of its Taxes; and (iv) all deficiencies asserted or assessments made as
a result of any examination of such Tax Returns by any taxing authority have
been paid in full. For purposes of this Agreement: (i) "Taxes" means any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or added minimum, ad valorem, value-added, transfer or excise tax,
or other tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty imposed by any
Governmental Entity, and (ii) "Tax Return" means any return, report or similar
statement (including the attached schedules) required to be filed with respect
to any Tax, including any information return, claim for refund, amended return
or declaration of estimated Tax.
Section 3.11 Actions and Proceedings. Except as set forth in Section
3.11 of the Company Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or involving
the Company or any of its Subsidiaries, or, to the knowledge of the Company,
against or involving any of the present or former directors, officers,
employees, consultants or agents of the Company or any of its Subsidiaries with
respect to the Company or any of its Subsidiaries,
any of the properties, assets or business of the Company or any of its
Subsidiaries or any Company Plan that, individually or in the aggregate, would
have a Material Adverse Effect on the Company, materially impair the ability of
the Company to perform its obligations hereunder or prevent or materially delay
the consummation of the Merger. Except as disclosed in the Company SEC Documents
filed with the SEC prior to the date hereof or in Section 3.11 of the Company
Letter, there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations (including claims for workers'
compensation) pending or, to the knowledge of the Company, threatened against or
involving the Company or any of its Subsidiaries or, to the Company's knowledge,
any of its or their present or former directors, officers, employees,
consultants or agents with respect to the Company or any of its Subsidiaries, or
any of the properties, assets or business of the Company or any of its
Subsidiaries or any Company Plan that, individually or in the aggregate, would
have a Material Adverse Effect on the Company, materially impair the ability of
the Company to perform its obligations hereunder or prevent or materially delay
the consummation of the Merger. The Company's expenses, losses and liabilities
in connection with, including any adverse outcome of, that class action lawsuit
filed in the United States District Court for the Northern District of Texas
against the Company by certain stockholders of the Company, entitled ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ v. Paymentech Inc. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. Truetzel, will, to the best of the Company's knowledge, be covered
by insurance maintained by the Company other than for the applicable deductibles
under the Company's insurance policies (which deductibles do not exceed, in the
aggregate, $1,000,000). There are no actions, suits, labor disputes or other
litigation, legal or administrative proceedings or governmental investigations
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or, to the Company's knowledge, any of its or
their present or former officers, directors, employees, consultants or agents
with respect to the Company or its Subsidiaries, or any of the properties,
assets or business of the Company or any of its Subsidiaries, in each case
relating to the transactions contemplated by this Agreement.
Section 3.12 Certain Agreements. Except as set forth in Section 3.12
of the Company Letter, neither the Company nor any of its Subsidiaries is a
party to any oral or written agreement or plan, including any employment
agreement, severance agreement, stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan (collectively, the
"Compensation Agreements"), pension plan (as defined in Section 3(2) of ERISA)
or welfare plan (as defined in Section 3(1) of ERISA) any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement. Except as set
forth in Section 5.4, no holder of any option to purchase Shares, or Shares
granted in connection with the performance of services for the Company or its
Subsidiaries, is or will be entitled to receive cash from the Company or any of
its Subsidiaries in lieu of or in exchange for such option or shares as a result
of the transactions contemplated by this Agreement. Section 3.12 of the Company
Letter sets forth (i) for each officer, director or employee who is a party to,
or will receive benefits under, any Compensation Agreement as a result of the
transactions contemplated herein, the total amount that each such person may
receive, or is eligible to receive, assuming that the transactions contemplated
by this Agreement are consummated on the date hereof, and (ii) the total amount
of indebtedness for borrowed money owed to the Company or its Subsidiaries from
each officer, director or employee of the Company and its Subsidiaries.
Section 3.13 ERISA. (a) As used herein, (i) "Company Plan" means a
"pension plan" (as defined in section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (other than a Company Multiemployer
Plan)), a "welfare plan" (as defined in section 3(1) of ERISA), or any other
written or oral bonus, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
restricted stock, stock appreciation right, holiday pay, vacation, severance,
medical, dental, vision, disability, death benefit, sick leave, fringe benefit,
personnel policy, insurance or other plan, arrangement or understanding, in each
case established or maintained by the Company or any of its Subsidiaries or
ERISA Affiliates or as to which the Company or any of its Subsidiaries or ERISA
Affiliates has contributed or otherwise may have any liability, (ii) "Company
Multiemployer Plan" means a "multiemployer plan" (as defined in section
4001(a)(3) of ERISA) to which the Company or any of its Subsidiaries or ERISA
Affiliates is or has been obligated to contribute or otherwise may have any
liability, and (iii) "ERISA Affiliate" means any trade or business (whether or
not incorporated) which would be considered a single employer with the Company
pursuant to section 414(b), (c), (m) or (o) of the Code and the regulations
promulgated under those sections or pursuant to section 4001(b) of ERISA and the
regulations promulgated thereunder.
(b) Each material Company Plan is listed in Section 3.13(b) of the
Company Letter. With respect to each Company Plan listed therein, the Company
has made available to Parent a true and correct copy of (i) the three most
recent annual reports (Form 5500) filed with the IRS if applicable, (ii) each
such Company Plan that has been reduced to writing and all amendments thereto,
(iii) each trust agreement, insurance contract or administration agreement
relating to each such Company Plan, (iv) a written summary of each unwritten
Company Plan, (v) the most recent summary plan description or other written
explanation of each Company Plan provided to participants, (vi) the most recent
determination letter and request therefore, if any, issued by the IRS with
respect to any Company Plan intended to be qualified under section 401(a) of the
Code, (vii) any request for a determination currently pending before the IRS and
(viii) all material correspondence with the IRS, the Department of Labor, the
SEC or Pension Benefit Guaranty Corporation relating to any potential
investigation or outstanding controversy. Except as would not have a Material
Adverse Effect on the Company, each Company Plan complies in all respects with
the ERISA, the Code and all other applicable statutes and governmental rules and
regulations. Except for Company Plans listed in Section 3.13(b) of the Company
Letter, neither the Company nor any ERISA Affiliate currently maintains,
contributes to or has any liability or, at any time during the past six years
has maintained or contributed to any pension plan which is subject to section
412 of the Code or section 302 of ERISA or Title IV of ERISA. Except for Company
Multiemployer Plans listed in Section 3.13(b) of the Company Letter, neither the
Company nor any ERISA Affiliate currently maintains, contributes to or has any
liability or, at any time during the past six years has maintained or
contributed to any Company Multiemployer Plan.
(c) Except as listed in Section 3.13(c) of the Company Letter, with
respect to the Company Plans, no event has occurred and, to the knowledge of the
Company, there exists no condition or set of circumstances in connection with
which the Company or any Subsidiary of the Company or ERISA Affiliate or Company
Plan fiduciary could reasonably be expected to be subject to any liability under
the terms of such Company Plans, ERISA, the Code or any other applicable law
which would have a Material Adverse Effect on the Company. All Company Plans
that are intended to be qualified under section 401(a) of the Code have been
determined by the IRS to be so qualified, or a timely application for such
determination is now pending and the Company is not aware of any reason why any
such Company Plan is not so qualified in operation. Except as disclosed in
Section 3.13(c) of the Company Letter, neither the Company nor any of its
Subsidiaries or ERISA Affiliates has any liability or obligation under any
welfare plan to provide benefits after termination of employment to any employee
or dependent other than as required by section 4980B of the Code. Neither the
Company nor any Subsidiary of the Company nor any ERISA Affiliate has any
liability whether direct, indirect, contingent or otherwise, under (i) Section
302 of ERISA or section 412 of the Code or (ii) Title IV of ERISA.
(d) Section 3.13(d) of the Company Letter contains a list of all (i)
severance and employment agreements with employees of the Company and each of
its Subsidiaries with respect to any employee whose annual rate of base salary
exceeds $100,000, and (ii) severance programs and policies of the Company and
each of its Subsidiaries with or relating to its employees and (iii) plans,
programs, agreements and other arrangements of the Company and each of its
Subsidiaries with or relating to its employees containing change of control or
similar provisions.
(e) Except as set forth in Section 3.13(e) of the Company Letter,
neither the Company nor any of its Subsidiaries is a party to any agreement,
contract or arrangement that could result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the
meaning of section 280G of the Code or that provides for payments that would be
nondeductible under section 162(m) of the Code.
(f) Except as set forth in Section 3.13(f) of the Company Letter,
with respect to each Company Plan not subject to United States law (a "Company
Foreign Benefit Plan"), except as would not have a Material Adverse Effect on
the Company, (i) the fair market value of the assets of each funded Company
Foreign Benefit Plan, the liability of each insurer for any Company Foreign
Benefit Plan funded through insurance or the reserve shown on the Company's
consolidated financial statements for any unfunded Company Foreign Benefit Plan,
together with any accrued contributions, is
sufficient to procure or provide for the benefit obligations, as of the
Effective Time, with respect to all current and former participants in such plan
according to reasonable, country specific actuarial assumptions and valuations
and no transaction contemplated by this Agreement shall cause such assets or
insurance obligations or book reserve to be less than such benefit obligations;
and (ii) each Company Foreign Benefit Plan required to be registered has been
registered and has been maintained in good standing with the appropriate
regulatory authorities.
Section 3.14 Liabilities; Services. (a) Except (i) as fully reflected
or reserved against in the financial statements included in the Company SEC
Documents filed with the SEC prior to the date hereof, or disclosed in the
footnotes thereto, (ii) for liabilities incurred in the ordinary course of
business since December 31, 1998, or (iii) as set forth in Section 3.14(a) of
the Company Letter, neither the Company nor any of its Subsidiaries has any
liabilities (including Tax liabilities) or obligations of any nature, whether
accrued, absolute, contingent or otherwise required by generally accepted
accounting principles ("GAAP") to be set forth on a consolidated balance sheet
of the Company and its Subsidiaries or in the notes thereto, other than
liabilities or obligations that would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. As of the date hereof, the
indebtedness for borrowed money of the Company and its Subsidiaries does not
exceed $85 million.
(b) Except as set forth in Section 3.14(b) of the Company Letter, to
the knowledge of the Company, no product or service sold or delivered or service
rendered by the Company or any of its Subsidiaries is subject to any guaranty,
warranty or other indemnity.
Section 3.15 Labor Matters. Except as set forth in Section 3.15 of
the Company Letter, neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement or labor contract with any union. Neither
the Company nor any of its Subsidiaries has engaged in any unfair labor practice
with respect to any persons employed by or otherwise performing services
primarily for the Company or any of its Subsidiaries (the "Company Business
Personnel"), and there is no unfair labor practice
complaint or grievance against the Company or any of its Subsidiaries by any
person pursuant to the National Labor Relations Act or any comparable state or
foreign law pending or threatened in writing with respect to the Company
Business Personnel, except where such unfair labor practice, complaint or
grievance would not have a Material Adverse Effect on the Company. There is no
labor strike, dispute, slowdown or stoppage pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
which may interfere with the respective business activities of the Company or
any of its Subsidiaries, except where such dispute, strike or work stoppage
would not have a Material Adverse Effect on the Company.
Section 3.16 Intellectual Property; Software; Year 2000.
(a) For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Computerized Assets" means all software, hardware,
firmware, embedded systems and other systems, components and/or services that
are owned or leased by the Company or any of its Subsidiaries and used in the
conduct of its business; (ii) "Intellectual Property Rights" means all patents,
trademarks, trade names, service marks, trade secrets, copyrights and other
proprietary intellectual property rights; and (iii) "Software" means computer
software programs and software systems, including, without limitation, all
databases, compilations, tool sets, compilers, higher level or "proprietary"
languages, related documentation and materials, whether in source code, object
code or human readable form.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, (i) the Company and its Subsidiaries
have all Intellectual Property Rights as are necessary in connection with the
business of the Company and its Subsidiaries, taken as a whole, (ii) neither the
Company nor any of its Subsidiaries is in breach of any agreement affecting the
Company's and/or its Subsidiaries' rights to use any of the licensed
Intellectual Property Rights or Software, and (iii) none of the owned
Intellectual Property Rights or Software infringes any Intellectual Property
Rights of any other Person.
(c) Except as would not have a Material Adverse Effect on the
Company or where a failure is attributable to the licensors or other third-party
providers of the Company or any of its Subsidiaries, all of the Company's and
each of its Subsidiary's Computerized Assets will be on or prior to January 1,
2000 capable of providing and will provide uninterrupted millennium
functionality to record, store, process and present calendar dates falling on or
after January 1, 2000 and date dependent data in such a manner and with such
functionality as is necessary for the operations of the Company and its
Subsidiaries, and will not cause an interruption in the ongoing operations or
business of the Company or any of its Subsidiaries on or after January 1, 2000.
Section 3.17 Title to and Sufficiency of Assets. (a) As of the date
hereof, the Company and its Subsidiaries own, and as of the Effective Time the
Company and its Subsidiaries will own, good and marketable title to all of their
assets (excluding, for purposes of this sentence, assets held under leases),
free and clear of any and all Liens, except as set forth in the Company SEC
Documents filed with the SEC prior to the date hereof or in Section 3.17 of the
Company Letter and except where the failure to own such title would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Such assets, together with all assets held by the Company and its Subsidiaries
under leases, include all tangible and intangible personal property, contracts
and rights necessary or required for the operation of the businesses of the
Company as presently conducted, except for such assets the failure to have would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
(b) Neither the Company nor any of its Subsidiaries owns any Real
Estate. All Real Estate assets held by the Company and its Subsidiaries under
leases or subleases are adequate for the operation of the businesses of the
Company as presently conducted, except for such assets the failure to have would
not, individually or in the aggregate, have a Material Adverse Effect. The
leases and subleases to all Real Estate occupied by the Company and its
Subsidiaries which are material to the operation of the businesses of the
Company are in full force and effect and no event has occurred which with the
passage of time, the giving of notice, or both, would constitute a default or
event of default by the Company or any of its Subsidiaries or, to the knowledge
of the Company, any other person who is a party signatory thereto, other than
such defaults
or events of default which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. For purposes of this Agreement, "Real
Estate" means, with respect to the Company or any of its Subsidiaries, as
applicable, all of the fee or leasehold ownership right, title and interest of
such person, in and to all real estate and improvements owned or leased by any
such person and which is used by any such person in connection with the
operation of its business.
Section 3.18 Required Vote of Company Stockholders. The Company
Stockholder Approval is required to adopt this Agreement and to consummate the
Merger. No other vote of the security holders of the Company is required by law,
the Company Charter or the By-laws of the Company or otherwise in order for the
Company to consummate the Merger and the transactions contemplated hereby.
Section 3.19 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Hazardous Substances" means (A) petroleum and
petroleum products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (B) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste or for which liability or standards of care are
imposed under any applicable Environmental Law; (ii) "Environmental Law" means
any foreign, federal, state or local law, past, present or future and as
amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, or common law,
relating to pollution or protection of the environment, health or safety or
natural resources, including those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Substances; and (iii) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law.
(b) Except as disclosed in Section 3.19 of the Company Letter, the
Company and its Subsidiaries are and have been in compliance with all applicable
Environmental Laws, have obtained all Environmental Permits and are in
compliance with their requirements, and have resolved all past
non-compliance with Environmental Laws and Environmental Permits without any
pending, on-going or future obligation, cost or liability, except in each case
for the notices set forth in Section 3.19 of the Company Letter or where such
non-compliance would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. To the knowledge of the Company, there are no
circumstances that are reasonably likely to prevent or interfere with such
compliance in the future. Except as disclosed in Section 3.19 of the Company
Letter, to the knowledge of the Company, there are no past or present actions or
activities, including, without limitation, the release, emission, discharge or
disposal of any Hazardous Substances at any site presently or previously owned
by the Company or its Subsidiaries in the conduct of their business that could
form the basis of any claim against the Company or its Subsidiaries under
Environmental Laws, except for such claims as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.20 Customers and Employees. (a) Except as set forth in
Section 3.20(a) of the Company Letter, neither the Company nor any of its
Subsidiaries has received any notice prior to the date of this Agreement that
(i) any of the top 25 customers of the Company and its Subsidiaries, as
determined with respect to the revenues generated in 1997 and 1998 from such
customers (the "Top 25 Customers"), intends to terminate or limit or alter its
business relationship with the Company or any of its Subsidiaries, or (ii) any
key employee intends to terminate or has terminated his or her employment with
the Company or any of its Subsidiaries.
(b) Except as set forth in Section 3.20(b) of the Company Letter, (i)
each contract between the Company and/or any of its Subsidiaries, on the one
hand, and any provider of goods and/or services that accepts Transaction Cards
as a payment vehicle which provider is one of the Top 25 Customers, on the other
hand (the "Company Merchant Contracts"), constitutes a valid and binding
obligation of the parties thereto and is in full force and effect, (ii) the
Company and/or its Subsidiary, as applicable, has fulfilled and performed in all
material respects its obligations under each of the Company Merchant Contacts,
(iii) the Company is not in, or alleged to be in, any material breach or
default under, nor is there or is there alleged to be any reasonable basis for
termination of, any of the Company Merchant Contracts and (iv) to the knowledge
of the Company, no other party to any of the Company Merchant Contracts has
materially breached or defaulted thereunder.
Section 3.21 Insurance. The Company and its Subsidiaries carry or are
entitled to the benefits of insurance as the Company believes are in such
character and amount at least equivalent to that carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
for any such failures to maintain insurance policies as set forth in Section
3.21 of the Company Letter or that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. The Company and each of its
Subsidiaries have made any and all payments required to maintain such policies
in full force and effect, except where the failure to make any such payments, in
the aggregate, would not have a Material Adverse Effect on the Company.
Section 3.22 Transactions with Affiliates. (a) For purposes of this
Section 3.22 and Section 3.9 hereof, the term "Affiliated Person" means (i) any
direct or indirect holder of 5% or more of the Company Common Stock, (ii) any
director or officer of the Company, any of its Subsidiaries or any Person
described in clause (i), (iii) any Person that directly or indirectly controls,
is controlled by, or is under common control with, any of the Company, any of
its Subsidiaries or any Person described in clause (i), or (iv) any member of
the immediate family or any of such persons.
(b) Except as set forth in Section 3.22 of the Company Letter or in
the Company SEC Reports filed with the SEC prior to the date hereof, since June
30, 1998, the Company and its Subsidiaries have not, in the ordinary course of
business or otherwise, (i) purchased, leased or otherwise acquired any material
property or assets or obtained any material services from, (ii) sold, leased or
otherwise disposed of any material property or assets or provided any material
services to (except with respect to remuneration for services rendered in the
ordinary course of business as director, officer or employee of the Company or
any of its Subsidiaries), (iii) entered into, renewed or modified in any manner
any contract with, or (iv) borrowed any money from, or made or forgiven any
loan or other advance (other than expenses or similar advances made in the
ordinary course of business) to, any Affiliated Person.
(c) Except as set forth in Section 3.22 of the Company Letter or in
the Company SEC Reports filed with the SEC prior to the date hereof, (i) the
contracts of the Company and its Subsidiaries do not include any material
obligation or commitment between the Company or any of its Subsidiaries and any
Affiliated Person, (ii) the assets of the Company or any of its Subsidiaries do
not include any receivable or other obligation or commitment from an Affiliated
Person to the Company or any of its Subsidiaries and (iii) the liabilities of
the Company and its Subsidiaries do not include any payable or other obligation
or commitment from the Company or any of its Subsidiaries to any Affiliated
Person.
(d) To the knowledge of the Company and except as set forth in Section
3.22 of the Company Letter or in the Company SEC Reports filed with the SEC
prior to the date hereof, no Affiliated Person of any of the Company or any of
its Subsidiaries is a party to any contract with any customer or supplier of the
Company or any of its Subsidiaries that affects in any material manner the
business, financial condition or results of operation of the Company or any of
its Subsidiaries.
Section 3.23 Brokers. No broker, investment banker or other person,
other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), the fees and expenses of
which will be paid by the Company is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The maximum amount of such fees of ▇▇▇▇▇▇▇ ▇▇▇▇▇ has
been disclosed by the Company to Parent.
Section 3.24 State Takeover Statute. If the Merger is consummated as
provided in this Agreement following receipt of the Company Stockholder
Approval, Section 203 of the DGCL will be inapplicable to the Merger.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. (a) Except as
expressly permitted by clauses (i) through (xvi) of this Section 4.1, during the
period from the date of this Agreement through the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, in all material respects,
carry on its business in the ordinary course of its business as currently
conducted and, to the extent consistent therewith, use commercially reasonable
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it. Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement or as set forth in the Company Letter
(with specific reference to the applicable subsection below), the Company shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Parent (provided that with respect to clauses (v), (vi), (viii),
(xi), (xiii) and (xiv) below, such consent shall not be unreasonably withheld or
delayed):
(i) (A) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of the Company's
or any of its Subsidiaries' capital stock, or otherwise make any payments or
other distributions (whether in cash or property) to its stockholders in their
capacity as such, other than dividends, distributions or other such payments by
the Company's Subsidiaries in the ordinary course of business consistent with
past practice, (B) split, combine or reclassify any of the Company's or any of
its Subsidiaries' capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
Company's or any of its Subsidiaries' capital stock or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
Subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities, other than in connection with
cashless exercises of Company Stock Options;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of the Company's or any of its Subsidiaries' capital stock, any other
voting securities or equity equivalent or any securities convertible into, or
any rights, warrants or options (including options under the Company Stock
Option Plan) to acquire any such shares, voting securities, equity equivalent or
convertible securities, other than (A) the issuance of shares of Company Common
Stock upon the exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms, (B) pursuant to the Company
Stock Purchase Plan or (C) as set forth in Section 4.1(ii) of the Company
Letter;
(iii) amend the Company Charter or By-laws or other similar
organizational documents of any of the Company's Subsidiaries;
(iv) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division thereof,
except for acquisitions in the ordinary course of business consistent with past
practice and involving aggregate consideration of up to $25 million (if the
Effective Time is on or prior to the 90th day following the date hereof) or $50
million (if the Effective Time is thereafter);
(v) except as provided in the Contribution Agreement, sell, lease,
encumber or otherwise dispose of, or agree to sell, lease, encumber or otherwise
dispose of, any of its assets, other than sales of inventory that are in the
ordinary course of business consistent with past practice and sales of assets
having an aggregate fair market value of up to $10 million;
(vi) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or other
investments in, any other person, other than (A) in the ordinary course of
business consistent with past practice and, in the case of indebtedness and
guarantees, in an amount not to exceed $50 million in the aggregate in excess of
amounts outstanding on the date hereof and (B) indebtedness, loans, advances,
capital contributions and investments between the Company and any of its
Subsidiaries or
between any of such Subsidiaries, in each case in the ordinary course of
business consistent with past practice;
(vii) except as provided in Section 4.1(vii) of the Company Letter,
alter (through merger, liquidation, reorganization, restructuring or in any
other fashion) the corporate structure or ownership of the Company or any of its
Subsidiaries;
(viii) except as provided in Section 4.1(viii) of the Company Letter
and Section 5.4 hereof, increase the compensation payable or to become payable
to the Company's or any of its Subsidiaries' directors, officers or employees or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or employee of the Company or
any of its Subsidiaries, or establish, adopt, enter into, or, except as may be
required to comply with applicable law, amend in any material respect or take
action to enhance in any material respect or accelerate any rights or benefits
under, any labor, collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee, except in any such case in the ordinary course of business or where
the aggregate annual expense to the Company and its Subsidiaries, taken as a
whole, associated with such actions is not in excess of $5 million;
(ix) knowingly violate or knowingly fail to perform, in any material
respect, any obligation or duty imposed upon the Company or any of its
Subsidiaries by any applicable federal, state or local law, rule, regulation,
guideline or ordinance;
(x) make any change to accounting policies, practices or procedures
(other than actions required to be taken as a result of a change in law or
GAAP);
(xi) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods;
(xii) settle or compromise any federal, state, local or foreign
income tax dispute in excess of $10 million;
(xiii) settle or compromise any claims or litigation where (i) the
consideration paid by the Company and its Subsidiaries, in the aggregate, has a
fair market value in excess of $6 million or (ii) there are potential criminal
liabilities;
(xiv) other than in the ordinary course of business consistent with
past practice and other than the Processing Agreement, dated as of the date
hereof, between the Company and First Data Merchant Services Corporation, enter
into, amend or terminate any agreement or contract to which the Company or any
of its Subsidiaries is a party, (i) having a remaining term in excess of 12
months or (ii) which involves or is expected to involve future receipt or
payment of $10 million or more during the term thereof, or waive, release or
assign any material rights or claims under any such agreement or contract; or
purchase any Real Estate, or make or agree to make any new capital expenditure
or expenditures (other than the purchase of real property) which in the
aggregate are in excess of 15% higher than expenditures contemplated by the
Company's capital budget for fiscal 1999 or fiscal 2000 as previously provided
to Parent in writing;
(xv) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
in excess of $6 million, other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice and in accordance
with their terms, of any such claims, liabilities or obligations (in each case
not related to pending litigation) reflected or disclosed in the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the Company SEC Documents or incurred since the date of such financial
statements in the ordinary course of business consistent with past practice;
(xvi) except as required by applicable law or by order of a
Governmental Entity, do any other act which would cause any representation or
warranty of the Company in this Agreement to be or
become untrue; or
(xvii) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(b) Except as permitted herein, during the period from the date of
this Agreement through the Effective Time, Parent shall not, and shall cause
each of its Subsidiaries not to, consummate or enter into any agreement to
consummate any transaction which would reasonably be expected to delay or impede
the consummation of the Merger or which relates to the merchant acquiring
business and would require filings to be made under the HSR Act; provided,
however, that this Section 4.1(b) shall be inapplicable with respect to the
exercise or enforcement by Parent or any of its Subsidiaries of any of their
current rights (including, without limitation, options to acquire assets or
perform services) or the performance by Parent or any of its Subsidiaries of any
current obligations (including, without limitation, in connection with rights of
third parties to require Parent or any of its Subsidiaries to acquire assets or
perform services).
Section 4.2 No Solicitation. (a) The Company shall, and shall cause
its Subsidiaries and its and their respective officers, directors, employees,
financial advisors, attorneys and other advisors and representatives
(collectively, "Company Representatives") to immediately cease any discussions
or negotiations with any Person that may be ongoing with respect to any
possibility or consideration of making a Takeover Proposal (as hereinafter
defined). The Company shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any Company Representative to, directly or
indirectly, (i) solicit, initiate or encourage any inquiries or the making or
implementation of any Takeover Proposal, (ii) make or implement or participate
in the making or implementation of any Takeover Proposal, (iii) approve or
recommend (except with respect to a Superior Proposal in respect of which the
Company is entitled to discuss or negotiate in accordance with this Section
4.2), or enter into any agreement with respect to, any Takeover Proposal or (iv)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to the Company or any of its Subsidiaries in
connection with, or take any other action that may
reasonably be expected to lead to any Takeover Proposal; provided, however, that
nothing contained in this Section 4.2(a) shall prohibit the Company or its
directors from complying with Rules 14d-9 and 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer; and provided, further,
that prior to the Effective Time, if (A) the Company receives a request for non-
public information that was not solicited in violation of this Section 4.2(a)
from a party who proposes a written bona fide Takeover Proposal and if the Board
of Directors of the Company determines in good faith that the failure to provide
the information requested would be inconsistent with such Board's fiduciary
duties to the Company and its stockholders or otherwise breach or violate
applicable law (based on the advice of outside legal counsel to the Company to
such effect, which advice shall specifically take into account the Stockholder
Agreement and all the terms thereof, including the obligations and agreements
therein of Bank One and First USA with respect to the Shares owned by First USA
and voting for the Merger and against any Takeover Proposal other than the
Merger (the "Legal Advice")), then the Company and the Company Representatives
may, in response to an unsolicited request therefor, and subject to compliance
with Section 4.2(b), furnish information with respect to the Company and its
Subsidiaries to the Person making such Takeover Proposal pursuant to a customary
confidentiality agreement (as determined by the Company's outside legal counsel)
on terms not in the aggregate materially more favorable to such Person than the
terms contained in the Confidentiality Agreement, and (B) (i) a Takeover
Proposal constitutes a Superior Proposal (as hereinafter defined), and (ii) the
Board of Directors of the Company reasonably determines in good faith that the
failure to provide the information requested or to engage in discussions or
negotiations would be inconsistent with such Board's fiduciary duties to the
Company and its stockholders or otherwise breach or violate applicable law
(based on Legal Advice), then to the extent such failure is inconsistent with
such Board's fiduciary duties (determined as aforesaid), the Company and the
Company Representatives may, in response to an unsolicited request therefor, and
subject to compliance
with Section 4.2(b), participate in discussions or negotiations with such
Person. Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in the preceding sentence by any Company
Representative, whether or not such person is purporting to act on behalf of the
Company or any of its Subsidiaries or otherwise, shall be deemed to be a breach
of this Section 4.2(a) by the Company. For purposes of this Agreement, "Takeover
Proposal" means (i) any written proposal or offer for a tender offer,
recapitalization, merger, consolidation or other business combination involving
the Company or any of its Subsidiaries or any proposal or offer to acquire in
any manner, directly or indirectly, an equity interest in, any voting securities
of, or a substantial portion of the assets of the Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement, the
Stockholder Agreement and the Contribution Agreement or (ii) any other
transaction the consummation of which could reasonably be expected to impede,
interfere with, prevent or materially delay the Merger or which could reasonably
be expected to dilute or adversely affect materially the benefits to Parent of
the transactions contemplated by this Agreement, the Stockholder Agreement and
the Contribution Agreement, and "Superior Proposal" means a bona fide Takeover
Proposal made by a third party on terms which the Board of Directors of the
Company reasonably determines in good faith to be more favorable to the
Company's stockholders than the Merger (based on a written opinion, with only
customary qualifications, from a nationally recognized investment banking firm
serving as financial advisor to the Company (a "Banker Opinion") that the value
of the consideration provided for in such proposal exceeds the Merger
Consideration) and for which financing, to the extent required, is then
committed or which the Board of Directors reasonably determines in good faith
(based on a Banker Opinion) is highly likely to be obtained by such third party.
In making its determination whether a Takeover Proposal constitutes a Superior
Proposal pursuant to the preceding sentence, the Board of Directors shall take
into account whether such Takeover Proposal has a reasonable prospect of being
consummated prior to October 1, 1999. Notwithstanding the foregoing, unless this
Agreement shall have been terminated pursuant to the terms hereof, nothing shall
prevent Parent, in its discretion, from consummating the Merger.
(b) The Company shall advise Parent and Bank One orally and in writing
of (i) any Takeover Proposal or any inquiry with respect to or which could lead
to any Takeover Proposal received by any officer or director of the Company or,
to the knowledge of the Company, any other Company Representative and (ii) the
identity of the Person making any such Takeover Proposal or inquiry, no later
than 24 hours following receipt of such Takeover Proposal or inquiry. If the
Company intends to furnish any Person with any information with respect to any
Takeover Proposal in accordance with Section 4.2(a), the Company shall advise
Parent and Bank One orally and in writing of such intention not less than 24
hours in advance of providing such information and shall promptly provide to
Parent and Bank One any information concerning the Company, its Subsidiaries,
business, properties or assets furnished to any third party and which has not
previously been provided to Parent and Bank One.
Section 4.3 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any standstill agreement to
which the Company or any of its Subsidiaries is a party (other than, to the
extent mutually agreed between Parent and the Company, any such agreement
involving Parent). During such period, the Company agrees to enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreements, including, but not limited to, obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States or any state thereof
having jurisdiction.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meeting. (a) As soon as practicable following
the execution of this Agreement, the Company will duly call, give notice of,
convene and hold a meeting of stockholders (the "Stockholder Meeting") for the
purpose of considering the adoption of this Agreement and the approval of the
Merger and at such meeting call for a vote and cause proxies to be voted in
respect of the adoption of this Agreement and the Company will, through its
Board of Directors, recommend to its stockholders the adoption of this
Agreement, and shall not withdraw or modify such recommendation (unless it has
been previously withdrawn pursuant to the terms of Section 4.2). This Agreement
shall be submitted to the Company's stockholders at the Stockholder Meeting
whether or not the Board of Directors determines at any time that this Agreement
is no longer advisable and recommends that the stockholders reject it.
(b) As soon as practicable after the execution of this Agreement, the
Company shall prepare and file a preliminary Proxy Statement with the SEC and
shall use its reasonable best efforts to respond to any comments of the SEC or
its staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company shall notify Parent and Bank One
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent and Bank One with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the SEC or its staff, on the other hand, with respect to
the Proxy Statement or the Merger. If at any time prior to the Stockholder
Meeting there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its stockholders such an amendment or supplement. Parent and its counsel and
Bank One and its counsel shall be given a reasonable opportunity to review and
comment upon the Proxy Statement and any such correspondence prior to its filing
with the SEC or dissemination to the Company's Stockholders. The Company shall
not so file or disseminate any Proxy Statement, or any amendment or supplement
thereto, to
which Parent or Bank One reasonably objects. Parent and Bank One shall cooperate
with the Company in the preparation of the Proxy Statement or any amendment or
supplement thereto.
Section 5.2 Access to Information. During the period from the date of
this Agreement through the Effective Time and subject to currently existing
contractual and legal restrictions applicable to the Company or any of its
Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to,
afford to the accountants, counsel, financial advisors and other representatives
of Parent reasonable access to, and permit them to make such inspections as they
may reasonably require of, all of their respective properties, books, contracts,
commitments and records and, during such period, the Company shall, and shall
cause each of its Subsidiaries to (i) furnish promptly to Parent a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state securities laws,
(ii) furnish promptly to Parent all other information concerning its business,
properties and personnel as Parent may reasonably request and (iii) promptly
make available to Parent all personnel of the Company and its Subsidiaries
knowledgeable about matters relevant to such inspections; provided, however,
that the foregoing shall not require the Company or any of its Subsidiaries to
furnish or otherwise make available to Parent or any of its Subsidiaries
customer-specific data or competitively sensitive information relating to areas
of the company's business in which Parent and/or any of its Subsidiaries
competes against the Company. No investigation pursuant to this Section 5.2
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto. All
information obtained by Parent pursuant to this Section 5.2 shall be kept
confidential in accordance with the Letter Agreement, dated September 4, 1997
between Parent and the Company, as confirmed in a letter dated October 22, 1998
from Parent to the Company (collectively, the "Confidentiality Agreement").
Section 5.3 Costs and Expenses; Termination Fee. (a) Except as
provided in this Section 5.3, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby (including the Merger),
including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such
costs and expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to
Parent $10 million (the "Termination Fee"), under the circumstances and at the
times set forth as follows:
(i) if Parent terminates this Agreement under Section 7.1(d) the
Company shall pay the Termination Fee upon demand; and
(ii) if the Company terminates this Agreement under Section 7.1(e),
the Company shall pay the Termination Fee simultaneously with such termination.
(c) If this Agreement is terminated pursuant to Section 7.1(b)(i) and
at the time of such termination the condition set forth in Section 6.1(c) shall
not have been fulfilled, then Parent shall reimburse the Company upon demand
for all documented out-of-pocket fees and expenses incurred or paid by or on
behalf of the Company in connection with this Agreement and the transactions
contemplated hereby, including all fees and expenses of its counsel, financial
advisor, accountant and other consultants and advisors; provided, however, that
Parent shall not be obligated to make payments pursuant to this Section 5.3(c)
in excess of $2 million in the aggregate.
Section 5.4 Stock Options. (a) Prior to the Effective Time, the Board
of Directors of the Company (or, if appropriate, any committee thereof) shall
adopt appropriate resolutions and take all other actions necessary or
appropriate, if any, to (i) cause each Company Stock Option that is outstanding
as of the date hereof to vest and to be exercisable immediately prior to the
consummation of the Merger, (ii) cause all restrictions applicable to any
restricted stock award heretofore granted under the Company Restricted Stock
Plan or any other similar plan outstanding upon the consummation of the Merger
to lapse immediately prior to the Effective Time and (iii) cause each Company
Stock Option that is outstanding upon the consummation of the Merger to be
exercisable solely for the Merger Consideration for each Share issuable upon
exercise thereof immediately prior to the Effective Time. The Company shall
offer each holder of a Company Stock Option (an "Option Holder"), in exchange
for the cancellation thereof, the right to receive from the Company an amount
equal to (A) the product of (1) the number of shares of Company Common Stock
subject to such Company Stock Option and (2) the excess, if any, of the Merger
Consideration over the exercise price per share for the purchase of the Company
Common Stock subject to such Company Stock Option, minus (B) all applicable
federal, state and local Taxes required to be withheld in respect of such
payment. The amounts payable pursuant to the immediately preceding sentence of
this 5.4 shall be paid as soon as reasonably practicable following the Effective
Time. The surrender of an Option in exchange for the consideration contemplated
by the second sentence of this Section 5.4 shall be deemed a release of any and
all rights the Option Holder had or may have had in respect thereof. The Company
shall take all such steps as may be required to cause the transactions
contemplated by this Section 5.4 and any other dispositions of Company equity
securities (including derivative securities) in connection with this Agreement
by each individual who is a director or officer of the Company to be exempt
under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in
accordance with the No-Action Letter dated January 12, 1999, issued by the SEC
to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
(b) The Company shall take all actions necessary to ensure that (i)
the Offering Period (as defined in the Company Stock Purchase Plan) applicable
to the options outstanding under the Company Stock Purchase Plan (each, a
"Purchase Plan Option") is shortened in accordance with Section 16 of the
Company Stock Purchase Plan so as to have an Exercise Date (as defined in the
Company Stock Purchase Plan) that occurs before the Effective Time; (ii) no new
Offering Period, other than the Offering Period scheduled to commence on April
1, 1999, shall commence on or after the date hereof, and (iii) no holder of a
Purchase Plan Option is permitted to increase his or her rate of payroll
deduction under the Company Stock Purchase Plan from and after the date hereof.
(c) The Company shall take all actions necessary to provide that,
prior to the Effective Time, (i) the Company Stock Option Plan, the Company
Stock Purchase Plan and any similar plan or agreement of the Company shall be
terminated, (ii) any rights under any other plan, program, agreement or
arrangement to the issuance or grant of any other interest in
respect of the capital stock of the Company or any of its Subsidiaries shall be
terminated, and (iii) no Option Holder will have any right to receive any shares
of capital stock of the Company or, if applicable, the Surviving Corporation,
upon exercise of any Company Stock Option.
(d) The Company represents and warrants that it has the power and
authority under the terms of the Company Stock Purchase Plan and each of the
Company Stock Option Plan and the Company Restricted Stock Plan to comply with
subsections (a), (b) and (c) hereof without the consent of any Option Holder or
any other person.
Section 5.5 Reasonable Best Efforts. (a) Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including: (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from all
Governmental Entities and Card Associations and the making of all necessary
registrations and filings (including filings under the HSR Act, the Change in
Bank Control Act and the Utah Statute and other filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity (including furnishing all information required under the HSR
Act, the Change in Bank Control Act and the Utah Statute and actions in
connection with State Takeover Approvals); (ii) the obtaining of all necessary
consents, approvals or waivers from third parties; (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby and thereby, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed; and
(iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by this Agreement. Each party will
promptly consult with the other with respect to, provide any necessary
information with respect to and provide the other (or its counsel) and Bank One
(or
its counsel) copies of, all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby. In addition, if at any time prior to the Effective Time any event or
circumstance relating to any of the Company, Parent or Merger Sub or any of
their respective Subsidiaries, or any of their respective officers or directors,
should be discovered by the Company, Parent or Merger Sub, as the case may be,
and which should be set forth in an amendment or supplement to the Proxy
Statement or the Schedule 13e-3, the discovering party will promptly inform the
other party of such event or circumstance. No party to this Agreement shall
consent to any voluntary delay of the consummation of the Merger at the behest
of any Governmental Entity without the consent of the other parties to this
Agreement, which consent shall not be unreasonably withheld.
(b) Each party shall use all reasonable best efforts to not take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, in connection with any filing or submission required or action to be
taken by either Parent or the Company to effect the Merger and to consummate the
other transactions contemplated hereby, the Company shall not, without Parent's
prior written consent, commit to any divestiture transaction other than with
respect to the Excluded Assets (as defined in the Contribution Agreement), and
neither Parent nor any of its affiliates shall be required to divest or hold
separate or otherwise take or commit to take any action that limits its freedom
of action with respect to, or its ability to retain, the Company or any of the
businesses, product lines or assets of Parent or any of its Subsidiaries or that
would have a Material Adverse Effect on Parent.
Section 5.6 Public Announcements. Parent and the Company will not
issue any press release with respect to the transactions
contemplated by this Agreement or otherwise issue any written public statements
with respect to such transactions without prior consultation with the other
party and Bank One, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange.
Section 5.7 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation is or may become applicable to the transactions contemplated hereby,
in the Stockholder Agreement or in the Contribution Agreement such that, without
further approval or action by Parent, the Company or their respective Boards of
Directors, such transactions cannot be consummated in accordance with the terms
hereof and thereof and such statute or regulations, then Parent and the Company
and their respective Boards of Directors shall use their reasonable efforts to
grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby and thereby may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby and thereby.
Section 5.8 Indemnification; Directors and Officers Insurance. (a)
From and after the Effective Time, Parent shall cause the Surviving Corporation
to indemnify and hold harmless all past and present officers and directors of
the Company and of its Subsidiaries (each an "Indemnified Party") to the same
extent and in the same manner such persons are indemnified as of the date of
this Agreement by the Company pursuant to the DGCL, the Company Charter or the
Company's By-laws for acts or omissions occurring at or prior to the Effective
Time. Parent also agrees to advance expenses as incurred to the fullest extent
permitted under the DGCL upon receipt from the applicable Indemnified Party to
whom expenses are to be advanced of an undertaking to repay such advances if it
is ultimately determined that such person is not entitled to indemnification
pursuant to this Section 5.8(a).
(b) Parent shall cause the Surviving Corporation to provide, for an
aggregate period of not less than six years from the Effective Time, the
Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring prior to the
Effective Time (the "D&O Insurance") that is substantially similar to the
Company's existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that the Surviving
Corporation shall not be required to pay an annual premium for the D&O Insurance
in excess of 150% of the last annual premium paid prior to the date hereof but
in such case shall purchase as much coverage as possible for such amount.
(c) The provisions of this Section 5.8(i) are intended to be for the
benefit of, and will be enforceable by, each Indemnified Party, his or her heirs
and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
Section 5.9 Notification of Certain Matters. Parent shall use its
reasonable best efforts to give prompt notice to the Company and Bank One, and
the Company shall use its reasonable best efforts to give prompt notice to
Parent and Bank One, of: (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which it is aware and which would be
reasonably likely to cause (x) any representation or warranty contained in this
Agreement and made by it to be untrue or inaccurate in any material respect or
(y) any covenant, condition or agreement contained in this Agreement and made by
it not to be complied with or satisfied in all material respects, (ii) any
failure of Parent or the Company, as the case may be, to comply in a timely
manner with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder or (iii) any change or event which has had a
Material Adverse Effect on the Company; provided, however, that the delivery of
any notice pursuant to this Section 5.9 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 5.10 Certain Litigation. The Company agrees that it shall not
settle any litigation commenced after the date hereof against the Company or any
of its directors by any stockholder of the Company relating to the Merger, this
Agreement or the Stockholder Agreement without the prior written consent of
Parent, which consent may not be unreasonably withheld. In addition, the Company
shall not voluntarily cooperate with any third party that may hereafter seek to
restrain or prohibit or otherwise oppose the Merger and shall cooperate with
Parent and Merger Sub to resist any such effort to restrain or prohibit or
otherwise oppose the Merger.
Section 5.11 Revolving Credit Agreement. The Company agrees to use
reasonable efforts to obtain a waiver of the restrictions on dividends or other
distributions by the Company under its existing revolving credit agreement and
the consent to the transfer of such revolving credit agreement to the Alliance.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. The Company Stockholder Approval
shall have been obtained.
(b) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making illegal the Merger or any of the other transactions
contemplated by this Agreement, the Stockholder Agreement or the Contribution
Agreement.
(c) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
(d) Regulatory Approvals. The parties shall have received the
approval of the Federal Deposit Insurance Corporation under the Change in Bank
Control Act and the approval of the Utah Department of Financial Institutions
under the Utah Statute, and any other governmental or regulatory notices or
approvals required with respect to the transactions contemplated hereby shall
have been either filed or received, except for those the failure to have given
or obtain would not have a Material Adverse Effect on the Company.
Section 6.2. Additional Conditions to Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to effect the Merger shall
be subject to fulfillment of the following additional conditions, any of which,
subject to Section 7.4, may be waived exclusively by Parent:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct as of the date of the Closing and the
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case as though made on and as of the
date of the Closing (except to the extent any such representation or warranty
expressly speaks as of an earlier date); and Parent and Merger Sub shall have
received a certificate signed on behalf of the Company by an executive officer
of the Company to such effect.
(b) Performance of Obligations. The Company shall have performed in
all material respects each material obligation and agreement and shall have
complied in all material respects with each material covenant required to be
performed and complied with by it under this Agreement at or prior to the
Effective Time; and Parent and Merger Sub shall have received a certificate
signed on behalf of the Company to such effect.
(c) Absence of Material Adverse Change. There shall not have occurred
any Material Adverse Change with respect to the Company.
(d) Absence of Pending Litigation. There shall not be pending by any
Governmental Entity any suit, action or proceeding (i) seeking to restrain or
prohibit the Merger or the performance of any of the other transactions
contemplated by this Agreement, the Stockholder Agreement or
the Contribution Agreement or seeking to obtain from the Company or Parent any
damages that would have a Material Adverse Effect on Parent or the Company, (ii)
seeking to compel the Company or Parent or any of their Affiliates to dispose of
or hold separate any material portion of the business or assets of the Company
and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as
a whole, as a result of the Merger or any of the other transactions contemplated
by this Agreement, the Stockholder Agreement or the Contribution Agreement or
(iii) which otherwise is reasonably likely to have a Material Adverse Effect on
the Company, other than such suits, actions or proceedings which, in the
reasonable opinion of both counsel to Parent and to the Company, are unlikely to
result in an adverse judgement.
(e) Stockholder Agreement and Contribution Agreement. Neither Bank
One nor First USA shall have terminated the Stockholder Agreement or the
Contribution Agreement (whether or not in accordance with the terms thereof) and
neither Bank One nor First USA shall be in material breach thereof or shall have
indicated its intention not to perform such party's obligations thereunder.
(f) Accounting Matters Applicable to Bank One. The conditions set
forth in Section 5.9 of the Contribution Agreement shall have been fulfilled or
waived pursuant to the terms of the Contribution Agreement.
Section 6.3. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger shall be subject to fulfillment
of the following additional conditions, any of which, subject to Section 7.4,
may be waived exclusively by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement that are
qualified as to materiality shall be true and correct as of the date of the
Closing and the representations and warranties that are not so qualified shall
be true and correct in all material respects, in each case as though made on and
as of the date of the Closing (except to the extent any such representation or
warranty expressly speaks as of an earlier date); and the Company shall have
received certificates signed on behalf of each of Parent and Merger Sub by an
executive officer of each to such effect.
(b) Performance of Obligations. Parent and Merger Sub shall
have performed in all material respects each material obligation and agreement
and shall have complied in all material respects with each material covenant
required to be performed and complied with by either of them under this
Agreement at or prior to the Effective Time; and the Company shall have
received certificates signed on behalf of each of Parent and Merger Sub to such
effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated prior to
October 1, 1999; provided, however, that the right to terminate this
Agreement pursuant to this Section 7.1(b)(i) shall not be available
to any party whose failure to perform any of its obligations under
this Agreement results in the failure of any such condition or if the
failure of such condition results from facts or circumstances that
constitute a breach of any representation or warranty under this
Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger or the other
transactions contemplated by this Agreement, the Stockholder
Agreement or the Contribution Agreement and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by Parent or the Company in the event of a breach by the other
(or Merger Sub, in the case of Parent) of any representation, warranty,
covenant or other agreement contained in this Agreement which (i) would
reasonably be expected to give rise to the failure of a condition set
forth in Sections 6.2 (a) or (b) or 6.3 (a) or (b), as
the case may be, and (ii) cannot be or has not been cured within
30 days after the giving of written notice of such breach to the
Company;
(d) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of the Merger or this Agreement, or
approved or recommended any Takeover Proposal (whether or not in
compliance with Section 4.2) or (ii) the Board of Directors of the Company
or any committee thereof shall have resolved to take any of the foregoing
actions; or
(e) by the Company prior to receipt of the Company Stockholder
Approval if (i) a Takeover Proposal constitutes a Superior Proposal, and
(ii) the Board of Directors of the Company reasonably determines in good
faith that the failure to terminate this Agreement and accept such
Superior Proposal would be inconsistent with such Board's fiduciary duties
to the Company and its stockholders or otherwise breach or violate
applicable law (based on Legal Advice); provided, however, that this
Agreement shall not terminate pursuant to this Section 7.1(e) unless (i)
the Company has complied with all provisions of Section 4.2, including the
notice provisions therein, (ii) simultaneously with such termination the
Company has complied with the requirements of Section 5.3(b) relating to
the payment (including the timing of any payment) of the Termination Fee
to the extent required by Section 5.3(b) and (iii) simultaneously with
such termination the Company enters into a definitive acquisition, merger
or similar agreement to effect such Superior Proposal; and provided,
further, that the Company may not terminate this Agreement pursuant to
this Section 7.1(e) unless and until 120 hours have elapsed following
delivery to Parent and Bank One of a written notice of such determination
by the Board of Directors of the Company and during such 120 hours Parent
has not informed the Company that it is willing to substantially match the
terms and conditions of such Superior Proposal.
The right of any party hereto to terminate this Agreement pursuant to
this Section 7.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any
party hereto, any person controlling any such party or any of their respective
officers or directors, after the execution of this Agreement.
Section 7.2 Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Merger Sub or their respective
officers or directors (except for Section 2.5, 2.7, 3.23, the last sentence of
Section 5.2, Section 5.3, this Section 7.2 and Article VIII, all of which shall
survive the termination); provided, however, that nothing contained in this
Section 7.2 shall relieve any party hereto from any liability for any willful
breach of a representation or warranty contained in this Agreement or the
material breach of any covenant contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the parties
hereto, at any time before or after Company Stockholder Approval (if required
by law); provided, that (i) if the Company Stockholder Approval shall have been
obtained, thereafter no amendment shall be made which by law requires further
approval by such stockholders without such further approval and (ii) no
amendment of this Agreement shall be made effective without the prior written
consent of Bank One which consent shall not be unreasonably withheld. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 7.4 Extension; Waiver. At any time prior to the Effective
Time and subject to in clause (ii) of Section 7.3, the parties hereto may to
the extent legally allowed (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements (except
those agreements referred to in the immediately following sentence in the event
of the Merger or those agreements and matters referred to in Section 7.2 in the
event of the termination of this Agreement in accordance with Section 7.1) in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time or the termination of this Agreement pursuant to
Section 7.1, as the case may be. This Section 8.1 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Effective Time of the Merger.
Section 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one
day after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Sub, to:
First Data Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and
Sidley & Austin
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Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Facsimile No.: 312-853-7036
(b) if to the Company, to:
Paymentech, Inc.
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Attention: General Counsel
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ ▇▇▇▇ LLP
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: 212-735-2000
(c) if to Bank One, to:
BANK ONE CORPORATION
One First National Plaza
Law Department
Mail Suite 0287
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Section 8.3 Interpretation; Definitions. (a) When a reference is made
in this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
(b) As used in this Agreement, the following terms have the meanings
specified in this Section 8.3(b) and shall be equally applicable to both the
singular and plural forms:
"Bank Card Association" means Mastercard International, Inc., VISA
U.S.A., Inc. or VISA International, Inc.
"Bank Cards" means a credit card, charge card, debit card, stored
value card or similar instrument that is issued by a licensee of a Bank Card
Association.
"Bank Holding Company Act" means the Bank Holding Company Act of
1956, as amended.
"Card Associations" means (i) Bank Card Associations and (ii) Other
Card companies (e.g. Discover, JCB, American Express, debit card networks or
links) and any other card association or similar entity with whom the Company
and/or any of its Subsidiaries may have a contract for processing and/or
facilitating settlement of transaction media (including
direct send contracts with Bank Card issuing banks) generated by holders of
cards or similar instruments issued by licensees of such groups.
"Cards" means Bank Cards and all Other Cards.
"Change in Bank Control Act" means Section 18(c)(1)(A) of the Federal
Insurance Corporation Act.
"IRS" means the Internal Revenue Service.
"Material Adverse Change" or "Material Adverse Effect" means, when
used with respect to the Company or Parent, as the case may be, any change or
effect that is or would reasonably be expected (as far as can be foreseen at
the time) to be materially adverse to the business, results of operations, or
condition (financial or otherwise), of the Company and its Subsidiaries, taken
as a whole, or Parent and its Subsidiaries, taken as a whole; provided,
however, that the effects of changes that are generally applicable to the
industries in which the Company operates or to the United States economy
generally, or which result from the announcement of the transactions
contemplated by this Agreement, shall be excluded from such determination.
"Other Cards" shall include Discover, JCB, American Express, Diners
Club, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and any other Card or similar instrument which may be
issued by a debit card network or any other Card Association (or licensee
thereof) other than Mastercard or Visa.
"Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other legal entity of which Parent, Bank One or the
Company, as the case may be (either alone or through or together with any other
such Subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation, partnership, limited liability company, joint venture or other
legal entity.
"Transaction Card" means a Card issued pursuant to a license from a
Card Association for which the Company and/or any of its Subsidiaries currently
provides service support.
(c) The following terms shall have the meanings set forth for such
terms in the Sections set forth below:
TERM SECTION
---- --------
"Affiliated Person" Section 3.22
"Agreement" Preamble
"Alliance" Recitals
"Bank One" Recitals
"Banker Opinion" Section 4.2(a)
"Blue Sky Laws" Section 2.3
"Certificate of Merger" Section 1.3
"Certificates" Section 1.7(b)
"Closing" Section 1.9
"Company" Preamble
"Company Business Personnel" Section 3.15
"Company Charter" Section 1.5(a)
"Company Common Stock" Recitals
"Company Foreign Benefit Plan" Section 3.13(f)
"Company Letter" Section 3.2
"Company Merchant Contracts" Section 3.20(c)
"Company Multiemployer Plan" Section 3.13(a)
"Company Permits" Section 3.9
"Company Plan" Section 3.13(a)
"Company Preferred Stock" Section 3.3
"Company Representatives" Section 4.2(a)
"Company Restricted Stock Plan" Section 3.3
"Company SEC Documents" Section 3.6
"Company Stock Option Plan" Section 3.3
"Company Stock Options" Section 3.3
"Company Stock Purchase Plan" Section 3.3
"Company Stockholder Approval" Section 2.4
"Compensation Agreements" Section 3.12
"Computerized Assets" Section 3.16
"Confidentiality Agreement" Section 5.2
"Constituent Corporations" Preamble
"Contribution Agreement" Recitals
"D&O Insurance" Section 5.8(b)
"DGCL" Section 1.2
"Dissenting Shares" Section 1.6(d)
"Dissenting Stockholder" Section 1.6(d)
"Effective Time" Section 1.3
"Environmental Law" Section 3.19(a)
"Environmental Permit" Section 3.19(a)
"ERISA" Section 3.13(a)
"ERISA Affiliate" Section 3.13(a)
"Exchange Act" Section 2.4
"First USA" Recitals
"GAAP" Section 3.14(a)
"Governmental Entity" Section 2.3
"Hazardous Substances" Section 3.19(a)
"Holdco" Preamble
"HSR Act" Section 2.3
"Intellectual Property Rights" Section 3.16
"Legal Advice" Section 4.2(a)
"Liens" Section 3.2
"Merger" Recitals
"Merger Consideration" Recitals
"Merger Sub" Preamble
"Option Holder" Section 5.4(a)
"Parent" Preamble
"Paying Agent" Section 1.7(a)
"Proxy Statement" Section 2.4
"Purchase Plan Option" Section 5.4(b)
"Real Estate" Section 3.17(b)
"Schedule 13e-3" Section 2.4
"SEC" Section 2.4
"Securities Act" Section 3.6
"Shares" Recitals
"Software" Section 3.16
"State Takeover Approvals" Section 2.3
"Stockholder Agreement" Recitals
"Stockholder Meeting" Section 5.1(a)
"Superior Proposal" Section 4.2(a)
"Surviving Corporation" Section 1.2
"Takeover Proposal" Section 4.2(a)
"Tax Return" Section 3.10
"Taxes" Section 3.10
"Termination Fee" Section 5.3(b)
"Top 25 Customers" Section 3.20(a)
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, except as provided in the last sentence of Section 5.2, constitutes
the entire agreement, and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. This Agreement, except for the provisions of Sections 1.2 and 5.8 and
except as expressly set forth in Sections 1.5, 1.7(a), 2.4, 4.2(b), 5.1, 5.5,
5.6, 5.9, 7.3 and 8.5 with respect to Bank One, is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof. In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any Federal or state court located in
the State of Delaware in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (ii) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for
leave from any such court, (iii) waives any objection based on forum non
conveniens or any other objection to venue thereof, and (iv) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 8.7 Assignment. Subject to Section 1.2, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. This
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and permitted assigns.
Section 8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic and legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent
possible.
Section 8.9 Enforcement of this Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific wording or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof, such
remedy being in addition to any other remedy to which any party is entitled at
law or in equity. Each party hereto waives any right to a trial by jury in
connection with any such action, suit or proceeding.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
FIRST DATA CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
FB MERGING CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
PAYMENTECH, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO - Pres.
Exhibits A and B intentionally omitted.
Exhibit C
As of the Effective Time, the Company Charter shall be amended to read in
its entirety as follows:
FIRST: The name of this corporation (hereinafter called the "Corporation") is
Paymentech, Inc.
SECOND: The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of
New Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The amount of the total authorized capital stock of this Corporation is
Ten Dollars ($10.00) divided into 1,000 shares, par value $0.01 per share.