EXHIBIT 99.5
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement") is made and entered into as
of July 12, 2004, by and among Bank of America Corporation, a Delaware
corporation ("Parent"), and National City Corporation, a Delaware corporation
("Shareholder"), and a shareholder of National Processing, Inc., an Ohio
corporation (the "Company").
RECITALS
A. Concurrently with the execution of this Agreement, Parent,
Monarch Acquisition, Inc., an Ohio corporation and wholly owned indirect
Subsidiary of Parent ("Merger Sub"), and the Company are entering into an
Agreement and Plan of Merger, dated as of the date hereof (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"), which provides
for the merger of Merger Sub with and into the Company (the "Merger"). Following
the Merger, the Company will continue as the surviving corporation (the
"Surviving Corporation"). In the Merger, each share of Company Common Stock,
other than Dissenting Shares and any shares of Company Common Stock owned by
Parent or Merger Sub or held in the treasury of the Company, will be converted
into the right to receive the Merger Consideration, on the terms and subject to
the conditions of the Merger Agreement.
B. As of the date hereof, Shareholder is the beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
and has the sole right to vote and dispose of 44,365,400 shares of Company
Common Stock (the "Shares").
C. Shareholder is entering into this Agreement, and causing its
Subsidiary, National City Bank of Kentucky ("NCBK") to enter into that certain
Service and Sponsorship Agreement of even date herewith (the "Sponsorship
Agreement"), as a material inducement and consideration to each of Parent and
Merger Sub to enter into the Merger Agreement and for Parent to supply funds to
the Company to make payment under the Sponsorship Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and upon the terms and subject to the conditions set forth herein,
the parties hereto agree as follows:
1. Definitions. Capitalized terms that are used in this Agreement
and are not otherwise defined herein will have the meanings ascribed to such
terms in the Merger Agreement.
(a) "Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.
(b) "Business" means the business of (i) authorizing, processing,
transmitting, settling and reporting Charge Card transactions for merchants,
(ii) the settlement and reporting of commission payments for car rental
companies, cruise line operators, tour operators and hotels and (iii) the
collection, settlement and reporting of health-care claims between insurance
payers and health-care providers; provided, however, that "Business" shall not
include (x) authorizing Charge Card transactions by a financial institution on
behalf of its own Charge Card holders or (y) the collection or settlement of
health-care claims by a financial institution on behalf of its customers in
connection with those customers' use of their checking, savings, money market,
Automated Clearinghouse (ACH) transfers (in connection with such financial
institution's cash management function) or similar accounts with such financial
institution.
(c) "Cash" means cash, cash equivalents and marketable securities
and excludes any cash in a settlement account at Shareholder but shall be deemed
to include any amounts paid by the Company from and including April 1, 2004
through and including September 30, 2004 for (i) legal fees and costs and
investment banking fees (including related costs) incurred by the Company in
connection with the negotiation, execution and performance of this Agreement and
the Merger Agreement and the transactions and other agreements contemplated
hereby and thereby and (ii) any severance or change in control payments made to
any employee of the Company resulting from consummation of the Merger.
(d) "Charge Card" means (i) a valid card issued by (A) an issuing
member of MasterCard International, Inc. ("MasterCard") or VISA U.S.A., Inc. or
VISA International Inc. (collectively, "VISA") that contains the MasterCard
service xxxx or the Visa Blue, White and Gold bands design service xxxx (or such
marks as MasterCard or VISA (or their successors) may establish from time to
time), or (B) American Express, Discover, JCB International Co., Ltd., Diners
Club or Xxxxx Xxxxxxx and (ii) any other card payment vehicles (including, but
not limited to, on-line debit and EBT cards).
(e) "Commercial Agreements" means (i) the Sponsorship Agreement and
(ii) the Referral Agreement.
(f) "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity (including its permitted successors and assigns).
(g) "Referral Agreement" means that certain Master Referral
Agreement of even date herewith between Parent and Shareholder.
(h) A "Subsidiary" of any Person means another Person, an amount of
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interest of which) is owned directly or indirectly by such first
Person.
(i) "Support Agreements" means those agreements entered into by the
Company or any Company Subsidiary in support of its obligations under the UAL
Agreement,
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including agreements with MasterCard, VISA, any other Charge Card organizations
and NCBK and the Sponsorship Agreement.
(j) "Tax Returns" means all domestic and foreign (whether national,
federal, state, provincial, local or otherwise) Tax Returns and reports required
to be filed by or with respect to Shareholder, the Company or any Company
Subsidiary.
(k) "Termination Date" means the date the Merger Agreement is
terminated in accordance with its terms.
(l) "Transfer" with respect to any security means to directly or
indirectly: (i) sell, pledge, encumber, transfer or dispose of, or grant an
option with respect to, such security or any interest in such security; or (ii)
enter into an agreement or commitment providing for the sale, pledge,
encumbrance, transfer or disposition of, or grant of an option with respect to,
such security or any interest therein.
(m) "UAL Agreement" means the Charge Card Processing Agreement,
dated as of November 15, 2000, by and among National Processing, LLC (successor
by merger to National Processing Company), United Air Lines, Inc. ("UAL") and
NCBK.
2. General Representations and Warranties of Shareholder.
Shareholder hereby represents and warrants to Parent as follows:
2.1 Authority; Enforceability. Shareholder has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Shareholder and the consummation by Shareholder of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Shareholder. This Agreement has been duly executed and delivered
by Shareholder, and, assuming the due authorization, execution and delivery by
Parent, constitutes the legal, valid and binding obligation of Shareholder,
enforceable against Shareholder in accordance with its terms, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting the rights of
creditors and subject to general equity principles.
2.2 Noncontravention; Consents. The execution and delivery of this
Agreement by Shareholder does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement by Shareholder will not, (i) conflict with the Amended and Restated
Certificate of Incorporation or First Restatement of By-laws of Shareholder,
(ii) result in any breach, violation or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
creation or acceleration of any obligation or right of a third party or loss of
a benefit under, or result in the creation of any Lien upon any of the
properties or assets of Shareholder under, any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license or other authorization applicable to Shareholder
or its properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, conflict with or violate
any law applicable to Shareholder or its properties or assets or
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any judgment, order or decree to which Shareholder or its properties or assets
have been specifically identified as subject, other than, in the case of clauses
(ii) and (iii), any such breaches, conflicts, violations, defaults, rights,
losses or Liens that, individually or in the aggregate, would not materially
impair the ability of Shareholder to consummate the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any Governmental Entity
is required by Shareholder in connection with the execution and delivery of this
Agreement by Shareholder or the consummation by Shareholder of the transactions
contemplated hereby, except for the filing with the SEC of such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby and such
consents, approvals, orders, authorizations, actions, registrations,
declarations or filings the failure of which to be made or obtained (as
applicable), individually or in the aggregate, would not materially impair the
ability of Shareholder to consummate the transactions contemplated by this
Agreement.
2.3 Shares Owned. As of the date hereof, Shareholder is the sole
record and beneficial owner of the Shares free and clear of any lien,
restriction, adverse claim, security interest or encumbrance. Shareholder holds
exclusive power to vote or transfer the Shares, subject to the limitations set
forth in this Agreement.
2.4 Employees. Since March 31, 2004, neither Shareholder nor any of
its Affiliates (other than the Company or any Company Subsidiary) has hired any
employee of the Company or any Company Subsidiary who is at a level of vice
president or above.
2.5 Taxes. Except as disclosed in Section 3.1(i) of the Company
Disclosure Letter:
(a) Shareholder has, or has caused to be, filed all Tax Returns and
reports required to be filed by it, or a request for extensions to file such Tax
Returns or reports has been timely filed, granted and has not expired, and all
such filed Tax Returns and reports are complete and accurate in all material
respects in so far as they relate to the Company and any Company Subsidiary;
(b) Shareholder, the Company, or a Company Subsidiary has paid or
withheld and remitted all Taxes shown due on such Tax Returns;
(c) Shareholder has withheld and paid, or has caused the Company or
a Company Subsidiary to withhold and pay, all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party;
(d) There are no pending or threatened audits, examinations,
investigations or other proceedings in respect of Taxes relating to Shareholder
or any Group of which the Company or any Company Subsidiary has been a member.
There is no dispute or claim concerning any material income Tax liability of any
Group for any taxable period during which the Company or any Company Subsidiary
was a member. Each deficiency resulting from any
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completed audit or examination relating to any amount of Taxes by any taxing
authority or any concluded litigation has been timely paid;
(e) There are no liens for Taxes upon the assets of the Company or
any Company Subsidiary;
(f) Neither the Company nor any Company Subsidiary has any liability
for Taxes for any Person (other than the Company or any Company Subsidiary under
Treasury Regulation Section 1.1502-6 (or any comparable provision of state,
local or foreign law);
(g) Neither Shareholder, nor any Group of which the Company or any
Company Subsidiary has been a member, has waived any statute of limitation with
respect to Taxes attributable to the Company or any Company Subsidiary or agreed
to any extension of time with respect to any Tax assessment or deficiency;
(h) The Company and each Company Subsidiary has been included in the
consolidated federal income Tax Return of the affiliated group of which
Shareholder is the common parent;
(i) Shareholder has not executed or entered into with the IRS, or
any taxing authority, a closing agreement pursuant to Section 7121 of the Code,
or any similar provision of law, that will require any increase in taxable
income or alternative minimum taxable income, or any reduction in Tax credits,
for the Company or any Company Subsidiary for any taxable period ending after
the Closing Date;
(j) Shareholder has not agreed to make any adjustment pursuant to
Section 481(a) of the Code (or any predecessor provision) by reason of any
change in any accounting method, and there is no application pending with any
taxing authority requesting permission for any changes in any accounting method
of Shareholder, the Company or any Company Subsidiary that will or would
reasonably cause the Company or any Company Subsidiary to include any adjustment
in taxable income for any taxable period (or portion thereof) ending after the
Closing Date;
(k) In the past five years, neither the Company nor any Company
Subsidiary has distributed a corporation and has been distributed in a
transaction that is reported to qualify under Code Section 355.
3. Representations and Warranties of Parent. Parent hereby
represents and warrants to Shareholder as follows:
3.1 Authority; Enforceability. Parent has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent. This Agreement has been duly executed and delivered by
Parent, and, assuming the due authorization, execution and delivery by
Shareholder, constitutes the legal, valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except as the
enforcement thereof may be limited by applicable bankruptcy,
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insolvency, reorganization, moratorium or similar laws generally affecting the
rights of creditors and subject to general equity principles.
3.2 Noncontravention; Consents. The execution and delivery of this
Agreement by Parent does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement by Parent will not conflict with the articles of association or bylaws
of Parent. No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any Governmental Entity
is required by Parent in connection with the execution and delivery of this
Agreement by Parent or the consummation by Parent of the transactions
contemplated hereby, except for the filing with the SEC of such reports under
Section 13 or 16(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby and for such consents,
approvals, orders, authorizations, actions, registrations, declarations or
filings the failure of which to be made or obtained (as applicable),
individually or in the aggregate, would not materially impair the ability of
Parent to consummate the transactions contemplated by this Agreement.
4. Agreement to Vote.
4.1 Voting.
(a) Shareholder hereby covenants and agrees that, prior to the
Termination Date, at any meeting (whether annual or special and whether or not
an adjourned or postponed meeting) of the shareholders of the Company, however
called, and in any action taken by the written consent of shareholders of the
Company without a meeting, Shareholder will appear at the meeting or otherwise
cause the Shares to be counted as present thereat for purposes of establishing a
quorum and vote or consent or cause to be voted or consented the Shares:
(i) to the extent a vote is solicited in connection with the
approval of any action, agreement or proposal that would result in a breach of
any representation, warranty, covenant or obligation of the Company in the
Merger Agreement or that would delay or hinder the consummation of the Merger or
that would postpone or adjourn such meeting (unless consented to by Parent in
writing) or that would preclude fulfillment of a condition precedent to the
Closing under the Merger Agreement, against the approval of such action,
agreement or proposal; and
(ii) against approval of any action, agreement, merger,
consolidation, combination, control share acquisition, sale or transfer of a
material amount of assets, reorganization, going-private transaction or
recapitalization of the Company other than pursuant to the Merger Agreement and
the Merger.
(b) Prior to the Termination Date, Shareholder will not enter into
any agreement or understanding with any Person to vote or give instructions in
any manner inconsistent with any provision of this Section 4.1. This Agreement
is intended to bind Shareholder only with respect to the specific matters set
forth in this Agreement.
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4.2 Transfer and Other Restrictions.
(a) From the date hereof until the Termination Date, Shareholder
agrees not to, directly or indirectly:
(i) Transfer any or all of the Shares or any interest therein; or
(ii) grant any proxy, power of attorney, deposit any Shares into a
voting trust or enter into a voting agreement or arrangement with respect to the
Shares; or
(iii) take any other action that would make any representation or
warranty of Shareholder contained herein untrue or incorrect or have the effect
of preventing or disabling Shareholder from performing its obligations under
this Agreement.
(b) Shareholder agrees with, and covenants to, Parent that
Shareholder shall not request that the Company register the Transfer (book-entry
or otherwise) of any certificate or uncertificated interest representing any
Shares.
4.3 Adjustments.
(a) In the event (i) of any stock dividend, stock split,
recapitalization, reclassification, combination or exchange of shares of capital
stock or other securities of the Company on, of or affecting the Shares, or the
like, or any other action that would have the effect of changing Shareholder's
ownership of the Company's capital stock or other securities or (ii) Shareholder
becomes the beneficial owner of any additional shares of Company Common Stock or
other securities of the Company, then the terms of this Agreement will apply to
the shares of capital stock held by such Shareholder immediately following the
effectiveness of the events described in clause (i) or such Shareholder becoming
the beneficial owner thereof, as described in clause (ii), as though they were
Shares of such Shareholder hereunder.
(b) Shareholder hereby agrees, from the date hereof through the
Effective Time (or the Termination Date if the Merger Agreement is terminated in
accordance with its terms), to promptly notify the Company and Parent of the
number of any new shares of Company Common Stock or other securities of the
Company acquired by Shareholder after the date hereof.
4.4 Acquisition Proposals.
(a) Except to the extent that the Company and its Board of Directors
are permitted by Section 4.2 of the Merger Agreement, from the date hereof
through the Termination Date, none of Shareholder, any of its Subsidiaries or
any of the officers or directors of Shareholder or any of its Subsidiaries
shall, and Shareholder shall cause its and its Subsidiaries' employees, agents
and Representatives retained by it or any of its Subsidiaries not to, directly
or indirectly, initiate, solicit or knowingly encourage or facilitate any
inquiries or the making of any Acquisition Proposal.
(b) Except to the extent that the Company and its Board of Directors
are permitted by Section 4.2 of the Merger Agreement, from the date hereof
through the Termination
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Date, none of Shareholder, any of its Subsidiaries or any of the officers or
directors of Shareholder or any of its Subsidiaries shall, and Shareholder shall
cause its and its Subsidiaries' employees, agents and Representatives not to,
directly or indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any Person
relating to an Acquisition Proposal, or otherwise knowingly encourage or
facilitate any effort or attempt to make or implement an Acquisition Proposal.
(c) Shareholder will immediately cease and cause to be terminated
any existing activities, discussions or negotiations between Shareholder and any
Person conducted heretofore with respect to any Acquisition Proposal.
Shareholder agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence of Section 4.4(a) of
the obligations undertaken in this Section 4.4.
5. Termination.
(a) Upon the Termination Date, this Agreement will terminate and be
of no further force and effect, except for Sections 2, 5(a), 5(b), 5(c) and 10
hereof, which shall survive the Termination Date. At the Effective Time,
Sections 4, 5(b) and 5(c) hereof will terminate and be of no further force or
effect. Except as set forth in the preceding two sentences, this Agreement shall
not terminate except by mutual written agreement of Parent and Shareholder. The
termination of this Agreement or any provisions contained in this Agreement
shall not release any party from any liability for any breach of this Agreement
that occurred prior to such termination.
(b) If Shareholder (i) does not vote the Shares in favor of adoption
of the Merger Agreement or (ii) breaches its obligations under Section 4 hereof
and (A) either the Company or Parent terminates the Merger Agreement pursuant to
Section 7.1(b)(ii) of the Merger Agreement or (B) the Merger Agreement is
terminated pursuant to Section 7.1(a), 7.1(b)(i) or 7.1(c) of the Merger
Agreement at a time when the Merger Agreement is terminable by Parent pursuant
to Section 7.1(b)(ii) of the Merger Agreement, Shareholder shall pay to Parent,
by wire transfer of immediately available funds, a fee in the sum of $50.0
million (the "Termination Fee") within one business day after the date of such
termination; provided, however, that in no event will Parent be entitled to
receive the Termination Fee from Shareholder pursuant to this Section 5(b) if it
has received the termination fee from the Company pursuant to Section 7.5(b) of
the Merger Agreement.
(c) Shareholder and Parent acknowledge that the agreement contained
in Section 5(b) is an integral part of the transaction contemplated in this
Agreement and the Merger Agreement, and that, without this agreement, Parent
would not enter into this Agreement or the Merger Agreement; accordingly, if
Shareholder fails to promptly pay the Termination Fee, and, in order to obtain
such payment, Parent commences a suit that results in a judgment against
Shareholder for any of the Termination Fee, Shareholder shall pay to Parent its
costs and expenses (including attorneys' fees) in connection with such suit,
together with interest on the amount of the Termination Fee at the prime rate of
Parent in effect on the date such payment was required to be made.
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6. Noncompetition and Nonsolicitation Obligations.
6.1 Acknowledgments by Shareholder. Shareholder acknowledges that
(a) the Business prior to the Effective Time is continental in scope; (b) the
products and services related to such Business are marketed throughout North
America; (c) the Company's Business prior to the Effective Time competes with
other businesses that are or could be located in any part of North America; (d)
Parent has required that Shareholder make the covenants set forth in this
Section 6 as a condition to and inducement for Parent entering into this
Agreement and the Merger Agreement; (e) the provisions of this Section 6 are
reasonable and necessary to protect and preserve Parent's and the Company's
interests in and operation of the Business from and after the Effective Time;
(f) Parent and the Company would be irreparably damaged if Shareholder were to
breach the covenants set forth in this Section 6; and (g) the covenant in
Section 6.2(a) is reasonable with respect to its duration, geographical area and
scope. As used in this Section 6, "Territory" means (i) the United States and
(ii) North America.
6.2 Noncompetition and Nonsolicitation. For a period of three years
after the Effective Time (the "Term"):
(a) Shareholder will not, directly or indirectly (including through
a downstream Affiliate), engage or invest in, own (or have more than a 5%
ownership interest in), manage, operate, control or participate in the
management, operation, control of, any Person engaged in the Business anywhere
within the Territory (a "Competing Activity"); provided, however, that a
Competing Activity shall in no case include (i) the performance by Shareholder
of its obligations under the Commercial Agreements, (ii) the performance by
Shareholder of its obligations related to retaining liability for the UAL
Agreement, (iii) subject to Shareholder's obligations under the Commercial
Agreements, Shareholder's or any of its Affiliates performing any agreement with
a third party requiring Shareholder or such Affiliate to refer business to such
third party that may compete with the Business or (iv) membership, participation
(including as a director, officer, committee or task force member or otherwise)
or an ownership interest in any debit card, ATM card, or credit card network
(the permitted activities set forth in clauses (i) and (ii) hereinafter being
referred to as the "Commercial Activities" and the permitted activities set
forth in clauses (i) through (iv) hereinafter being referred to as the
"Permitted Activities");
(b) Other than with respect to the Permitted Activities, Shareholder
will not, directly or indirectly (including through a downstream Affiliate),
induce or attempt to induce any customer, supplier, licensee or other Person to
cease doing business with the Company or any of Company Subsidiary or in any way
interfere with the relationship between any such customer, supplier, licensee or
other business entity and the Company or any Company Subsidiary; and
(c) Other than with respect to the Permitted Activities, Shareholder
will not, directly or indirectly (including through a downstream Affiliate),
solicit the business of any Person known to Shareholder to be a customer of the
Company or any Company Subsidiary, whether or not Shareholder or any such
Affiliate had personal contact with such Person, with respect to products or
activities that compete in whole or in part with the Business.
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In the event of a breach by Shareholder or any Affiliate thereof of
any covenant set forth in this Section 6, the term of such covenant will be
extended by the period of the duration of such breach.
6.3 Exceptions.
(a) If Shareholder complies with Section 6.4 hereof, its acquisition
of a Person engaged in whole or in part (whether directly or through another
Person) in the Business (such Person's portion of the Business, including, with
respect to any interest of such Person in a joint venture, such Person's
interest in the joint venture, the "Third Party Processing Business") will not
constitute a breach of Shareholder's obligations under Section 6.2.
(b) Shareholder's acquisition by (including by merger) a Person
engaged in whole or in part in the Business will not constitute a breach of
Shareholder's obligations under Section 6.2 unless such acquisition of
Shareholder by such Person is structured as an acquisition of Shareholder for
the purpose of circumventing the restrictions contained in Section 6.2, in which
case the Third Party Processing Business of such acquiring Person shall be
subject to the provisions of Section 6.4 as if Shareholder or one of its
Affiliates were the acquiring party.
6.4 Parent Rights With Respect to Third Party Processing Businesses.
(a) If, during the Term, Shareholder (directly or through a
downstream Affiliate) enters into a contract to acquire, and consummates its
acquisition of (whether during the Term or thereafter), a Third Party Processing
Business in the United States or any interest in any such business, except if
pursuant to Section 6.4(b) Shareholder decides not to sell such business,
Shareholder will promptly deliver to Parent (i) notice of that acquisition
accompanied by a description of the acquired business and financial information
in sufficient detail to permit Parent or a third party to determine whether
Parent desires to purchase such Third Party Processing Business and (ii) if the
Third Party Processing Business is subject to any operating or ownership
agreements, such as a joint venture or shareholders agreement, complete copies
of these documents (under standard confidentiality terms).
(b) If, during the Term, Shareholder (directly or through a
downstream Affiliate) enters into a contract to acquire, and consummates its
acquisition of (whether during the Term or thereafter), a Third Party Processing
Business that has a market share less than 5% of the Business in the United
States (based on purchase volume in U.S. dollars) and Shareholder determines to
dispose of such Third Party Processing Business, Parent shall have a right to
purchase such Third Party Processing Business under the terms described in the
following sentences in this subsection (b); provided, however, that if and when
Shareholder acquires multiple Third Party Processing Businesses that together
aggregate a market share equal to or greater than 5% of the Business in the
United States (based on purchase volume in U.S. dollars) such acquired
businesses shall be treated as the acquisition of a single Third Party
Processing Business as set forth in Section 6.4(c) hereof. Within 30 days of the
closing of Shareholder's acquisition, Shareholder shall provide to Parent the
information described in Section 6.4(a). Within 30 days after receipt of the
last of such information, Parent shall notify Shareholder in writing whether or
not it desires to purchase such Third Party Processing Business (the "Notice").
If it elects to purchase such business, (i) for a period no longer than 15 days,
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Shareholder and Parent shall attempt in good faith to agree upon an independent
valuation expert experienced in the field of valuation of merchant processing
businesses or (ii) if agreement has not been reached within such period, Parent
and Shareholder shall each select an independent valuation expert experienced in
the field of valuation of merchant processing businesses and those two
individuals shall select a third such expert (in either the case of (i) or (ii),
the "Valuation Expert"). Shareholder shall provide or cause to be provided to
the Valuation Expert information and access to personnel regarding the Third
Party Processing Business (under standard confidentiality terms) reasonably
sufficient for it to render its valuation. Within 30 days of its appointment,
using customary valuation techniques, the Valuation Expert shall render an
opinion as to the fair market value of the Third Party Processing Business,
which shall be binding (the "Fair Market Value"). If Parent has elected to
purchase the Third Party Processing Business and has caused the parties to
initiate the valuation process described above, and after such valuation
process, Parent determines that it does not want to pursue such purchase, it
shall reimburse Shareholder for its expenses related to such valuation process.
If Parent determines to pursue such purchase, Parent shall then be obligated to
purchase the Third Party Processing Business for Fair Market Value and on other
terms mutually agreed by Shareholder and Parent negotiating in good faith and
using all reasonable efforts to close such transaction within 12 months of the
date of Shareholder's acquisition of such Third Party Processing Business. If
Parent elects not to purchase the Third Party Processing Business, Shareholder
may retain such Third Party Processing Business.
(c) If, during the Term, Shareholder (directly or through a
downstream Affiliate) enters into a contract to acquire, and consummates its
acquisition of (whether during the Term or thereafter), a Third Party Processing
Business that has a market share equal to or greater than 5% of the Business in
the United States (based on purchase volume in U.S. dollars), Shareholder must
sell such Third Party Processing Business within 18 months of the closing of its
acquisition; provided, however, that if Parent elects not to purchase such Third
Party Processing Business, and Shareholder's acquisition of such Third Party
Processing Business closes after the Term, Shareholder may retain such Third
Party Processing Business. Parent shall have the right to purchase such Third
Party Processing Business under the terms described in the following sentences
in this subsection (c). Within 30 days of the closing of Shareholder's
acquisition, Shareholder shall provide to Parent the information described in
Section 6.4(a). Within 30 days after receipt of the last of such information,
Parent shall notify Shareholder in writing (i) that it desires to purchase the
applicable Third Party Processing Business or (ii) that it does not desire to
purchase such business. If Parent notifies Shareholder of its desire to purchase
such business, it must then either (x) commit to purchasing such business at a
Fair Market Value determined by a Valuation Expert selected in accordance with
the procedure set forth in Section 6.4(b) or (y) notify Shareholder to conduct
an auction process to sell the Third Party Processing Business. If Shareholder
initiates an auction process pursuant to the preceding sentence, Parent must be
permitted the opportunity to participate in such process with the same rights as
any other participant. If the purchase is to be based on Fair Market Value
determined by the Valuation Expert, Shareholder shall provide or cause to be
provided to the Valuation Expert information and access to personnel regarding
the Third Party Processing Business (under standard confidentiality terms)
reasonably sufficient for it to render its valuation. Within 30 days of its
appointment, using customary valuation techniques, the Valuation Expert shall
render an opinion as to the Fair Market Value. Parent shall then be obligated to
purchase the Third Party Processing Business for Fair Market Value and on other
terms mutually agreed by Shareholder
11
and Parent negotiating in good faith and using all reasonable efforts to close
such transaction within 12 months of the date of Shareholder's acquisition of
such Third Party Processing Business.
(d) If the acquired Third Party Processing Business represents less
than 100% ownership of the entity in which such Third Party Processing Business
is conducted and such entity is subject to option or similar agreement giving
Shareholder the right to dissolve, withdraw from or otherwise acquire a portion
of the Business, the Parent shall have the right to purchase that acquired
interest using the valuation method set forth in Section 6.4(b).
(e) Notwithstanding the foregoing provisions in this Section 6.4,
with respect to any Third Party Processing Business that consists of
Shareholder's or its Affiliate's interest in a joint venture, Shareholder or its
Affiliate, as applicable, need only exercise all reasonable efforts to carry out
the intent of this Section 6.4 and shall not be required to breach any written
agreement governing that joint venture.
6.5 Restrictions on Soliciting Employees. During the Term,
Shareholder shall not, and shall cause each of its directors, officers,
employees, agents, assigns, Affiliates and Representatives (collectively, the
"Related Parties") not to, without the prior written approval of the Parent,
directly or indirectly, solicit, hire, employ, or intentionally encourage,
entice or induce, or assist any other Person in so doing, as an employee or
independent contractor, any individual who is an employee of the Company or any
Company Subsidiary as of the date hereof (i) with a base salary in excess of
$100,000, (ii) with a title of vice president or above or (iii) who is employed
in a sales position (exclusive of employees who serve in principally
administrative support position); provided, however, that the foregoing
prohibitions shall not be deemed to be violated by any general solicitation of
employment not specifically directed at such employees, including advertising of
open positions, participating in job fairs or other generalized forms of
solicitation or response to unsolicited inquiries about employment opportunities
or if any such person contacts Shareholder of his or her own initiative without
any direct or indirect solicitation by, or encouragement from, Shareholder.
6.6 Remedies. If Shareholder breaches the covenants set forth in
this Section 6, Parent and the Company will be entitled to the following
remedies: (a) other than with respect to Section 6.4, damages from Shareholder
and (b) injunctive or other equitable relief (other than the right to offset) to
restrain any breach or threatened breach or otherwise to specifically enforce
the provisions of this Section 6, it being agreed that money damages alone would
be inadequate to compensate the Company and Parent and would be an inadequate
remedy for such breach. The rights and remedies of the Company and Parent in
this Section 6 are cumulative and not alternative, and are in addition to any
other remedies the Company and Parent has under this Agreement or by law.
6.7 Severability. Whenever possible, each provision and term of this
Section 6 will be interpreted in a manner to be effective and valid, but if any
provision or term of this Section 6 is held to be prohibited or invalid, then
such provision or term will be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Section 6. If any of the covenants set forth in this Section 6
are held to be unreasonable,
12
arbitrary or against public policy, such covenants will be considered divisible
with respect to scope, time and geographic area, and in such lesser scope, time
and geographic area, will be effective, binding and enforceable against
Shareholder to the greatest extent permissible.
7. Nondisclosure of Proprietary Information.
(a) Other than to the extent necessary with respect to the
Commercial Activities, at any time after the Effective Time, Shareholder shall
not, and shall cause its Related Parties not to, at any time, except as required
by law or the disclosure requirements of any applicable stock exchange or the
SEC, make use of in competition with the Parent, the Company or any of their
respective Affiliates, divulge or otherwise disclose, directly or indirectly,
any trade secret, proprietary data, pricing or other confidential information
(including, but not limited to, any customer list, record or financial
information) concerning the Business or the Company's customers that Shareholder
or such Related Party may have learned as an owner, shareholder, employee,
officer or director of the Company (collectively, the "Company Proprietary
Information"). Notwithstanding the foregoing, Company Proprietary Information
shall not include (i) any information that has become generally available in the
public domain other than through a disclosure by Shareholder or a Related Party
of Shareholder that is prohibited by this Section 7(a) or (ii) is shown to have
been received by Shareholder or a Related Party of Shareholder from a Person
that is not (A) a Related Party of the Company or the Parent or (B) under a
restriction against divulging Company Proprietary Information.
(b) Notwithstanding the foregoing Section 7(a), in the event that
Shareholder or any of its Related Parties is requested or required (under
applicable laws or by oral questions, interrogatories, requests for information
or documents by any Governmental Entity or other Person in legal proceedings,
subpoenas, civil investigative demands or other similar process) to disclose any
Company Proprietary Information, such Shareholder or Related Party so requested
or required shall provide the Company with prompt written notice of any such
request or requirement so that the Company may object to production, seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or other
remedy or the receipt of a waiver of the Company, Shareholder or a Related Party
is nonetheless legally compelled to disclose such Company Proprietary
Information, Shareholder or such Related Party may, without liability hereunder,
disclose only that portion of the Company Proprietary Information that is
legally required to be disclosed.
8. Tax Matters.
8.1 Tax Periods Ending Before the Closing Date.
(a) Shareholder shall (i) prepare and file all federal and state
income and franchise Tax Returns for the Company or any Company Subsidiary with
respect to all periods ending before the Closing Date that are due before the
Closing Date, (ii) prepare and file or cause the Company or any Company
Subsidiary to prepare and file all other Tax Returns, reports and forms for the
Company or any Company Subsidiary that are due before the Closing Date and (iii)
pay all Taxes with respect to clause (i) shown on such Tax Returns and at the
time of such filing shall pay or shall cause the Company and any Company
Subsidiary, as applicable, to pay all
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Taxes with respect to clause (ii) shown on such returns. All such Tax Returns
shall be prepared in a manner consistent with prior practices for the Company or
any Company Subsidiary.
(b) Parent shall prepare and file, or cause the Company or a Company
Subsidiary to prepare and file, all other Tax Returns due on or after the
Closing Date (other than income Tax Returns with respect to periods for which a
consolidated, unitary or combined income Tax Return of Shareholder will include
the operation of the Company or any Company Subsidiary) with respect to taxable
periods ending before the Closing Date in a manner consistent with prior
practices for the Company or any Company Subsidiary, except for changes
necessary to comply with changes in, or application of, Tax law. Notwithstanding
preparation of such Tax Returns, Shareholder shall be solely responsible for any
Taxes incurred before the Closing Date in excess of any Taxes properly accrued
on the books of the Company and any Company Subsidiary as of the Closing Date,
excluding penalties solely attributable to the negligence of or the late filing
of such Tax Returns by Parent or the Company or any Company Subsidiary after the
Closing Date and net of any Tax overaccruals.
(c) The filing party shall submit any such federal or state income
or franchise Tax Returns to the reviewing party a reasonable number of days
before the due date thereof (including any extensions that have been properly
filed and copied to the reviewing party). The filing party shall submit all
other Tax Returns to the reviewing party a reasonable number of days before the
due date thereof (including any extensions that have been properly filed and
copied to the other) to allow for reasonable review and comment. The reviewing
party shall have the right to review and comment and consent to the form and
substance of such Tax Returns (which consent may not be unreasonably withheld).
Upon agreement with respect to the form and substance of such Tax Return, the
filing party shall cause such Tax Return to be filed. If the filing party does
not prepare and submit such Tax Return within the period set forth herein, the
reviewing party may prepare and file (or cause to be prepared and filed) such
Tax Return in a manner consistent with prior practices for the Company or any
Company Subsidiary.
8.2 Tax Periods Beginning Before and Ending After the Closing Date.
(a) Parent shall prepare or cause to be prepared and file or cause
to be filed any Tax Returns for the Company and any Company Subsidiary for Tax
periods beginning before and ending after the Closing Date in a manner
consistent with prior practices for the Company and any Company Subsidiary,
except for changes necessary to comply with changes in, or application of, Tax
law. Notwithstanding preparation of such Tax Returns, Shareholder shall be
solely responsible for any Taxes incurred before the Closing Date in excess of
any Taxes properly accrued on the books of the Company and any Company
Subsidiary as of the Closing Date, excluding penalties solely attributable to
the negligence of or the late filing of such Tax Returns by Parent or the
Company or any Company Subsidiary after the Closing Date and net of any Tax
overaccruals.
(b) For purposes of this Section 8.2, the portion of Taxes incurred
before the Closing Date shall be allocated (i) based on an interim closing of
the books as of the Closing Date with respect to Taxes determined on the basis
of income and (ii) on a per diem basis with respect to all other Taxes.
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(c) Parent shall submit all Tax Returns to Shareholder a reasonable
number of days before the due date thereof (including any extensions that have
been properly filed and copied to the other) to allow for reasonable review and
comment. Shareholder shall have the right to review and comment and consent to
the form and substance of any such Tax Return prepared by Parent (which consent
may not be unreasonably withheld). Upon agreement with respect to the form and
substance of such Tax Return, Parent shall cause such Tax Return to be filed. If
Parent does not prepare and submit such Tax Return within the period set forth
herein, Shareholder may prepare and file (or cause to be prepared and filed)
such Tax Return in a manner consistent with prior practices for the Company or
any Company Subsidiary, as the case may be.
8.3 Tax Periods Beginning On or After the Closing Date. Parent shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Company and any Company Subsidiary for Tax periods beginning on or after
the Closing Date and shall be solely responsible for any Taxes incurred on or
after the Closing Date.
8.4 Cooperation on Tax and Other Matters.
(a) (i) Shareholder shall have the right to elect to control any
audit or examination by any taxing authority, file any amended return, contest,
resolve and defend against any assessment, notice of deficiency or other
adjustment or proposed adjustment relating or with respect to any federal or
state income Taxes of the Company and any Company Subsidiary for all Tax periods
ending before the Closing Date and (ii) Parent shall have the right to elect to
control any audit or examination by any taxing authority, initiate any claim for
refund, file any amended return, contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed adjustment
relating or with respect to any Taxes, other than those described in Section
8.4(a)(i), of the Company and any Company Subsidiary for all Tax periods;
provided, however, that each party shall promptly notify the other of any audit,
proceeding or other event described above in clause (i) or (ii) (each, an
"Event"), and the parties shall consult with each other with respect to the
resolution of any issue relating to Taxes arising as a result of or in
connection with each Event and shall not, without prior consent of the other
party, finally settle, compromise or resolve any matter related to such Event if
such final settlement, compromise or resolution would result in liability to the
other party. Shareholder shall not settle any audit or examination in a manner
that would adversely effect the Company or any Company Subsidiary after the
Closing Date without the prior written consent of Parent, which consent shall
not be unreasonably withheld. Parent shall not settle any audit or examination
in a manner that would adversely effect Shareholder or its Affiliates without
the prior written consent of Shareholder, which consent shall not be
unreasonably withheld. To the extent a party controls any Event as provided in
this Section 8.4(a), such party shall pay the costs and expenses relating
thereto.
(b) Shareholder shall have the right to control an Event that
relates only to its Taxes for Tax periods ending before the Closing Date. If
such Event and the resolution thereof may involve, or have any effect on, the
Taxes or liability of the Company or any Company Subsidiary or Parent after the
Effective Time, Shareholder shall promptly notify Parent of such Event, and
Shareholder shall consult with Parent with respect to the resolution of any
issue relating to Taxes arising as a result of or in connection with such Event
and shall not, without the
15
prior consent of Parent, finally settle, compromise or resolve any matter
related to such Event if such final settlement, compromise or resolution would
result in liability to Parent, the Company or any Company Subsidiary. To the
extent Shareholder controls any Event as provided in this Section 8.4(b),
Shareholder shall pay the costs and expenses relating thereto, other than the
costs and expenses related to Parent's review and consultation.
(c) The parties shall cooperate fully, as and to the extent
reasonably requested by any other party, in connection with the filing of Tax
Returns pursuant to this Section 8 and any audit, litigation, examination or
other judicial or administrative proceeding with respect to Taxes or preparation
of other financial or accounting reports or other documents. Such cooperation
shall include the retention and (upon the other party's request and sole
expense) the provision of records and information that are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. The parties further agree, upon request,
that they will use commercially reasonable efforts to obtain any certificate or
other document from any Governmental Entity or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including with respect to the transactions contemplated hereby). Shareholder
may not make any Tax election regarding the Company or any Company Subsidiary
from the date hereof through the Closing Date without the prior written consent
of Parent, which consent may be withheld in its sole discretion. Parent may not
make any Tax election regarding the Company or any Company Subsidiary after the
Closing Date that could have an adverse impact on Shareholder or any of its
Affiliates for a Tax period ending on or prior to the Closing Date.
(d) Parent and Shareholder will provide reasonable assistance and
access to records as reasonably requested by each other, including the testimony
of employees, officers, experts and other witnesses within its control, in the
defense of any claim, lawsuit, Tax examination or other proceeding relating to
the Company or any Company Subsidiary. The requesting party shall reimburse all
direct expenses incurred by the other party in providing such assistance.
(e) Post-Closing Elections. At Shareholder's request, Parent shall
cause the Company or any Company Subsidiary to make or join with Shareholder in
making any election if the making of such election does not have an adverse
impact on Parent (or the Company or any Company Subsidiary) for any Tax period
ending after the Closing Date.
(f) Carrybacks. Shareholder shall pay to Parent any Tax refund (or
reduction in Tax liability) resulting from a carryback of a Tax attribute
arising in a taxable period beginning after the Closing Date of the Company or
any Company Subsidiary into Shareholder's consolidated Tax Return, when such
refund (or reduction) is realized by Shareholder or any Affiliate. Shareholder
shall be entitled to retain any Tax refund (or reduction in Tax liability)
resulting from a carryback of a Tax attribute arising in a taxable period ending
on or before or including the Closing Date. At Parent's request, Shareholder
will cooperate with the Company and any Company Subsidiary in obtaining a refund
(or reduction), including through the filing of amended Tax Returns or refund
claims to the extent relating to a Tax period ending after the Closing Date,
provided that the costs associated with any such filing or cooperation shall be
borne solely by Parent. Parent agrees to indemnify Shareholder for any Taxes
resulting from the
16
disallowance of any post-acquisition Tax attribute on audit or otherwise.
Notwithstanding anything in this Section 8.4(f) to the contrary, in no event
will Shareholder be required to cooperate with the Company and any Company
Subsidiary in obtaining a refund (or reduction) for a Tax period ending after
the Closing Date if such action could result in an adverse Tax or financial
impact on Shareholder or any of its Affiliates.
(g) Carryovers. Shareholder shall be entitled to elect to retain any
net operating loss carryovers or capital loss carryovers of the Company or any
Company Subsidiary relating to a period ending on or prior to the Closing Date.
(h) Tax-Sharing Agreement. Any Tax-sharing agreement between
Shareholder and the Company or any Company Subsidiary will be terminated as of
the Closing Date and shall have no further effect for any taxable year (whether
the current year, a future year, or a past year).
9. Indemnification.
9.1 UAL Liability. Parent and Shareholder agree that all liabilities
arising from the relationships between the Company and the Company Subsidiaries,
on the one hand, and United Airlines, Inc. and its Affiliates, on the other
hand, whether arising from the UAL Agreement or any other agreement or course of
conduct, shall be exclusively the obligation and liability of Shareholder.
Accordingly, the parties shall take all steps appropriate to transfer to
Shareholder, all past, present and future liability for the UAL Agreement and
the Support Agreements as fully as if Shareholder had been the party contracting
to such agreements in place of the Company, and Shareholder shall indemnify the
Parent Group (as defined below) as provided in this Agreement. Notwithstanding
the generality of the foregoing:
(a) Shareholder shall pay in a timely fashion the entire cost of
performance and shall satisfy all other obligations (other than those paid by
NCBK under the Sponsorship Agreement) under the UAL Agreement and the Support
Agreements, including, without limitation, the following (collectively, the "UAL
Agreement Liability"):
(i) the Company's (or any Company Subsidiary's) past activities
under the UAL Agreement or any Support Agreement that result from a
breach of the UAL Agreement or any Support Agreement or that result
in a third party Claim;
(ii) any transactions processed under the UAL Agreement, the
Support Agreements or otherwise on behalf of UAL or any of its
Affiliates, or the credit or debit card charges incurred in
connection with those transactions, whether past, present or future,
that may result in any charge, chargeback, recapture, refund, fee,
tax, claim or other payment made upon the Company or any Company
Subsidiary;
(iii) the Company's (or any Company Subsidiary's) processing or
transmitting of electronic data for UAL pursuant to the UAL
Agreement or the Sponsorship Agreement whether prior to or after the
Effective Time (provided that in connection with future transactions
Parent shall cause the Company to follow the reasonable, good faith
directions of Shareholder in performing under such
17
contract) that may result in any charge, chargeback, recapture,
refund, fee, tax, claim or other payment made upon the Company or
any Company Subsidiary;
(iv) any guarantee between the Company (or any Company Subsidiary)
and MasterCard, VISA or any other Charge Card organization as well
as any contractual obligation or commitment or payment or
reimbursement obligation owing to MasterCard, VISA or any other
Charge Card organization arising from any transaction processed for
UAL or any guarantee of the payment of that transaction;
(v) any sponsor agreement, obligation or guarantee by the Company
or any Company Subsidiary in favor of NCBK;
(vi) any charge, chargeback, recapture, refund, fee, Tax, Claim or
other payment made upon, or payments by, the Company or any Company
Subsidiary as a result of the failure by UAL to pay any of such
amounts; and
(vii) the Company's (or any Company Subsidiary's) cost for
rendering, processing or subprocessing services on behalf of
Shareholder in connection with the UAL Agreement as provided in the
Sponsorship Agreement.
(b) Shareholder shall indemnify, defend, reimburse and hold harmless
the Parent and its Affiliates, and each officer, director and employee of the
Parent or of any of its Affiliates and their respective heirs, successors and
assigns (collectively, the "Parent Group"), from and against all Claims (as
defined in Section 9.4), as asserted against, resulting to, imposed upon or
incurred by any member of the Parent Group, directly or indirectly, arising
from:
(i) any litigation or other proceedings in bankruptcy initiated by
or on behalf of UAL or any creditor of, or trustee for, UAL;
(ii) by any third party resulting from the failure or omission by
the Company, prior to the Effective Time, to make or accurately
report or disclose the scope, nature or amount of its liability,
potential liability or risk exposure with respect to UAL as required
under applicable law; and
(iii) the UAL Agreement, Shareholder's (or any of its Affiliates')
relationship with UAL or any obligation of NCBK to the Company (or
any of its Affiliates) under the Sponsorship Agreement.
9.2 General Indemnity. Upon the terms and subject to the conditions
of this Section 9, Shareholder shall indemnify, defend, reimburse and hold
harmless the Parent Group from and against all Claims, as incurred, asserted
against, resulting to, imposed upon or incurred by any member of the Parent
Group, directly or indirectly, arising from:
(a) if, and to the extent that, Parent or its Affiliate has suffered
provable monetary damages, the breach or violation of Sections 6 or 7 of this
Agreement;
(b) the breach or violation of Sections 2.4, 2.5, 8 or 9.1 of this
Agreement;
18
(c) any and all Taxes of any (i) member of a Group (other than the
Company or any Company Subsidiary) of which the Company or any Company
Subsidiary (or any predecessor of any of the foregoing) is or was a member on or
prior to the Closing Date, including pursuant to Treasury Regulation Section
1.1502-6 or any analogous or similar state, local, or foreign law or regulation,
and (ii) Person (other than the Company or any Company Subsidiary) imposed on
the Company or any Company Subsidiary as a transferee or successor, by contract
or pursuant to any law, rule or regulation, which Taxes relate to an event or
transaction occurring before the Effective Time.
9.3 Purchase Price Indemnity. Shareholder shall reimburse Parent:
(a) in an amount equal to (i) (A) the Merger Consideration times (B)
the number of shares of Company Common Stock issued and outstanding at the
Effective Time, including restricted shares, in excess of (1) 53,344,125 plus
(2) the number of shares of Company Common Stock underlying any Company Options
listed in Section 3.1(c) of the Company Disclosure Letter exercised between the
date hereof and the Effective Time, if any, plus (ii) (A) the number of shares
of Company Common Stock underlying any Company Options not listed in Section
3.1(c) of the Company Disclosure Letter times (B) the Merger Consideration minus
the exercise price of such Company Options; and
(b) in an amount equal to (i) 0.83 times (ii) the amount by which
the Cash on the Company's balance sheet on September 30, 2004 is less than the
sum of (A) $322 million plus (B) the aggregate exercise price of all Company
Options exercised between the date hereof and September 30, 2004 (the sum of
clauses (A) and (B), the "Threshold Amount"); provided, however, that in no
event will the amount of reimbursement pursuant to this Section 9.3(b) exceed
(x) 0.83 times (y) (1) the Threshold Amount minus (2) $296 million.
9.4 Any member of the Parent Group claiming entitlement to
indemnification pursuant to this Section 9 is hereinafter sometimes referred to
as an "Indemnified Party". The term "Claim" means and includes any and all
liabilities, losses, damages, claims, costs and expenses, Taxes, interest,
awards, charges, assessments, litigation, proceeding, investigation, settlement,
judgment or judicial compromise (whether voluntary or involuntary), judgments
and penalties (including, without limitation, reasonable attorneys' and
consultants' fees and expenses) actually suffered or incurred by any Indemnitee
(including, without limitation, any action brought or otherwise initiated by any
of them), including any consequential, punitive, special or incidental damages
paid to any third party, but excluding any consequential, punitive, special or
incidental damages awarded to Parent or its Affiliates. For purposes of
determining the amount of a Claim from an underaccrual of income Taxes, such
amount shall be reduced by any Tax benefit (including any future Tax benefit)
derived by the Company or Shareholder in connection with that underaccrual. To
avoid duplication of payments hereunder, if any, whenever following receipt of
an indemnification payment, either party receives insurance proceeds or other
third-party payment with respect to the same Claim for which indemnification has
been paid, the amount of the indemnification payment duplicated will be refunded
to the party making payment.
9.5 Procedures.
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(a) An Indemnified Party shall give Shareholder written notice of
any matter that such Indemnified Party has determined has given or could give
rise to a right of indemnification under this Agreement within 20 days of such
determination, stating the indemnifiable amount, if known, and method of
computation thereof. The failure by any Indemnified Party so to notify
Shareholder shall not relieve Shareholder from any liability which it may have
to such Indemnified Party under this Section 9, except to the extent that
Shareholder demonstrates that it has been materially prejudiced by such failure
(except that Shareholder shall not be liable for any expense incurred during the
period, if any, from the date that is 20 days after such determination to the
date the Indemnified Party provides notice hereunder). If Shareholder does not
notify the Indemnified Party in writing within 20 days following its receipt of
such notice that Shareholder disputes its liability to the Indemnified Party
under this Section 9, such Claim specified by the Indemnified Party in such
notice shall be conclusively deemed a liability of Shareholder under this
Section 9 and Shareholder shall pay the amount of such liability to the
Indemnified Party on demand or, in the case of any notice in which the amount of
the Claim (or any portion thereof) is estimated, on such later date when the
amount of such Claim (or such portion thereof) becomes finally determined. If
Shareholder has timely disputed its liability with respect to such Claim, as
provided above, Shareholder and the Indemnified Party shall proceed in good
faith to negotiate a resolution of such dispute and, if not resolved through
negotiations and paid within 20 days, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction pursuant to the
terms hereof.
(b) Shareholder shall have the right to compromise or, if
appropriate, defend any Claim at its own cost and, except as provided in the
Shareholder Disclosure Letter delivered herewith, through counsel of its own
choosing. In the event Shareholder undertakes to compromise or defend any Claim,
it shall promptly (and in any event, no later than 20 days after receipt of the
applicable notice of the Claim from the Indemnified Party) notify the
Indemnified Party in writing of its intention to do so. The Indemnified Party
shall fully cooperate with Shareholder and its counsel in the defense or
compromise of such Claim (including by making available to Shareholder all
books, records and other documents and materials that are under the direct or
indirect control of the Indemnified Party and that are reasonably necessary or
desirable for the defense of such matter). After the assumption of the defense
by Shareholder, the Indemnified Party shall not be liable for any legal or other
expenses subsequently incurred by Shareholder in connection with such Claim,
including any costs or expenses associated with the compromise or resolution of
the Claim (unless Shareholder disputes its liability for such indemnification
Claim and a final, nonappealable court order or judgment determines that
Shareholder is not liable to indemnify the Indemnified Party), but the
Indemnified Party (unless the claim involves Taxes) may participate in such
defense at its own expense. No settlement of a Claim defended by Shareholder
shall be made without the prior written consent of the Indemnified Party, such
consent not to be unreasonably withheld. Shareholder shall not, except with the
prior written consent of the Indemnified Party, consent to the entry of a
judgment or settlement of a Claim that does not include as an unconditional term
thereof, the giving by the claimant and/or plaintiff to the Indemnified Party of
an unconditional release from all liability in respect of such Claim. If notice
is given to Shareholder of a Claim and Shareholder does not, within 20 days
after the Indemnified Party's notice is given, give notice to the Indemnified
Party of its election to assume the defense of such Claim, Shareholder will be
bound by any determination made in a proceeding with respect to such Claim or
any compromise or settlement effected by the Indemnified Party.
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(c) Notwithstanding the foregoing, if an Indemnified Party
determines in good faith that there is a reasonable probability that a
proceeding involving a Claim may adversely affect it or its Affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Party may, by notice to
Shareholder, assume the exclusive right to defend, compromise or settle such
proceeding; provided, that the Indemnified Party may not settle or compromise
any such claim or demand without the prior written consent of Shareholder, such
consent not to be unreasonably withheld.
9.6 Procedure for Calculating Cash at the Effective Time. Within 30
days after the earlier to occur of October 31, 2004 or the Closing Date, Parent
shall deliver to Shareholder its calculation (in a manner consistent with the
Company's past practice) of Cash at the Effective Time with supporting
documentation (the "Calculations"). If Shareholder disputes Parent's calculation
of Cash, Shareholder shall give Parent notice within 15 days of receipt of the
Calculations, (i) setting forth Shareholder's calculation of Cash and (ii)
specifying in reasonable detail Shareholder's basis for its disagreement with
Parent's Calculations. The failure by Shareholder to notify Parent of its
disagreement within such 15 calendar-day period will constitute Shareholder's
acceptance of Parent's computation of Cash. If Shareholder and Parent are unable
to resolve any disagreement between them within 10 calendar days after
Shareholder's giving the notice of disagreement, the items in dispute will be
referred for determination to a nationally recognized accounting firm
independent of Shareholder and Parent and mutually acceptable to Shareholder and
Parent (the "Accountants"). The Accountants will make a determination as to each
of the disputed items, which determination will be (w) in writing, (x) furnished
to each of Shareholder and Parent as promptly as practicable after the referral
of the disputed items to the Accountants but in any event no later than 15
calendar days after being retained, (y) made in accordance with this Agreement
and (z) conclusive and binding on Shareholder and Parent. The fees and expenses
of the Accountants in connection with the determination referred to in this
Section 9.5 will be borne equally by Shareholder and Parent.
10. Miscellaneous.
10.1 Further Assurances. The parties shall execute such further
instruments and take such further actions as may reasonably be necessary to
carry out the intent of this Agreement. Each party hereto shall cooperate with
the other party hereto, to the extent reasonably requested by such party, to
enforce rights and obligations herein provided.
10.2 Limitation. Shareholder will retain at all times the right to
vote the Shares, in Shareholder's sole discretion, on all matters, other than
those set forth in Section 4.1, which are at any time or from time to time
presented to the Company's shareholders generally.
10.3 Severability. If any term in or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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10.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
10.5 Extension; Waiver. Either Parent or Shareholder may (a) extend
the time for the performance of any of the obligations or other acts of the
other party, (b) waive any inaccuracies in the representations and warranties of
the other party contained in this Agreement, or (c) waive compliance by the
other party with any of the agreements contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver will be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise will not constitute a waiver of such rights.
10.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
together with the Shareholder Disclosure Letter delivered herewith (which shall
be incorporated herein be reference) constitutes the entire agreement, and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement and is not
intended to confer upon any Person other than the parties any rights or
remedies.
10.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of each other party. Any assignment in violation of this
Section 10.7 will be void and of no effect. Subject to the preceding two
sentences, this Agreement is binding upon, inures to the benefit of, and is
enforceable by, the parties and their respective successors and assigns.
10.8 Governing Law. This Agreement is to be governed by, and
construed in accordance with, the laws of the State of Ohio, regardless of the
laws that might otherwise govern under applicable principles of conflict of laws
thereof.
10.9 Jurisdiction. With respect to any matter that may be litigated
hereunder, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of the federal courts located in the State of Ohio in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any other
court. The parties waive their right to jury trial.
10.10 Notices. All notices, requests, claims, demands and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed) or sent by a nationally
recognized overnight courier service (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as is
specified by like notice):
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If to Parent:
Bank of America Corporation
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxx Mulliss & Wicker, PLLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
If to Shareholder:
National City Corporation
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxx Day
Xxxxx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
10.11 Specific Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. The parties accordingly agree that the parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any federal court
located in the State of Ohio, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.12 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
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10.13 Interpretation. When a reference is made in this Agreement to
an Article, Section or Exhibit, such reference is to an Article or Section of,
or an Exhibit to, this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and do not affect in
any way the meaning or interpretation of this Agreement. In the event an
ambiguity or question of intent or interpretation, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement. No provision of this Agreement will be
interpreted in favor of, or against any of the parties hereto by reason of the
extent to which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is inconsistent
with any prior draft hereof or thereof. Whenever the words "include," "includes"
or "including" are used in this Agreement, they will be deemed to be followed by
the words "without limitation."
10.14 Fees and Expenses. Except as provided in Section 5 hereof or
in the Shareholder Disclosure Letter delivered pursuant hereto, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such expenses.
10.15 Survival of Representations and Warranties. All
representations and warranties in this Agreement shall survive the Termination
Date.
[Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
as of the date first above written.
BANK OF AMERICA CORPORATION
By: /s/ Xxxx-Xxxxx X. Xxxxxxx
___________________________________________
Name: Xxxx-Xxxxx X. Xxxxxxx
Title: Senior Vice President
NATIONAL CITY CORPORATION
By: /s/ J. Xxxxxxx Xxxxxxx
___________________________________________
Name: J. Xxxxxxx Xxxxxxx
Title: Executive Vice President
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