EXHIBIT 10.2
EXECUTION COPY
CONTRIBUTION AGREEMENT
DATED AS OF MARCH 22, 1999
BETWEEN
FIRST DATA CORPORATION
AND
BANK ONE CORPORATION
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Interpretation . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
PRELIMINARY TRANSACTIONS
2.1. Divestiture of Excluded Assets. . . . . . . . . . . . . . 2
2.2. Subsidiaries of Alpha. . . . . . . . . . . . . . . . . . . 3
ARTICLE III
CLOSING
3.1. Time and Place of Closing . . . . . . . . . . . . . . . . 3
3.2. Execution and/or Amendment of Agreements . . . . . . . . . 4
3.3. Contribution of Specified Assets and
Liabilities . . . . . . . . . . . . . . . . . . . . . . 4
3.4. Alpha Deliveries. . . . . . . . . . . . . . . . . . . . . 4
3.5. Alliance Deliveries . . . . . . . . . . . . . . . . . . . 4
3.6. Other Deliveries. . . . . . . . . . . . . . . . . . . . . 5
3.7. Consents to Assignment . . . . . . . . . . . . . . . . . . 5
3.8. Closing Costs; Transfer Fees . . . . . . . . . . . . . . . 6
ARTICLE IV
CONTRIBUTION OF ASSETS
AND LIABILITIES OF ALPHA
4.1. Contribution Assets . . . . . . . . . . . . . . . . . . . 6
4.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . 7
4.3. Assumed Liabilities . . . . . . . . . . . . . . . . . . . 7
4.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . 8
ARTICLE V
CONDITIONS TO CLOSING
5.1. Illegality, Etc . . . . . . . . . . . . . . . . . . . . . 8
5.2. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3. Consents and Approvals . . . . . . . . . . . . . . . . . . 9
5.4. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.5. Other Agreements . . . . . . . . . . . . . . . . . . . . . 9
5.6. Divestiture of Unrelated Assets . . . . . . . . . . . . . 9
5.7. Resolutions, Certificates, Etc. . . . . . . . . . . . . 10
5.8. Opinions of Counsel . . . . . . . . . . . . . . . . . . 10
5.9. Accounting . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of Bank One and
Bank One Affiliates . . . . . . . . . . . . . . . . . 11
6.2. Representations and Warranties of FDC and FDC
Affiliates . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
SCHEDULES OF ALPHA ASSETS AND LIABILITIES . . . . . . . . . . . . 16
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. Reasonable Access. . . . . . . . . . . . . . . . . . . . 16
8.2. Accuracy of Representations and Warranties . . . . . . . 16
8.3. Efforts to Consummate. . . . . . . . . . . . . . . . . . 17
8.4. No Public Announcement. . . . . . . . . . . . . . . . . 17
8.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . 17
8.6 Notification of Certain Matters . . . . . . . . . . . . 19
8.7. Card Association Approvals. . . . . . . . . . . . . . . 19
8.8. Related Party Transactions . . . . . . . . . . . . . . . 19
8.9. Operations Prior to Closing Date . . . . . . . . . . . . 19
8.10. Intercompany Agreements . . . . . . . . . . . . . . . . 19
8.11. Cooperation on Debt . . . . . . . . . . . . . . . . . . 20
8.12. Certain Fees . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX
EMPLOYEE MATTERS
9.1. Employment of Alpha Employees . . . . . . . . . . . . . 20
9.2. Maintenance of Employee Benefits Plans . . . . . . . . . 21
9.3. Bonuses . . . . . . . . . . . . . . . . . . . . . . . . 21
9.4. Vacation and Sick Leave . . . . . . . . . . . . . . . . 21
9.5. Workers' Compensation . . . . . . . . . . . . . . . . . 21
9.6. Employees of Alliance Members . . . . . . . . . . . . . 21
ARTICLE X
INDEMNIFICATION; PAYMENT OF CERTAIN COSTS
10.1. Indemnification by FDC . . . . . . . . . . . . . . . . . 21
10.2. Indemnification by Bank One . . . . . . . . . . . . . . 22
10.3. Notice of Claims . . . . . . . . . . . . . . . . . . . . 22
10.4. Third Person Claims . . . . . . . . . . . . . . . . . . 23
10.5. Limitation . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XI
TERMINATION
11.1. Termination . . . . . . . . . . . . . . . . . . . . . . 24
11.2. Notice of Termination . . . . . . . . . . . . . . . . . 24
11.3. Effect of Termination . . . . . . . . . . . . . . . . . 25
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Counterparts. . . . . . . . . . . . . . . . . . . . . . 25
12.2. Entire Agreement. . . . . . . . . . . . . . . . . . . . 25
12.3. Partial Invalidity. . . . . . . . . . . . . . . . . . . 25
12.4. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 25
12.5. Governing Law. . . . . . . . . . . . . . . . . . . . . . 25
12.6. Waiver. . . . . . . . . . . . . . . . . . . . . . . . 25
12.7. Further Assurances. . . . . . . . . . . . . . . . . . . 26
12.8. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 26
12.9. Survival of Obligations . . . . . . . . . . . . . . . . 26
12.10. Successors and Assigns . . . . . . . . . . . . . . . . . 27
12.11. Confidential Nature of Information . . . . . . . . . . . 27
12.12. Informal Dispute Resolution . . . . . . . . . . . . . . 27
12.13. Arbitration . . . . . . . . . . . . . . . . . . . . . . 28
12.14. Judicial Procedure . . . . . . . . . . . . . . . . . . . 31
12.15. Amendment of Alliance Agreement . . . . . . . . . . . . 31
ANNEXES
ANNEX I - Definitions
EXHIBITS
EXHIBIT A - Form of Operating Agreement
EXHIBIT B - Related Party Transactions
EXHIBIT C - List of Schedules
EXHIBIT D - Knowledge of Bank One
EXHIBIT E - Other Alliances
EXHIBIT F - Intentionally Omitted
EXHIBIT G - Form of Revised Processing Agreement - Additional Terms
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT, dated as of March 22, 1999 (this
"Agreement"), between First Data Corporation, a Delaware corporation
("FDC"), and BANK ONE CORPORATION, a Delaware corporation ("Bank One").
W I T N E S E T H:
WHEREAS, First Data Merchant Services Corporation, a Florida
corporation ("FDMS") and wholly owned subsidiary of FDC (successor to Card
Establishment Services, Inc.), First Data Resources Inc., a Delaware
corporation ("FDR") and wholly owned subsidiary of FDC, and Banc One POS
Services Corporation, an Ohio corporation ("Banc One POS") and wholly owned
subsidiary of Bank One, entered into an Alliance Agreement dated June 15,
1995, as amended on January 10, 1996 (the "Alliance Agreement");
WHEREAS, FDMS, Banc One POS, and Banc One Payment Services
L.L.C., a Delaware limited liability company (the "Alliance") have entered
into a Limited Liability Company Agreement dated January 10, 1996, as
amended on December 31, 1996 (the "Formation Agreement");
WHEREAS, Bank One, through its wholly-owned subsidiary, First USA
Financial, Inc., a Delaware corporation ("FUSA"), holds approximately 55%
of the issued and outstanding common stock of Paymentech, Inc., a Delaware
corporation ("Alpha");
WHEREAS, FDC proposes to negotiate and enter into, or cause an
Affiliate to enter into, an agreement of merger (the "Merger Agreement")
with Alpha pursuant to which all the issued and outstanding common stock of
Alpha not owned, directly or indirectly, by Bank One will be acquired by
such Affiliate (the "Merger"), and FDC and Bank One propose to negotiate
and enter into, or cause an Affiliate to enter into a stockholders
agreement (the "Stockholders Agreement") governing certain actions of FDC,
Bank One and/or certain of their Affiliates relative to Alpha and certain
Affiliates of Alpha;
WHEREAS, following the Merger, FDC and Bank One desire to cause
the assets and liabilities and business operations of Alpha to be
contributed to the Alliance in exchange for a Membership Interest, as
defined in the Operating Agreement (as defined herein), in the Alliance;
WHEREAS, upon the Closing, as hereinafter defined, FDC and Bank
One shall cause the members of the Alliance, including Alpha, to enter into
an amended and restated limited liability company agreement (the "Operating
Agreement") in the form attached hereto as Exhibit A;
WHEREAS, in recognition of the additional capabilities that the
Alliance will have upon the contribution to the Alliance of the assets and
business of Alpha, upon the Closing, FDC and Bank One shall cause the
Alliance and FDMS to execute an amended and restated processing agreement
(the "Revised Processing Agreement") in the form of the agreement dated as
of March 22, 1999 between FDMS and Paymentech Merchant Services, Inc.,
except for such changes necessary to reflect the appropriate parties
thereto and except as described on Exhibit G attached hereto;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. In this Agreement, unless the context shall
otherwise require, the capitalized terms used herein shall have the
respective meanings specified or referred to in Annex I hereto, which is
incorporated by reference herein. Each agreement referred to in Annex I
shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and
hereof.
1.2. INTERPRETATION. Each definition contained or referred to
in this Agreement includes the singular and the plural, and reference to
the neuter gender includes the masculine and feminine where appropriate.
References to any statute or regulation means such statute or regulations
as amended at the time and includes any successor legislation or
regulations. The headings to the Articles and Sections are for convenience
of reference and shall not affect the meaning or interpretation of this
Agreement. Except as otherwise stated, reference to Articles, Sections,
Exhibits and Schedules means the Articles, Sections, Exhibits and Schedules
of this Agreement. The Exhibits and Schedules are hereby incorporated by
reference into and shall be deemed a part of this Agreement.
ARTICLE II
PRELIMINARY TRANSACTIONS
2.1. DIVESTITURE OF EXCLUDED ASSETS. Upon the terms and subject
to the conditions of this Agreement, Bank One and FDC shall cause the spin-
off, sale or other disposition of the capital stock or, at the election of
Bank One, the assets and liabilities of First USA Financial Services, Inc.,
a Utah industrial loan company ("FUFSI"), and the capital stock of Message
Media, Inc., a Delaware corporation ("Message Media"). With respect to
FUFSI, such spin-off, sale or divestiture shall occur promptly following
the consummation of the Merger and in any event prior to the Closing Date
unless such spin-off, sale or other disposition shall have been previously
effected with the consent of FDC. With respect to Message Media, such
spin-off, sale or divestiture shall occur as soon as practical after the
date hereof and in any event prior to the Closing Date. Such spin-off,
sale or other disposition of FUFSI shall be for a net aggregate
consideration to Alpha as shall be mutually agreed upon by FDC and Bank One
or, if FDC and Bank One are not able to agree, for such net aggregate
consideration as shall be determined pursuant to the Appraisal Procedure.
Such spin-off, sale or other disposition of Message Media shall be for a
net aggregate consideration to Alpha realized from the sale of such stock
in the open market.
2.2. SUBSIDIARIES OF ALPHA. Upon the terms and subject to the
conditions of this Agreement, unless Bank One and FDC shall mutually agree
to the contrary, Bank One and FDC shall make appropriate mutually agreeable
arrangements to retain the Subsidiaries of Alpha in existence as
Subsidiaries of Alpha after the Closing or, if mutually agreed, to merge or
otherwise combine one or more such Subsidiaries into or with one or more
other such Subsidiaries, and in each case thereafter cause the assets,
liabilities and business of each surviving Subsidiary to be contributed
(directly or indirectly) to the Alliance in exchange for a Membership
Interest, as defined in the Operating Agreement, in the Alliance.
References herein to Alpha shall, where appropriate, be deemed to be
references to Alpha and each surviving Subsidiary of Alpha.
ARTICLE III
CLOSING
3.1. TIME AND PLACE OF CLOSING. Subject to the terms and
conditions set forth herein, the closing of the transactions contemplated
hereby (the "Closing") shall take place at 10:00 a.m. central time on the
third Banking Day following the satisfaction of the closing conditions
specified in Article V or such later date as may be agreed upon by the
parties hereto after the conditions set forth in Article V have been
satisfied or waived,(the "Closing Date"), at the offices of Sidley &
Austin, Chicago, Illinois, or at such other time and place as the parties
hereto shall agree. All of the actions scheduled in this Agreement for the
Closing Date taken or occurring on the Closing Date shall be deemed to
occur simultaneously thereon.
3.2. EXECUTION AND/OR AMENDMENT OF AGREEMENTS. Upon the terms
and subject to the conditions of this Agreement, on the Closing Date, Bank
One and FDC, respectively, shall cause each of the agreements listed in
Section 5.5 to be executed and delivered by the appropriate parties
thereto.
3.3. CONTRIBUTION OF SPECIFIED ASSETS AND LIABILITIES. Upon the
terms and subject to the conditions of this Agreement, on the Closing Date,
FDC and Bank One, respectively, shall cause the Contributed Assets and the
Assumed Liabilities to be transferred to the Alliance as set forth in
Article IV and shall cause the Alliance to assume all such Assumed
Liabilities.
3.4. ALPHA DELIVERIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Bank One and FDC,
respectively, shall cause Alpha to deliver to the Alliance all of the
following:
(a) Certified copies of resolutions of the stockholders and the
Board of Directors of Alpha authorizing the transactions contemplated
hereby;
(b) An instrument of assignment and assumption in form and
substance reasonably satisfactory to Bank One and FDC (the "Instrument
of Assignment and Assumption" );
(c) Certificates of title or origin (or like documents) with
respect to any of the Contributed Assets for which a certificate of
title or origin is required in order to transfer title;
(d) Any consents, waivers or approvals obtained by Alpha with
respect to the Contributed Assets or the consummation of the
transactions contemplated by this Agreement; and
(e) Such other bills of sale, assignments and other instruments
of transfer or conveyance as either Bank One or FDC may reasonably
request or as may otherwise be necessary to evidence and effect the
assignment, transfer, conveyance and delivery of the Contributed
Assets by Alpha to the Alliance.
3.5. ALLIANCE DELIVERIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Bank One and FDC,
respectively, shall cause the Alliance to deliver to Alpha all of the
following:
(a) The Instrument of Assignment and Assumption;
(b) Such other instruments as either Bank One or FDC may
reasonably request or as may be otherwise necessary to evidence or
effect the assumption by the Alliance of the Assumed Liabilities
In addition to the foregoing, on the Closing Date, Alpha will receive a
Membership Interest (as such term is defined in the Operating Agreement) in
the Alliance as described in Section 4.2 of the Operating Agreement. Bank
One and FDC agree that Alpha will be acquiring its Membership Interest for
its own account for investment and with no present intention of
distributing or reselling such Membership Interest or any part thereof.
Alpha will be fully informed as to the applicable limitations upon any
distribution or resale of the Membership Interest, which will not be
registered pursuant to the Securities Act. Bank One and FDC will cause
Alpha to agree not to distribute or resell all or any portion of the
Membership Interest if such distribution or resale would constitute a
violation of the Securities Act by either Alpha or the Alliance.
3.6. OTHER DELIVERIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Bank One and FDC shall
cause their respective Affiliates to deliver to the other party such
additional documents and instruments, including certified copies of
corporate charters or comparable documents, by-laws, resolutions or other
items, as either party may reasonably request.
3.7. CONSENTS TO ASSIGNMENT. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any contract or agreement, or any claim or right or any benefit
arising thereunder or resulting therefrom, if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a
breach thereof or would in any way adversely affect the rights of the
Alliance thereunder. If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would affect the rights
thereunder so that the Alliance would not receive all such rights, Bank One
and FDC will cause Alpha and the Alliance to cooperate, in all reasonable
respects, to obtain such consent as soon as practicable and, until such
consent is obtained, to provide to the Alliance the benefits under any of
the foregoing to which such consent relates (with the Alliance responsible
for all the liabilities and obligations thereunder). In particular, in the
event that any such consent is not obtained prior to the Closing Date, then
Bank One and FDC will cause Alpha and the Alliance to enter into such
arrangements (including subleasing or subcontracting if permitted) to
provide to all parties the economic and operational equivalent of obtaining
such consents and assigning such contract or agreement, including the
enforcement for the benefit of the Alliance of all claims or rights arising
thereunder, and the performance by the Alliance of the obligations
thereunder.
3.8. CLOSING COSTS; TRANSFER FEES. The cost of any surveys,
title reports or title searches, and the recording or filing of all
applicable conveyancing instruments incurred by reason of the transfer of
Contributed Assets to the Alliance will be paid by Alpha upon the Closing.
ARTICLE IV
CONTRIBUTION OF ASSETS
AND LIABILITIES OF ALPHA
4.1. CONTRIBUTION ASSETS. On the Closing Date and upon the
terms and subject to the conditions of this Agreement including Section
3.7, FDC and Bank One shall cause Alpha, and each surviving Subsidiary
under Section 2.2, to (and on or prior to the Closing Date FDC and Bank One
shall cause Alpha, and each surviving Subsidiary under Section 2.2, on its
own behalf, to agree in writing with the Alliance upon such terms and
subject to such conditions, to) assign, transfer, convey and deliver unto
the Alliance, on a going concern basis, all of the business and operations
of Alpha, and each such Subsidiary, and all of the assets and properties of
Alpha, and each such Subsidiary, of every kind and description, wherever
located, real, personal and mixed, tangible and intangible (other than
Excluded Assets) as the same shall exist on the Closing Date (the
"Contributed Assets"), including, without limitation, all right, title and
interest of Alpha, and each such Subsidiary, under, to and in:
(a) cash and cash equivalents;
(b) assets reflected on the balance sheet of Alpha, and
each such Subsidiary, as of December 31, 1998, except for those
assets disposed of subsequent to such date;
(c) Personal Property;
(d) Accounts Receivable and Inventory;
(e) any Owned Real Property;
(f) Leased Real Property and leasehold improvements;
(g) Capital Stock of Subsidiaries of Alpha, if mutually
agreed by Bank One and FDC;
(h) any Investments;
(i) Contracts including without limitation Merchant
Agreements;
(j) goodwill together with all customer lists, processes,
manuals, know how and other proprietary information;
(k) owned Intellectual Property and Software, and the contracts,
licenses, sublicenses, assignments, indemnities and other agreements
with third parties related thereto;
(l) licensed Intellectual Property and Software, and the
contracts, licenses, sublicenses, assignments, indemnities and other
agreements with third parties related thereto;
(m) telephone, telex, telephone facsimile numbers and other
directory listings, web sites and Internet domain names;
(n) any rights, claims or causes of action against third
Persons;
(o) any Governmental Permits;
(p) Insurance Policies;
(q) books, files, reports, records, correspondence, documents
and other material including, without limitation, supplier lists and
customer files, payroll and personnel records and financial, sales and
purchasing records; and
(r) all other assets owned by Alpha on the Closing Date except
for the Excluded Assets.
4.2. EXCLUDED ASSETS. Notwithstanding the provisions of
Section 4.1, the Contributed Assets shall not include the capital stock of
FUFSI or the capital stock of Message Media (herein referred to as the
"Excluded Assets").
4.3. ASSUMED LIABILITIES. On the Closing Date and upon the
terms and subject to the conditions of this Agreement, FDC and Bank One
shall cause the Alliance to (and on or prior to the Closing Date FDC and
Bank One shall cause Alpha, and each surviving Subsidiary under Section
2.2, on its own behalf, to enter into an agreement with the Alliance
causing the Alliance, upon such terms and subject to such conditions, to)
assume and be obligated to pay, perform and otherwise discharge all
liabilities and obligations of Alpha, and each such Subsidiary, direct or
indirect, known or unknown, absolute or contingent (other than the Excluded
Liabilities) (the "Assumed Liabilities"), including, without limitation:
(a) accounts payable and other accrued liabilities and
obligations that are reflected on the balance sheet of Alpha, and each
such Subsidiary, as of December 31, 1998 and similar liabilities and
obligations incurred subsequent to such date;
(b) all liabilities in respect of any pending or threatened
action, suit, or proceeding against Alpha or any such Subsidiary;
(c) Chargebacks and credit losses;
(d) liabilities in respect of Taxes;
(e) contingent liabilities; and
(f) liabilities and obligations under the Contracts.
4.4. EXCLUDED LIABILITIES. Notwithstanding the provisions of
Section 4.3, the Alliance shall not assume or be obligated to pay, perform
or otherwise discharge liabilities or obligations of Alpha or any such
Subsidiary in respect of the Excluded Assets (all such liabilities and
obligations not being assumed by the Alliance being herein referred to as
the "Excluded Liabilities").
ARTICLE V
CONDITIONS TO CLOSING
The obligations of the parties hereto to consummate the
transactions contemplated by this Agreement to occur at the Closing shall
be subject to the satisfaction, or waiver by the appropriate party or
parties, on or prior to the Closing Date of the following conditions
precedent (except that the obligation of any party shall not be subject to
such party's own performance or compliance):
5.1. ILLEGALITY, ETC. No change shall have occurred as of the
Closing Date in applicable Requirements of Laws that in the reasonable
opinion of any party would make it illegal for it to participate in any of
the transactions contemplated to occur at the Closing.
5.2. LITIGATION. No action, proceeding or investigation shall
have been instituted, nor shall action before any court or Governmental
Body be threatened, which in the opinion of counsel for FDC or Bank One is
not frivolous, nor shall any order, judgment or decree have been issued or
proposed to be issued by any court or Governmental Body, at the time of the
Closing Date to modify, set aside, invalidate, restrain, enjoin or prevent
the consummation of this Agreement, the Operating Agreement, the Revenue
Sharing Agreement, the Revised Processing Agreement or the transactions
contemplated herein or therein.
5.3. CONSENTS AND APPROVALS. (a) All actions, approvals,
consents, waivers, exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses (other than any thereof that are
routine in nature and that cannot be obtained, or that are not normally
applied for, prior to the time they are required and that FDC or Bank One,
as the case may be, does not have any reason to believe any difficulty will
be encountered in obtaining) required to be taken, given or obtained, as
the case may be, by or from any Governmental Body, that are necessary in
connection with the consummation of the transactions contemplated by this
Agreement, the Operating Agreement, the Revenue Sharing Agreement and the
Revised Processing Agreement shall have been duly taken, given or obtained,
as the case may be, and shall be in full force and effect on the Closing
Date.
(b) Notwithstanding the foregoing, the waiting period under the
HSR Act, if applicable, shall have expired or been terminated.
5.4. MERGER. The Merger shall have been consummated.
5.5. OTHER AGREEMENTS. The following agreements shall have been
duly authorized, executed and delivered by the respective party or parties
thereto, or shall have been received by a party hereto, shall each be
satisfactory in form and substance to each such party and shall be in full
force and effect, and executed counterparts shall have been delivered to
each such party and its respective counsel:
(a) this Agreement;
(b) the Operating Agreement;
(c) the Revised Processing Agreement;
(d) the Revenue Sharing Agreement; and
(e) a guaranty of Bank One, N.A., Columbus, Ohio and a guaranty
of FDC in form and substance mutually agreeable to Bank One
and FDC, it being understood that such guaranties will cover
only the obligations of the members under the Operating
Agreement and that the enforcement of such guaranties shall
not require as a pre-condition obtaining a judgment against
the primary obligor.
5.6. DIVESTITURE OF UNRELATED ASSETS. The transactions
contemplated by Section 2.1 hereof shall have occurred.
5.7 RESOLUTIONS, CERTIFICATES, ETC. Each party hereto shall
have received, in form and substance reasonably satisfactory to it,
(a) a copy of resolutions of the Board of Directors of each
party (other than FDC and Bank One) to any of the agreements referred to in
Section 5.5, certified as of the Closing Date by the Secretary or an
Assistant Secretary thereof, duly authorizing the execution, delivery and
performance by such party, respectively, of each such agreement to which it
is a party, together with an incumbency certificate as to the person or
persons authorized to execute and deliver such documents on its behalf; and
(b) such other documents and evidence with respect to FDC or
Bank One and each other party to any of the agreements referred to in
Section 5.5 as FDC or Bank One or their respective counsel may reasonably
request in order to consummate the transactions contemplated hereby, the
taking of all corporate proceedings in connection therewith and compliance
with the conditions herein.
5.8. OPINIONS OF COUNSEL. The following opinions of legal
counsel, dated the Closing Date, shall have been delivered:
(a) Opinion of Counsel for FDC. Opinion from Xxxxxxx X. Xxxxxx,
general counsel of FDC, addressed to Bank One in form and substance
reasonably satisfactory to Bank One.
(b) Opinion of Counsel for Bank One. Opinion from Xxxxxxx X.
Xxxxxxxx, General Counsel for Bank One, addressed to FDC in form and
substance reasonably satisfactory to FDC.
5.9. ACCOUNTING. (a) On or prior to the Closing Date, Bank One
shall request a formal written opinion of Xxxxxx Xxxxxxxx LLP to the effect
that the transactions contemplated by this Agreement, the Operating
Agreement and the Merger Agreement (and identified in such opinion) will
not adversely affect "pooling of interests" accounting treatment for any
then publicly announced or completed transaction by Bank One or any
Affiliate assuming any changes to the Operating Agreement that would be
reasonably acceptable to Bank One. In the event that Xxxxxx Xxxxxxxx LLP
will not issue the formal written opinion described in the preceding
sentence, Bank One will request Xxxxxx Xxxxxxxx LLP provide to Bank One and
FDC the basis for its inability to deliver such opinion, such basis to be
given orally or in writing in reasonable detail. If Bank One fails to
receive a written opinion as described in the first sentence of this
Section 5.9(a), Bank One shall not be obligated to close the transaction
contemplated by this Agreement, it being understood that the condition set
forth in such first sentence shall be subsequently deemed satisfied if Bank
One shall receive a subsequent formal written opinion of Xxxxxx Xxxxxxxx
LLP in form and substance satisfactory to Bank One that the transactions
contemplated by this Agreement, the Operating Agreement and the Merger
Agreement will not adversely affect "pooling of interests" accounting
treatment for any then publicly announced or completed transaction by Bank
One or any Affiliate.
(b) On or prior to the Closing Date, FDC shall request a formal
written opinion of Ernst & Young LLP to the effect that the transactions
contemplated by this Agreement, the Operating Agreement and the Merger
Agreement (and identified in such opinion) will not adversely affect
"pooling of interests" accounting treatment for any then publicly announced
or completed transaction by FDC or any Affiliate assuming any changes to
the Operating Agreement that would be reasonably acceptable to FDC. In the
event that Ernst & Young LLP will not issue the formal written opinion
described in the preceding sentence, FDC will request Ernst & Young LLP
provide to Bank One and FDC the basis for its inability to deliver such
opinion, such basis to be given orally or in writing in reasonable detail.
If FDC fails to receive a written opinion as described in the first
sentence of this Section 5.9(b), FDC shall not be obligated to close the
transaction contemplated by this Agreement, it being understood that the
condition set forth in such first sentence shall be subsequently deemed
satisfied if FDC shall receive a subsequent formal written opinion of Ernst
& Young LLP in form and substance satisfactory to FDC that the transactions
contemplated by this Agreement, the Operating Agreement and the Merger
Agreement will not adversely affect "pooling of interests" accounting
treatment for any then publicly announced or completed transaction by FDC
or any Affiliate.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. REPRESENTATIONS AND WARRANTIES OF BANK ONE AND BANK ONE
AFFILIATES. As an inducement to FDC to enter into this Agreement, and to
cause one of its Affiliates to enter into the Operating Agreement, the
Revenue Sharing Agreement and the Revised Processing Agreement, and to
consummate the transactions contemplated hereby and thereby, Bank One
represents and warrants to FDC and agrees as follows except as may be
otherwise provided in the Confidential Disclosure letter of Bank One
attached hereto:
(a) Organization, Corporate Power, Etc. Bank One is a bank
holding company duly organized and validly existing as a corporation under
the laws of the State of Delaware. Each Bank One Affiliate (other than
Alpha and its Subsidiaries) that will be a party to any of the agreements
contemplated by this Agreement is a corporation or other entity duly
organized and validly existing under the laws of its respective
jurisdiction of organization. Bank One is duly licensed or qualified to do
business as a foreign corporation in all of the jurisdictions in which Bank
One is required to be so licensed or qualified with respect to the
Alliance, except where the failure to be so licensed or qualified would not
have a material adverse effect on the operations or financial condition of
the Alliance. Bank One and each of its Affiliates (other than Alpha and
its Subsidiaries) that will be performing obligations under any other
agreement contemplated by this Agreement, has all requisite corporate power
and authority to own, operate and lease its assets and to carry on its
business as it is now being conducted except where the failure to have such
power and authority would not have a material adverse effect on the
operations or financial condition of Bank One or the applicable Affiliate,
and Bank One and each such Affiliate has all requisite corporate power and
authority to perform its respective obligations hereunder and thereunder.
(b) Authority of Bank One. Bank One and each of its applicable
Affiliates (other than Alpha and its Subsidiaries) has full power and
authority to execute, deliver and perform this Agreement, the Operating
Agreement, the Revenue Sharing Agreement, the Revised Processing Agreement
and any other agreement contemplated hereby to which Bank One or such
applicable Affiliate is a party. The execution, delivery and performance
of this Agreement, the Operating Agreement, the Revenue Sharing Agreement,
the Revised Processing Agreement and any other agreement contemplated
hereby by Bank One or such Affiliate have been duly authorized and approved
by Bank One or such Affiliate, as the case may be, and do not require any
further authorization or consent of Bank One, any such Affiliate or their
respective boards of directors or stockholders. This Agreement has been,
and the Operating Agreement, the Revenue Sharing Agreement and the Revised
Processing Agreement will be, duly authorized, executed and delivered by
Bank One or such Affiliate and are or will be upon execution, the legal,
valid and binding obligations of Bank One or such Affiliate enforceable in
accordance with its terms.
Neither the execution and delivery of this Agreement, the
Operating Agreement, the Revenue Sharing Agreement, the Revised Processing
Agreement or any other agreement contemplated hereby, or the consummation
of any of the transactions contemplated hereby or thereby nor compliance
with or fulfillment of the terms, conditions and provisions hereof or
thereof will (i) conflict with, violate, result in a breach of, or
constitute a default under the charter or By-laws of Bank One or any such
Affiliate, (ii) conflict with (A) any Court Order to which Bank One or any
such Affiliate is a party or by which Bank One or any such Affiliate is
bound, or (B) any Requirements of Laws affecting Bank One or any such
Affiliate, or (iii) conflict with or violate in any material manner or
result in a material breach of, or constitute a material default under any
material note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to which
Bank One or any such Affiliate is a party or by which Bank One or any such
Affiliate is bound.
(c) Consents and Approvals. Except for such consents, approvals
or authorizations to be applied for under the HSR Act or as may be required
under licenses or other agreements relating to the Alliance, if any, no
consent, approval or authorization of, or declaration, filing or
registration with, or notice to, or order or action of, any court,
administrative agency or other Governmental Body or any other Person
(including, without limitation, any financial institution or Card
Association) is required to be made or obtained by Bank One or any of its
Affiliates (excluding Alpha and its Subsidiaries) in connection with the
execution and delivery by Bank One or any such Affiliate of this Agreement,
the Operating Agreement, the Revenue Sharing Agreement, the Revised
Processing Agreement or any other agreement contemplated hereby, the
consummation by Bank One of the transactions contemplated hereby or thereby
and the performance by Bank One or any such Affiliate of its obligations
contained herein or therein.
(d) Card Association Rules. To the best of Bank One's
knowledge, Bank One or its applicable clearing affiliate is, and, since
January 1, 1998 has been, in substantial compliance with all applicable
Card Association rules, by-laws and regulations and has received no notice
of any material violations thereof.
(e) Financial Statements of Alpha. Bank One has no knowledge
that (i) the audited balance sheets of Alpha as of June 30, 1998 and 1997
and the related statements of income and cash flows for the years then
ended, together with the appropriate notes to such financial statements, or
(ii) the unaudited balance sheet of Alpha as of September 30, 1998 and 1997
and the related statements of income and cash flows for the three months
then ended have not been prepared in conformity with generally accepted
accounting principles consistently applied, or do not fairly present the
financial position and results of operations of Alpha as of their
respective dates and for the respective periods covered thereby, except as
set forth therein or in the notes thereto.
(f) Changes Since September 30, 1998. Bank One has no knowledge
that since September 30, 1998, (i) there has been any material adverse
change in the Contributed Assets or the business or operations,
liabilities, profits, prospects or condition (financial or otherwise) of
Alpha or (ii) Alpha has not generally conducted its business in the
ordinary course and in conformity with past practice.
(g) No Broker or Finder. No broker, finder or investment banker
is entitled to any fee or commission from Bank One or any of its Affiliates
in connection with the transactions contemplated by this Agreement, the
Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement, but not including the transactions contemplated by
the Merger Agreement.
(h) Knowledge of Bank One. As used in this Agreement, knowledge
of Bank One when used in phrases such as "Bank One has no knowledge", "to
the best of Bank One's knowledge" or similar phrases shall be limited to
actual knowledge of the officers and employees of Bank One identified on
Exhibit D hereto.
6.2. REPRESENTATIONS AND WARRANTIES OF FDC AND FDC AFFILIATES.
As an inducement to Bank One to enter into this Agreement, and to cause one
of its Affiliates to enter into the Operating Agreement, the Revenue
Sharing Agreement and the Revised Processing Agreement and to consummate
the transactions contemplated hereby and thereby, FDC represents and
warrants to Bank One and agrees as follows:
(a) Organization, Corporate Power, Etc. FDC and each of its
Affiliates that will be a party to any of the agreements contemplated
hereby is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and
is duly licensed or qualified to do business as a foreign corporation in
all of the jurisdictions in which such entity is required to be so licensed
or qualified, except where the failure to be so licensed or qualified would
not have a material adverse effect on the operations or financial condition
of the Alliance. FDC has all requisite corporate power and authority to
own, operate and lease its assets and to carry on its business as it is now
being conducted except where failure to have such power and authority would
not have a material adverse effect on the operations or financial condition
of FDC or the applicable Affiliate, and FDC and each of its Affiliates that
will be performing obligations under this Agreement, the Operating
Agreement, the Revenue Sharing Agreement, the Revised Processing Agreement
or any other agreement contemplated hereby has all requisite corporate
power and authority to perform its obligations hereunder and thereunder.
(b) Authority of FDC. FDC and each of its applicable Affiliates
has full power and authority to execute, deliver and perform this
Agreement, the Operating Agreement, the Revenue Sharing Agreement, the
Revised Processing Agreement and any other agreement contemplated hereby to
which FDC or such applicable Affiliate is a party. The execution, delivery
and performance of this Agreement, the Operating Agreement, the Revenue
Sharing Agreement, the Revised Processing Agreement and any other
agreements contemplated hereby by FDC or such Affiliate have been duly
authorized and approved by the Board of Directors of FDC or such Affiliate,
as the case may be, and do not require any further authorization or consent
of FDC, any of its Affiliates or their respective stockholders. This
Agreement has been, and the Operating Agreement, the Revenue Sharing
Agreement and the Revised Processing Agreement will be, duly authorized,
executed and delivered by FDC or such Affiliate and are or will be upon
execution, the legal, valid and binding obligations of FDC or such
Affiliate enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement, the
Operating Agreement, the Revenue Sharing Agreement, the Revised Processing
Agreement or any other agreement contemplated hereby, or the consummation
of any of the transactions contemplated hereby or thereby nor compliance
with or fulfillment of the terms, conditions and provisions hereof or
thereof will (i) conflict with, violate, result in a breach of, or
constitute a default under (1) the charter or By-laws of FDC or any such
Affiliate,(2) any Court Order to which FDC or any such Affiliate is a party
or by which FDC or any such Affiliate is bound, or (3) any Requirements of
Laws affecting FDC or any such Affiliate, or (ii) conflict with or violate
in any material manner, or result in a material breach of, or constitute a
material default under any material note, instrument, agreement, mortgage,
lease, license, franchise, permit or other authorization, right,
restriction or obligation to which FDC or any such Affiliate is a party or
by which FDC or any such Affiliate is bound.
(c) Consents and Approvals. Except for such consents, approvals
or authorizations to be applied for under the HSR Act or as may be required
under licenses or other agreements relating to the Alliances, if any, no
consent, approval or authorization of, or declaration, filing or
registration with, or notice to, or order or action of, any court,
administrative agency or other Governmental Body or any other Person
(including, without limitation, any financial institution or Card
Association) is required to be made or obtained by FDC or any of its
Affiliates in connection with the execution and delivery by FDC or any of
its Affiliates of this Agreement, the Operating Agreement, the Revenue
Sharing Agreement, Revised Processing Agreement or any other agreement
contemplated hereby, the consummation by FDC or any of its Affiliates of
the transactions contemplated hereby or thereby and the performance by FDC
or any of its Affiliates of its obligations contained herein or therein.
(d) Card Association Rules. To the best of FDC's knowledge, FDC
or any of its applicable Affiliates is, and, since January 1, 1998 has
been, in substantial compliance with all applicable Card Association rules,
by-laws and regulations and has received no notice of any material
violations thereof.
(e) Other Alliances. Attached hereto as Exhibit E is a brief
description of the material terms and provisions of all existing
restrictions binding on FDMS or any of its Affiliates that would prohibit,
restrict or limit the right of FDMS or any such Affiliate to transfer
Merchant Agreements to the UMS portfolio as contemplated by Section 4.8 of
the Operating Agreement.
(f) No Broker or Finder. No broker, finder or investment banker
is entitled to any fee or commission from FDC or any of its Affiliates in
connection with the transactions contemplated by this Agreement, the
Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement, but not including the transactions contemplated by
the Merger Agreement.
ARTICLE VII
SCHEDULES OF ALPHA ASSETS AND LIABILITIES
Prior to the Closing Date, FDC and Bank One shall cooperate in
the preparation of Schedules referred to in Exhibit C, which Schedules are
intended to be complete lists of the assets, properties, contracts and
other data of Alpha and its Subsidiaries to the best knowledge of FDC and
Bank One, respectively, identified in such Schedules.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. REASONABLE ACCESS. Between the date hereof and the Closing
Date, Bank One shall use reasonable efforts to cause Alpha and its
Subsidiaries to make available to the employees, agents and representatives
of FDC or its Affiliates, at reasonably acceptable times and at locations
reasonably acceptable and accessible, the books and records of Alpha and
its Subsidiaries and allow employees, agents and representatives of FDC to
discuss the business of Alpha with certain key employees of Alpha and its
Subsidiaries to facilitate the Merger and transfer of the Contributed
Assets and to determine whether the conditions set forth in Article V or in
the Merger Agreement have been satisfied.
8.2. ACCURACY OF REPRESENTATIONS AND WARRANTIES. Between the
date hereof and the Closing Date, each of FDC and Bank One will use
reasonable efforts not to take any action or omit to take any action, and
to cause its Affiliates (excluding Alpha and its Subsidiaries) not to take
any action or omit to take any action, that would result in its respective
representations or warranties contained in Article VI of this Agreement,
the Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement not being true and correct as of the Closing Date.
Each party shall promptly notify the other of the receipt of any written
notice regarding any action, suit or proceeding that shall be instituted or
threatened against such party to restrain, prohibit or otherwise challenge
the legality of any transactions contemplated by this Agreement.
8.3. EFFORTS TO CONSUMMATE. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to negotiate in good
faith with respect to the terms of the Merger Agreement and the Stockholder
Agreement, and upon the execution of the Merger Agreement and the
Stockholder Agreement agrees to use reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable to consummate, as promptly as practicable, the
transactions contemplated hereby, in the Operating Agreement, in the
Revenue Sharing Agreement and in the Revised Processing Agreement
including, but not limited to, the obtaining of all necessary consents,
waivers, authorizations, orders and approvals of third parties, whether
private or governmental, required of it by this Agreement, the Operating
Agreement, the Revenue Sharing Agreement or the Revised Processing
Agreement; provided, however, that Bank One and FDC shall each have
complete discretion with respect to determining the amount and type of
consideration to be offered for the outstanding Common Stock of Alpha in
the Merger not owned by FDC or an Affiliate of Bank One; provided, further,
that neither FDC nor Bank One shall be required to make any payments (other
than customary administrative and processing fees and reasonable legal
expenses), commence litigation or agree to any material modifications to
the terms of any Contracts, Real Property Leases or Permits in connection
with the foregoing. Each of FDC and Bank One agrees to cooperate fully
with the other in assisting it to comply with the provisions of this
Section 8.3.
8.4. NO PUBLIC ANNOUNCEMENT. Neither FDC nor Bank One shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement,
the Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement, except as and to the extent that any such party shall
be so obligated by law or the rules of any stock exchange, in which case
the other party shall be advised and the parties shall use their best
efforts to cause a mutually agreeable release or announcement to be issued;
provided that the foregoing shall not preclude communications or
disclosures necessary to implement the provisions of this Agreement, the
Operating Agreement, the Revenue Sharing Agreement or the Revised
Processing Agreement or to comply with the accounting and Securities and
Exchange Commission disclosure obligations.
8.5. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally, by courier or facsimile transmission
or mailed (first class postage prepaid) to the parties at the addresses or
facsimile numbers set forth below:
If to Bank One, to:
BANK ONE CORPORATION
Law Department
Mail Suite 0287
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy Number: 000-000-0000 or
000-000-0000
If to FDC, to:
First Data Corporation
0000 Xxx Xxxxxxxxx Xx.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: General Counsel
Telecopy Number: 000-000-0000
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. X'Xxxx
Telecopy Number: 312-853-7036
The parties hereto agree that delivery of any copy shall not, by
itself, be considered notice pursuant to this Section 8.5.
All such notices and other communications will (x) if delivered
personally or by courier to the address provided in this Section 8.5, be
deemed given upon delivery, (y) if delivered by facsimile transmission to
the facsimile number provided in this Section 8.5, be deemed given when
receipt of transmission has been electronically confirmed by the sending
party, and (z) if delivered by first class or registered mail in the manner
described above to the address as provided in this Section 8.5, be deemed
given three (3) Banking Days after deposit in the United States mail (in
each case regardless of whether such notice, request or other communication
is received by any other Person to whom a copy of such notice is to be
delivered pursuant to this Section 8.5). Any party from time to time may
change its address, facsimile number or other information for the purpose
of notices to that party by giving notice specifying such change to the
other party.
8.6 NOTIFICATION OF CERTAIN MATTERS. From the date hereof
through the Closing Date, Bank One and FDC shall give prompt notice to the
other of (a) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any of such party's
representations or warranties contained in this Agreement, the Operating
Agreement, the Revenue Sharing Agreement, or the Revised Processing
Agreement to be untrue or inaccurate in any material respect, and (b) any
failure of such party to comply with or satisfy in any material respect any
of its respective covenants, conditions or agreements to be complied with
or satisfied by it under this Agreement, the Operating Agreement, the
Revenue Sharing Agreement, or the Revised Processing Agreement; provided,
however, that such disclosure shall not be deemed to cure any breach of a
representation, warranty, covenant or agreement, or to satisfy any
condition.
8.7. CARD ASSOCIATION APPROVALS. Bank One and FDC shall give or
cause to be given to each applicable Card Association all notices required
in connection with the transaction contemplated hereby.
8.8. RELATED PARTY TRANSACTIONS. Prior to the Closing Date, Bank
One shall and shall cause Alpha to prepare the information required by
Exhibit B.
8.9. OPERATIONS PRIOR TO CLOSING DATE. Except as set forth on
Schedule 8.9 and subject to the matters contemplated by this Agreement, the
Merger Agreement, the Revised Processing Agreement and the Stockholders
Agreement, between the date hereof and the Closing Date, Bank One and FDC
shall use reasonable efforts to cause Alpha to conduct its business only in
the ordinary course and in conformity with past practice.
8.10. INTERCOMPANY AGREEMENTS. Bank One agrees to, or to cause
its appropriate Affiliates to, (i) terminate the tax sharing agreement
between FUSA and Alpha to the extent the parties reasonably agree portions
thereof should be terminated, (ii) terminate the registration rights
agreement between Bank One and Alpha, (iii) enter into agreements with
respect to the provision to Alpha of office space in Dallas, Texas, certain
insurance coverage and a license to use the name "First USA" and certain
other trademarks and such other services as Bank One or one of its
Affiliates are providing to Alpha or its Affiliates on economic terms
consistent with arrangements in effect prior to the Closing (said economic
terms to be in effect for 12 months from and after the Closing Date and
thereafter to be subject to good faith negotiation among the parties), and
(iv) perform the unwritten agreements between Alpha and First USA Bank
described in Section 4.23 of the Company Letter referred to in the Merger
Agreement, in each case on or before the Closing to the extent practicable.
8.11. COOPERATION ON DEBT. If, upon the transfer of the
Contributed Assets by Alpha to the Alliance, or the assumption by Alpha of
the Assumed Liabilities, as contemplated by this Agreement, Alpha would
recognize income or gain for federal income tax purposes as a result of the
amount or nature of its indebtedness (including, without limitation, by
reason of all or a portion of its indebtedness being treated as Member
Nonrecourse Debt), then prior to such contribution and assumption, the
parties hereby agree to (and to cause their respective Affiliates to) take
reasonable steps to avoid such income or gain.
8.12. CERTAIN FEES. Bank One shall cause the Alliance to pay to
FDMS, in lieu of the amounts that would otherwise have been payable to FDMS
under Section 8.24 of the Alliance Agreement, (i) $666,667 on the last day
of each month or portion thereof remaining in calendar year 1999 after the
Closing Date, (ii) $666,667 on the last day of each month in calendar year
2000, and (iii) $750,000 on the last day of each month in calendar year
2001.
ARTICLE IX
EMPLOYEE MATTERS
9.1. EMPLOYMENT OF ALPHA EMPLOYEES. The employment of each
employee of Alpha who is actively employed (including such employees who
are on vacation) as of the Closing shall be transferred to the Alliance
effective as of the Closing at the same base compensation and wage levels
as in effect immediately preceding the Closing. Notwithstanding anything
herein to the contrary, nothing in this Agreement shall create any
obligation on the part of the Alliance or any of its Affiliates to continue
the employment of any employee for any definite period following the
Closing. The Alliance shall offer employment (or severance benefits if
such individual's position is no longer available as allowed by applicable
law) to any individual who was an employee of Alpha who is on sick or
disability leave or who is on an approved leave of absence as of the
Closing as of the date such individual returns to work. The persons who
become employed by the Alliance pursuant to this paragraph shall be
referred to herein as "Transferred Employees."
9.2. MAINTENANCE OF EMPLOYEE BENEFITS PLANS. Effective as of the
Closing Date and until such time as the Alliance implements its own benefit
plans,, FDC, Bank One and the Alliance shall take any reasonable actions
necessary (including but not limited to plan amendment, governmental
notices, etc.) to maintain the participation of the Transferred Employees
in the plans, programs, agreements or arrangements which covered the
Transferred Employees as of the Closing Date.
9.3. BONUSES. The Alliance shall assume all obligations and
liabilities for bonuses and incentive payments in connection with the
relevant bonus programs of Alpha in effect immediately prior to the Closing
Date and shall cause the payment of such bonuses or incentive payments, if
any, to be made in accordance with the terms of such plans consistent with
past practice.
9.4. VACATION AND SICK LEAVE. The Alliance shall credit each
Transferred Employee with the number of unused vacation days and sick leave
credited to such individual through the Closing Date under the applicable
vacation and sick leave policies of Alpha and shall permit or cause
Transferred Employees to be permitted to use such vacation days and sick
leave.
9.5. WORKERS' COMPENSATION. The Alliance shall assume the
obligation and liability for any workers' compensation or similar workers'
protection claims with respect to any person who was an Alpha employee.
9.6. EMPLOYEES OF ALLIANCE MEMBERS. At the present time both
Bank One, POS and FDMS have employees that provide services in connection
with the Alliance business, although none of such employees are employees
of the Alliance. Bank One and FDC acknowledge that subsequent to the
Closing, the Alliance management will decide whether or not they wish to
offer employment to any of these employees of Bank One, POS or FDMS. In
the event that such a decision to offer employment is made, the Alliance
shall be under no restrictions regarding offering employment to individuals
who are dedicated full-time to the Alliance, and Bank One and FDC shall
cooperate, and shall cause their respective Affiliates, to cooperate, in
facilitating the transfer of such employees to the Alliance.
ARTICLE X
INDEMNIFICATION; PAYMENT OF CERTAIN COSTS
10.1. INDEMNIFICATION BY FDC. FDC shall indemnify and hold
harmless Bank One and any of its Affiliates from and against any and all
Losses and Expenses, whether or not litigation is commenced, imposed upon,
incurred by or asserted against Bank One or any of its Affiliates in
connection with or arising from the breach by FDC of any representation,
warranty, covenant or agreement of FDC in this Agreement, provided,
however, that FDC shall not be required to indemnify or hold Bank One or
any of its Affiliates harmless from or against any such Losses or Expenses
to the extent that such Losses or Expenses arise as a result of Bank One's
or any of its Affiliates' own negligence, willful misconduct or breach of
any of its representations, warranties or obligations pursuant to this
Agreement.
10.2. INDEMNIFICATION BY BANK ONE. Bank One shall indemnify and
hold harmless FDC and its Affiliates from and against any and all Losses
and Expenses, whether or not litigation is commenced, imposed upon,
incurred by or asserted against FDC or its Affiliates in connection with or
arising from the breach by Bank One of any representation, warranty,
covenant or agreement of Bank One in this Agreement, provided, however,
that Bank One shall not be required to indemnify or hold FDC or any of its
Affiliates harmless from or against any such Losses or Expenses to the
extent that such Losses or Expenses arise as a result of FDC's or one of
its Affiliates' own negligence, willful misconduct or breach of any of its
representations, warranties or obligations pursuant to this Agreement.
10.3. NOTICE OF CLAIMS. (a) If either Bank One, FDC or an
Affiliate of either party (each an "Indemnified Party")shall seek
indemnification hereunder, such Indemnified Party shall give promptly to
the party obligated to provide indemnification to such Indemnified Party
(the "Indemnitor") a notice (a "Claim Notice") describing in reasonable
detail the facts giving rise to any claim for indemnification hereunder and
shall include in such Claim Notice (if then known) the amount or the method
of computation of the amount of such claim, and a reference to the
provision of this Agreement or any other agreement, document or instrument
executed hereunder or in connection herewith upon which such claim is
based; provided, however, that a Claim Notice in respect of any action at
law or suit in equity by or against a third Person as to which
indemnification will be sought shall be given promptly after the action or
suit is commenced.
(b) In calculating any Loss or Expense there shall be deducted
(i) any insurance recovery in respect thereof (and no right of subrogation
shall accrue hereunder to any insurer) and (ii) the amount of any tax
benefit to the Indemnified Party (or any of its Affiliates) with respect to
such Loss or Expense (after giving effect to the tax effect of receipt of
the indemnification payments).
(c) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which an Indemnified Party shall be entitled
under this Article X shall be determined: (i) by the written agreement
between the Indemnified Party and the Indemnitor; (ii) by a final judgment
or decree of any court of competent jurisdiction; or (iii) by any other
means to which the Indemnified Party and the Indemnitor shall agree. The
judgment or decree of a court shall be deemed final when the time for
appeal, if any, shall have expired and no appeal shall have been taken or
when all appeals taken shall have been finally determined. The Indemnified
Party shall have the burden of proof in establishing the amount of Loss and
Expense suffered by it.
10.4. THIRD PERSON CLAIMS. (a) In order for an Indemnified
Party to be entitled to any indemnification provided for under this
Agreement in respect of, arising out of or involving a claim or demand made
by any third Person against an Indemnified Party, such Indemnified Party
must notify the Indemnitor in writing, and in reasonable detail, of the
third Person claim within 10 Banking Days after receipt by such Indemnified
Party of written notice of the third Person claim. Thereafter, the
Indemnified Party shall deliver to the Indemnitor, within 10 Banking Days
after the Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party
relating to the third Person claim. Notwithstanding the foregoing, should
an Indemnified Party be physically served with a complaint with regard to a
third Person claim, the Indemnified Party must notify the Indemnitor and
deliver a copy of the complaint within 10 Banking Days after receipt
thereof and shall deliver to the Indemnitor within 10 Banking Days after
the receipt of such complaint copies of notices and documents (including
court papers) received by the Indemnified Party relating to the third
Person claim.
(b) In the event of the initiation of any legal proceeding,
claim or demand against the Indemnified Party by a third Person, the
Indemnitor shall have the sole and absolute right after the receipt of
notice, at its option and at its own expense, to be represented by counsel
reasonably acceptable to the Indemnified Party and to control, defend
against, negotiate, settle or otherwise deal with any proceeding, claim, or
demand which relates to any Loss or Expense indemnified against hereunder;
provided, however, that the Indemnified Party may participate in any such
proceeding with counsel of its choice and at its expense. The parties
hereto agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such legal proceeding, claim or
demand. To the extent the Indemnitor elects not to defend such proceeding,
claim or demand, and the Indemnified Party defends against or otherwise
deals with any such proceeding, claim or demand, the Indemnified Party may
retain counsel, at the expense of the Indemnitor, and control the defense
of such proceeding. Neither the Indemnitor nor the Indemnified Party may
settle any such proceeding which settlement obligates the other party to
pay money, to perform obligations or to admit liability without the consent
of the other party, such consent not to be unreasonably withheld. After
any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and
the time in which to appeal therefrom has expired, or a settlement shall
have been consummated, or the Indemnified Party and the Indemnitor shall
arrive at a mutually binding agreement with respect to each separate matter
alleged to be indemnified by the Indemnitor hereunder, the Indemnified
Party shall forward to the Indemnitor notice of any sums due and owing by
it with respect to such matter and the Indemnitor shall pay all of the sums
so owning to the Indemnified Party by wire transfer, certified or bank
cashier's check within 30 days after the date of such notice.
10.5. LIMITATION. No failure of the Indemnified Party to give
the Indemnitor timely notice as required by Section 10.3 or 10.4 above
shall affect such Indemnified Party's right to indemnification hereunder
unless, and then only to the extent that the rights of the Indemnitor to
defend against such claim have been prejudiced thereby.
ARTICLE XI
TERMINATION
11.1. TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time
prior to the Closing Date:
(a) by the mutual written consent of Bank One and FDC;
(b) by Bank One or FDC if the Merger Agreement shall be
terminated pursuant to its terms;
(c) by Bank One or FDC if the transactions contemplated by the
Merger Agreement shall not have been consummated on or before October
1, 1999; and
(d) by Bank One or FDC if the Closing shall not have occurred on
or before October 1, 1999.
11.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to Section 11.1 shall give written notice of such
termination to the other party to this Agreement.
11.3. EFFECT OF TERMINATION. In the event that this Agreement
shall be terminated pursuant to this Article XI, all further obligations of
the parties under this Agreement (other than Sections 12.8 and 12.11) shall
be terminated without further liability of any party to the other, provided
that nothing herein shall relieve any party from liability for its willful
breach of this Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
12.2. ENTIRE AGREEMENT. This Agreement, the Operating
Agreement, the Revenue Sharing Agreement and the Revised Processing
Agreement and the Exhibits, Annexes and Schedules hereto and thereto
constitute the entire agreement among the parties hereto and contain all of
the agreements among such parties with respect to the subject matter hereof
and thereof. This Agreement, the Operating Agreement, the Revenue Sharing
Agreement and the Revised Processing Agreement and the Exhibits, Annexes
and Schedules hereto and thereto supersede any and all other agreements,
either oral or written, between such parties with respect to the subject
matter hereof and thereof.
12.3. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid
under applicable law, but in case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision shall be ineffective to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid,
illegal or unenforceable provision or provisions or any other provisions
hereof, unless such a construction would be unreasonable.
12.4. AMENDMENT. Except as expressly provided herein, this
Agreement may be amended only by a written agreement executed by each of
FDC and Bank One.
12.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO ITS CONFLICTS OF LAW DOCTRINE, EXCEPT TO THE EXTENT THE
DELAWARE LIMITED LIABILITY COMPANY ACT IS CONTROLLING.
12.6. WAIVER. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be validly
and sufficiently authorized for the purposes of this Agreement if, as to
any party, it is authorized in writing by an authorized representative of
such party. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
12.7. FURTHER ASSURANCES. In connection with this Agreement,
the Operating Agreement, the Revenue Sharing Agreement and the Revised
Processing Agreement and the transactions contemplated hereby and thereby,
after the Closing each of FDC and Bank One shall execute and deliver, or
use reasonable best efforts to cause to be executed and delivered (whether
by Alpha or by any of its other Affiliates), any additional documents and
instruments, and each will perform, or use reasonable best efforts to cause
to be performed (whether by Alpha or by any of its other Affiliates), any
additional acts that may be necessary or appropriate to effectuate and
perform the provisions of this Agreement, the Operating Agreement, the
Revenue Sharing Agreement, the Revised Processing Agreement and any other
agreement contemplated hereby to which it or any of its Affiliates is a
party and the transactions contemplated hereby and thereby.
12.8. EXPENSES. Each of FDC and Bank One shall pay its own
legal, accounting and other expenses incident to its negotiation and
preparation of this Agreement, the Operating Agreement, the Revenue
Sharing Agreement and the Revised Processing Agreement and (except as
expressly set forth herein or therein) the consummation of the transactions
contemplated hereby and thereby.
12.9. SURVIVAL OF OBLIGATIONS. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement; provided,
however, that the representations and warranties contained in Section
6.1(e), (f) and (g) shall terminate on the Closing Date and the other
representations and warranties contained in Section 6.1 and Section 6.2
shall terminate on the third anniversary of the Closing Date.
12.10. SUCCESSORS AND ASSIGNS. (a) The rights of either party
under this Agreement shall not be assignable by such party hereto without
the written consent of the other.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
The successors and permitted assigns hereunder shall include without
limitation, any permitted assignee as well as the successors in interest to
such permitted assignee (whether by merger, liquidation (including
successive mergers or liquidations) or otherwise). Nothing in this
Agreement, expressed or implied, is intended or shall be construed to
confer upon any Person other than the parties and successors and assigns
permitted by this Section 12.10 any right, remedy or claim under or by
reason of this Agreement.
12.11. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence during the period prior to the Closing
Date all documents, materials and other information which it shall have
obtained regarding the other party and its Affiliates during the course of
the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein and the preparation of
this Agreement and other related documents, and, in the event the
transactions contemplated hereby shall not be consummated, each party will
return to the other party all copies of nonpublic documents and materials
which have been furnished in connection therewith. Such documents,
materials and information shall not be communicated to any third Person
(other than counsel, accountants or financial advisors of FDC and Bank
One). No other party shall use any confidential information in any manner
whatsoever except solely for the purpose of evaluating the transactions.
The obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information which (i) is
or becomes available to such party from a source other than such party
provided such source is not known by the recipient to be subject to an
obligation of confidentiality with respect to such information, (ii) is or
becomes available to the public other than as a result of disclosure by
such party or its agents, (iii) is required to be disclosed under
applicable law or judicial process, but only to the extent it must be
disclosed, or (iv) following prior written notice to the other party
disclosing the nature of the proposed disclosure and the reasons such
disclosure is required, such party reasonably deems necessary to disclose
to obtain any of the consents or approvals contemplated hereby.
12.12. INFORMAL DISPUTE RESOLUTION. Any dispute, controversy or
claim between FDC and Bank One, including any dispute, controversy or claim
involving their respective Affiliates, arising from or in connection with
this Agreement or the relationship of the parties under this Agreement,
whether based on contract, tort, common law, equity, statute, regulation,
order or otherwise ("Dispute") shall be resolved as follows:
(a) Upon written request of either party, each party will
appoint a designated representative whose task it will be to meet for
the purpose of endeavoring to resolve such Dispute.
(b) The designated representatives shall meet as often as the
parties reasonably deem necessary to discuss the problem in an effort
to resolve the Dispute without the necessity of any formal proceeding.
During the discussions, all reasonable requests by a party to another
party for non-privileged information reasonably related to the Dispute
shall be honored in order that each party may be fully advised of the
other party's position.
(c) Formal proceedings for the resolution of a Dispute may not
be commenced until the earlier of:
(i) the designated representatives concluding in good faith
that amicable resolution through continued negotiation of the
matter does not appear likely; or
(ii) the expiration of the fifteen (15) day period
immediately following the initial request to negotiate the
Dispute;
provided, however, that this Section 12.12 will not be construed to prevent
a party from instituting formal proceedings earlier to avoid the expiration
of any applicable limitations period, to preserve a superior position with
respect to other creditors, or to seek temporary or preliminary injunctive
relief pursuant to Section 12.14.
12.13. ARBITRATION.
(a) If the parties are unable to resolve any Dispute as
contemplated by Section 12.12, such Dispute shall be submitted to
mandatory and binding arbitration at the election of any disputing
party (the "Disputing Party"). It is the intent of the parties that
the arbitration be structured in such a way as to minimize costs.
Except as otherwise provided in this Section 12.13, the arbitration
shall be pursuant to the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA").
(b) To initiate the arbitration, the Disputing Party shall
notify the other party in writing (the "Arbitration Demand"), which
shall (i) describe in reasonable detail the nature of the Dispute,
(ii) state the amount of the claim, (iii) specify the requested relief
and (iv) name an arbitrator who (A) has been licensed to practice law
in the U.S. for at least ten years, (B) is not then an employee of
Bank One or FDC or an employee of an Affiliate of Bank One or FDC, and
(C) is experienced in representing clients in connection with mergers
and acquisitions and the subject matter of the Dispute (the "Basic
Qualifications"). Within fifteen (15) days after the other party's
receipt of the Arbitration Demand, such other party shall file and
serve on the Disputing Party, a written statement (i) answering the
claims set forth in the Arbitration Demand, including any affirmative
defenses of such party; (ii) asserting any counterclaim, which shall
(A) describe in reasonable detail the nature of the Dispute relating
to the counterclaim, (B) state the amount of the counterclaim, and (C)
specify the requested relief; and (iii) either accepting the
arbitrator proposed by the Disputing Party as the sole arbitrator for
the proceedings or naming a second arbitrator satisfying the Basic
Qualifications. The Disputing Party shall notify the other party
within two (2) days whether the Disputing Party accepts the arbitrator
proposed by the other party as the sole arbitrator for the proceedings
or rejects such arbitrator and proposes an alternate arbitrator, in
which event within fifteen (15) days thereafter, the two arbitrators
so named by each party will select a third neutral arbitrator from a
list provided by the AAA of potential arbitrators who satisfy the
Basic Qualifications and who have no past or present relationships
with the parties or their counsel, except as otherwise disclosed in
writing to and approved by the parties. The arbitration will be heard
by a panel consisting of either one arbitrator or three arbitrators,
as determined in accordance with this paragraph (b) (the "Arbitration
Panel") with, in the case of three arbitrators, the third arbitrator
so chosen serving as the chairperson of the Arbitration Panel.
Decisions of a majority of the members of the Arbitration Panel shall
be determinative.
(c) The arbitration hearing shall be held in Chicago, Illinois.
The Arbitration Panel is specifically authorized to render partial or
full summary judgment as provided for in the Federal Rules of Civil
Procedure. In the event summary judgment or partial summary judgment
is granted, the non-prevailing party may not raise as a basis for a
motion to vacate an award that the Arbitration Panel failed or refused
to consider evidence bearing on the dismissed claim(s) or issue(s).
The Federal Rules of Evidence shall apply to the arbitration hearing.
The party bringing a particular claim or asserting an affirmative
defense will have the burden of proof with respect thereto. The
arbitration proceedings and all testimony, filings, documents and
information relating to or presented during the arbitration
proceedings shall be deemed to be information subject to the
confidentiality provisions of this Agreement. The Arbitration Panel
will have no power or authority, under the Commercial Arbitration
Rules of the AAA or otherwise, to relieve the parties from their
agreement hereunder to arbitrate or otherwise to amend or disregard
any provision of this Agreement, including the provisions of this
Section 12.13.
(d) Should an arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section 12.13, the
arbitrator shall be replaced by the party who selected such arbitrator
(and approved by the other party if in a sole arbitrator proceeding),
or if such arbitrator was selected by the two party-appointed
arbitrators, by such two party-appointed arbitrators selecting a new
third arbitrator in accordance with Section 12.13(b). Each such
replacement arbitrator shall satisfy the Basic Qualifications. If an
arbitrator is replaced pursuant to this Section 12.13(d) after the
arbitration hearing has commenced, then a rehearing shall take place
in accordance with the provisions of this Section 12.13 and the
Commercial Arbitration Rules of the AAA.
(e) At the time of granting or denying a motion for summary
judgment as provided for in paragraph (c) of this Section 12.13 and
within fifteen (15) days after the closing of the arbitration hearing,
the Arbitration Panel shall prepare and distribute to the parties a
writing setting forth the Arbitration Panel's finding of facts and
conclusions of law relating to the Dispute, including the reasons for
the giving or denial of any award. The findings and conclusions and
the award, if any, shall be deemed to be information subject to the
confidentiality provisions of this Agreement.
(f) The Arbitration Panel is instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case
management initiative and control to effect an efficient and
expeditious resolution of the Dispute. Each party's presentation at
the arbitration hearing shall be limited to fourteen (14) hours, and
the hearing shall be completed within ten (10) Banking Days.
Summaries of any expert testimony, along with copies of all documents
to be submitted as Exhibits shall be exchanged as soon as possible and
in all events at least ten (10) Banking Days before the arbitration
hearing under procedures set up by the Arbitration Panel. Except as
otherwise specified herein, there shall be no discovery or dispositive
motion practice except as may be permitted by the Arbitration Panel,
who may authorize only such discovery as is shown to be necessary to
insure a fair hearing. No discovery or motions permitted by the
Arbitration Panel shall in any way alter the time limits specified
herein. Both parties shall continue to perform their respective
obligations in accordance with the terms of this Agreement and any
agreements contemplated hereby during any arbitration proceeding. The
fact that arbitration has commenced shall not impair the exercise of
any termination rights set forth in this Agreement. The Arbitration
Panel is authorized to issue monetary sanctions against either party
if, upon a showing of good cause, such party is unreasonably delaying
the proceeding.
(g) Any award rendered by the Arbitration Panel will be final,
conclusive and binding upon the parties and any judgment thereon may
be entered and enforced in any court of competent jurisdiction. The
Arbitration Panel may not award punitive damages or any other relief
not contemplated by this Agreement. In particular, the Arbitration
Panel may not order the dissolution, liquidation or other termination
of the Company except as specifically contemplated by the Formation
Agreement.
(h) Each party will bear a pro rata share of all fees, costs and
expenses of the arbitrators, and notwithstanding any law to the
contrary, each party will bear all the fees, costs and expenses of its
own attorneys, experts and witnesses; provided, however, that in
connection with any judicial proceeding to compel arbitration pursuant
to this Agreement or to confirm, vacate or enforce any award rendered
by the Arbitration Panel, the prevailing party in such a proceeding
will be entitled to recover reasonable attorneys' fees and expenses
incurred in connection with such proceeding, in addition to any other
relief to which it may be entitled.
12.14. JUDICIAL PROCEDURE. Nothing in Sections 12.12 or 12.13
shall be construed to prevent any party from seeking from a court a
temporary restraining order or other temporary or preliminary relief
pending final resolution of a Dispute pursuant to such Sections 12.12 or
12.13.
12.15. TERMINATION OF ALLIANCE AGREEMENT. Except with respect
to the provisions of Sections 3.1(d), 3.1(e), 3.2(d) and 3.2(e) of the
Alliance Agreement and the obligations of the parties under Article V of
the Alliance Agreement with respect to such sections, the Alliance
Agreement shall be terminated in all respects as of the Closing Date.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the
date first above written.
FIRST DATA CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
______________________________
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
BANK ONE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
______________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief
Operating Officer
