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Sample Business ContractsHome: Sample Business Contracts:
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
FIRST DATA CORPORATION,
MONACO SUBSIDIARY CORPORATION
AND
CONCORD EFS, INC.
DATED AS OF APRIL 1, 2003
<PAGE>
ARTICLE I
INTERPRETATION; DEFINITIONS
Section 1.1 Interpretation; Definitions ................................... 1
ARTICLE II
THE MERGER
Section 2.1 The Merger .................................................... 8
Section 2.2 Closing ....................................................... 8
Section 2.3 Effective Time ................................................ 8
Section 2.4 Effects of the Merger ......................................... 8
Section 2.5 Certificate of Incorporation and Bylaws; Officers
and Directors. ................................................ 8
ARTICLE III
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Stock ............................................... 9
Section 3.2 Conversion .................................................... 9
Section 3.3 Exchange of Certificates ...................................... 9
Section 3.4 Tax Consequences .............................................. 11
Section 3.5 Adjustment of Exchange Ratio .................................. 11
Section 3.6 Lost Certificates ............................................. 12
Section 3.7 Further Assurances ............................................ 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization .................................................. 12
Section 4.2 Subsidiaries .................................................. 13
Section 4.3 Capital Structure ............................................. 13
Section 4.4 Authority ..................................................... 14
Section 4.5 Consents and Approvals; No Violations ......................... 14
Section 4.6 SEC Documents and Other Reports ............................... 14
Section 4.7 Absence of Material Adverse Change ............................ 15
Section 4.8 Information Supplied .......................................... 15
Section 4.9 Compliance with Laws; Permits ................................. 16
Section 4.10 Tax Matters .................................................. 16
Section 4.11 Liabilities .................................................. 18
Section 4.12 Litigation ................................................... 18
Section 4.13 Benefit Plans ................................................ 18
Section 4.14 Environmental Matters ........................................ 19
Section 4.15 Intellectual Property ........................................ 20
Section 4.16 Banking; Credit Card Associations ............................ 20
Section 4.17 Customers .................................................... 20
Section 4.18 Material Contracts ........................................... 21
Section 4.19 Required Vote of Company Stockholders ........................ 21
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TABLE OF CONTENTS
(continued)
Page
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Section 4.20 State Takeover Statutes ...................................... 21
Section 4.21 Brokers ...................................................... 21
Section 4.22 Opinions of Financial Advisors ............................... 22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 5.1 Organization .................................................. 22
Section 5.2 Subsidiaries .................................................. 22
Section 5.3 Capital Structure ............................................. 22
Section 5.4 Authority ..................................................... 23
Section 5.5 Consents and Approvals; No Violations ......................... 24
Section 5.6 SEC Documents and Other Reports ............................... 24
Section 5.7 Absence of Material Adverse Change ............................ 25
Section 5.8 Information Supplied .......................................... 25
Section 5.9 Compliance with Laws; Permits ................................. 25
Section 5.10 Parent Shares ................................................ 26
Section 5.11 Reorganization ............................................... 26
Section 5.12 Litigation ................................................... 26
Section 5.13 Parent Benefit Plans ......................................... 26
Section 5.14 Liabilities .................................................. 27
Section 5.15 Interim Operations of Sub .................................... 27
Section 5.16 State Takeover Statutes ...................................... 27
Section 5.17 Required Vote of Parent Stockholders ......................... 27
Section 5.18 Brokers ...................................................... 27
Section 5.19 Opinions of Financial Advisor ................................ 27
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business Pending the Merger. ....................... 27
Section 6.2 No Solicitation ............................................... 31
Section 6.3 Disclosure of Certain Matters; Delivery of Certain Filings .... 32
Section 6.4 Conduct of Business of Sub Pending the Merger ................. 33
Section 6.5 NYSE Listing .................................................. 33
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Employee Benefits ............................................. 33
Section 7.2 Options ....................................................... 34
Section 7.3 Stockholder Approval; Preparation of Proxy
Statement; Other Actions ...................................... 35
Section 7.4 Access to Information ......................................... 36
Section 7.5 Fees and Expenses ............................................. 37
Section 7.6 Public Announcements; Employee Communications ................. 37
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TABLE OF CONTENTS
(continued)
Page
----
Section 7.7 Transfer Taxes ................................................ 37
Section 7.8 State Takeover Laws ........................................... 37
Section 7.9 Indemnification; Directors and Officers Insurance ............. 37
Section 7.10 Appropriate Actions; Consents; Filings ....................... 38
Section 7.11 Section 16 Matters ........................................... 40
Section 7.12 Affiliate Letters ............................................ 40
Section 7.13 Board of Directors Representative ............................ 40
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger .... 40
Section 8.2 Conditions to the Obligations of the Company to
Effect the Merger ............................................. 41
Section 8.3 Conditions to the Obligations of Parent and Sub to
Effect the Merger ............................................. 42
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination ................................................... 43
Section 9.2 Effect of Termination ......................................... 44
Section 9.3 Amendment ..................................................... 45
Section 9.4 Extension; Waiver ............................................. 46
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and Warranties
and Agreements ............................................... 46
Section 10.2 Notices ...................................................... 46
Section 10.3 Counterparts ................................................. 47
Section 10.4 Entire Agreement; No Third-Party Beneficiaries ............... 47
Section 10.5 Governing Law and Venue; Waiver of Jury Trial ................ 47
Section 10.6 Assignment ................................................... 48
Section 10.7 Severability ................................................. 48
Section 10.8 Remedies ..................................................... 49
Section 10.9 Obligations of Subsidiaries .................................. 49
Exhibits
--------
Exhibit A - Form of Affiliate Letter
Disclosure Letters
------------------
Company Letter
Parent Letter
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 1, 2003 (this "Agreement")
among First Data Corporation, a Delaware corporation ("Parent"), Monaco
Subsidiary Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and Concord EFS, Inc., a Delaware corporation (the "Company")
(Sub and the Company being hereinafter collectively referred to as the
"Constituent Corporations"). Except as otherwise set forth herein, capitalized
(and certain other) terms used herein shall have the meanings set forth in
Section 1.1.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have each approved the merger of Sub with and into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby the issued and outstanding shares of Common Stock, par value $0.33 1/3
per share, of the Company ("Company Common Stock," and the shares of Company
Common Stock are hereinafter referred to as the "Shares"), other than Shares
held directly or indirectly by Parent, Sub or the Company (other than such
Shares held by Parent, Sub or the Company in a fiduciary, collateral, custodial
or similar capacity), will be converted into shares of Common Stock, par value
$0.01 per share, of Parent (the "Parent Shares");
WHEREAS, the Board of Directors of the Company has determined that this
Agreement is advisable to the Company's stockholders and has recommended that
the Company's stockholders adopt this Agreement;
WHEREAS, the Board of Directors of Parent has determined that this
Agreement is advisable to Parent's stockholders and has recommended that
Parent's stockholders approve the issuance of Parent Shares in the Merger;
WHEREAS, for federal income Tax purposes, it is intended that the Merger
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Code; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:
ARTICLE I
INTERPRETATION; DEFINITIONS
Section 1.1 Interpretation; Definitions. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of this Agreement
<PAGE>
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." As used in this Agreement, the
phrase "made available" shall mean that the information referred to has been
made available if requested by the party to whom such information is to be made
available.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 1.1 and shall be equally applicable to both the
singular and plural forms. Any agreement referred to below shall mean such
agreement as amended, supplemented or modified from time to time to the extent
permitted by the applicable provisions thereof and by this Agreement.
"Acquisition Agreement" shall have the meaning set forth in Section
6.2(a).
"Affiliate" shall have the meaning as defined in Rule 12b-2 under the
Exchange Act.
"Agreement" means this Agreement and Plan of Merger among Parent, Sub and
the Company.
"Alliance" shall mean any venture (in any form, including in corporate,
partnership or limited liability company form) or contractual alliance between
Parent or any of its Affiliates and one or more third parties (i) pursuant to
which any such third party venturer or party has the contractual or other legal
right to block major actions by such venture or contractual alliance or (ii) to
whom Parent or any of its Affiliates owe a fiduciary duty.
"Applicable Law" means all applicable laws, statutes, orders, rules,
regulations and all applicable legally binding policies or guidelines
promulgated, or judgments, decisions or orders entered, by any Governmental
Entity.
"Bank Act" means the Bank Holding Company Act of 1956, as amended, together
with the rules and regulations promulgated thereunder.
"Bank Regulatory Authorities" means one or more of the following: the Board
of Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the Colorado Division of
Banking or the Tennessee Department of Financial Institutions.
"Benefit Plan" means any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, restricted stock, phantom stock, stock appreciation or other
equity-based compensation, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, program or arrangement
providing compensation or benefits to or in respect of any current or former
employee, officer or director of the Company or Parent, as the case may be, or
any of their respective Subsidiaries.
"Certificate of Merger" shall have the meaning set forth in Section 2.3.
"Certificates" shall have the meaning set forth in Section 3.3(b).
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"Closing Date" shall have the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the introductory paragraph of
this Agreement.
"Company Common Stock" shall have the meaning set forth in the first
recital provision of this Agreement.
"Company Filed SEC Documents" means the documents (but excluding the
exhibits thereto) filed by the Company with the SEC and publicly available since
December 31, 2000 and prior to the execution of this Agreement.
"Company Letter" means the letter from the Company to Parent dated the date
hereof, which letter relates to this Agreement and is designated therein as the
Company Letter.
"Company Material Contract" shall have the meaning set forth in Section
4.18.
"Company Permits" shall have the meaning set forth in Section 4.9(a).
"Company SEC Documents" shall have the meaning set forth in Section 4.6.
"Company Stock Options" shall have the meaning set forth in Section 4.3.
"Company Stock Plans" shall have the meaning set forth in Section 4.3.
"Company Stockholder Approval" shall have the meaning set forth in Section
7.3(a).
"Company Stockholders Meeting" shall have the meaning set forth in Section
7.3(a).
"Compensation Commitments" shall have the meaning set forth in Section
4.13(a).
"Confidentiality Agreement" shall have the meaning set forth in Section
7.4.
"Constituent Corporations" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Contract" shall mean any written or oral agreement, contract, commitment,
lease, license, contract, note, bond, mortgage, indenture, arrangement or other
instrument or obligation.
"Current Premium" shall have the meaning set forth in Section 7.9(b).
"D&O Insurance" shall have the meaning set forth in Section 7.9(b).
"DGCL" means the General Corporation Law of the State of Delaware.
"Effective Time" shall have the meaning set forth in Section 2.3.
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<PAGE>
"Environmental Law" means any federal, state, local or foreign statute,
law, regulation, order, decree, permit, authorization, common law or legally
binding agency requirement relating to: (i) the protection, investigation or
restoration of the environment, health, safety or natural resources, (ii) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (iii) noise, odor, indoor air, employee exposure,
wetlands, pollution, contamination or any injury or threat of injury to persons
or property relating to any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.
"ERISA Benefit Plan" means a Benefit Plan which is also an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) or which is also an
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Exchange Agent" shall have the meaning set forth in Section 3.3(a).
"Exchange Fund" shall have the meaning set forth in Section 3.3(a).
"Exchange Ratio" shall have the meaning set forth in Section 3.2(c).
"Extended End Date" shall have the meaning set forth in Section 9.1(i).
"Goldman Sachs" shall have the meaning set forth in Section 4.21.
"Governmental Entity" means any federal, state or local government or any
court, tribunal, administrative agency or commission or other governmental or
other regulatory authority or agency, domestic, foreign or supranational,
including the Bank Regulatory Authorities.
"Hazardous Substance" means (i) any substance that is listed, classified,
regulated or for which liability is imposed pursuant to any Environmental Law;
(ii) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
material or radon; and (iii) any other substance which is the subject of
regulatory action by any Government Entity in connection with any Environmental
Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Indemnified Person" shall have the meaning set forth in Section 7.9(a).
"Intellectual Property Rights" shall have the meaning set forth in Section
4.15.
"IRS" means the Internal Revenue Service.
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"J.P. Morgan" shall have the meaning set forth in Section 5.18.
"Key Customers" shall have the meaning set forth in Section 4.17.
"Knowledge" shall mean the actual knowledge of the directors or executive
officers of the Company or the directors or executive officers of Parent, as the
case may be.
"Liens" means any pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
"Material Adverse Change" or "Material Adverse Effect" means, when used in
connection with the Company or Parent, as the case may be, any effect, change or
development that, individually or in the aggregate, with other effects, changes
or developments, is, or would reasonably be expected to be, material and adverse
to the financial condition, business, operations or results of operations of the
Company and its Subsidiaries taken as a whole, or Parent and its Subsidiaries
taken as a whole, as the case may be; provided, however, that to the extent any
effect, change or development is caused by or results from any of the following,
it shall not be taken into account in determining whether there has been (or
would reasonably be expected to be) a "Material Adverse Change" and "Material
Adverse Effect": (A) the announcement of the execution of this Agreement or the
performance of obligations under this Agreement, (B) factors affecting the
economy or financial markets as a whole or generally affecting the payment
services industry, except to the extent the Company or Parent, as the case may
be, is materially and adversely affected in a disproportionate manner as
compared to other comparable participants in such industry, (C) failure to meet
analyst financial forecasts of the Company or Parent, as the case may be, in and
of itself, or the trading price of the Company Common Stock or Parent Shares, as
the case may be, in and of itself (it being understood that the facts or
occurrences giving rise or contributing to any such effect, change or
development which affects or otherwise relates to the failure to meet analyst
financial forecasts or the trading price, as the case may be, may be deemed to
constitute, or be taken into account in determining whether there has been, or
would reasonably be expected to be, a Material Adverse Change or Material
Adverse Effect), and (D) the commencement, occurrence or continuation of any
war, armed hostilities or acts of terrorism involving or affecting the United
States of America or any part thereof. The parties hereto agree and understand
that, for the avoidance of doubt, a criminal indictment or criminal information
or similar proceeding or action against a party or its Subsidiaries or against
any of their respective officers or directors relating to actions within the
scope of the party's business or an SEC enforcement action, or SEC formal
investigation that is not resolved by the earlier of 90 days after its
commencement or the Extended End Date (such period being an "Investigation
Period"), of a party, its Subsidiaries or their respective officers or directors
relating to actions within the scope of the party's business will constitute a
Material Adverse Effect or Material Adverse Change with respect to the party.
The parties hereto further agree and understand that, for the avoidance of
doubt, for purposes of Section 8.2(a) and 8.3(a), during any Investigation
Period, the party not subject to (and whose Subsidiaries and their respective
officers and directors are not subject to) such investigation shall not be
required to consummate the transactions contemplated by this Agreement.
"Merger" shall have the meaning set forth in the first recital provision of
this Agreement.
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"Merrill Lynch" shall have the meaning set forth in Section 5.18.
"NYSE" means the New York Stock Exchange, Inc.
"Order" shall have the meaning set forth in Section 8.1(b).
"Parent" shall have the meaning set forth in the introductory paragraph of
this Agreement.
"Parent Filed SEC Documents" means the documents (but excluding the
exhibits thereto) filed by Parent with the SEC and publicly available since
December 31, 2000 and prior to the execution of this Agreement.
"Parent Letter" means the letter from Parent to the Company dated the date
hereof, which letter relates to this Agreement and is designated therein as the
Parent Letter.
"Parent Options" shall have the meaning set forth in Section 7.2(b).
"Parent Permits" shall have the meaning set forth in Section 5.9(a).
"Parent Preferred Stock" shall have the meaning set forth in Section
5.3(a).
"Parent SEC Documents" shall have the meaning set forth in Section 5.6.
"Parent Share Issuance" means the issuance of the Parent Shares upon
conversion of the Shares pursuant to Section 3.2(c).
"Parent Shares" shall have the meaning set forth in the first recital
provision of this Agreement.
"Parent Stock Equivalents" shall have the meaning set forth in Section
5.3(a).
"Parent Stock Incentive Plans" shall have the meaning set forth in Section
5.3(a).
"Parent Stock Options" shall have the meaning set forth in Section 5.3(a).
"Parent Stockholder Approval" shall have the meaning set forth in Section
7.3(a).
"Parent Stockholders Meeting" shall have the meaning set forth in Section
7.3(a).
"Person" means any person, employee, individual, corporation, limited
liability company, partnership, trust, or any other non-governmental entity or
any governmental or regulatory authority or body.
"Proxy Statement" shall have the meaning set forth in Section 4.8.
"Registration Statement" shall have the meaning set forth in Section 4.8.
"SEC" means the Securities and Exchange Commission.
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"Sarbanes-Oxley" shall have the meaning set forth in Section 4.9(b).
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"Shares" shall have the meaning set forth in the first recital provision of
this Agreement.
"Significant Subsidiary" of any Person means a Subsidiary of such Person
that would constitute a "significant subsidiary" of such Person within the
meaning of Rule 1.02(v) of Regulation S-X as promulgated by the SEC.
"Stock Equivalents" shall have the meaning set forth in Section 4.3.
"Stockholders Meetings" shall have the meaning set forth in Section 7.3(a).
"Sub" shall have the meaning set forth in the introductory paragraph of
this Agreement.
"Subsidiary" or "subsidiary" of any Person means another Person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"Superior Proposal" shall have the meaning set forth in Section 6.2(a).
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Takeover Proposal" shall have the meaning set forth in Section 6.2(a).
"Tax" and "Taxes" means (i) any federal, state, local or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value added, transfer,
stamp, or environmental tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty, addition to tax or additional amount imposed by any
Governmental Entity, and (ii) any liability of the Company or any Subsidiary for
the payment of amounts with respect to payments of a type described in clause
(i) as a result of being a member of an affiliated, consolidated, combined or
unitary group, or as a result of any obligation of the Company or any Subsidiary
under any tax sharing arrangement or tax indemnity arrangement.
"Tax Return" means any return, report or similar statement required to be
filed with respect to any Tax including any information return, claim for
refund, amended return or declaration of estimated Tax.
"Termination Fee" shall have the meaning set forth in Section 9.2(b).
"Transfer Taxes" shall have the meaning set forth in Section 7.7.
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"William Blair" shall have the meaning set forth in Section 4.21.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the DGCL, Sub shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the separate
corporate existence of 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 Sub and the Company in accordance with
the DGCL.
Section 2.2 Closing. The closing of the Merger will take place at 10:00
a.m. on a date mutually agreed to by Parent and the Company, which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VIII (the "Closing Date"), at the offices of
Sidley Austin Brown & Wood, Bank One Plaza, 10 South Dearborn Street, Chicago,
Illinois 60603, unless another date, time or place is agreed to by the parties
hereto.
Section 2.3 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 duly filed with the Secretary of State
of the State of Delaware, or at such other time as Sub and the Company shall
agree should be 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 as soon as
practicable after the satisfaction or waiver of the conditions to the Merger set
forth in Article VIII.
Section 2.4 Effects of the Merger. The Merger shall have the effects set
forth in the DGCL.
Section 2.5 Certificate of Incorporation and Bylaws; Officers and
Directors.
(a) The Restated Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by the DGCL.
(b) The Bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter changed or amended as provided by the Restated Certificate of
Incorporation of the Surviving Corporation or by the DGCL.
(c) The directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, until the next annual meeting of
stockholders (or the earlier of their resignation or removal) and until their
respective successors are duly elected and qualified, as the case may be.
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(d) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until the earlier of their
resignation or removal and until their respective successors are duly elected
and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any of Sub, the Company or the
holders of any securities of the Constituent Corporations, the capital stock of
the Constituent Corporations shall be treated as set forth in this Article III
and in accordance with the terms of this Agreement.
Section 3.2 Conversion. (a) Capital Stock of Sub. Each issued and
outstanding share of capital stock of Sub shall be converted into and become one
validly issued, fully paid and nonassessable share of Common Stock, $0.33 1/3
par value, of the Surviving Corporation.
(b) Treasury Stock and Parent Owned Stock. Each Share that is held by the
Company or by any wholly owned Subsidiary of the Company and each Share that is
held by Parent, Sub or any other wholly owned Subsidiary of Parent (other than
such Shares held by Parent, Sub or the Company in a fiduciary, collateral,
custodial or similar capacity, which will be converted pursuant to Section
3.2(c)) shall automatically be cancelled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each Share issued and outstanding (other than
Shares to be cancelled in accordance with Section 3.2(b)) shall be converted
into 0.40 of a duly authorized, validly issued, fully paid and non-assessable
Parent Share (the "Exchange Ratio"). As of the Effective Time, all such Shares,
when so converted, shall no longer be outstanding and shall automatically be
cancelled and retired, and each holder of a certificate formerly representing
any such Shares shall cease to have any rights with respect thereto, except the
right to receive any dividends or distributions in accordance with Section
3.3(c), certificates representing the Parent Shares into which such Shares are
converted and any cash, without interest, in lieu of fractional shares to be
issued or paid in consideration therefor upon the surrender of such certificate
in accordance with Section 3.3(d).
Section 3.3 Exchange of Certificates. (a) At the Effective Time, Parent
shall deposit, or shall cause to be deposited, with Wells Fargo Bank Minnesota,
National Association or with a banking or other financial institution selected
by Parent and reasonably acceptable to the Company (and on terms reasonably
acceptable to the Company) (the "Exchange Agent"), for the benefit of the
holders of Shares, for exchange in accordance with this Article III,
certificates representing the Parent Shares to be issued in connection with the
Merger and an amount of cash sufficient to permit the Exchange Agent to make the
necessary payments of cash in lieu of fractional shares (such cash and
certificates for Parent Shares, together with any dividends or distributions
with respect thereto (relating to record dates for such dividends or
distributions after the Effective Time), being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 3.2 and paid pursuant to this
Section 3.3 in exchange for outstanding Shares.
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(b) Exchange Procedure. As soon as practicable after the Effective Time,
Parent shall cause the Exchange Agent to 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
be in customary form and 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 Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the consideration (and any
unpaid distributions and dividends) contemplated by Section 3.2 and this Section
3.3, including cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive promptly in exchange therefor (x) a certificate representing that
number of whole Parent Shares and (y) a check representing the amount of cash in
lieu of fractional shares, if any, and unpaid dividends and distributions with
respect to the Parent Shares as provided for in Section 3.3(c), if any, that
such holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article III, after giving effect to any
required withholding Tax. No interest will be paid or accrued on the cash
payable to holders of Shares. In the event of a transfer of ownership of Shares
that is not registered in the transfer records of the Company, a certificate
representing the proper number of Parent Shares, together with a check for the
cash to be paid pursuant to this Section 3.3 may be issued to such a transferee
if such Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the transferee 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 Parent that such Tax has been
paid or is not applicable. Parent or the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or under any
provision of state, local or foreign Tax law. To the extent that amounts are so
withheld by Parent or the Exchange 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 and withholding was made.
(c) Dividends. No dividends or other distributions declared with a record
date after the Effective Time on Parent Shares shall be paid with respect to any
Shares represented by a Certificate until such Certificate is surrendered for
exchange as provided herein or a Person claiming a Certificate to be lost,
stolen or destroyed has complied with the provisions of Section 3.6. Promptly
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole Parent Shares issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole Parent Shares and not paid, less
the amount of any withholding Taxes which may be required thereon, and (ii) at
the appropriate payment date or as promptly as practicable thereafter, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole Parent Shares, less the amount of
any withholding Taxes which may be required thereon. Parent will, no later than
the applicable dividend or distribution payment dates, provide the Exchange
Agent with the cash necessary to make the payments contemplated by this Section
3.3(c).
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(d) No Fractional Securities. No fractional Parent Shares shall be issued
pursuant hereto. In lieu of the issuance of any fractional share of Parent
Shares, cash adjustments will be paid to holders in respect of any fractional
share of Parent Shares that would otherwise be issuable, and the amount of such
cash adjustment shall be equal to the product obtained by multiplying such
stockholder's fractional share of Parent Shares that would otherwise be issuable
by the closing price per share of Parent Shares on the New York Stock Exchange
Composite Tape on the Closing Date as reported by The Wall Street Journal
(Northeast edition) (or, if not reported thereby, any other authoritative
source).
(e) No Further Ownership Rights in Shares. All Parent Shares issued upon
the surrender for exchange of Certificates in accordance with the terms of this
Article III (including any cash paid pursuant to this Section 3.3) shall be
deemed to have been issued 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 Exchange Agent for any reason, they shall be
cancelled and exchanged as provided in this Article III.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any Parent Shares) which
remains undistributed to the holders of Shares for six months after the
Effective Time may be delivered to Parent, upon demand, and any holders of
Shares who have not theretofore complied with this Article III and the
instructions set forth in the letter of transmittal mailed to such holders after
the Effective Time shall thereafter look only to Parent or its agent (subject to
abandoned property, escheat or other similar laws) for payment of their Parent
Shares, cash and unpaid dividends and distributions on Parent Shares deliverable
in respect of each Share such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
(g) No Liability. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any Person in respect of any amount properly delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 3.4 Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a "reorganization" within the meaning of Section 368(a)
of the Code, and the parties hereto adopt this Agreement as a "plan of
reorganization" for such purposes.
Section 3.5 Adjustment of Exchange Ratio. In the event that Parent changes
or establishes a record date for changing the number of Parent Shares issued and
outstanding as a result of a stock split, stock dividend, recapitalization,
subdivision, reclassification, combination or similar transaction with respect
to the outstanding Parent Shares and the record date therefor shall be prior to
the Effective Time, the Exchange Ratio applicable to the Merger and any other
calculations based on or relating to Parent Shares shall be appropriately
adjusted to reflect such stock split, stock dividend, recapitalization,
subdivision, reclassification, combination or similar transaction.
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Section 3.6 Lost 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 Exchange Agent, the posting by such Person of a bond, in such
reasonable amount as Parent or the Exchange Agent may direct as indemnity
against any claim that may be made against them with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Parent Shares, any cash in lieu of fractional shares
of Parent Shares to which the holders thereof are entitled pursuant to Section
3.3(b) and any dividends or other distributions to which the holders thereof are
entitled pursuant to Section 3.3(c).
Section 3.7 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, permits, licenses 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.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows, except as
set forth in the Company Letter or as disclosed in the Company Filed SEC
Documents (it being understood that any matter set forth in the Company Filed
SEC Documents shall be deemed to qualify any representation or warranty in this
Article IV only to the extent that the description of such matter in the Company
Filed SEC Documents would be reasonably inferred to be a qualification with
respect to such representation or warranty):
Section 4.1 Organization. The Company and each of its Subsidiaries are duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their respective organization and have requisite power and
authority to carry on their respective businesses as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority would not have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified or licensed
to do business and in good standing in each jurisdiction in which the nature of
their respective businesses or the ownership or leasing of their respective
properties makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on the Company. The Company
has delivered to Parent complete and correct copies of its Restated Certificate
of Incorporation and Bylaws and has made available to Parent the charter and
bylaws (or similar organizational documents) of each of its Significant
Subsidiaries.
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Section 4.2 Subsidiaries. As of the date of this Agreement, Exhibit 21 to
the Company's Annual Report on Form 10-K for the year ended December 31, 2002,
as filed with the SEC, is a true, accurate and complete statement in all
material respects of all of the information required to be set forth therein by
Regulation S-K as promulgated by the SEC. All of the outstanding shares of
capital stock of each Significant Subsidiary of the Company that is a
corporation have been validly issued and are fully paid and nonassessable. All
of the outstanding shares of capital stock of each Subsidiary of the Company are
owned by the Company, by one or more Subsidiaries of the Company or by the
Company and one or more Subsidiaries of the Company, free and clear of all
Liens. 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 of the Company and its Subsidiaries,
taken as a whole.
Section 4.3 Capital Structure. The authorized capital stock of the Company
consists of 1,500,000,000 Shares. At the close of business on March 28, 2003,
(i) 486,483,143 Shares were issued and outstanding, all of which were validly
issued, fully paid and nonassessable and free of preemptive rights, (ii) no
Shares were held by the Company in its treasury, (iii) 58,239,379 Shares were
reserved for issuance pursuant to outstanding options to purchase Company Common
Stock (options to purchase Company Common Stock being "Company Stock Options")
granted under the Company's 2002 Stock Option Plan, the Company's 1993 Incentive
Stock Option Plan and the Star Systems, Inc. 2000 Equity Incentive Plan
(together, and each as amended, the "Company Stock Plans") and (iv) 34,717,849
Shares were reserved for the grant of additional awards under the Company Stock
Plans. As of the close of business on March 28, 2003, except as set forth above,
no Shares were issued, reserved for issuance or outstanding, no Company Stock
Options have been granted and there are not any phantom stock or other
contractual rights the value of which is determined in whole or in part by the
value of any capital stock of the Company ("Stock Equivalents"). Since March 28,
2003 and on or prior to the date of this Agreement, except for the exercise of
any Company Stock Options referred to in clause (iii) above, the Company has not
issued any Shares or made any grant of awards under the Company Stock Plans or
authorized or entered into any Contract to do any of the foregoing. There are no
outstanding stock appreciation rights with respect to the capital stock of the
Company. Each outstanding Share is, and each Share which may be issued pursuant
to the Company Stock Plans will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. Other
than the Company Common Stock, there are no other authorized classes of capital
stock of the Company. There are no outstanding bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
the Company's stockholders may vote. Except as set forth above, as of the date
of this Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its Significant Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Significant Subsidiaries to
issue, deliver or sell or create, or cause to be issued, delivered or sold or
created, additional shares of capital stock, Company Stock Options or other
voting securities or Stock Equivalents of the Company or of any of its
Significant Subsidiaries or obligating the Company or any of its Significant
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. As of
the date of this Agreement, there are no outstanding contractual obligations of
the Company or
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any of its Significant Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Significant
Subsidiaries. There are no outstanding agreements to which the Company, its
Significant Subsidiaries or any of their respective officers or directors is a
party concerning the voting of any capital stock of the Company or any of its
Significant Subsidiaries.
Section 4.4 Authority. On or prior to the date of this Agreement, the Board
of Directors of the Company unanimously approved this Agreement, declared this
Agreement and the Merger advisable to the Company and its stockholders, resolved
to recommend the approval and adoption of this Agreement by the Company's
stockholders and directed that this Agreement be submitted to the Company's
stockholders for approval and adoption (all in accordance with the DGCL). The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and, subject to adoption by the Company's stockholders of this
Agreement, 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 on the part of the
Company, subject to adoption by the Company's stockholders of this Agreement.
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
Sub) constitutes the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
Section 4.5 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the Securities Act, the HSR
Act, the DGCL, the laws applied by the Bank Regulatory Authorities, state
takeover laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, and except as may be required in connection with the
Taxes described in Section 7.7, neither the execution, delivery or performance
of this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Restated Certificate of Incorporation or Bylaws of the
Company or of the similar organizational documents of any of its Subsidiaries,
(ii) require any filing or registration with, or permit, authorization, consent
or approval of, any Governmental Entity on the part of the Company or any of its
Subsidiaries, (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any Contract to which the Company or any of
its Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, except in the case of clauses (ii), (iii)
and (iv) for failures, violations, breaches or defaults that would not have a
Material Adverse Effect on the Company.
Section 4.6 SEC Documents and Other Reports. The Company has timely filed
with the SEC all documents required to be filed by it since December 31, 2000
under the Securities Act or the Exchange Act (the "Company SEC Documents"). As
of their respective filing dates, the
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Company SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, each as in effect on
the date so filed, and at the time filed with the SEC none of the Company SEC
Documents 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 financial statements of the Company included in the Company
SEC Documents complied as of their respective dates in all material respects
with the then applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles (except in the case of the unaudited
statements, as permitted by Form 10-Q under the Exchange Act) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the 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).
Section 4.7 Absence of Material Adverse Change. Since December 31, 2002,
the Company and its Subsidiaries have conducted their respective businesses in
all material respects only in the ordinary course, and there has not been (i)
any Material Adverse Change with respect to the Company, (ii) any declaration,
setting aside or payment of any dividend or other distribution with respect to
its capital stock, (iii) any split, combination or reclassification of any of
its capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) any change in accounting methods, principles or practices by
the Company, (v) any material damage, destruction or other casualty loss with
respect to any material asset or property owned, leased or otherwise used by the
Company or any of its Subsidiaries which is not covered by insurance or (vi) any
material amendment of any of the Benefit Plans of the Company or any of its
Subsidiaries other than amendments in the ordinary course.
Section 4.8 Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by reference
in Parent's registration statement on Form S-4 (together with any amendments or
supplements thereto, the "Registration Statement"), pursuant to which Parent
Shares issuable in the Merger will be registered, or the joint proxy
statement/prospectus (together with any amendments or supplements thereto, the
"Proxy Statement") relating to the Stockholders Meetings, will, in the case of
the Registration Statement, at the time it becomes effective, and, in the case
of the Proxy Statement, at the time it is first mailed to the stockholders of
the Company or Parent and at the time of the Stockholders Meetings, 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 or
necessary to correct any statement in any earlier communication by the Company
with respect to the solicitation of proxies for the Stockholders Meetings which
has become false or 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 in the Proxy Statement based on information
supplied by Parent or Sub or any of their representatives specifically for
inclusion or incorporation by reference therein or
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based on information which is not made in or incorporated by reference in the
Proxy Statement but which should have been disclosed by Parent pursuant to
Section 5.8.
Section 4.9 Compliance with Laws; Permits. (a) The businesses of the
Company and its Subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except for possible
violations that would not have a Material Adverse Effect on the Company. 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 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 have a
Material Adverse Effect on the Company, and, as of the date of this Agreement,
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 have a Material Adverse
Effect on the Company.
(b) The Company and each of its officers and directors have complied in all
material respects with (i) the applicable provisions of the Sarbanes-Oxley Act
of 2002 and the related rules and regulations promulgated under such Act or the
Exchange Act ("Sarbanes-Oxley") and (ii) the applicable listing and corporate
governance rules and regulations of the NYSE. The Company has previously
disclosed to Parent any of the information required to be disclosed by the
Company and certain of its officers to the Company's Board of Directors or any
committee thereof pursuant to the certification requirements contained in Form
10-K and Form 10-Q under the Exchange Act. From the period beginning January 1,
2000 through the enactment of Sarbanes-Oxley, neither the Company nor any of its
Affiliates made any loans to any executive officer or director of the Company
equal to or in excess of $60,000. Since the enactment of Sarbanes-Oxley, neither
the Company nor any of its Affiliates has made any loans to any executive
officer or director of the Company.
(c) Each executive officer and director of the Company has complied with
all Applicable Laws in connection with or relating to actions within the scope
of the Company's business, except where the failure to comply would not have a
Material Adverse Effect on the Company. No executive officer or director of the
Company is a party to or the subject of any pending or threatened suit, action,
proceeding or investigation by any Governmental Entity that would have a
Material Adverse Effect on the Company, except as disclosed in the Company Filed
SEC Documents.
Section 4.10 Tax Matters. (a) (i) The Company and each of its Subsidiaries
has timely filed (after taking into account any extensions to file properly
obtained) all Tax Returns required to be filed by them either on a separate or
combined or consolidated basis, except where the failure to timely file would
not have a Material Adverse Effect on the Company; (ii) all such Tax Returns are
complete and accurate in all respects, except where the failure to be complete
or accurate would not have a Material Adverse Effect on the Company; (iii) each
of the Company and its Subsidiaries has duly and timely paid all Taxes that are
required to be paid, and all Taxes which the Company or any Subsidiary is
required to withhold or collect for payment have been duly withheld or collected
and paid to the appropriate Governmental Entity, except where the failure to do
so would not have a Material Adverse Effect on the Company; (iv) no deficiencies
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for any Taxes have been asserted, proposed or assessed against the Company or
any of its Subsidiaries that have not been fully paid or otherwise fully
settled, except for deficiencies asserted, proposed or assessed which, if fully
paid, would not have a Material Adverse Effect on the Company; and (v) neither
the Company nor any of its Subsidiaries has waived any statute of limitations
with respect to any material Taxes or, to the extent related to material Taxes,
agreed to any extensions of time with respect to a Tax assessment or deficiency,
in each case to the extent such waiver or agreement is currently in effect, (vi)
with respect to all tax years ending on or before December 31, 1998, the Tax
Returns referred to in clause (i), to the extent related to federal income, or
material state, local or foreign income or franchise, Taxes, have been examined
by the IRS or the appropriate state, local or foreign Taxing authority or the
period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired, (vii) as of the date of this Agreement, there
are no material audits, examinations, investigations or other proceedings
pending or threatened in writing in respect of Taxes or Tax matters of the
Company or any of its Subsidiaries, (viii) there are no material Liens relating
to Taxes on any of the assets of the Company or any of its Subsidiaries, except
for Liens relating to current Taxes not yet due and payable or relating to Taxes
that are being contested in good faith, (ix) neither the Company nor any
predecessor to the Company has made with respect to the Company, or any
predecessor of the Company, any consent under Section 341 of the Code, (x)
during the last three years, none of the Company or any of its Subsidiaries has
been a party to any transaction (other than a transaction described in Section
355(e)(2)(C) of the Code) treated by the parties thereto as one to which Section
355 of the Code (or any similar provision of state, local or foreign law)
applied, (xi) neither the Company nor any Subsidiary has ever been a member of a
group of corporations filing Tax Returns on a consolidated, combined or unitary
basis other than the group, if any, of which it is currently a member and (xii)
except in the case of any transaction or arrangement that could not reasonably
be expected to affect the Tax or other liability of the Company or any of its
Subsidiaries, neither the Company nor any of its Subsidiaries has been a party
to, or a promoter or organizer of, any "tax shelter" or similar transaction
(including, without limitation, any transaction or arrangement a principal
purpose of which was the reduction of federal income taxes or any so-called
"listed transaction" identified by the IRS).
(b) No payment or other benefit, and no acceleration of the vesting of any
options, payments or other benefits, will be, as a direct or indirect result of
the transactions contemplated by this Agreement (or under Section 280G of the
Code and the Treasury Regulations thereunder be presumed to be) a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code and the Treasury Regulations thereunder, without regard to
whether such payment or acceleration is reasonable compensation for personal
services performed or to be performed in the future.
(c) Neither the Company nor any of its Affiliates has taken or agreed to
take any action that, to the Knowledge of the Company, will (or will be
reasonably likely to) prevent the Merger from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code. To the Knowledge of the
Company, the representations set forth in the Company Tax Certificate attached
to the Company Letter, if made on the date hereof (assuming the Merger were
consummated on the date hereof and based on reasonable estimates in the case of
certain information not available on the date hereof), would be true and correct
in all material respects.
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Section 4.11 Liabilities. Since December 31, 2002, neither the Company nor
any of its Subsidiaries has incurred any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise), other than
liabilities or obligations incurred in the ordinary course of business since
December 31, 2002 and liabilities or obligations which would not have a Material
Adverse Effect on the Company.
Section 4.12 Litigation. As of the date of this Agreement, there is no
suit, action, proceeding or investigation pending against the Company or any of
its Subsidiaries that would have a Material Adverse Effect on the Company.
Neither the Company nor any of its Subsidiaries is subject to any outstanding
judgment, order, writ, injunction or decree that would have a Material Adverse
Effect on the Company.
Section 4.13 Benefit Plans. (a) Item 4.13(a) of the Company Letter sets
forth a true and complete list of each material Benefit Plan (including each
ERISA Benefit Plan) maintained by the Company or any of its Subsidiaries. Except
as required by law, neither the Company nor any of its Subsidiaries has adopted
or amended in any material respect any Benefit Plan since the date of the most
recent audited financial statements included in the Company Filed SEC Documents.
None of the Company, its Subsidiaries or any trade or business which has been,
during the six-year period preceding the date hereof, treated as a single
employer with the Company under Section 414(b), (c), (m) or (o) of the Code has
during such time contributed to any ERISA Benefit Plan that is a "multiemployer
plan" (as defined in Section 3(37) of ERISA) or maintained any ERISA Benefit
Plan that is subject to Title IV of ERISA or Section 412 of the Code. As of the
date of this Agreement there exist no material agreement, commitment,
understanding, plan, policy or arrangement of any kind, whether written or oral,
with or for the benefit of any current or former officer or director
("Compensation Commitments"). Neither the Company nor any of its Subsidiaries
maintains or contributes to any employee benefit plans, programs or arrangements
or employs any employees outside of the United States.
(b) With respect to each Benefit Plan listed in Item 4.13(a) of the Company
Letter, correct and complete copies, where applicable, of the following
documents have been made available to Parent: (i) all Benefit Plan documents and
amendments, trust agreements and insurance and annuity contracts and policies,
(ii) the most recent IRS determination letter or opinion letter if the Benefit
Plan is intended to satisfy the requirements for Tax favored treatment pursuant
to Sections 401-417 of the Code, (iii) the Annual Reports (Form 5500 Series) and
accompanying schedules, as filed, for the three most recently completed plan
years, (iv) any discrimination or coverage tests performed during the last two
(2) plan years and (v) the current summary plan description. True and complete
copies of all written Compensation Commitments and of all related insurance and
annuity policies and contracts and other documents with respect to each
Compensation Commitment have been made available to Parent.
(c) Each Benefit Plan listed in Item 4.13(a) of the Company Letter which is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS that such plan is so qualified under the Code
or has been established pursuant to a prototype plan that has received a
favorable opinion letter from the IRS, and no circumstance exists which might
cause such plan to cease being so qualified except for any circumstance that
would not have a Material Adverse Effect on the Company. Each Benefit Plan
listed in Item 4.13(a) of the Company Letter complies and has been maintained in
all respects
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with its terms and all requirements of law and regulations applicable thereto,
and there has been no notice issued by any Governmental Entity questioning or
challenging such compliance, except for any noncompliance or other circumstance
that would not have a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries has taken any action to take corrective
action or make a filing under any voluntary correction program of the IRS,
Department of Labor or any other Governmental Entity with respect to any Benefit
Plan or Compensation Commitment, and neither the Company nor any of its
Subsidiaries has any Knowledge of any material plan defect which would qualify
for correction under any such program. There is no dispute, arbitration,
grievance, action, suit or claim (other than routine claims for benefits)
pending or, to the Knowledge of the Company, threatened involving such Benefit
Plans or the assets of such plans. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement. The Company does
not have any obligations under any welfare plans or otherwise to provide health
or death benefits to or in respect of former employees of the Company, except as
specifically required by the continuation requirements of Part 6 of Title I of
ERISA or applicable state law. The Company has no liability on account of (i)
any violation of the health care requirements of Part 6 of Title I of ERISA or
Section 4980B of the Code, (ii) under Section 502(i) or Section 502(l) of ERISA
or Section 4975 of the Code, (iii) under Section 302 of ERISA or Section 412 of
the Code or (iv) under Title IV of ERISA, except in the case of clauses (i) or
(ii) for any circumstance that would not have a Material Adverse Effect on the
Company. No amounts will become payable as a result of the Merger for which the
Company or any of its Subsidiaries will bear any liability.
(d) Prior to the date hereof, the Company has terminated (it being
understood that such terminations may be conditioned upon the consummation of
the Merger) all split dollar agreements to which the Company or any of its
Subsidiaries was a party (including obtaining consents to such terminations by
the executives who are parties to such agreements) without making or agreeing to
make any payment of any amounts by the Company to any Person or waiving or
agreeing to waive any rights.
Section 4.14 Environmental Matters. Except for matters that would not have
a Material Adverse Effect on the Company: (i) the Company and its Subsidiaries
are in compliance with all applicable Environmental Laws; (ii) no property
currently owned or operated by the Company or any of its Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) is
contaminated with any Hazardous Substance which contamination could reasonably
be expected to require remediation pursuant to any Environmental Law; (iii) to
the Knowledge of the Company, no property formerly owned or operated by the
Company or any of its Subsidiaries was contaminated with any Hazardous Substance
during or prior to such period of ownership or operation which contamination
could reasonably be expected to require remediation pursuant to any
Environmental Law; (iv) to the Knowledge of the Company, neither the Company nor
any of its Subsidiaries is liable for any Hazardous Substance disposal or
contamination on any third party property; (v) neither the Company nor any of
its Subsidiaries has received any written notice, demand, letter, claim or
request for information alleging that the Company or any of its Subsidiaries may
be in violation of or subject to liability under any Environmental Law; (vi)
neither the Company nor any of its Subsidiaries is subject to any written order,
decree, injunction or indemnity with any Governmental Entity or any third party
relating to liability under any Environmental Law or relating to Hazardous
Substances; and (vii) to the Knowledge of the Company, there are no other
circumstances or conditions involving the Company or any of its
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Subsidiaries that could reasonably be expected to result in any claim,
liability, investigation, cost or restriction on the ownership, use, or transfer
of any property pursuant to any Environmental Law. Sections 4.5 and 4.14 set
forth the sole representations and warranties of the Company with respect to
environmental or workplace health or safety matters, including all matters
arising under Environmental Laws.
Section 4.15 Intellectual Property. The Company and its Subsidiaries own or
have a valid right to use all patents, trademarks, trade names, service marks,
domain names, copyrights, and any applications and registrations therefor,
technology, trade secrets, know-how, computer software and tangible and
intangible proprietary information and materials (collectively, "Intellectual
Property Rights") as are necessary in connection with the business of the
Company and its Subsidiaries, taken as a whole, except where the failure to so
own or have a valid right to use such Intellectual Property would not have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries has infringed, misappropriated or violated in any material respect
any Intellectual Property Rights of any third party, except where such
infringement, misappropriation or violation would not have a Material Adverse
Effect on the Company. No third party infringes, misappropriates or violates any
Intellectual Property Rights owned or exclusively licensed by or to the Company
or any of its Subsidiaries, except where such infringement, misappropriation or
violation would not have a Material Adverse Effect on the Company.
Section 4.16 Banking; Credit Card Associations. The Company is registered
as a financial holding company pursuant to the Bank Act and satisfies all
eligibility requirements for financial holding companies set forth thereunder,
except where the failure to satisfy such eligibility requirements would not have
a Material Adverse Effect on the Company. None of the operations of the Company,
any of its Subsidiaries or any of their respective businesses are being
conducted in violation of the Bank Act or any other law applied by the Bank
Regulatory Authorities, except for possible violations that would not have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries owns or controls, directly or indirectly or acting in concert with
others, more than 5% of the voting stock of any insured depository institution.
Neither the Company nor any of its Subsidiaries is in default under or in
violation of any provisions of the rules and regulations of VISA U.S.A., Inc.,
VISA International, Inc., MasterCard International, Inc. and any successor
organizations or associations, except where such default or violation would not
have a Material Adverse Effect on the Company.
Section 4.17 Customers. Item 4.17 of the Company Letter sets forth a list
(without specifying the identity of any customer listed thereon) for the twelve
months ended December 31, 2002 of the top 25 revenue producing network services
customers and the top 25 revenue producing payment services customers, in each
case of the Company and its Subsidiaries (collectively, the "Key Customers"),
including the amount of revenue received from such Key Customers for the twelve
months ended December 31, 2002. Since January 1, 2002 there has been no actual
or, to the Knowledge of the Company, threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship of
the Company or any of its Subsidiaries with any one or more of the Key
Customers, other than as would not have a Material Adverse Effect on the
Company. To the Knowledge of the Company, there exists no present condition or
state of facts or circumstances involving any Key Customer and their
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relationships with the Company or any of its Subsidiaries which would have a
Material Adverse Effect on the Company or prevent the conduct of its business
after the consummation of the transactions contemplated by this Agreement in
essentially the same manner in which such business has heretofore been
conducted.
Section 4.18 Material Contracts. Except as filed as exhibits to the Company
Filed SEC Documents prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries is a party to or bound by any Contract that (i) is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K promulgated by the SEC) or (ii) materially limits or otherwise materially
restricts the Company or any of its Subsidiaries or that would, after the
Effective Time, materially limit or otherwise materially restrict Parent or any
of its Subsidiaries (including the Surviving Corporation and its Subsidiaries)
or any successor thereto, from engaging or competing in any material line of
business in any geographic area or that contains most favored nation pricing
provisions or exclusivity or non-solicitation provisions with respect to
customers. Each Contract of the type described in this Section 4.18, whether or
not set forth in Item 4.18 of the Company Letter, is referred to herein as a
"Company Material Contract." Neither the Company nor any of its Subsidiaries has
Knowledge of, or has received notice of, any violation of or default under (or
any condition which with the passage of time or the giving of notice would cause
such a violation of or default under) any Company Material Contract or any other
Contract to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that would not have a
Material Adverse Effect on the Company or, after giving effect to the Merger,
Parent. As of the date of this Agreement, neither the Company nor any of its
Subsidiaries is a party to any standstill or similar agreement with any Person
which relates to any transaction that could constitute a Takeover Proposal.
Section 4.19 Required Vote of Company Stockholders. The affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock
approving this Agreement is the only vote of the holders of any class or series
of the Company's capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
Section 4.20 State Takeover Statutes. The action of the Board of Directors
of the Company in approving the Merger and this Agreement is sufficient to
render inapplicable to Parent, Sub, the Merger and this Agreement the provisions
of Section 203 of the DGCL. To the Knowledge of the Company, no "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover statute
or regulation or any anti-takeover provision in the Company's Restated
Certificate of Incorporation or Bylaws is, or at the Effective Time will be,
applicable to the Company, the Company Common Stock, the Parent Shares, Parent,
Sub or the Merger.
Section 4.21 Brokers. No broker, investment banker, financial advisor or
other Person, other than William Blair & Company, L.L.C. ("William Blair") and
Goldman, Sachs & Co. ("Goldman Sachs"), the fees and expenses of which will be
paid by the Company (and are reflected in an agreement between William Blair and
the Company and an agreement between Goldman Sachs and the Company, complete
copies of which have been furnished to 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 the Company.
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Section 4.22 Opinions of Financial Advisors. The Company has received the
opinions of William Blair and Goldman Sachs to the effect that, as of the date
thereof, the Exchange Ratio is fair to the Company's holders of the Company
Common Stock from a financial point of view.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows, except as
set forth in the Parent Letter or as disclosed in the Parent Filed SEC Documents
(it being understood that any matter set forth in the Parent Filed SEC Documents
shall be deemed to qualify any representation or warranty in this Article V only
to the extent that the description of such matter in the Parent Filed SEC
Documents would be reasonably inferred to be a qualification with respect to
such representation or warranty):
Section 5.1 Organization. Parent and each of its Significant Subsidiaries
are duly organized, validly existing and in good standing under the laws of the
jurisdiction of their respective organization and have the requisite corporate
power and authority to carry on their respective businesses as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not have a Material Adverse
Effect on Parent. Parent and each of its Significant Subsidiaries are duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the nature of their respective businesses or the ownership or leasing
of their respective properties makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect on
Parent. Parent has delivered to the Company complete and correct copies of its
Second Amended and Restated Certificate of Incorporation and By-laws and the
Certificate of Incorporation and By-laws of Sub.
Section 5.2 Subsidiaries. As of the date of this Agreement, Exhibit 21 to
Parent's Annual Report on Form 10-K for the year ended December 31, 2002, as
filed with the SEC, is a true, accurate and complete statement in all material
respects of all of the information required to be set forth therein by
Regulation S-K as promulgated by the SEC. All of the outstanding shares of
capital stock of each Significant Subsidiary of Parent that is a corporation
have been validly issued and are fully paid and nonassessable. All of the
outstanding shares of capital stock of each Subsidiary of Parent are owned by
Parent, by one or more Subsidiaries of Parent or by Parent and one or more
Subsidiaries of Parent, free and clear of all Liens. Except for the capital
stock of its Subsidiaries, Parent 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 of Parent and its Subsidiaries, taken as a whole.
Section 5.3 Capital Structure. (a) The authorized capital stock of Parent
consists of 2,000,000,000 Parent Shares and 10,000,000 shares of Preferred
Stock, par value $1.00 per share ("Parent Preferred Stock"). At the close of
business on March 28, 2003, (i) 747,788,465 Parent Shares were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) 150,125,817 Parent Shares were held by Parent in
its treasury, (iii) 65,769,847 Parent Shares were reserved for issuance pursuant
to outstanding options to purchase Parent Shares (options to purchase Parent
Shares being "Parent Stock
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Options") granted under Parent's 2002 Long-Term Incentive Plan, 1992 Long-Term
Incentive Plan or 1993 Directors' Stock Option Plan (together with Parent's
Employee Stock Purchase ESPP, the "Parent Stock Incentive Plans"), (iv)
61,985,645 Parent Shares were reserved for the grant of additional awards under
the Parent Stock Incentive Plans and (v) no shares of Parent Preferred Stock
were issued and outstanding. As of the date of this Agreement, except as set
forth above, no Parent Shares were issued, reserved for issuance or outstanding,
no Parent Stock Options have been granted and there are not any phantom stock or
other contractual rights the value of which is determined in whole or in part by
the value of any capital stock of Parent ("Parent Stock Equivalents"). Since
March 28, 2003 and on or prior to the date of this Agreement, except for the
exercise of any Parent Stock Options referred to in clause (iii) above, Parent
has not issued any Parent Shares or made any grant of awards under the Parent
Stock Incentive Plans or authorized or entered into any Contract to do any of
the foregoing. There are no outstanding stock appreciation rights with respect
to the capital stock of Parent. Each outstanding Parent Share is, and each
Parent Share which may be issued pursuant to Parent Stock Incentive Plans will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. Other than the Parent Shares and the
Parent Preferred Stock, there are no other authorized classes of capital stock
of Parent. Other than Parent's 4 7/8% Convertible Notes due 2005 and 2% Senior
Convertible Contingent Debt Securities due 2008, there are no outstanding bonds,
debentures, notes or other indebtedness of Parent having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matter on which Parent's stockholders may vote. Other than the warrants held
by iFormation Group Holdings, LP and an Affiliate of J.P. Morgan & Chase Co. and
as set forth above, as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Parent or any of its Significant Subsidiaries
is a party or by which any of them is bound obligating Parent or any of its
Significant Subsidiaries to issue, deliver or sell or create, or cause to be
issued, delivered or sold or created, additional shares of capital stock, Parent
Stock Options or other voting securities or Parent Stock Equivalents of Parent
or of any of its Significant Subsidiaries or obligating Parent or any of its
Significant Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
contractual obligations of Parent or any of its Significant Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent or
any of its Significant Subsidiaries. There are no outstanding agreements to
which Parent, its Significant Subsidiaries or any of their respective officers
or directors is a party concerning the voting of any capital stock of Parent or
any of its Significant Subsidiaries.
(b) The authorized capital stock of Sub consists solely of 1000 shares of
common stock, par value $0.01 per share, of which, as of the date hereof, 100
were issued and outstanding. All outstanding shares of common stock of Sub have
been duly authorized and validly issued and are fully paid and nonassessable,
free of any preemptive or other similar right. Sub does not own any securities.
Section 5.4 Authority. On or prior to the date of this Agreement, the
Boards of Directors of Parent and Sub approved this Agreement and the Parent
Share Issuance, resolved to recommend the Parent Share Issuance to its
stockholders for approval and directed that the Parent Share Issuance be
submitted to its stockholders for approval. Each of Parent and Sub has
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all requisite corporate power and authority to execute and deliver this
Agreement and, subject to approval by Parent's stockholders of the issuance of
Parent Shares in the Merger, to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by each of Parent and
Sub and the consummation by Parent and Sub of the Merger and of the other
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of each of Parent and Sub, subject to approval by
Parent's stockholders of the issuance of Parent Shares in the Merger. This
Agreement has been approved by Parent as the sole stockholder of Sub. This
Agreement has been duly executed and delivered by each of Parent and Sub and
(assuming the valid authorization, execution and delivery of this Agreement by
the Company) constitutes the valid and binding obligation of each of Parent and
Sub enforceable against it in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
Section 5.5 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the Securities Act, the HSR
Act, the DGCL, the laws applied by the Bank Regulatory Authorities, state
takeover laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, and except as may be required in connection with the
Taxes described in Section 7.7, neither the execution, delivery or performance
of this Agreement by Parent or Sub nor the consummation by Parent or Sub of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Second Amended and Restated Certificate of Incorporation
or By-laws of Parent, the Certificate of Incorporation or By-laws of Sub or of
the similar organizational documents of any of Parent's Subsidiaries, (ii)
require any filing or registration with, or permit, authorization, consent or
approval of, any Governmental Entity on the part of Parent or any of Parent's
Subsidiaries, (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any Contract to which Parent or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent, Sub, any of its Significant
Subsidiaries or any of their properties or assets, except in the case of clauses
(ii), (iii) and (iv) for failures, violations, breaches or defaults that would
not have a Material Adverse Effect on Parent.
Section 5.6 SEC Documents and Other Reports. Parent has timely filed with
the SEC all documents required to be filed by it since December 31, 2000 under
the Securities Act or the Exchange Act (the "Parent SEC Documents"). As of their
respective filing dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, each as in effect on the date so filed, and at the time filed with
the SEC none of the Parent SEC Documents 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 financial statements of Parent
included in the Parent SEC Documents complied as of their respective dates in
all material respects with the then applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles (except in the case
of the unaudited statements, as
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permitted by Form 10-Q under the Exchange Act) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the consolidated financial
position of Parent and its consolidated Subsidiaries as at the 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).
Section 5.7 Absence of Material Adverse Change. Since December 31, 2002,
with respect to Parent and its Subsidiaries, there has not been (i) any Material
Adverse Change with respect to Parent, (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to its capital stock,
other than with respect to the payment of quarterly dividends, (iii) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iv) any change in
accounting methods, principles or practices by Parent.
Section 5.8 Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Registration Statement or the Proxy Statement, will, in the
case of the Registration Statement, at the time it becomes effective, and, in
the case of the Proxy Statement, at the time it is first mailed to the
stockholders of the Company or Parent or at the time of the Stockholders
Meetings, 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 or necessary to correct any statement in any earlier communication by
Parent or Sub with respect to the solicitation of proxies for the Stockholders
Meetings which has become false or misleading. The Registration Statement will
comply as to form in all material respects with the requirements of the
Securities Act and 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 Parent or Sub with respect to statements
made or incorporated by reference in the Registration Statement or the Proxy
Statement based on information supplied by the Company or any of its
representatives specifically for inclusion or incorporation by reference therein
or based on information which is not made in or incorporated by reference in the
Registration Statement or Proxy Statement but which should have been disclosed
by the Company pursuant to Section 4.8.
Section 5.9 Compliance with Laws; Permits. (a) The businesses of Parent and
its Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that would
not have a Material Adverse Effect on Parent. Each of Parent 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 necessary for Parent 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 "Parent Permits"), except where the
failure to have any of the Parent Permits would not have a Material Adverse
Effect on Parent, and, as of the date of this Agreement, no suspension or
cancellation of any of the Parent Permits is pending or, to the Knowledge of
Parent, threatened, except where the suspension or cancellation of any of the
Parent Permits would not have a Material Adverse Effect on Parent.
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(b) Parent and each of its officers and directors have complied in all
material respects with (i) the applicable provisions of Sarbanes-Oxley and (ii)
the applicable listing and corporate governance rules and regulations of the
NYSE. Parent has previously disclosed to the Company any of the information
required to be disclosed by Parent and certain of its officers to Parent's Board
of Directors or any committee thereof pursuant to the certification requirements
contained in Form 10-K and Form 10-Q under the Exchange Act. From the period
beginning January 1, 2000 through the enactment of Sarbanes-Oxley, neither
Parent nor any of its Affiliates made any loans to any executive officer or
director of Parent equal to or in excess of $60,000. Since the enactment of
Sarbanes-Oxley, neither Parent nor any of its Affiliates has made any loans to
any executive officer or director of Parent.
(c) Each executive officer and director of Parent has complied with all
Applicable Laws in connection with or relating to or actions within the scope of
Parent's business, except where the failure to comply would not have a Material
Adverse Effect on Parent. No executive officer or director of Parent is a party
to or the subject of any pending or threatened suit, action, proceeding or
investigation by any Governmental Entity that would have a Material Adverse
Effect on Parent, except as disclosed in the Parent Filed SEC Documents.
Section 5.10 Parent Shares. All of the Parent Shares issuable in exchange
for Shares in the Merger in accordance with this Agreement have been duly
authorized and will be, when so issued, validly issued, fully paid and
non-assessable and free of preemptive or other similar rights. The issuance of
such Parent Shares will be registered under the Securities Act and registered or
exempt from registration under applicable state securities laws. The Parent
Shares that will become subject to options to purchase Parent Shares pursuant to
Section 7.2(a) have been duly authorized. Upon payment to Parent of the
appropriate exercise price, those Parent Shares will be validly issued, fully
paid and nonassessable.
Section 5.11 Reorganization. Neither Parent nor any of its Affiliates has
taken or agreed to take any action that, to the Knowledge of Parent, will (or
will be reasonably likely to) prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code. To the
Knowledge of Parent, the representations set forth in the Parent Tax Certificate
attached to the Parent Letter, if made on the date hereof (assuming the Merger
were consummated on the date hereof and based on reasonable estimates in the
case of certain information not available on the date hereof), would be true and
correct in all material respects.
Section 5.12 Litigation. As of the date of this Agreement, there is no
suit, action, proceeding or investigation pending against Parent or any of its
Subsidiaries that would have a Material Adverse Effect on Parent. Neither Parent
nor any of its Subsidiaries is subject to any outstanding judgment, order, writ,
injunction or decree that would have a Material Adverse Effect on Parent.
Section 5.13 Parent Benefit Plans. Except for any circumstance that would
not have a Material Adverse Effect on Parent: (i) each ERISA Benefit Plan of
Parent has been maintained and operated in substantial compliance with its
terms, the applicable requirements of the Code and ERISA and the regulations
issued thereunder; (ii) no material litigation or asserted claims against Parent
exist with respect to any such ERISA Benefit Plan other than claims for benefits
in the normal course of business; and (iii) no such ERISA Benefit Plan is a
"multi-employer
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plan" as such term is defined in Section 3(37) of ERISA. With respect to each
ERISA Benefit Plan of Parent which is subject to Title IV of ERISA or Section
412 of the Code, no accumulated funding deficiencies under Title IV of ERISA or
the Code have been incurred or are reasonably likely to be incurred by Parent or
by any trade or business that together with the Parent would be deemed a "single
employer" under Section 414 of the Code (an "ERISA Affiliate"), except for any
potential liability which would not have a Material Adverse Effect on Parent or
any ERISA Affiliate.
Section 5.14 Liabilities. Since December 31, 2002, neither Parent nor any
of its Subsidiaries has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise), other than liabilities or
obligations incurred in the ordinary course of business since December 31, 2002
and liabilities or obligations which would not have a Material Adverse Effect on
Parent.
Section 5.15 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
business or other activities, has incurred no liabilities or obligations, other
than as contemplated hereby, and will conduct its activities only as
contemplated hereby.
Section 5.16 State Takeover Statutes. To the Knowledge of Parent, other
than the provisions of Section 203 of the DGCL, no "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
or any anti-takeover provision in Parent's Second Amended and Restated
Certificate of Incorporation or Bylaws is, or at the Effective Time will be,
applicable to the Parent Shares, Parent, Sub or the Merger.
Section 5.17 Required Vote of Parent Stockholders. The affirmative vote of
the holders of a majority of the Parent Shares represented at the Parent
Stockholder Meeting (provided that at least a majority of the Parent Shares are
represented in person or by proxy at such meeting) approving the issuance of
Parent Shares in the Merger is the only vote of the holders of any class or
series of Parent's capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
Section 5.18 Brokers. No broker, investment banker, financial advisor or
other Person, other than Merrill Lynch & Co. ("Merrill Lynch") and J.P. Morgan
Securities, Inc. ("J.P. Morgan"), 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 or Sub.
Section 5.19 Opinions of Financial Advisor. Parent has received the
opinions of each of Merrill Lynch and J.P. Morgan to the effect that, as of the
date of such opinions, the Exchange Ratio is fair to Parent from a financial
point of view.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business Pending the Merger.
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(a) Conduct of Business by the Company Pending the Merger. During the
period from the date of this Agreement until the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, except as expressly
contemplated by this Agreement and the Company Letter or as required by any
Applicable Law, in all material respects carry on its business in the ordinary
course and, to the extent consistent therewith, use reasonable best efforts to
preserve its business organization substantially intact and maintain its
existing relations and goodwill with customers, suppliers, distributors,
creditors, lessors, employees and business associates. Without limiting the
generality of the foregoing, and except as otherwise expressly contemplated by
this Agreement and the Company Letter or as required by any Applicable Law,
during such period, the Company shall not, and shall not permit any of its
Subsidiaries or other controlled entities to, without the prior written consent
of Parent or its designated advisors (not to be unreasonably withheld or
delayed):
(i) (A) amend the Company's Restated Certificate of Incorporation or
the Company's Bylaws; (B) other than in the case of any direct or indirect
wholly owned Subsidiary, split, combine or reclassify its outstanding
shares of capital stock; (C) declare, set aside or pay any dividend or
distribution payable in cash, stock or property in respect of any capital
stock other than dividends or distributions from its direct or indirect
wholly owned Subsidiaries; and (D) except in connection with the Company
Stock Plans, repurchase, redeem or otherwise acquire, or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of its capital
stock or any securities convertible into or exchangeable or exercisable for
any shares of its capital stock;
(ii) (A) issue, sell, pledge, dispose of or encumber any shares of, or
securities convertible into or exchangeable or exercisable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of its capital stock of any class (other than (x) the issuance of shares of
Company Common Stock and Company Stock Options to employees of the Company
or any of its Subsidiaries pursuant to Company Stock Plans as set forth in
Item 6.1(a)(ii)(A) of the Company Letter, (y) Shares issuable under Company
Stock Options outstanding as of the date of this Agreement or (z) the
issuance by any direct or indirect wholly owned Subsidiary of the Company
of its capital stock to the Company or another wholly owned Subsidiary of
the Company); (B) other than products or services sold in the ordinary
course of business, transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of or encumber any other property or assets; (C) incur or
modify any indebtedness (other than (i) indebtedness existing solely
between the Company and its wholly owned Subsidiaries or between such
wholly owned Subsidiaries or (ii) incremental indebtedness to the extent
such incremental indebtedness, together with all other indebtedness of the
Company and its Subsidiaries, is materially consistent with the historical
debt-to-equity ratio of the Company and its Subsidiaries, taken as a whole
(adjusting for the sale of the demand deposits of EFS National Bank to
Union Planters Bank, N.A. pursuant to that certain Agreement to Purchase
Assets and Assume Liabilities dated November 14, 2002)); (D) make or
authorize or commit to any capital expenditures (other than as set forth in
Item 6.1(a)(ii)(D) of the Company Letter or which, individually, is not in
excess of $250,000 and, in
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the aggregate, are not in excess of $10,000,000); (E) by any means, make
any purchase or acquisition (including by way of merger or other business
combination) of, or investment in (i) the capital stock of or other
interest in, any other Person other than a wholly owned Subsidiary of the
Company or (ii) except in the ordinary course of business consistent with
past practice, assets of any other Person (other than, in the case of
clauses (i) and (ii), (x) consummation of an acquisition publicly announced
prior to the date of this Agreement or (y) acquisitions (including
acquisitions of additional non-publicly traded equity interests in any
Person in which the Company or any of its Subsidiaries owns any equity
interest) that individually involve aggregate consideration not exceeding
$10,000,000); and (F) make any loans, advances or capital contributions to
any other Person (other than to the Company or any of its wholly owned
Subsidiaries) outside of the ordinary course of business;
(iii) except as required by the terms of this Agreement, (A)
terminate, establish, adopt, enter into, make any new grants or awards
under, amend or otherwise modify, any Benefit Plans or Compensation
Commitments, (B) increase the compensation of any officer or any other
employee earning annual compensation of more than $200,000 (other than
pursuant to Contracts currently in force and previously disclosed to
Parent) and (C) hire any employee at a compensation level expected to be
more than $200,000 a year;
(iv) other than as required in Section 6.1(a)(v), pay, discharge,
settle, compromise or satisfy any material claims, liabilities or other
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the ordinary course of business consistent with
past practice or in accordance with their terms existing on the date
hereof, or waive, release or assign any material rights or claims other
than in the ordinary course of business consistent with past practice;
(v) pay, discharge, settle, compromise or satisfy (i) any litigation
or claims not related to the matters set forth in Item 6.1(a)(v) of the
Company Letter (other than in the ordinary course of business) or (ii) any
of the matters set forth in Item 6.1(a)(v) of the Company Letter;
(vi) modify, amend or terminate any material Contracts (including any
Company Material Contract), if such modification, amendment or termination
would be materially adverse to the Company, other than (i) customer
Contracts or (ii) Contracts entered in the ordinary course of business
consistent with past practice;
(vii) implement or adopt any change in its accounting principles or
accounting practices, in all cases other than as may be required by a
change in generally accepted accounting principles or as recommended by the
Company's outside auditors;
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(viii) prepare or file any Tax Return inconsistent in any material
respect with past practice or, on any such Tax Return, take any position,
make any election, or adopt any method that is materially inconsistent with
positions taken, elections made or methods used in preparing or filing
similar Tax Returns in prior periods;
(ix) enter into any Contract that would restrict, after the Effective
Time, Parent and its Subsidiaries (other than the Company and its
Subsidiaries) with respect to engaging or competing in any line of business
or in any geographic area;
(x) enter into any Contract that would restrict, after the Effective
Time, the Company and its Subsidiaries with respect to (A) engaging or
competing in any of Parent's core businesses or in any geographic area or
(B) pricing, to the extent such Contract contains a provision which
restricts pricing in any of Parent's core businesses;
(xi) enter into any material Contract that contains a change of
control provision which would be applicable to the Merger or the
transactions contemplated by this Agreement;
(xii) take any action or omit to take any action that would reasonably
be expected to cause any of its representations and warranties herein to
become untrue, such that the condition set forth in Section 8.3(a) would
fail to be satisfied; or
(xiii) authorize or enter into any Contract to do any of the
foregoing.
(b) Conduct of Business by Parent Pending the Merger. During the period
from the date of this Agreement until the Effective Time, except as expressly
contemplated by this Agreement or as required by any Applicable Law, during such
period, Parent shall not, and shall not permit any of its Subsidiaries or other
controlled entities to, without the prior written consent of the Company (not to
be unreasonably withheld or delayed):
(i) make any change in or amendment to Parent's Second Amended and
Restated Certificate of Incorporation that changes any material term or
provision of the Parent Shares;
(ii) make any material change in or amendment to Sub's Certificate of
Incorporation;
(iii) engage in any recapitalization, restructuring or reorganization
with respect to Parent's capital stock, including by way of any
extraordinary dividend on, or other extraordinary distributions with
respect to, Parent's capital stock;
(iv) take any action or omit to take any action that would reasonably
be expected to cause any of its representations and warranties herein to
become untrue, such that the condition set forth in Section 8.2(a) would
fail to be satisfied;
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(v) enter into any agreement to acquire or purchase (whether by
merger, acquisition of equity or assets, joint venture or otherwise) any
Person or any interest in any Person if such acquisition or purchase would
cause a material delay in or prevent the receipt of any antitrust or
competition law approval necessary for the consummation of the Merger,
unless prior to taking such action Parent reasonably determines that such
action would not be reasonably expected to cause such effect; or
(vi) authorize or enter into any Contract to do any of the foregoing;
provided, however, that to the extent the restrictions provided in clauses (iv),
(v) and (vi) apply to any Alliance, the obligations of Parent or any of its
Subsidiaries or other controlled entities with respect to such restrictions
shall be subject to applicable fiduciary duties and contractual restrictions
with respect to such Alliance; and provided further that, unless it has received
the prior written consent of the Company (not to be unreasonably withheld or
delayed), Parent shall, and shall cause its Subsidiaries and other controlled
entities to (to the extent it may do so under applicable fiduciary duties,
contractual restrictions and Applicable Law), vote any voting equity interest it
holds in any Alliance against any proposal by any Alliance to take any of the
actions referred to in clauses (iv), (v) and (vi).
Section 6.2 No Solicitation. (a) As of the date hereof, the Company shall
not, nor shall it permit any of its Subsidiaries to, nor shall it or its
Subsidiaries authorize or permit any of their respective officers, directors,
employees, representatives or agents to, directly or indirectly, (i) solicit,
initiate or knowingly encourage (including by way of furnishing non-public
information) any inquiries regarding, or the making of any proposal which
constitutes, any Takeover Proposal, (ii) enter into any letter of intent or
agreement related to any Takeover Proposal other than a confidentiality
agreement (each, an "Acquisition Agreement") or (iii) participate in any
discussions or negotiations regarding, or take any other action knowingly to
facilitate any inquiries or the making of any proposal that constitutes, or that
would reasonably be expected to lead to, any Takeover Proposal; provided,
however, that if, at any time prior to the Company Stockholders Meeting, and
without any breach of the terms of this Section 6.2(a), the Company receives a
Takeover Proposal from any Person that in the good faith judgment of the
Company's Board of Directors is, or is reasonably likely to lead to the delivery
of, a Superior Proposal, the Company may (x) furnish information (including
non-public information) with respect to the Company to any such Person pursuant
to a confidentiality agreement containing confidentiality provisions no more
favorable to such Person than those in the Confidentiality Agreement and (y)
participate in negotiations with such Person regarding such Takeover Proposal.
For purposes of this Agreement, "Takeover Proposal" means any inquiry, proposal
or offer from any Person (other than Parent and its Affiliates) relating to any
direct or indirect acquisition or purchase of 25% or more of the assets of the
Company and its Subsidiaries or 25% or more of the voting power of the capital
stock of the Company or the capital stock of such Subsidiaries then outstanding,
any tender offer or exchange offer that if consummated would result in any
Person beneficially owning 25% or more of the voting power of the capital stock
of the Company or the capital stock of such Subsidiaries then outstanding, or
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other than the
transactions with Parent and Sub contemplated by this Agreement. For purposes of
this Agreement, a "Superior Proposal" means any bona fide Takeover Proposal made
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by any Person (other than Parent and its Affiliates) to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
50% of the voting power of the Shares then outstanding or all or substantially
all the assets of the Company and otherwise on terms which the Board of
Directors of the Company determines in good faith would, if consummated, result
in a transaction that would, or would be reasonably likely to, be more favorable
to the stockholders of the Company (taking into account such factors as the
Company's Board of Directors in good faith deems relevant, including the
identity of the offeror and all legal, financial, regulatory and other aspects
of the proposal, including the terms of any financing and the likelihood that
the transaction will be consummated) than the transactions contemplated hereby.
(b) Except as set forth in Section 9.1(e), neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of the Merger or
this Agreement; (ii) approve or recommend, or propose to approve or recommend,
any Takeover Proposal; or (iii) authorize or permit the Company or any of its
Subsidiaries to enter into any Acquisition Agreement.
(c) Nothing contained in this Section 6.2 shall prohibit the Company
from complying with Rules 14d-9 or 14e-2 promulgated under the Exchange Act with
respect to a Takeover Proposal.
(d) The Company agrees that it and its Subsidiaries shall, and the
Company shall direct its and its Subsidiaries' respective officers, directors,
employees, representatives and agents to, immediately cease and cause to be
terminated any activities, discussions or negotiations with any Persons with
respect to any Takeover Proposal. The Company agrees that it will notify Parent
promptly (but no later than 24 hours) if, to the Company's Knowledge, any
Takeover Proposal is received by, any information is requested from, or any
discussions or negotiations relating to a Takeover Proposal are sought to be
initiated or continued with, the Company, its Subsidiaries, or their officers,
directors, |
