EXHIBIT 10.18
[Form of]
MERCHANT ASSET PURCHASE
AGREEMENT
by and among
FIRST HORIZON MERCHANT SERVICES,
INC.,
GLOBAL CARD SERVICES,
INC.,
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
and
NOVA INFORMATION SYSTEMS,
INC.
JANUARY 31, 2006
Table of Contents
SCHEDULES
|
2.3
|
Merchant Security Arrangement
Sharing
|
|
|
4.2
|
Schedule of Relationship
Merchants Subject to the Holdback Amount
|
|
4.5
|
Items to be Prorated
|
|
|
11.4(f)
|
Schedule of Annual Net Revenue of
Assigned Merchants
|
|
|
|
|
|
|
|
EXHIBITS
Exhibit "A" - Bill of Sale and Assignment and
Assumption Agreement
Exhibit "B" - Interim Services
Agreement
Exhibit "C" - Merchant Services
Agreement
Exhibit "D" - Non-Competition
Agreement
Exhibit "E" - Opinion of Counsel to Parent, GCS
and Seller
Exhibit "F" - Opinion of Counsel to
Buyer
Exhibit "G" - Forms of Merchant
Agreements
Exhibit "H" – Form of Employee Retention,
Sale Participation and Non-Solicitation Agreement
Exhibit "I" – Form of Residual Commission
Buyout Agreement
MERCHANT ASSET PURCHASE
AGREEMENT
THIS MERCHANT ASSET PURCHASE
AGREEMENT ( this "
Agreement ") is made and entered into as of January 31,
2006, by and among FIRST HORIZON MERCHANT SERVICES, INC. , a
Tennessee corporation (" Seller "), GLOBAL CARD SERVICES,
INC. , a Florida corporation (" GCS "), FIRST
TENNESSEE BANK NATIONAL ASSOCIATION , a national banking
association (" Parent ") and NOVA INFORMATION SYSTEMS,
INC. , a Georgia corporation (" Buyer ").
R E C I T A L S:
Seller is a former division and a
current indirect subsidiary of Parent. Parent is the owner of
certain of the fixed assets related to the Business (as defined in
Section 1.1 of this Agreement).
|
|
GCS is a wholly owned subsidiary of
Seller.
|
Both Parent, Seller and GCS, on the
one hand, and Buyer, on the other hand, are engaged in the Merchant
Processing Business, including the business of providing Merchant
Services to commercial establishments which accept Credit Cards,
Private Label Cards, Gift Cards, Travel and Entertainment Cards,
Debit Cards and other Financial Transaction Devices. Seller, Parent
and GCS desire to sell and transfer to Buyer, and Buyer desires to
acquire and assume, certain assets and liabilities related to the
Business on the terms and subject to the conditions set forth in
this Agreement (the " Transaction "). The parties also
desire to enter into certain other agreements in connection with
the Transaction.
Certain capitalized terms used in
this Agreement are defined in Section 1.1.
NOW, THEREFORE
, in consideration of these premises
and the mutual covenants set forth herein, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
1.1
Definitions . Except as otherwise expressly provided, the
capitalized terms set forth below shall have the meanings set forth
below. Capitalized terms used in this Agreement and defined
elsewhere in this Agreement shall have the meanings given to them
where defined herein.
"Acquiring Merchant"
means a Merchant for whom Parent,
Seller or GCS provides Merchant Services in connection with which
Parent, Seller or GCS bears the risk (whether by Payment Network
Regulation, contract, or otherwise) for Chargebacks or Credit
Losses.
"Acquiror"
shall have the meaning set forth in
Section 8.4(b).
"Acquisition
Transaction" shall have
the meaning set forth in Section 8.4(a).
"Affiliate"
of a Person means any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such
Person. For this purpose, "control" shall exist when a Person owns
beneficially, directly or indirectly, more than 50% of the
outstanding voting securities or equity interests of another Person
or where a Person has the ability to elect or to cause the election
of a majority of the directors, partners, members or managers of
another Person.
"Agent Bank"
means a financial institution
sponsored by Seller and for which services related to the Business
are provided to such financial institution and/or its merchants by
or on behalf of Seller.
"Agent Bank Agreement"
means an agreement between Parent,
Seller or GCS and an Agent Bank pursuant to which the Agent Bank
and Parent, Seller or GCS provide services relating to the
Business.
"Agreed Allocation"
shall have the meaning set forth in
Section 4.2.
"Applicable Period"
means, with respect to any Buyer
Confidential Information, Transferred Business Confidential
Information or Seller Confidential Information that qualifies as a
trade secret under applicable Law, the maximum survival period
allowed thereby, and as to all other Buyer Confidential
Information, Transferred Business Confidential Information or
Seller Confidential Information, five (5) years after the date of
this Agreement.
"Assets" of a Person means all of the assets, properties,
businesses and rights of such Person of every kind, nature,
character and description, whether real, personal or mixed,
tangible or intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the
books and records of such Person, and whether or not owned in the
name of such Person or any Affiliate of such Person and wherever
located.
"Assigned Acquiring
Merchant" means any
Acquiring Merchant that is a party to an Assigned Merchant
Agreement.
"Assigned Acquisition
Contract" means any of
those certain contracts described in Section 2.1(c).
"Assigned Merchant"
means any Merchant that is a party
to an Assigned Merchant Agreement.
"Assigned Merchant
Agreement" means any
Merchant Agreement to which Parent, Seller or GCS is party as of
the Effective Time, except for those Merchant Agreements identified
on Section 2.2(d)(i) of the Seller Disclosure Schedule.
"Assigned Other
Contracts" shall have the
meaning set forth in Section 2.1(e).
"Assigned Other
Merchant" means any Other
Merchant that is a party to an Assigned Merchant
Agreement.
"Assigned Real Property
Leases" shall have the
meaning set forth in Section 2.1(d).
"Assumed Liabilities"
shall have the meaning set forth in
Section 3.1.
"Bill of Sale and Assignment and
Assumption Agreement" shall have the meaning set forth in Section
5.2(a)(i).
"BINs" and "ICAs" means the VISA bank
identification numbers and MasterCard interchange clearing account
numbers owned by Seller and/or Parent and used in the Business
which shall be transferred to Buyer or its designee in connection
with the Transaction.
"Books and Records"
shall have the meaning set forth in
Section 2.2(e).
"Business"
means the Merchant Processing
Business conducted by Parent, Seller and GCS.
"Business Day"
means a day other than a Saturday,
Sunday, or a legal holiday on which federally chartered banks in
Memphis, Tennessee are generally closed for business.
"Buyer Confidential
Information" shall have
the meaning set forth in Section 9.2(a)(i).
"Buyer Consents"
shall have the meaning set forth in
Section 7.3.
"Buyer Disclosure
Schedule" means the
written information entitled "Buyer Disclosure Schedule to Merchant
Asset Purchase Agreement" delivered to Seller on the date of this
Agreement describing the matters contained therein. Parent, GCS and
Seller shall not be entitled to claim that any fact or combination
of facts constitutes a breach of any of the representations or
warranties of Buyer contained in this Agreement if and to the
extent that such fact or combination of facts has been fairly
disclosed in the numbered section of the Buyer Disclosure Schedule
that corresponds to the Section of this Agreement in respect of
which such disclosure is made (in each case in sufficient detail to
put a reasonable person on notice of the relevance of the facts or
circumstances so disclosed); provided, however, that the burden of
proof in this regard shall, with respect to the Buyer Disclosure
Schedule, always rest with Buyer. The inclusion, in and of itself,
of any matter in the Buyer Disclosure Schedule shall not be deemed
an admission or an acknowledgement or otherwise to imply that any
such matter is material or outside the ordinary course of business
for purposes of this Agreement (unless such conclusion or inference
is to be reached on the basis of the representation(s) that such
matter qualifies, or unless such matter is included as part of the
certificate to be delivered by Buyer pursuant to Section
10.3(c)).
"Buyer Group"
shall have the meaning set forth in
Section 11.2(a).
"Buyer Standard of
Care" shall have the
meaning set forth in Section 11.5.
"Buyer Threshold"
shall have the meaning set forth in
Section 11.4(b).
"Card" means any of a Credit Card, Gift Card, Travel
and Entertainment Card, electronic benefits transfer Card ,
Private Label Card and/or Debit Card.
"Cash Payment"
shall have the meaning set forth in
Section 4.1.
"Chargeback"
means a transaction that has been
presented to either the cardholder or the issuer of a Financial
Transaction Device and for which payment has been refused or
reversed in accordance with the Payment Network Regulations or Card
issuer policies.
"Claim" shall have the meaning set forth in Section
11.1(c).
"Closing" shall have the meaning set forth in Section
5.1.
"Closing Date"
shall have the meaning set forth in
Section 5.1.
"Confidentiality
Agreement" means that
certain confidentiality agreement dated October 21, 2005 by and
among Buyer, Parent and Seller.
"Consent" means any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"Consequential
Damages" means
consequential damages, including without limitation lost profits
and/or damages calculated on the basis of a multiple of revenue,
earnings, or other financial measure.
"Contest" shall have the meaning set forth in Section
4.3(d).
"Contract"
means, with respect to any Person,
any written or oral agreement, arrangement, authorization,
commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any
kind or character, or other document to which such Person is a
party or that is binding on such Person or its capital stock,
Assets or business.
"Conversion Date"
means the Business Day following the
Closing of the Transaction as agreed to by the Parties in the
Interim Services Agreement when the Buyer (or its designee) assumes
the obligations from Parent, GCS and/or Seller for providing the
services identified in the Interim Services Agreement as required
to process, clear and settle the Financial Transaction Device
transactions of Assigned Merchants. Such process shall include
without limitation the transfer to Buyer (or its designee) of the
BINs and ICAs used in the Business, as approved by VISA and
MasterCard.
"Credit Card"
means (i) a VISA card or other card
bearing the symbol(s) of VISA U.S.A., Inc. or VISA International,
Inc., or (ii) a MasterCard card or other card bearing the symbol(s)
of MasterCard International Incorporated, or (iii) any card bearing
the symbols of any other Credit Card Association.
"Credit Card
Associations" means (i)
VISA U.S.A., Inc., (ii) VISA International, Inc., (iii) MasterCard
International Incorporated and any successor organization or
association to any of the foregoing.
"Credit Loss"
means any loss resulting from the
failure by a Merchant to pay amounts owed by it under a Merchant
Agreement or any other loss incurred for any reason attributable to
a Merchant.
"Damages" shall have the meaning set forth in Section
11.2(a).
"Debit Card"
means a card bearing the symbol(s)
of one or more EFT Networks which enables the holder to pay for
goods or services by authorizing an electronic debit to the
cardholder's designated deposit account.
"Default" means (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any
event that with the passage of time or the giving of notice or both
would constitute a breach or violation of or default under any
Contract, Order or Permit, or (iii) any occurrence of any event
that with or without the passage of time or the giving of notice
would give rise to a right to terminate or revoke, change the
current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order or
Permit.
"Default Allocation"
shall have the meaning set forth in
Section 4.2(a).
"Deferred Transferred
Assets" shall have the
meaning set forth in Section 5.3(c).
"Designated Employee Transfer
Date" shall have the
meaning set forth in Section 8.5(b).
"Designated Employees"
shall have the meaning set forth in
Section 6.11(a).
"Effective Time"
shall have the meaning set forth in
Section 5.1.
"EFT Networks"
means electronic funds transfer
networks such as STAR, Pulse, and NYCE, Interlink, Maestro and
other similar networks.
"Equipment"
shall have the meaning set forth in
Section 2.1(i).
"Equipment Contracts"
shall have the meaning set forth in
Section 2.1(b).
"Evaluation Material"
shall have the meaning set forth in
Section 9.2(i).
"Excluded Events"
shall have the meaning set forth in
the last sentence of Section 11.4(e).
"FHN" means First Horizon National Corporation, the
parent company of Parent.
"Financial Transaction
Device" or "FTD"
means any Card and any other financial transaction device, such as
a stored value card or "smart" card, that is used for the purpose
of obtaining credit or debiting consumer accounts at the point of
sale and is effected through transactions with merchants, and other
reasonably related products and services provided pursuant or
ancillary to or in connection with transactions effected pursuant
to the rules and regulations, to the extent applicable, of one or
more Payment Networks.
"GAAP" means United States generally accepted
accounting principles.
"Gift Card"
means a prepaid Credit Card issued
by a Merchant in accordance with the rules of the Credit Card
Associations.
"Group One Representations and
Warranties" shall mean
(a) as to Parent, GCS and Seller, the representations and
warranties contained in Sections 6.2 (Power; Authority; Enforceable
Obligations), 6.6 (Title to Assets) and 13.14 (Brokers and
Finders), and (b) as to Buyer, the representations and warranties
contained in Sections 7.2 (Power; Authority; Enforceable
Obligations) and 13.14 (Brokers and Finders).
"Group Two Representations and
Warranties" means the
representations and warranties made by Parent, GCS and Seller in
Sections 6.8(a) and (c) (but solely as such representations and
warranties relate to Assigned Merchants and Assigned Merchant
Agreements), Sections 6.3(a)(iii), 6.3(b), 6.4, 6.8(b), (d), (f)
and (g), and Section 6.12.
"Holdback Amount"
has the meaning set forth in Section
4.2.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party"
shall have the meaning set forth in
Section 11.3(a).
"Indemnifying Party"
shall have the meaning set forth in
Section 11.3(a).
"Interim Services
Agreement" shall have the
meaning set forth in Section 5.2(a)(iii).
"ISO" and "ISA" means an independent sales
organization or an independent sales association, respectively,
that is a party to an ISO Agreement or an ISA Agreement.
"ISO Agreement"
and "ISA Agreement" means an
agreement or arrangement whether oral or in writing by and between
Parent, Seller or GCS and an ISO, or Parent, Seller or GCS and an
ISA, respectively, providing for the referral of prospective
Merchants.
"Knowledge"
of a party means, in the case of
Parent, Seller and GCS, the actual knowledge of executive officers
and of the persons listed in Section 1.1(k) of the Seller
Disclosure Schedule (which in all events includes the senior
executive officers of the Business) and in the case of Buyer, the
persons listed in Section 1.1(k) of the Buyer Disclosure Schedule,
in all cases after due investigation and reasonable
inquiry.
"Law" means any code, law, ordinance, regulation,
reporting or licensing requirement, rule or statute applicable to a
Person or its Assets, Liabilities or business, including those
promulgated, interpreted or enforced by any Regulatory
Authority.
"Liability"
means any liability, indebtedness,
obligation, penalty, cost or expense (including costs of
investigation, collection and defense and reasonable attorneys'
fees), deficiency, guaranty or endorsement of or by any Person
(other than endorsement of notes, bills, checks, and drafts
presented for collection or deposit in the ordinary course of
business) of any
type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured,
direct or indirect, primary or secondary, or otherwise.
"Licensed Software"
shall mean Software and other
technology which is licensed by Parent, Seller and/or GCS from
third parties and which is used by Parent, Seller and/or GCS
(including their Merchants) in the Business, including the Seller
Proprietary Rights, as described and identified in Section 6.12(e)
of the Seller Disclosure Schedule. Licensed Software excludes any
Software licensed from third parties (i) by Seller, GCS and/or
Parent or any of Seller's, GCS's and/or Parent's Affiliates that is
not used in the Business, (ii) by Seller, GCS and/or Parent or any
of Seller's, GCS's and/or Parent's Affiliates that is "off the
shelf" licensed software, unless such "off the shelf" licensed
software is assignable and (iii) by Parent or any of Parent's
Affiliates other than Seller or GCS that is not "off the shelf"
licensed software and that is licensed for use in FHN's and its
Affiliates' corporate operations.
"Lien" means any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention or other security arrangement,
or any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest.
"Litigation"
means any action, suit, claim,
indictment, grievance, arbitration, complaint, criminal
prosecution, governmental or other examination or investigation,
hearing, inquiry, administrative or other proceeding relating to or
affecting a party, its business, its Assets, Contracts, or the
Transaction.
"Material Adverse
Effect" means a
circumstance, state of facts, event, change or occurrence which,
either alone or when taken together with other circumstances,
states of facts, events, changes or occurrences, does or could
reasonably be expected to have a material adverse effect on (i) in
the case of or with respect to Buyer, the ability of Buyer to
perform its obligations under this Agreement and the other
Operative Documents or to consummate the Transaction, (ii) in the
case of or with respect to Seller, GCS or the Business, the
condition (financial or otherwise), properties, assets,
liabilities, position, business or results of operations of Seller
and GCS with respect to the Business or the Transferred Assets,
taken as a whole, or the ability of Seller and GCS to perform their
respective obligations under this Agreement and the other Operative
Documents or to consummate the Transaction, and (iii) in the case
of or with respect to Parent, the ability of Parent to perform its
obligations under this Agreement and the other Operative Documents
or to consummate the Transaction.
"Merchant"
means any person or entity (other
than Seller and/or Parent or GCS) that is a party to a Merchant
Agreement and specifically includes both (a) Acquiring Merchants
and (b) Other Merchants.
"Merchant Accounts
Receivable" shall have
the meaning set forth in Section 2.1(a).
"Merchant Agreement"
means an agreement between or among
Parent, Seller or GCS, as applicable, and a Merchant, pursuant to
which the Merchant undertakes to honor Financial Transaction
Devices and Parent, Seller or GCS, as applicable, undertakes to
provide Merchant
Services. The parties acknowledge
and agree that a Merchant Agreement may be constituted of (i) an
application page duly executed by the Merchant together with (ii) a
pricing schedule and (iii) terms and conditions, as amended from
time to time, provided to the Merchant, all of which taken together
are legally binding upon the Merchant and Parent, Seller or GCS, as
applicable.
"Merchant Processing
Business" means, with
respect to any Person, the business of providing Merchant
Services.
"Merchant Security
Arrangements" shall have
the meaning set forth in Section 2.3.
"Merchant Security Arrangement
Allocation Period" shall
have the meaning set forth in Section 2.3.
"Merchant Services"
means acceptance of FTD transaction
records in documentary or electronic form from merchants (i) in the
case of GCS, in connection with the routing of such transaction
records to the appropriate sources for authorizations, settlement,
retrievals, Chargebacks, and other transactions by such merchants'
processors and (ii) in the case of FHMS, in connection with the
processing and clearing of such records for settlement and payment
to such merchants, and such activities as are incidental,
reasonably complementary or reasonably similar thereto, including
general ledger posting, retrievals and Chargebacks, as are
conducted or engaged in by Buyer or its Affiliates, respectively,
from time to time; provided, that "Merchant Services" specifically
excludes commercial treasury management, cash management, check
clearing and other commercial bank customer payment systems
products or services offered by FTB, its Affiliates, successor or
assigns, respectively, from time to time, so long as none of such
products or services implicate the acceptance and/or processing of
association-branded or association-supported payment devices for
goods or services.
"Merchant Services
Agreement" shall have the
meaning set forth in Section 5.2(a)(iv).
"Net Revenue"
shall mean, with respect to any
Assigned Merchant, for purposes of Section 11.4(f), (i) if
applicable, the annual net revenue received by FHMS or GCS, as
applicable, for providing Merchant Services to such Assigned
Merchant during the twelve (12) months ended November 30, 2005, as
particularly set forth on Schedule 11.4(f) , and (ii) if
such Assigned Merchant was not a Merchant for such full twelve
month period ending November 30, 2005, the annualized net revenue
received by FHMS or GCS, as applicable, for providing Merchant
Services to such Assigned Merchant calculated with respect to the
period beginning on the date such Assigned Merchant became a
Merchant and ending on the Closing Date.
"Non-Competition
Agreement" shall have the
meaning set forth in Section 5.2(a)(v).
"Operative Documents"
means this Agreement, the Merchant
Services Agreement, the Interim Services Agreement, the
Non-Competition Agreement, and the Transfer Documents.
"Order" means any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or
award, ruling, or writ of any federal, state, local or foreign or
other court, arbitrator, mediator, tribunal, administrative agency
or Regulatory Authority.
"Ordinary Course of
Business" means, with
respect to actions and operations conducted by Parent, Seller
and/or GCS with respect to the Business, actions and operations
that are (a) consistent with the past practices of the Business,
(b) taken in the ordinary course of the normal, day-to-day
operations of the Business, and (c) not required to be authorized
by the Board of Directors of Parent, Seller or GCS.
"Other Contracts"
shall have the meaning set forth in
Section 6.8(j)(iv).
"Other Merchant"
means a Merchant for whom Parent,
Seller or GCS provides Merchant Services in connection with which
Parent, Seller or GCS does not bear any risk (whether by Payment
Network Regulation, contract, or otherwise) for Chargebacks or
Credit Losses.
"Other Representations and
Warranties" means the
representations and warranties made by Parent, GCS and Seller in
this Agreement (or any certificate delivered pursuant to Section
10.2(c)) other than any Group One Representations and Warranties
and Group Two Representations and Warranties.
"Owned Software"
shall mean (a) all Software which is
owned by Seller or GCS, whether developed by Seller, GCS, any other
Person, (b) all Software which is owned by Parent, whether
developed by Parent or any other Person, that is designed for use
in or which is used in the Business, and (c) with respect to (a)
and (b), any Software that is included in Seller Proprietary
Rights. The Owned Software is identified in Section 6.12(d) of the
Seller Disclosure Schedule.
"Parent Transaction"
shall have the meaning set forth in
Section 8.4(b).
"Payment Network"
means any Credit Card Association,
EFT Network and any other organization or association that issues
or sponsors a Financial Transaction Device.
"Payment Network
Regulations" means,
collectively, the rules and regulations promulgated by any Payment
Network.
"Permit" shall mean any federal, state, local, and
foreign governmental approval, authorization, certificate,
easement, franchise, license, notice, permit, or right to which any
Person is a party or that is or may be binding upon or inure to the
benefit of any Person or its securities, Assets or
business.
"Permitted Liens"
means Liens for Taxes not yet due
and payable and such Liens or other imperfections of title, if any,
as do not materially detract from the value of or materially
interfere with the present use of the property or asset affected
thereby.
"Person" shall mean a natural person or any legal,
commercial or governmental entity, including a corporation, general
partnership, joint venture, limited partnership, limited liability
company, trust, business association, or person acting in a
representative capacity.
"Post-Closing Period"
shall have the meaning set forth in
Section 4.3(e).
"Pre-Closing Period"
shall have the meaning set forth in
Section 4.3(e).
"Private Label Card"
means a Credit Card issued by and
bearing the symbols of Merchants enabling their customers to
purchase such Merchant's products and services through the
extension of credit.
"Purchase Price"
shall have the meaning set forth in
Section 4.1.
"Regulatory
Authorities" shall mean,
collectively, the United States Federal Trade Commission, the
United States Department of Justice, the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation,
the Office of the Comptroller of the Currency, all federal or state
regulatory agencies having jurisdiction over Parent, Buyer or
Seller, the Securities and Exchange Commission, the Payment
Networks, the New York Stock Exchange and any other federal or
state governmental agency or regulatory body.
"Relationship
Merchant" shall mean any
one of the five Top 100 Acquiring Merchants identified on
Schedule 4.2 .
"Representative"
means, with respect to any Person,
any investment banker, financial advisor, attorney, accountant,
employee, officer, director, consultant, or other agent or
representative of such Person.
"Retained Assets"
shall have the meaning set forth in
Section 2.2.
"Retained Books and
Records" shall have the
meaning set forth in Section 2.2(e).
"Retained Contracts"
shall have the meaning set forth in
Section 2.2(d).
"Retained Liabilities"
shall have the meaning set forth in
Section 3.2.
"Seller Confidential
Information" shall have
the meaning set forth in Section 9.2(e).
"Seller Consents"
shall have the meaning set forth in
Section 6.3.
"Seller Disclosure
Schedule" means the
written information entitled "Seller Disclosure Schedule to
Merchant Asset Purchase Agreement" delivered on the date of this
Agreement to Buyer describing the matters contained therein. Buyer
shall not be entitled to claim that any fact or combination of
facts constitutes a breach of any of the representations or
warranties of Parent, Seller or GCS contained in this Agreement if
and to the extent that such fact or combination of facts has been
fairly disclosed in the numbered section of the Seller Disclosure
Schedule that corresponds to the Section of this Agreement in
respect of which such disclosure is made (in each case in
sufficient detail to put a reasonable person on notice of the
relevance of the facts or circumstances so disclosed); provided,
however, that the burden of proof in this regard shall, with
respect to the Seller Disclosure Schedule, always rest with Seller,
GCS and/or Parent, as applicable. The inclusion, in and of itself,
of any matter in the Seller Disclosure Schedule shall not be deemed
an admission or an acknowledgement or otherwise to imply that any
such matter is material or outside the ordinary course of business
for purposes of this Agreement (unless such conclusion or inference
is to be reached on the basis of the representation(s) that such
matter
qualifies (e.g., Section 6.8(j)), or
unless such matter is included as part of the certificate to be
delivered by Parent and Seller pursuant to Section
10.2(c)).
"Seller Financial
Information" shall have
the meaning set forth in Section 6.4.
"Seller Group"
shall have the meaning set forth in
Section 11.2(b).
"Seller Proprietary
Rights" shall have the
meaning set forth in Section 6.12(a).
"Seller Threshold"
shall have the meaning set forth in
Section 11.4(a).
"Software"
means the Owned Software and the
Licensed Software, collectively, in the form and condition that
such Software exists on the Closing Date.
"Specified Consents"
shall have the meaning set forth in
Section 5.3(b).
"Specified Merchant"
means any Assigned Merchant that (a)
is involved in the airline, cruise line, or tour operator business
(whether as an Acquiring Merchant or Other Merchant), (b) is a Top
100 Acquiring Merchant, or (c) is a Top 10 Other
Merchant.
"Specified Merchant
Agreement" means any
Merchant Agreement to which a Specified Merchant is a
party.
"Straddle Period"
shall have the meaning set forth in
Section 4.3(e).
"Survival Period"
shall have the meaning set forth in
Section 11.1(a).
"Tax" or "Taxes" shall mean all taxes, charges,
fees, levies or other assessments, including all gross receipts,
sales, use, value added, ad valorem, real estate transfer,
documentary stamp, gains, bulk sales, profits, license,
withholding, payroll, employment, social security, unemployment,
excise, severance, property or other similar taxes, duties, fees,
assessments or charges of any kind whatsoever, including any
interest, penalties or additional amounts attributable thereto
imposed by any United States federal, state, local or foreign
governmental authority, and specifically including any taxes,
duties, fees or charges imposed on or measured by net or gross
income, capital stock or net worth or in the nature of an income,
capital, franchise, or net worth tax.
"Tax Return"
shall mean any return, report,
information return, statement, declaration or other document
(including any related or supporting information) filed or required
to be filed with any United States federal, state, local or foreign
governmental authority in connection with any determination,
assessment or collection of any Tax or other administration of any
Laws, regulations or administrative requirements.
"Termination Date"
shall have the meaning set forth in
Section 12.1(b).
"Third Party Claim
Notice" shall have the
meaning set forth in Section 11.3(a).
"Third Party Claims"
shall have the meaning set forth in
Section 11.3.
"Tier 1 Relationship
Merchant" shall mean any
one of the three Relationship Merchants identified as such on
Schedule 4.2 .
"Tier 2 Relationship
Merchant" shall mean any
one of the two Relationship Merchants identified as such on
Schedule 4.2 .
"Top 100 Acquiring
Merchants" means the one
hundred (100) Assigned Acquiring Merchants with the highest dollar
value of Card transactions processed during the twelve (12) month
period ending November 30, 2005.
"Top 10 Other
Merchants" means the ten
(10) Assigned Other Merchants with the highest dollar value of
revenue earned by the Business during the twelve (12) month period
ending November 30, 2005.
"Transaction"
means collectively the various
transactions contemplated by the Operative Documents.
"Transfer Documents"
shall have the meaning set forth in
Section 5.2(a)(ii).
"Transfer Taxes"
shall have the meaning set forth in
Section 4.3(a).
"Transferred Assets"
shall have the meaning set forth in
Section 2.1 and shall include any Deferred Transferred Asset from
and after the time such Asset is transferred to Buyer.
"Transferred Books and
Records" shall have the
meaning set forth in Section 2.1(j).
"Transferred Business
Confidential Information" shall have the meaning set forth in Section
9.2(a)(ii).
"Transferred
Contracts" shall have the
meaning set forth in Section 2.1(f).
"Transferred
Employees" shall have the
meaning set forth in Section 8.5(b).
"Transferred Permits"
shall have the meaning set forth in
Section 2.1(g).
"Transferred Vendor
Contracts" shall have the
meaning set forth in Section 2.1(f).
"Transition Period"
means the period from the Closing
Date through and including the Conversion Date.
"Travel and Entertainment
Card" means any and all
of the credit or charge cards issued by any of American Express
Company, Discover Bank, Carte Blanche, JCB International Credit
Card Co., Ltd. and Diners Club International Ltd.
"WARN Act"
shall have the meaning set forth in
Section 3.2(c).
ARTICLE II
PURCHASE AND SALE OF
ASSETS
2.1
Purchase and Sale of Assets . On the terms and subject to
the conditions set forth in this Agreement, at the Closing and
effective as of the Effective Time, Parent, Seller and GCS shall
sell, transfer, convey, assign and deliver to Buyer, free and clear
of all Liens (other than Permitted Liens), and Buyer shall
purchase, acquire and accept from Parent, GCS and Seller, all of
Parent's, GCS's and Seller's respective right, title and interest
in and to the following assets, rights, properties, claims and
contracts, whether tangible or intangible, real, personal or mixed,
accrued, contingent or otherwise, described in paragraphs (a)
through (o) below (" Transferred Assets "):
(a) all
Assigned Merchant Agreements, including any rights and interests of
Parent, Seller or GCS under any guaranty agreements and, subject to
Section 2.3, any Merchant Security Arrangements established or
maintained in connection with the Assigned Merchant Agreements, but
not including (i) any right to receive payment for or in connection
with transactions processed before the Effective Time (including
all accounts receivable, all notes, bonds, guarantees, and other
evidence of indebtedness and all other rights to receive payments
arising out of the Assigned Merchant Agreements before the
Effective Time) (the " Merchant Accounts Receivable ") or
(ii) any right to assert claims or take other actions in respect of
Defaults under the Assigned Merchant Agreements that arise out of
or relate to events occurring before the Effective Time;
(b) all
Contracts for the provision by third parties of point-of-sale
terminals to Assigned Merchants in connection with the Business in
which Parent, Seller or GCS has any economic interest or with
respect to which Seller or GCS derives any revenue (the "
Equipment Contracts "), but not including any right to
receive payment or to assert claims or take other action in respect
of Defaults under the Equipment Contracts that arise out of or
relate to events occurring prior to the Effective Time;
(c) all
Contracts identified on Section 2.1(c) of the Seller Disclosure
Schedule pursuant to which, in the last five (5) years, (x) Parent,
Seller or GCS acquired any Merchant Processing Business or any
business which is incidental to and in support of the Business from
any Person, whether by acquisition of substantially all of the
assets or the capital stock, or by merger, of such Merchant
Processing Business or business, or (y) Parent, Seller or GCS sold
certain assets and liabilities of the Business to another Person
(collectively, the " Assigned Acquisition Contracts
");
(d) the
real property leases identified on Section 2.1(d) of the Seller
Disclosure Schedule (the " Assigned Real Property Leases "),
but not including any right to receive payment or to assert claims
or take other action in respect of Defaults under the Assigned Real
Property Leases that arise out of or relate to events occurring
prior to the Effective Time;
(e) the
Contracts identified in Section 2.1(e) of the Seller Disclosure
Schedule (the " Assigned Other Contracts "), but not
including any right to receive payment or to
assert claims or take other action
in respect of Defaults under the Assigned Other Contracts that
arise out of or relate to events occurring prior to the Effective
Time;
(f) all
Contracts (other than Assigned Merchant Agreements, Assigned
Acquisition Contracts, Equipment Contracts, Assigned Other
Contracts, Assigned Real Property Leases, and insurance policies)
pursuant to which Parent, Seller or GCS obtains goods, benefits or
services from, or provides goods, benefits or services to, a third
party in connection with the Business and which are to be assigned
to Buyer as identified on Section 2.1(f) of the Seller Disclosure
Schedule (collectively, the " Transferred Vendor Contracts
," and together with the Assigned Merchant Agreements, the
Equipment Contracts, the Assigned Acquisition Contracts, the
Assigned Other Contracts and the Assigned Real Property Leases, the
" Transferred Contracts "), including any right to receive
goods, services or payments pursuant to the Transferred Vendor
Contracts, but not including any right to assert claims or take
other actions in respect of Defaults under the Transferred Vendor
Contracts that arise out of or relate to events occurring before
the Effective Time;
(g) to
the extent transferable, the Permits identified on Section 2.1(g)
of the Seller Disclosure Schedule, if any (the " Transferred
Permits ");
(h) the
BINs and ICAs used by Parent, Seller and/or GCS in connection with
the Business, as identified on Section 2.1(h) of the Seller
Disclosure Schedule;
(i) all
equipment set forth in Section 2.1(i) of the Seller Disclosure
Schedule, any applicable related revenues accruing on or after the
Effective Time, and all warranties and guarantees, if any,
expressed or implied, existing for the benefit of Seller in
connection with any of the same (collectively, the "
Equipment ");
(j) the
books, records, operating data, and documents, including Assigned
Merchant Agreements (whether in hard copy or electronic form),
relating to the Transferred Assets or the Business (including
manuals, operating guidelines and practices, sales and promotional
data, advertising materials, customer lists, credit information,
historical cost and pricing information, supplier lists, reference
catalogs, and other similar property) (the " Transferred Books
and Records "); provided, however, that in no event shall such
Transferred Books and Records include books or records involving
operations other than of the Business, and further provided that
Parent, GCS and/or Seller may retain copies of such Transferred
Books and Records;
(k) to
the extent assignable or otherwise transferable, but subject to the
obligations in Section 5.3, all rights in and to the Licensed
Software;
(l) the
trademarks and trademark registrations identified on Section 2.1(l)
of the Seller Disclosure Schedule;
(m) the
Owned Software, including copyright, trademark (unless and to the
extent trademark rights include the names "First Horizon," "First
Horizon Merchant
Services," "FHMSi," or "FHMS"),
patent, trade secret and other rights thereto, and all copies of
the Owned Software;
(n) all
copies in Seller's or GCS's possession of the Software and any
other materials comprising or containing Seller's Proprietary
Rights retaining no copies thereof; and
(o) the
goodwill associated with the Business as a going concern, to the
extent any such goodwill exists.
2.2
Retained Assets . Parent, Seller and GCS shall retain all
assets held by Parent, Seller, GCS or any of their respective
Affiliates which are not included in the Transferred Assets (the "
Retained Assets "), including:
(a) all
(i) cash and cash equivalents, including debt and equity securities
owned by Seller or Parent, bank accounts and deposits, investments
in money market funds, commercial paper, certificates of deposit,
treasury bills and accrued interest thereon and (ii) accounts
receivable and other rights to receive payments in respect of the
Business including all Merchant Accounts Receivable; provided that,
with respect to rights to receive payments in respect of the
Business other than the Merchant Accounts Receivable, only those
rights which arose prior to the Effective Time;
(b) subject
to such rights as may be licensed to Buyer under the other
Operative Documents and except for rights in the Owned Software and
the trademarks and trademark registrations identified on Section
2.1(l) of the Seller Disclosure Schedule, all ownership rights in
all U.S. and foreign trademarks and trademark registrations,
copyright registrations, trade name registrations, service marks
and service mark registrations, logos and any applications or
pending applications related to any of the foregoing, all
confidential information (other than as embodied in the Transferred
Books and Records or relating to or comprising the Transferred
Assets), trade secrets, compilations, know-how, drawings,
techniques, and processes, and all invention disclosures and common
law trademarks, service marks, copyrights and trade names owned or
controlled by Seller, GCS or Parent, pursuant to license or
otherwise and whether or not used in the Business;
(c) all
rights in Licensed Software not transferred to Buyer under this
Agreement;
(d) all
Contracts that are not Transferred Contracts, including (i) any
Contracts identified on Section 2.2(d)(i) of the Seller Disclosure
Schedule, and (ii) any Contracts of insurance in respect of the
Business or the Transferred Assets (collectively, the " Retained
Contracts ");
(e) all
corporate charters, minute books, stock records and corporate
seals, and all other books and records that are not included in the
Transferred Books and Records (" Retained Books and Records
"; the Transferred Books and Records and the
Retained Books and Records are
sometimes collectively referred to herein as the " Books and
Records ");
(f) any
refunds, credits or other assets or rights (including interest
thereon or claims therefor) with respect to any Taxes paid or
incurred by Parent, Seller or GCS;
(g) any
rights (including rights to indemnification and any policy of
insurance) and claims and recoveries under litigation against third
parties arising out of or relating to events in respect of the
Business occurring before the Effective Time; and
(h) any
assets used in the Business that are transferred or otherwise
disposed of by Seller, GCS or Parent in compliance with the terms
of this Agreement between the date of signing of this Agreement but
before the Closing Date.
2.3
Access to Merchant Security Arrangements . The parties
acknowledge and agree that Chargebacks resulting from transactions
occurring prior to the Effective Date (a " Pre-Closing
Chargeback ") are for the sole account of Seller and that
Chargebacks resulting from transactions occurring on or after the
Effective Date (a " Post-Closing Chargeback ") are for the
sole account of Buyer. Seller has required certain Assigned
Merchants to establish reserve accounts, letters of credit, and
other forms of security (collectively, " Merchant Security
Arrangements ") for such Assigned Merchants' obligations and
liabilities under the Assigned Merchant Agreements. Accordingly,
during the twelve (12) month period following the Closing Date (the
" Merchant Security Arrangement Allocation Period "), Seller
and Buyer shall each be entitled to reimbursement from the then
remaining funds in the applicable Merchant Security Arrangement on
the sliding scale proportionate basis set forth in Schedule
2.3 attached hereto. In order to be entitled to reimbursement,
the party having liability for such Chargeback (whether Buyer or
Seller) shall notify the other party in writing and shall provide
documentation reasonably requested showing that a Pre-Closing
Chargeback or Post-Closing Chargeback, as applicable, has occurred
with respect to the applicable Assigned Merchant and that the
balance in the Assigned Merchant's account is not sufficient to
cover the Chargeback. Following the termination of the Merchant
Security Arrangement Allocation Period as to any Assigned Merchant,
Buyer shall be entitled to the funds in such Merchant Security
Arrangement, and Seller shall have no further interest in any such
Merchant Security Arrangement. Notwithstanding the foregoing, (a)
in no event shall Seller be entitled to more than fifty percent
(50%) of the funds in any Merchant Security Arrangement as of the
Effective Date, and (b) Buyer shall in no event be obligated to
provide Seller with access to, and Seller shall have no rights to,
or obligations relating to, any reserve accounts, letters of credit
or other security established, created or collected, as applicable,
by Buyer after the Effective Date with respect to any Assigned
Merchant.
ARTICLE III
ASSUMPTION OF
LIABILITIES
3.1
Transfer and Assumption of Assumed Liabilities . Effective
as of the Effective Time and subject to the terms and conditions of
the Operative Documents, as part of the consideration for the
Transferred Assets to be transferred and sold to Buyer hereunder,
Buyer shall agree to be bound by the Transferred Contracts and
Transferred Permits and shall assume
and agree to pay, perform and
discharge, when due, only the following liabilities and obligations
of Seller, GCS or Parent (the " Assumed Liabilities
"):
(a) the
Liabilities and obligations of Seller, GCS and/or Parent arising at
or after the Effective Time to perform under the Transferred
Contracts and Transferred Permits assigned to Buyer pursuant to
this Agreement, to the extent such Liabilities and obligations (i)
are disclosed in or discernible from the face of such Transferred
Contracts and Transferred Permits, (ii) are fairly disclosed on
Section 3.1 of the Seller Disclosure Schedule, or (iii) are
consistent with Seller's historical operation of the Business in
the Ordinary Course of the Business and which Liabilities and
obligations do not individually exceed $10,000 or collectively
exceed $200,000 (excluding, for purposes of clauses (i), (ii) and
(iii), any claim, Liability or obligation arising out of or
relating to an actual or alleged Default of Seller, GCS or Parent
that occurred prior to the Effective Time);
(b) the
obligations of Seller, GCS or Parent to pay assessments,
interchange fees, transaction fees, fines, penalties or other fees
or charges to the Credit Card Associations or EFT Networks,
provided such obligations relate to transactions which occur both
(i) under the Assigned Merchant Agreements and (ii) at or after the
Effective Time;
(c) Chargebacks
in respect of any Credit Card transaction processed by Buyer
pursuant to an Assigned Merchant Agreement with an Acquiring
Merchant at and after the Effective Time and other Credit Losses at
and after the Effective Time, but only to the extent that such
Chargeback or other Credit Loss relates to or arises out of an
original sales transaction occurring at or after the Effective
Time; and
(d) commissions
payable to the Designated Employees as further described on Section
3.1(d) of the Seller Disclosure Schedule, to the extent that such
commissions relate to sales generated after the Closing Date and
prior to the Designated Employee Transfer Date; and
(e) any
other claims, Liabilities or Litigation in respect of the
Transferred Assets, and the business conducted in connection with
the foregoing, provided that any such claims, Liabilities or
Litigation relate to or arise out of events, transactions or
actions or omissions of Buyer on or after the Effective
Time.
|
|
3.2
|
Retained Liabilities .
|
(a) Buyer
shall not assume or become liable for, in whole or in part, the
payment or performance of any debts, Taxes (except as and to the
extent provided in Section 4.3), Liabilities, Litigation, losses,
Credit Losses, Chargebacks, accounts payable, indebtedness,
mortgages, or other obligations of Seller, GCS, Parent or any
Merchant or other third party, whether the same are known or
unknown, now existing or hereafter arising, of whatever nature or
character, whether absolute or contingent, liquidated or disputed,
that are not Assumed Liabilities, including those items provided in
Section 3.2(b) below (the " Retained Liabilities "). Without
limiting the foregoing, Buyer shall not
assume, and Seller and/or Parent
shall retain, discharge and pay any and all liabilities and
obligations, direct or indirect, absolute or contingent:
(i) arising
before the Effective Time, or relating to any time prior to the
Effective Time, in connection with the ownership or operation of
the Business or the Transferred Assets, including (x) any claim by
any Person alleging any failure by Seller, GCS or Parent to comply
with the terms and conditions of any Transferred Contract or
Transferred Permit before the Effective Time and (y) any and all
Chargebacks and Credit Losses in respect of any Assigned Merchant
Agreement that relate to or arise out of transactions, events, acts
or omissions of Seller, GCS, Parent or a Merchant or other third
party which occurred prior to the Effective Time;
(ii) in
respect of any other claims, Liabilities or Litigation with respect
to (A) the Retained Assets and the Business conducted in connection
with the foregoing, and (B) the Transferred Assets and the Business
conducted in connection with the foregoing, provided that any such
claims, Liabilities or Litigation in respect of the Transferred
Assets relate to or arise out of events, transactions or actions or
omissions prior to the Effective Time; or
(iii) arising
out of or related to the matters set forth on Section 3.2(a)(iii)
of the Seller Disclosure Schedule.
(b) Buyer
shall not adopt, assume or otherwise become responsible for, either
primarily or as a successor employer, any assets or liabilities of
any employee benefit plans, arrangements, commitments or policies
currently provided by Seller, GCS, Parent, or by any member of
Seller's, GCS's or Parent's controlled group of corporations,
including any employee retention agreements or commission buyout
agreements with any Designated Employees as referenced in Section
8.1(k). In particular, Buyer shall not assume liability for any
group health continuation coverage or coverage rights under
Internal Revenue Code Section 4980B and ERISA Section 606 which
exist as of the Closing Date, the Effective Time or the Designated
Employee Transfer Date, or which may arise as a result of
termination of any group health plan or plans in existence in
connection with the Business.
(c) To
the extent that, if required due to the sale of the Transferred
Assets hereunder, adequate notice (or pay and benefits) is not
provided by Seller, GCS or Parent under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. §§2101-2109 (the "
WARN Act "), or Seller, GCS and/or Parent otherwise fail to
comply with the WARN Act, Parent, Seller and GCS agree to retain,
and Buyer shall not assume or otherwise become responsible for, any
liability arising under the WARN Act with respect to the Designated
Employees whose employment is terminated on or before the Closing
Date, the Effective Time or the Designated Employee Transfer Date.
To the extent the Buyer determines in its sole discretion to hire
any Designated Employees after the Closing Date, Buyer agrees to
provide adequate notice or assume any liability as may be required
under the WARN Act or applicable state or local law for any
terminations of such employment after hire by Buyer after the
Effective Time.
ARTICLE IV
PURCHASE
PRICE
4.1
Purchase Price . The aggregate purchase price for the
Transferred Assets shall be (i) $432,700,000.00 in cash payable at
the Closing (the " Cash Payment "), (ii) the assumption by
Buyer of the Assumed Liabilities by execution of the Bill of Sale
and Assignment and Assumption Agreement at the Closing and (iii) at
the time and to the extent owed, as further provided by Section
4.2, the Holdback Amount (collectively, the " Purchase Price
"). On the Closing Date, Buyer will deliver the Cash Payment to
Parent by wire transfer of immediately available funds to such bank
account or accounts as shall be designated in writing by Seller to
Buyer at least two (2) Business Days prior to the
Closing.
(a)
Holdback Amount . Seventeen Million Three Hundred Thousand
Dollars ($17,300,000) of the Purchase Price (the " Holdback
Amount ") shall not be paid to Seller at the Closing, but shall
instead be retained by Buyer and paid to Parent if and to the
extent provided by this Section 4.2.
|
|
(b)
|
Tier 1 Relationship Merchants
.
|
(i) If
on the second anniversary of the Closing Date, and provided the
provisions of Section 4.2(b)(iv) do not apply, a Tier 1
Relationship Merchant then maintains its business relationship with
Buyer and such relationship has not suffered a material adverse
change (except where such material adverse change was caused by an
Excluded Event with respect to such Tier 1 Relationship Merchant),
then Buyer shall pay to Parent within five (5) Business Days after
such anniversary one-third (1/3) of the portion of the Holdback
Amount set forth on Schedule 4.2 opposite the name of such
Tier 1 Relationship Merchant.
(ii) If
on the third anniversary of the Closing Date, and provided the
provisions of Section 4.2(b)(iv) do not apply, a Tier 1
Relationship Merchant then maintains its business relationship with
Buyer and such relationship has not suffered a material adverse
change (except where such material adverse change was caused by an
Excluded Event with respect to such Tier 1 Relationship Merchant),
then Buyer shall pay to Parent within five (5) Business Days after
such anniversary one-third (1/3) of the portion of the Holdback
Amount set forth on Schedule 4.2 opposite the name of such
Tier 1 Relationship Merchant.
(iii) If
on the fourth anniversary of the Closing Date, and provided the
provisions of Section 4.2(b)(iv) do not apply, a Tier 1
Relationship Merchant then maintains its business relationship with
Buyer and such relationship has not suffered a material adverse
change (except where such material adverse change was caused by an
Excluded Event with respect to such Tier 1 Relationship Merchant),
then Buyer shall pay to Parent within five (5) Business Days after
such anniversary one-third (1/3) of the portion of the Holdback
Amount set forth on Schedule 4.2 opposite the name of such
Tier 1 Relationship Merchant.
(iv) Notwithstanding
the other provisions of this Section 4.2(b), if on or before the
fourth yearly anniversary of the Closing Date, a Tier 1
Relationship Merchant has executed a merchant agreement with Buyer
on terms and conditions satisfactory to Buyer in the exercise of
its commercially reasonable judgment, then Buyer shall pay to
Parent within five (5) Business Days any then unpaid portion of the
Holdback Amount set forth on Schedule 4.2 opposite the name
of such Tier 1 Relationship Merchant.
(v) For
the avoidance of doubt, in no event will Parent entitled to be paid
in respect of any Relationship Merchant more than the amount set
forth opposite such Relationship Merchant's name on Schedule
4.2 .
(c)
Tier 2 Relationship Merchants . If, on the first anniversary
of the Closing Date, a Tier 2 Relationship Merchant then maintains
its business relationship with Buyer and such relationship has not
suffered a material adverse change (except where such material
adverse change was caused by an Excluded Event with respect to such
Tier 2 Relationship Merchant), then Buyer shall pay to Parent
within five (5) Business Days after such anniversary the portion of
the Holdback Amount set forth on Schedule 4.2 opposite the
name of such Tier 2 Relationship Merchant. Further, if on or before
the first anniversary of the Closing Date, a Tier 2 Relationship
Merchant has executed a merchant agreement with Buyer on terms and
conditions satisfactory to Buyer in the exercise of its
commercially reasonable judgment, then Buyer shall pay to Parent
within five (5) Business Days the portion of the Holdback Amount
set forth on Schedule 4.2 opposite the name of such Tier 2
Relationship Merchant.
(d)
Manner of Payment . Any amounts payable under this Section
4.2 shall be paid by wire transfer of immediately available funds
to such bank account or accounts as shall be designated in writing
by Parent to Buyer at least two (2) Business Days prior to date
such payment is due.
(e)
Commercially Reasonable Efforts to Procure Merchant
Agreement . Beginning on the Closing Date and continuing
throughout the first anniversary of the Closing Date (with respect
to Tier 2 Relationship Merchants) and the fourth anniversary of the
Closing Date (with respect to Tier 1 Relationship Merchants), Buyer
shall, with such reasonable assistance from Parent, Seller and GCS
as Buyer may from time to time request and as may be practicable,
use its commercially reasonable efforts to cause each Relationship
Merchant to execute a merchant agreement with Buyer on terms and
conditions satisfactory to Buyer in the exercise of its
commercially reasonable judgment.
|
|
(f)
|
Right to Withhold Payment
.
|
(i) Upon
prior written notice to Parent, Seller and GCS, which notice shall
set forth in reasonable detail the basis therefor, Buyer, acting in
good faith, shall be entitled to withhold from any amount with
respect to any Relationship Merchant that otherwise would be
payable to Parent pursuant to this Section 4.2 any amount to which
it may be entitled under Article XI, to the extent Buyer's claim
under Article XI arises or results from Buyer's relationship with
such
Relationship Merchant (and does not
arise or result from Buyer's breach of the Buyer Standard of Care
or an Excluded Event with respect to such Relationship Merchant),
so long as Buyer has properly given notice to Parent, Seller and
GCS of such claim as required by this Agreement and either (i) such
claim has been finally resolved in Buyer's favor, or (ii) in the
event that Parent, Seller and GCS dispute such claim, such claim is
in the process of resolution as provided by this
Agreement.
(ii) Nothing
in this Section 4.2(f) shall operate to limit the amount of a claim
that Buyer may recover upon the proper resolution of such claim as
provided by this Agreement. Without limiting the foregoing, this
Section 4.2(f) shall not be deemed to limit Buyer's right to
recovery in respect of any claim with respect to a Relationship
Merchant to the amount initially withheld from the obligation
otherwise payable to Parent, Seller and GCS if, upon final
resolution thereof, the amount of the award to Buyer is greater
than the amount withheld. Similarly, in the event that the final
resolution of a claim with respect to a Relationship Merchant
awards Buyer an amount less than that withheld, then NOVA shall pay
over to Parent that portion of the withheld monies that is in
excess of the amount of the award within two (2) Business Days
following the date of the final resolution of such
claim.
|
|
4.3
|
Allocation of Purchase Price
.
|
(a) The
Purchase Price shall be allocated among the Transferred Assets and
the Merchant Services Agreement, if applicable, in the manner set
forth in a schedule that shall be jointly prepared by Buyer and
Seller on or prior to the Closing Date (the " Agreed
Allocation "); provided, that if Buyer and Seller fail to agree
after good faith efforts on the part of each of them on the
allocation in such schedule on or prior to the Closing Date, the
Purchase Price shall be allocated first to tangible personal
property in accordance with Seller's net book value of such
property as of the last day of the most recent month prior to the
Closing Date for which Seller has completed the closing of its
consolidated balance sheet, and the balance of the Purchase Price
shall be allocated to the intangible Transferred Assets and
goodwill (the " Default Allocation ").
(b) Each
party agrees that it will adopt and utilize the amounts allocated
pursuant to Section 4.2(a) to each of the Transferred Assets and
such other assets and benefits for all tax purposes, including in
preparation of all Tax Returns (including, if required, IRS Form
8594 and any supplements thereto) filed by it and that it will not
voluntarily take any tax position inconsistent therewith, or on any
such Tax Returns or in any legal or administrative proceeding or
otherwise. Each party agrees to prepare and timely file all
applicable Internal Revenue Service and applicable State tax forms
(including, if required, IRS Form 8594 and any required supplements
thereto), to cooperate with the other party in the preparation of
such forms, and to furnish the other party with a copy of such
forms prepared in draft, within a reasonable period before the
filing due date thereof. Neither party will assert that such
allocation was not separately bargained for at arm's-length and in
good faith. Each party recognizes that the Purchase
Price does not include Buyer's
acquisition expenses and that Buyer will allocate such expenses
appropriately.
(a) All
sales taxes, use taxes, gross receipts taxes, value added taxes,
goods and services taxes, excise taxes, real estate transfer taxes,
recordation taxes, documentary taxes, stamp taxes, and other
similar taxes, charges, fees, levies, or other assessments, but
specifically excluding any taxes, duties, fees or charges imposed
on or measured by net or gross income, capital stock or net worth
or in the nature of an income, capital, franchise, or net worth
tax, arising from or in connection with the transfers by Parent,
Seller and GCS of the Transferred Assets to Buyer (" Transfer
Taxes ") shall be borne by Buyer.
(b) To
the extent that any Transfer Taxes apply to the transfers by
Parent, Seller and GCS of the Transferred Assets to Buyer, the
relevant Tax Return shall be prepared by the party required by law
to file such return and shall be submitted to the other party for
its review and approval (which shall not be unreasonably withheld
or delayed). Upon such approval, the preparing party shall timely
file the relevant Tax Return and remit the Transfer Taxes shown on
such Tax Returns, but if the preparing party is Seller, then Buyer
shall reimburse Seller and GCS therefor. The parties shall
cooperate to the extent reasonably necessary to file all relevant
Tax Returns relating to Transfer Taxes.
(c) Parent,
Seller and GCS shall cooperate with, and subject to the other terms
of this Agreement, take any action reasonably requested by Buyer
provided that such action does not cause Parent, Seller or GCS to
incur any material cost or material inconvenience in order to
minimize any such Transfer Taxes, including adopting, supporting,
and defending any reasonable position that the transactions
contemplated under this Agreement qualify for an exemption or
exemptions from Transfer Taxes. In this regard, with respect to any
tangible personal property included in the Transferred Assets that
will be held for resale by Buyer, Buyer shall furnish Parent,
Seller and GCS at Closing with valid and proper exemption
certificates and Parent, Seller and GCS shall accept such
certificates with respect to any such tangible personal property.
Buyer shall also furnish Parent, Seller and GCS with any applicable
exemption certificates, letter rulings, notifications or similar
documents, including those furnished to Buyer from the appropriate
taxing authority with respect to Transfer Taxes. The parties
further acknowledge and agree that, where applicable, the transfer
of the Transferred Assets by Parent, Seller and GCS to be
effectuated pursuant to this Agreement will be treated by the
parties as a sale of the entire operating assets of one or more
businesses, or of one or more separate divisions, branches, or
identifiable segments of a business. The parties agree that they
will adopt positions that are consistent with the foregoing
characterization in any Tax Return, tax audit, tax contest, tax
proceeding, or tax ruling request.
(d) If
a state taxing authority formally or informally proposes to issue
an assessment to Parent, Seller or GCS for unpaid Transfer Taxes
arising from the sale of the Transferred Assets, Buyer shall
cooperate with Parent, Seller and GCS in providing
proof that it paid such Transfer
Taxes directly to the state taxing authority. To the extent that a
state taxing authority issues an assessment for unpaid Transfer
Taxes arising from the sale of the Transferred Assets against
Parent, Seller and GCS, Buyer agrees to fully indemnify Parent,
Seller and GCS for such liability, including all related penalties
and interest. Parent, Seller and GCS shall notify Buyer in writing
of any claim or demand for any Transfer Taxes promptly after
Parent, Seller or GCS obtains knowledge thereof. Buyer may direct,
at Buyer's sole cost and expense through counsel selected by Buyer
and reasonably acceptable to Parent, Seller and GCS, any such claim
or proceeding for such Transfer Taxes, and shall keep Parent,
Seller and GCS informed of all actions taken by Buyer; provided
that at Parent's, Seller's or GCS's request, Parent, Seller and GCS
may participate (at its sole cost and expense) in such claim or
proceeding. Parent, Seller and GCS shall cooperate with Buyer, and
Buyer shall cooperate with Parent, Seller and GCS in good faith in
the defense, prosecution, compromise or settlement of any claim,
demand or proceeding involving Transfer Taxes (a " Contest
"), except that neither party shall agree to a settlement or
compromise of a Contest without the prior written consent of the
other party. The parties' obligations under this Section 4.3 shall
remain notwithstanding any other provisions of this
Agreement.
(e) For
purposes of this Section, (i) the term " Straddle Period "
shall mean any Tax period that begins before and ends on or after
the Effective Time; (ii) the term " Pre-Closing Period "
shall mean any Tax period ending before the Effective Time, and, in
the case of any Straddle Period, the portion of such Straddle
Period ending before the Effective Time; and (iii) the term "
Post-Closing Period " shall mean any Tax period beginning at
or after the Effective Time, and, in the case of any Straddle
Period, the portion of such Straddle Period beginning at or after
the Effective Time. Parent, Seller and GCS shall be jointly and
severally liable for any and all Taxes (other than Transfer Taxes
for which Buyer is responsible pursuant to Section 4.3(a) above),
including property, income and franchise Taxes, which are
attributable to or connected with the ownership or operation of the
Transferred Assets or the Business during any Pre-Closing Period.
Buyer shall be liable for any and all Taxes, including income and
franchise Taxes, which are attributable to or connected with the
ownership or operation of the Transferred Assets or the Business
during any Post-Closing Period. In the case of Straddle Periods,
the portion of Taxes (and, where applicable, property, income and
franchise Taxes) attributable to the Pre-Closing Period and the
Post-Closing Period, respectively, shall be determined on the basis
of an interim closing of the books of Seller, except that Taxes
imposed on a periodic basis shall be allocated to such periods on a
daily basis.
(f) Buyer
shall promptly pay to Parent, Seller and GCS the net amount, after
subtracting any applicable reasonably incurred out-of-pocket
attorney's fees or other Contest costs, of any credit or refund
received directly or indirectly by, or credited to, Buyer of Taxes
attributable to any Pre-Closing Period with respect to Parent's,
Seller's or GCS's ownership or operation of the Business or
Transferred Assets that were paid by or on behalf of Seller.
Parent, Seller and GCS shall promptly pay to Buyer the net amount,
after subtracting any applicable reasonably incurred out-of-pocket
attorneys' fees or other Contest costs, of any credit or refund
received directly or indirectly by, or credited to,
Parent, Seller or GCS of Taxes
attributable to any Post-Closing Period with respect to Buyer's
ownership or operation of the Business or Transferred Assets and
that are paid by or on behalf of Buyer. Buyer shall be entitled to
all refunds of Transfer Taxes. In cases where Buyer is not
permitted to directly claim refunds or credits of overpayments of
Transfer Taxes paid by or on its behalf, Parent, Seller and GCS
shall use reasonable efforts to claim credits on their Tax Returns
for such overpayments of Transfer Taxes paid by or on behalf of
Buyer or, to the extent it is not feasible to claim such credits,
then to claim refunds of such overpayments of Transfer
Taxes.
4.5
Prorations . Those expenditures arising from the conduct of
the Business set forth on Schedule 4.5 shall be (i) prorated
between Buyer, on the one hand, and Parent, Seller and GCS, on the
other hand, in accordance with the principle that Parent, Seller
and GCS shall be responsible for all such expenses, payables,
costs, obligations and liabilities allocable to the conduct of the
Business for the period ending on or prior to the Closing, and
Buyer shall be responsible for all such expenses, payables, costs,
obligations and liabilities allocable to the conduct of the
Business for the period after the Closing or (ii) allocated between
Buyer and Parent as the parties may otherwise mutually agree in
writing on the Closing Date. Notwithstanding the foregoing, there
shall be no proration with regard to, and Parent, Seller and GCS
shall collectively remain solely liable with respect to, any
Retained Assets or Retained Liabilities.
ARTICLE V
CLOSING AND CLOSING
DELIVERIES
5.1
Closing . Subject to the satisfaction or waiver of the
conditions set forth herein, the consummation of the purchase and
sale of the Transferred Assets and the transfer and assumption of
the Assumed Liabilities (the " Closing ") shall take place
at the offices of Baker, Donelson, Bearman, Caldwell &
Berkowitz, located at 165 Madison Avenue, Suite 2000, Memphis,
Tennessee, at 9:00 a.m. on the third Business Day after the
satisfaction or waiver of the conditions set forth in Article X
hereof, or at such other date and time and at such other location
as the parties shall mutually agree in writing (the " Closing
Date "), and shall be effective as of 12:01 a.m. Central
Standard Time on March 1, 2006 (the " Effective Time ").
Subject to the provisions of Article XII, failure to consummate the
purchase and sale provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 5.1 will
not result in the termination of this Agreement and will not
relieve any party of any obligation under this
Agreement.
|
|
5.2
|
Deliveries at the Closing
.
|
(a) At
the Closing, Parent, Seller and GCS will duly execute (to the
extent applicable) and deliver or cause to be delivered to
Buyer:
(i) a
bill of sale for the Transferred Assets and assignment and
assumption agreement for the Assumed Liabilities in the form of
Exhibit "A" attached hereto (together with appropriate
schedules and exhibits, the " Bill of Sale and Assignment and
Assumption Agreement ");
(ii) such
other deeds, endorsements, transfers, assignments and other
instruments as Buyer may reasonably request and as are reasonably
necessary to transfer to Buyer good and marketable title to the
Transferred Assets (the " Transfer Documents ");
(iii) an
interim services agreement substantially in the form of Exhibit
"B" (together with appropriate schedules and exhibits, the "
Interim Services Agreement ");
(iv) a
merchant services agreement in the form of Exhibit "C"
(together with appropriate schedules and exhibits, the "
Merchant Services Agreement ");
(v) a
non-competition agreement in the form of Exhibit "D"
(together with appropriate schedules and exhibits, the "
Non-Competition Agreement ");
(vi) an
opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz,
counsel to Parent, Seller and GCS, in the form attached hereto as
Exhibit "E" ;
|
|
(vii)
|
the
certificates referred to in Section 10.2(c);
|
(viii) Employee
Retention, Sale Participation and Non-Solicitation Agreements in
the form attached hereto as Exhibit "H" , duly executed by
Parent, Seller and each employee listed on Section 8.1(k) of the
Seller Disclosure Schedule;
(ix) copies
of any and all releases, termination statements and other documents
and instruments as are reasonably necessary to evidence the removal
and release of any Liens (other than Permitted Liens) which may
encumber any of the Transferred Assets;
(x) copies
of all required applications and notices which have been submitted
to VISA and MasterCard to request approval of the transfer of the
BIN and ICA from Parent and/or Seller to Buyer and/or U.S. Bank
National Association on the books and records of VISA and
MasterCard together with any consents and responses thereto;
and
(xi) all
copies in Seller's or GCS's possession of the Software and any
other materials comprising or containing Seller's Proprietary
Rights.
(b) At
the Closing, Buyer will duly execute (to the extent applicable) and
deliver or cause to be delivered to Parent, Seller and/or GCS, as
applicable:
|
|
(i)
|
the
Cash Payment pursuant to the terms of Section 4.1;
|
|
|
|
(ii)
|
the
Bill of Sale and Assignment and Assumption Agreement;
|
|
|
(iii)
|
the
Interim Services Agreement;
|
|
|
|
|
|
|
|
|
|
(iv)
|
the
Merchant Services Agreement;
|
|
|
(v)
|
the
Non-Competition Agreement;
|
|
(vi) an
opinion of McKenna Long & Aldridge LLP, counsel to Buyer, in
the form attached hereto as Exhibit "F" , and
|
|
(vii)
|
the
certificates referred to in Section 10.3(c).
|
|
|
|
5.3
|
Certain Consents; No Unlawful Transfers; Further
Assurances .
|
|
|
|
|
|
|
|
(a) Parent,
Seller, GCS and Buyer shall use commercially reasonable efforts to
obtain at the earliest practicable date, and in all instances prior
to the Closing, all Seller Consents and Buyer Consents related to
the consummation of the Transaction, and will provide to each other
copies of each such Consent promptly after such Consent is
obtained. If any third party imposes a condition as a term of
giving its Consent, then Parent, Seller, GCS and Buyer shall
cooperate in good faith to find a mutually acceptable means of
satisfying the requirements of such third party.
(b) To
the extent that the rights of Parent, Seller or GCS under any of
the Transferred Assets or obligations under the Assumed Liabilities
intended to be transferred or assigned to Buyer hereunder may not
be transferred or assigned without the Consent of another Person
which Consent has not been obtained prior to the Closing Date (any
such unobtained Consents to be identified in writing by Seller to
Buyer not later than two (2) Business Days before the Closing Date
and are referred to herein as the " Specified Consents "),
this Agreement shall not constitute an agreement to transfer or
assign the same if an attempted transfer or assignment would
constitute a Default thereunder or be unlawful.
(c) If,
on the Closing Date, (i) Parent, Seller or GCS has not obtained any
Specified Consent necessary to transfer or assign any of its right,
title or interest in or to any of the Transferred Assets after
having used commercially reasonable efforts to obtain such
Specified Consent, or an attempted transfer or assignment of any of
the Transferred Assets would be ineffective, or the failure to
obtain such Specified Consent would constitute a Default thereunder
or would otherwise adversely affect the ability of Parent, GCS
and/or Seller to convey any such Transferred Asset to Buyer as
required by Section 2.1, (ii) the conditions precedent to the
Closing set forth in Article X otherwise have been satisfied or
waived as provided therein, and (iii) the failure to transfer or
assign such asset(s), either individually or in the aggregate, is
not reasonably likely to have a Material Adverse Effect on the
Business, then such Transferred Assets shall constitute "
Deferred Transferred Assets " and shall not be transferred
to Buyer at the Closing.
(i) Parent,
Seller, GCS and Buyer will continue to use commercially reasonable
efforts to obtain such Specified Consent and/or to remove any other
impediments to the transfer or assignment of each Deferred
Transferred Asset, in
accordance with Section 5.3(a), and
will transfer or assign each Deferred Transferred Asset to Buyer
within five (5) Business Days after the receipt of such Specified
Consent and/or removal of such impediment;
(ii) until
the transfer or assignment with respect to any Deferred Transferred
Asset is accomplished, Parent, GCS and Seller will continue to
perform all of their respective obligations with respect to such
Deferred Transferred Asset as reasonably requested by Buyer, and
will, with such reasonable cooperation of Buyer as Parent, GCS or
Seller may from time to time request, take commercially reasonable
actions to assure that Buyer shall receive all benefits of such
Deferred Transferred Asset or the economic equivalent thereof, and
allow Buyer to perform its obligations under the Assumed
Liabilities, to the same extent as if the Deferred Transferred
Asset were transferred or assigned to Buyer at Closing, and each
party shall bear its own incidental administrative expenses
incurred in connection with any such arrangement; and
(iii) until
the transfer or assignment with respect to any Deferred Transferred
Asset is accomplished, Parent, GCS and Seller, at the reasonable
request and for the account of Buyer, shall enforce, at Buyer's
expense, their respective rights thereto or interests therein
against any other parties thereto (including the right to extend or
terminate any such Deferred Transferred Asset in accordance with
its terms, provided that Buyer shall pay any cancellation or other
fee due upon such termination).
(e) Buyer
shall reimburse Parent, GCS and/or Seller for the reasonable
out-of-pocket costs incurred with respect to its or their
performance under this Section 5.3 with respect to the Deferred
Transferred Assets, subject to Buyer's receipt of reasonable
documentation detailing such costs.
(f) As
soon as reasonably practicable following the Closing Date, Parent,
GCS, Seller and Buyer shall cooperate to deliver to each of the
Assigned Merchants, at Buyer's expense, a notice in a mutually
agreed form of the assignment of such Assigned Merchant Agreements
to Buyer. In Buyer's discretion, such notice may inform each
Assigned Merchant of Buyer's intention to convert the Assigned
Merchant to Buyer's network, as well as to a merchant accounting
system designated by Buyer.
(g) In
addition to any other further assurances or covenants of
cooperation contained in this Agreement, each party will execute,
acknowledge, file and deliver (or will cause to be executed,
acknowledged, filed and delivered), upon the reasonable request of
the other party, such documents as may be reasonably necessary or
appropriate to further document or evidence the respective
obligations of the parties under this Agreement, including
documents to further evidence the transfer or assignment of the
Transferred Assets to Buyer and the assumption of the Assumed
Liabilities by Buyer. Each of the parties to this Agreement will
cooperate with the other in good faith to obtain Consents in a
cost-effective and efficient manner and to
