EXHIBIT 10.27
AGREEMENT RESPECTING A LIMITED LIABILITY COMPANY
THIS AGREEMENT is made as of this 12th day of December 1997, by and among
KEYBANK NATIONAL ASSOCIATION, a national banking association ("KeyBank"), NOVA
CORPORATION, a corporation chartered under the laws of the State of Georgia
("NOVA Corp"), and NOVA INFORMATION SYSTEMS, INC., a wholly owned subsidiary of
NOVA Corp that is a corporation chartered under the laws of the State of Georgia
with its main office located in Atlanta, Georgia ("NOVA"). For purposes of this
Agreement, capitalized terms used herein, unless otherwise defined herein, shall
have the meaning ascribed to such terms in the Definitional Supplement attached
hereto as Exhibit A, which is incorporated herein by this reference.
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R E C I T A L S:
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WHEREAS, KeyBank seeks to form an alliance with a company providing Bank
Card Processing services to maximize efficiencies and create economies of scale;
WHEREAS, NOVA is a company engaged in the business of providing Bank Card
Processing services, including the business of providing Bank Card Processing
services to commercial establishments that accept Credit Card and Debit Card
products;
WHEREAS, KeyBank Sub and NOVA desire to become members of a limited
liability company to provide Bank Card Processing services for Merchants,
including New Merchants;
NOW, THEREFORE, in consideration of these premises and the mutual covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF NOVA
NOVA Corp and NOVA jointly and severally represent and warrant to KeyBank
as follows:
1.01 Each of NOVA Corp and NOVA is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia and has due
authority to conduct business in all states where it conducts business, except
where the failure to have such authority has not and will not have a Material
Adverse Effect.
1.02 The execution and delivery of this Agreement and the consummation of
the transactions herein contemplated do not conflict in any material respect
with, or constitute a material breach or Default under, the organizational
documents of NOVA Corp or NOVA or under the terms and conditions of any Contract
to which NOVA Corp or NOVA is a party.
1.03 The NOVA Corp Financial Statements fairly present the financial
condition of NOVA Corp and its subsidiaries as of their respective dates, and
the results of operations of NOVA Corp and its subsidiaries for the periods
indicated, in accordance with GAAP applied on a consistent basis throughout the
periods involved, subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments, none of which are reasonably likely
to be, either individually or in the aggregate, material in amount. Neither
NOVA Corp nor any of its subsidiaries has any Liabilities required to be
disclosed by NOVA Corp in financial statements prepared in accordance with GAAP
applied on a basis consistent throughout the periods involved other than (i)
Liabilities disclosed in the NOVA Corp Financial Statements, (ii) Liabilities
for which NOVA Corp has made adequate reserves as reflected in the NOVA Corp
Financial Statements, and (iii) Liabilities, ordinary in nature and amount,
incurred since September 30, 1997 in the ordinary course of business. To the
Knowledge of NOVA, there is no basis for a material write-down in the value of
the Assets shown in the NOVA Corp Financial Statements. Since September 30,
1997, there has been no Material Adverse Effect on NOVA Corp or any of its
subsidiaries.
1.04 Except where such failure to file has not and will not have a Material
Adverse Effect, since January 1, 1996, NOVA Corp has filed all forms, reports,
statements and other documents required to be filed by it with the Securities
and Exchange Commission. The NOVA Corp SEC Reports, as amended to date, (i) were
prepared in all material respects in accordance with the requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, as the case may be, and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
1.05 Neither NOVA Corp nor NOVA has received notice from any Regulatory
Authority indicating that such Regulatory Authority would oppose or not grant or
issue its Consent, if required, with respect to the transactions contemplated by
this Agreement and the other Operative Documents.
1.06 Except as set forth on Schedule 1.06(a), no action of, or filing
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with, or Consent of, any Regulatory Authority is required by NOVA Corp or NOVA
to authorize, or is otherwise required in connection with, the execution and
delivery by NOVA Corp or NOVA of this Agreement or the other Operative Documents
or, if required, the requisite filing has been made and all necessary Consents
have been obtained. Except as disclosed on Schedule 1.06(b), no filing with, or
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Consent of, any third party is required by virtue of the execution of this
Agreement or any other Operative Document by NOVA Corp or NOVA, or the
consummation of the transactions contemplated herein by NOVA Corp or NOVA, to
avoid the violation or breach of, or Default under, the terms of any Law,
Permit, Order or Contract to which NOVA Corp or NOVA or any of their
subsidiaries is a party or to which any of their respective Assets is subject.
Neither NOVA Corp nor NOVA has received notice from any third party indicating
that such third party would oppose or not grant or issue its Consent, if
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required, with respect to the transactions contemplated by this Agreement and
the other Operative Documents.
1.07 Except as set forth in Schedule 1.07, there is no Litigation relating
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to NOVA's Merchant Business (including Litigation conducted by or related to any
Payment Network) that is pending or, to the knowledge of NOVA, threatened
against NOVA Corp or NOVA that, if adversely determined, would have a Material
Adverse Effect on NOVA Corp or NOVA. Schedule 1.07 indicates which of such
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Litigation is being defended by an insurance carrier, and which of such
Litigation being so defended is being defended under a reservation of rights.
NOVA has made available to KeyBank correct and complete copies of all pleadings,
briefs and other documents filed in each pending Litigation listed in Schedule
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1.07, and the Orders, indictments and information, grand jury subpoenas and
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civil investigative demands, plea agreements, stipulations and awards listed in
Schedule 1.07.
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1.08 NOVA has the Permits relating to NOVA's Merchant Business that are
listed on Schedule 1.08. These Permits include all of the Permits necessary for
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the conduct by NOVA of its Merchant Business, except where the failure to have
the Permits does not and will not have a Material Adverse Effect.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF KEYBANK
KeyBank represents and warrants to NOVA Corp and NOVA as follows:
2.01 KeyBank is duly organized and validly existing as a national banking
association under the laws of the United States, and has due authority to
conduct the KeyBank Merchant Business in all states where it conducts the
KeyBank Merchant Business, except where the failure to have such authority has
not and will not have a Material Adverse Effect. POSSI is duly organized,
validly existing, and in good standing as a corporation under the laws of the
State of Ohio and has due authority to conduct its business in all states where
it conducts its business, except where the failure to have such authority has
not and will not have a Material Adverse Effect.
2.02 The execution and delivery of this Agreement and the consummation of
the transactions herein contemplated do not conflict in any material respect
with, or constitute a material breach or Default under, the organizational
documents of KeyBank or POSSI or under the terms and conditions of any Contract
to which KeyBank or POSSI is a party.
2.03 The terms of the Assigned Agent Bank Agreements, the Assigned Agent
Bank Merchant Agreements, the Assigned Third Party Agreements, and the Assigned
Merchant Agreements and the KeyBank Merchant Regulations comply in all material
respects with applicable Laws, Orders and Permits. With respect to the KeyBank
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Merchant Business generally, KeyBank and POSSI are not, and have not been, in
material violation of any applicable Law, Order or Permit.
2.04 KeyBank is a principal member in good standing of the Credit Card
Associations. KeyBank and the KeyBank Merchant Business complies in all material
respects with all applicable rules, regulations and certification requirements
of the Credit Card Associations, including but not limited to applicable "Year
2000" certification requirements. KeyBank has provided (or will provide prior
to Closing) NOVA with true, complete, and correct copies of all Contracts
between KeyBank and any of the Credit Card Associations.
2.05 KeyBank has not received notice from any Regulatory Authority
indicating that such Regulatory Authority would oppose or not grant or issue its
Consent, if required, with respect to the transactions contemplated by this
Agreement and the other Operative Documents.
2.06 Except as set forth on Schedule 2.06 and except with respect to the
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POSSI Assets, KeyBank is the owner of, and has good and valid title to, the
Contributed Assets, free and clear of all Liens. Without limiting the
generality of the foregoing, no Person other than KeyBank has any right, title,
or interest in the Contributed Assets except for (i) Merchants with respect to
Merchant Agreements to which they are a party, (ii) Agent Banks with respect to
the Agent Bank Agreement to which they are a party and with respect to any Agent
Bank Merchant Agreement to which they are a party, (iii) any third parties with
respect to the Assigned Third Party Agreements to which they are a party, (iv)
POSSI with respect to the POSSI Assets and (v) Merchants with respect to the
POSSI Equipment Leases to which they are a party. POSSI is the owner of, and
has good and valid title to, all of the POSSI Assets , other than POSSI Assets
disposed of by POSSI since September 30, 1997 in the ordinary course of
business. All of the POSSI Assets will be assigned to the Company pursuant to
the Assignment and Assumption Agreements.
2.07 The KeyBank Merchant Business Financial Statements fairly present the
financial condition of the KeyBank Merchant Business as of their respective
dates, and the results of its operations for the periods indicated, in
accordance with GAAP applied on a consistent basis throughout the periods
involved, subject, in the case of any interim financial statements, to normal
year-end adjustments, none of which are reasonably likely to be, either
individually or in the aggregate, material in amount, and, in the case of 1996
financial statements, for the realization of $1.56 million in gain from the sale
of assets to POSSI, which may not have been in accordance with GAAP. The
KeyBank Merchant Business has no Liabilities required to be disclosed by KeyBank
in financial statements prepared in accordance with GAAP applied on a basis
consistent throughout the periods involved other than (i) Liabilities disclosed
in the KeyBank Merchant Business Financial Statements, (ii) Liabilities for
which KeyBank has made adequate reserves as reflected in the KeyBank Merchant
Business Financial Statements, and (iii) Liabilities, ordinary in nature and
amount, incurred since September 30, 1997 in the ordinary course of business.
To the Knowledge of KeyBank, there is no basis for a material write-down in the
value of the Assets shown in the KeyBank Merchant Business Financial Statements.
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Since September 30, 1997, there has been no Material Adverse Effect on the
KeyBank Merchant Business.
2.08 The information relative to Merchants' (i) Credit Card sales volume
and (ii) Debit Card sales volume set forth on Schedule 2.08 is accurate and
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complete in all material respects as of the date hereof and for the periods
indicated.
2.09 Schedule 2.09 lists each of the Agent Bank Agreements now in effect,
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each of which shall be assigned to the Company pursuant to the Assignment and
Assumption Agreements. KeyBank has provided (or will provide prior to Closing)
NOVA with true, complete, and correct copies of all such Agent Bank Agreements.
KeyBank has also made available to NOVA lists of all Merchants, including Agent
Bank Merchants, and will provide NOVA with updated lists of such Merchants as of
the Closing Date. The Merchant Agreements with all such Merchants shall be
assigned to the Company pursuant to the Assignment and Assumption Agreements.
Except as set forth on Schedule 2.09, the Agent Bank Agreements and the Agent
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Bank Merchant Agreements are freely assignable by KeyBank without the consent of
the applicable Agent Bank. KeyBank has no reason to believe that the rate of
fraud, Credit Loss, bankruptcy or termination with respect to the Merchant
Agreements or the Agent Bank Agreements will exceed rates experienced in the
past (except as may result from changes in general economic conditions).
KeyBank has not received or given any notice of material Default or termination
under, and has not received an adverse comment from any Regulatory Authority in
respect of, any of the Merchant Agreements, Agent Bank Agreements, Agent Bank
Merchant Agreements, or Assigned Third Party Agreements.
2.10 All Merchant Agreements are substantially in the form of one of the
Merchant Agreements attached hereto as Exhibit 2.10 and are freely assignable by
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KeyBank without the Consent of the applicable Merchant or any other party.
KeyBank has obtained ACH Agreements with respect to each such Merchant, all of
which are freely assignable by KeyBank without the Consent of the applicable
Merchant or any other party.
2.11 Except for the Agent Bank Agreements, KeyBank is not party to any
agreements, written or oral, with any agent bank, other financial institution,
independent sales or service organization or any similar third party which
provides for any one or more of the following: (i) the deposit of Credit Card
or Debit Card transaction records; (ii) the settlement of Credit Card or Debit
Card transactions; (iii) the processing of Credit Card or Debit Card
transactions; or (iv) the referral of merchants to KeyBank. Schedule 2.11
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identifies each agreement with a trade or other similar association of merchants
to which KeyBank is a party and that relates to the KeyBank Merchant Business.
2.12 Except for disputes that have arisen in the ordinary course of
business and that are, to the Knowledge of KeyBank, ordinary in nature and
amount, KeyBank is not engaged in any dispute with any Merchant, Agent Bank, or
any party to any Assigned Third Party Agreement. KeyBank has no reason to
believe, and has received no written notice, that the consummation of the
transactions contemplated hereunder will have any material adverse effect on the
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business relationship of KeyBank with any Merchant, Agent Bank, or any party to
any Assigned Third Party Agreement.
2.13 Schedule 2.13 identifies the Merchants that have an annual processed
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Credit Card sales volume in excess of $5,000,000. To the Knowledge of KeyBank,
KeyBank has not received notice of the insolvency, receivership, bankruptcy or
similar event of any Merchant identified on Schedule 2.13.
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2.14 KeyBank is a member in good standing of the EFT Networks identified
on Schedule 2.14. KeyBank and the KeyBank Merchant Business are in full
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compliance in all material respects with the applicable rules and regulations of
the EFT Networks.
2.15 Except as set forth on Schedule 2.15(a), no action of, or filing
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with, or Consent of, any Regulatory Authority is required by KeyBank to
authorize, or is otherwise required in connection with, the execution and
delivery by KeyBank of this Agreement or the other Operative Documents or, if
required, the requisite filing has been made and all necessary Consents have
been obtained. Except as disclosed on Schedule 2.15(b), no filing with, or
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Consent of, any third party is required by virtue of the execution by KeyBank of
this Agreement or any other Operative Document, or the consummation by KeyBank
of the transactions contemplated herein, to avoid the violation or breach of, or
Default under, or the creation of a Lien on any of the Contributed Assets
pursuant to, the terms of any Law, Permit, Order or Contract to which any Key
Entity is a party or to which any of the Contributed Assets is subject.
2.16 Except as set forth on Schedule 2.16, there is no Litigation
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relating to the KeyBank Merchant Business (including Litigation conducted by or
related to any Payment Network) that is pending or, to the Knowledge of KeyBank,
threatened against KeyBank that, if adversely determined, would have a Material
Adverse Effect on the KeyBank Merchant Business. Schedule 2.16 indicates which
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of such Litigation is being defended by an insurance carrier, and which of such
Litigation being so defended is being defended under a reservation of rights.
KeyBank has made available to NOVA correct and complete copies of all pleadings,
briefs and other documents filed in each pending Litigation listed in Schedule
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2.16, and the Orders, indictments and information, grand jury subpoenas and
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civil investigative demands, plea agreements, stipulations and awards listed in
Schedule 2.16.
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2.17 KeyBank and POSSI have the Permits relating to the KeyBank Merchant
Business that are listed on Schedule 2.17. These Permits include all of the
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Permits necessary for the conduct by KeyBank and POSSI of the KeyBank Merchant
Business, except where the failure to have the Permits does not and will not
have a Material Adverse Effect.
2.18 Except for the Merchant Agreements and related ACH Agreements and
guaranties, the Agent Bank Agreements, the Assigned Third Party Agreements, the
Retained Third Party Agreements, and the agreements identified in Section 2.22
or in Schedule 2.22(a) or 2.22(b), KeyBank is not party to or bound by, and the
Contributed Assets do not include:
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(a) any Contract related to the KeyBank Merchant Business by which
Company, upon consummation of the KeyBank Contribution or otherwise, will
be bound and that entails the expenditure or receipt by KeyBank of more
than $100,000 in any year and cannot be canceled on notice of ninety (90)
days or less without liability for any penalty or premium;
(b) any Contract related to the KeyBank Merchant Business containing
covenants limiting the freedom of KeyBank or POSSI to compete in the
Merchant Business in any geographic area; or
(c) any Contract entitling any person or other entity to any profits,
revenues or cash flows of the KeyBank Merchant Business or requiring any
payments or other distributions based on such profits, revenues or cash
flows.
2.19 Except as set forth in Schedule 2.19 and where the failure to be
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valid and binding, in full force and effect and enforceable does not and will
not have a Material Adverse Effect, all of the Assigned Merchant Agreements,
Assigned Agent Bank Agreements, Assigned Agent Bank Merchant Agreements, and
Assigned Third Party Agreements are valid and binding, in full force and effect
and enforceable in accordance with their terms, subject to (i) applicable
bankruptcy, reorganization, insolvency, moratorium or other similar Laws from
time to time in effect affecting creditors' rights generally and (ii) equitable
principles of general application. Except for (i) the Assets to be made
available to the Company by KeyBank pursuant to the Services Agreement, (ii) the
Assets to be made available to the Company by NOVA pursuant to the Processing
Agreement, (iii) rights under the Retained Third Party Agreements, and (iv) all
software licenses other than the Workflow System that cannot be transferred
because of license restrictions, the Contributed Assets constitute substantially
all of the Assets necessary for the conduct of the KeyBank Merchant Business as
it is currently conducted.
2.20 Schedule 2.20(a) identifies all of the Retained Third Party
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Agreements. Schedule 2.20(b) identifies the Assigned Third Party Agreements,
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and KeyBank has provided to NOVA true, complete and correct copies of all such
Assigned Third Party Agreements.
2.21 Except for discussions with third parties and related activities in
connection with the possible disposition of all or a portion of the KeyBank
Merchant Business, including the transactions contemplated by this Agreement and
the other Operative Documents, since September 30, 1997, KeyBank has conducted
the KeyBank Merchant Business only in the ordinary course.
2.22 Schedule 2.22(a) sets forth the names, title and current
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compensation (broken down by category, e.g. salary and incentive compensation)
of all sales and marketing employees of the KeyBank Merchant Business. Except
as set forth on Schedule 2.22(b), no such employee is a party to any employment
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agreement with KeyBank. Except as set forth on Schedule 2.22(b), there are no
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labor contracts, collective bargaining agreements, letters of understanding or
other arrangements, formal or informal, with any union or labor organization
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covering any of the employees of the KeyBank Merchant Business, and no such
employees are represented by any union or labor organization.
2.23 With respect to the employees of the KeyBank Merchant Business, (i)
KeyBank complies in all material respects with all federal and state Laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and (ii) KeyBank is not and has not been engaged in
any unfair labor practice, and no unfair labor practice complaint against
KeyBank is pending before the National Labor Relations Board, with respect to
any such employees.
2.24 Schedule 2.24 identifies, and describes the functions of, all
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computer software and databases (including but not limited to those relating to
the "Workflow System") owned, licensed, leased, internally developed or
otherwise used in connection with the KeyBank Merchant Business.
2.25 The value of all slow moving or obsolete Equipment reflected in the
consolidated balance sheet of the KeyBank Merchant Business has been written
down to net realizable market value on a basis consistent with GAAP. The
quantities of point-of-sale terminals, printers and other point-of-sale Assets
utilized by Merchants that are included in the Contributed Assets are not
excessive and are reasonable in the present circumstances of the KeyBank
Merchant Business.
2.26 The POSSI Balance Sheet fairly presents the financial condition of
POSSI as of September 30, 1997 in accordance with GAAP applied on a consistent
basis, subject to normal year-end adjustments, none of which are reasonably
likely to be, either individually or in the aggregate, material in amount.
POSSI has no Liabilities required to be disclosed by POSSI in financial
statements prepared on that basis other than (i) Liabilities disclosed in the
POSSI Balance Sheet, (ii) Liabilities for which POSSI has made adequate reserves
as reflected in the POSSI Balance Sheet, and (iii) Liabilities, ordinary in
nature and amount, incurred since September 30, 1997 in the ordinary course of
business. To the Knowledge of POSSI, there is no basis for a material write-
down in the value of the Assets shown in the POSSI Balance Sheet. Since
September 30, 1997, there has been no Material Adverse Effect on POSSI.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ALL PARTIES
3.01 ALL PARTIES. NOVA Corp and NOVA jointly and severally represent
and warrant to KeyBank, and KeyBank represents and warrants to NOVA Corp and
NOVA, that each has the corporate power and authority to execute and deliver
this Agreement and to perform their obligations hereunder; such execution,
delivery and performance have been duly authorized by all necessary action on
their part; and this Agreement constitutes their valid and legally binding
obligation, enforceable against them in accordance with the terms hereof, except
as may be limited by (a) applicable bankruptcy, reorganization, insolvency,
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moratorium or other similar Laws from time to time in effect affecting
creditors' rights generally or (b) equitable principles of general application.
ARTICLE IV
FORMATION OF COMPANY AND RELATED MATTERS
4.01 FORMATION OF COMPANY. KeyBank has caused the Company to be formed by
filing a Certificate of Formation (in the form of Exhibit 4.01 attached hereto)
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with the Delaware Secretary of State. Upon the consummation of the KeyBank
Contribution, KeyBank, KeyBank Sub and POSSI shall be the sole Members of the
Company, with KeyBank and POSSI owning, in the aggregate, fifty-one percent
(51%) Membership Interests and KeyBank Sub owning a forty-nine percent (49%)
Membership Interest. In connection therewith:
(a) The name of the Company shall be "Key Merchant Services, LLC," or
such other name as KeyBank and NOVA may mutually agree upon in writing.
(b) The purposes of the Company shall be to provide transaction
processing and electronic payment services to Merchants. Unless approved
by a Supermajority Vote, however, the business of the Company will be
limited to the Merchant Business and Bank Card Processing relating thereto.
For as long as KeyBank maintains a national bank charter, the Company will
not engage in any activities that are not permitted activities for national
banking associations, or for entities in which national banking
associations are permitted to invest, as set forth in the Operating
Agreement.
(c) The initial principal place of business of the Company shall be in
Atlanta, Georgia.
(d) Prior to the Closing, KeyBank shall cause the Company to execute
the Company Supplement attached to this Agreement as Exhibit 4.01(d)
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evidencing the Company's contractual obligation to comply with the terms of
this Agreement and the other Operative Documents.
(e) KeyBank shall cause KeyBank Sub and POSSI to comply with and
perform all of its obligations under all of the Operative Documents. In
that regard, KeyBank shall enter into and deliver at the Closing the
Guaranty and Agreement to Comply attached hereto as Exhibit 4.01(e) (the
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"Guaranty and Agreement to Comply").
4.02 CONTRIBUTION/COMPANY INTEREST PURCHASE.
(a) Following the formation of the Company, but prior to the Closing,
KeyBank shall, and shall cause KeyBank Sub and POSSI to, assign, transfer,
convey and deliver to the Company, in contributions intended to qualify
under Section 721 of the Code, free and clear of all Liens, and the
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Company shall acquire from KeyBank, KeyBank Sub and POSSI (the "KeyBank
Contribution"), all right, title and interest of KeyBank, KeyBank Sub and
POSSI in the KeyBank Merchant Assets and, simultaneously therewith, KeyBank
and POSSI shall assign to the Company, and the Company shall assume and
agree thereafter to pay and discharge when due, the Assumed Liabilities
(the date of the KeyBank Contribution is referred to herein as the
"Contribution Date"). The Company shall not assume or become liable for
the payment of any Credit Losses, Chargebacks or other Liabilities of any
Key Entity, any Merchant or any Agent Bank, except for Assumed Liabilities.
Accordingly, at the Contribution Date, KeyBank, KeyBank Sub and POSSI shall
cause to be delivered to the Company the KeyBank Merchant Assets to be
contributed by them hereunder, together with such instruments of transfer
and other documentation as shall be necessary to transfer good and
marketable title thereof to the Company. The parties shall carry out the
assignment by KeyBank, KeyBank Sub and POSSI, and the assumption by the
Company, of the Assumed Liabilities by execution and delivery, at the
Contribution Date, of Assignment and Assumption Agreements substantially in
the form of Exhibit 4.02(a) attached hereto. Notwithstanding any
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provisions of this or any other agreement to the contrary (except Section
3.06(b) of the Operating Agreement), the Capital Accounts of KeyBank,
KeyBank Sub and POSSI, upon consummation of the KeyBank Contribution, shall
be as set forth on Schedule 4.02(a) attached hereto.
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(b) At the Closing, NOVA shall purchase from KeyBank and POSSI, and
KeyBank shall sell and cause POSSI to sell to NOVA, an aggregate fifty-one
percent (51%) Membership Interest in the Company (the "NOVA Company
Interest Purchase"). KeyBank Sub shall retain a forty-nine percent (49%)
Membership Interest in the Company. The purchase price to be paid by NOVA
in connection with the NOVA Company Interest Purchase (the "Purchase
Price") shall be determined in accordance with Section 4.03. The NOVA
Company Interest Purchase shall be evidenced by the Xxxx of Sale attached
hereto as Exhibit 4.02(b).
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(c) Immediately following the consummation of the NOVA Company Interest
Purchase, NOVA shall, and KeyBank shall cause KeyBank Sub to, execute and
deliver the Operating Agreement attached hereto as Exhibit 4.02(c).
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(d) As a condition to the NOVA Company Interest Purchase, KeyBank
covenants and agrees that, effective for the taxable year in which the
Closing occurs, it shall make a timely and proper election pursuant to Code
Section 197(f)(9)(B), and the proposed or final Treasury Regulations
thereunder, to, notwithstanding any other provision of the Code, recognize
gain on the NOVA Company Interest Purchase, and pay income tax on such
gain, at the highest rate of income tax applicable to KeyBank under the
Code (the "Recognition of Gain Election"). For the purposes of this
Section 4.02(d), the gross gain recognized by KeyBank in connection with
the NOVA Company Interest Purchase shall, notwithstanding anything to the
contrary in this Agreement or under the Code, be equal to $74,100,000 (the
"Gross Gain Amount").
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(e) Notwithstanding anything to the contrary herein or in any other
Operative Document, KeyBank shall, and shall cause KeyBank Sub and POSSI
to, fully cooperate in assisting NOVA, on behalf of the Company, to cause
the Company to make a proper 754 election (the "754 Election") under the
Code, and the Treasury Regulations thereunder, such that the 754 Election
shall be effective for the Company's first taxable year.
(f) Notwithstanding anything to the contrary herein, KeyBank shall make
an election pursuant to Code Section 453(d) (the "Election Out of
Installment Method") such that the general rule of Code Section 453(a) will
not apply to the NOVA Company Interest Purchase. KeyBank's Election Out of
Installment Method shall be made in the manner prescribed by the
appropriate forms on or before the due date (including extensions) to file
its return for the taxable year in which the Closing occurs. As a result
of the Election Out of Installment Method, KeyBank shall recognize gross
gain from the NOVA Company Interest Purchase for the taxable year in which
the Closing occurs in an amount equal to the Gross Gain Amount.
4.03 DETERMINATION OF PURCHASE PRICE. The Purchase Price shall be payable
over a period of three (3) years following the Closing in the manner set forth
in this Section 4.03, and shall be contingent upon the attainment of the
"Merchant Business Gross Revenue" (as defined below) thresholds set forth in
this Section 4.03.
(a) YEAR 1 PAYMENT. On the Closing Date, NOVA shall make a preliminary
payment to KeyBank in the amount of [*]. On or before December 31, 1998, an
estimate of the portion of the purchase price payable to KeyBank in the
first year (the "Estimated Year 1 Payment") shall be calculated based on an
estimate of the "Merchant Business Gross Revenue" (as defined below)
attributable to the Company's Merchant Business during the period starting
on the day immediately after the Closing Date and ending on December 31,
1998 ("Year 1"; the Merchant Business Gross Revenue attributable to Year 1*
being the "Year 0 Xxxxxxxx Xxxxxxxx Xxxxx Xxxxxxx"). Specifically, the
Estimated Year 1 Payment shall be an amount corresponding to the
appropriate level of estimated Year 1 Merchant Business Gross Revenue, as
listed in the table set forth below (the "Payment Table"):
[*] CONFIDENTIAL TREATMENT REQUESTED.
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XXXXXXXX XXXXXXXX XXXXX XXXXXXX PAYMENT TO KEYBANK
EARNED DURING SUBJECT YEAR*
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Equal to or exceeding $63,050,000 [*]
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Less than $63,050,000, but equal to or [*]
exceeding $53,350,000
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Less than $53,350,000, but equal to or [*]
exceeding $38,800,000
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Less than $38,800,000 [*]
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* For Year 1, the Merchant Business Gross Revenue will be annualized by
multiplying the actual amount of such revenue by a fraction, the numerator
of which is 365 and the denominator of which is the number of days during
the period starting on the day immediately after the Closing Date and
ending on December 31, 1998.
On or before December 31, 1998, (i) if the Estimated Year 1 Payment
exceeds [*], NOVA shall pay the amount of the excess to KeyBank
or (ii) if the Estimated Year 1 Payment is less than [*], KeyBank
shall reimburse NOVA for the amount of the shortfall. On or before January
31, 1999, the amount of the payment (the "Year 1 Payment") due to KeyBank
based on the actual Year 1 Merchant Business Gross Revenue will be
determined, and (x) if the Year 1 Payment exceeds the Estimated Year 1
Payment, NOVA shall pay the amount of the excess to KeyBank or (y) if the
Year 1 Payment is less than the Estimated Year 1 Payment, KeyBank shall
reimburse NOVA the amount of the shortfall.
(b) YEAR 2 PAYMENT. On January 1, 1999, NOVA shall make a preliminary
payment to KeyBank in the amount of [*]. On or before December 31, 1999, an
estimate of the portion of the purchase price payable to KeyBank with
respect to the second year (the "Estimated Year 2 Payment") shall be
calculated based on an estimate of the Merchant Business Gross Revenue
attributable to the Company's Merchant Business during the year ended
December 31, 1999 ("Year 2"; the Merchant Business Gross Revenue
attributable to Year 2 being the "Year 2 Merchant Business Gross Revenue").
Specifically, the Estimated Year 2 Payment shall be an amount corresponding
to the appropriate level of estimated Year 2 Merchant Business Gross
Revenue, as listed in the Payment Table. On or before December 31, 1999,
(i) if the Estimated Year 2 Payment exceeds [*], NOVA shall pay the amount
of the excess to KeyBank or (ii) if the Estimated Year 2 Payment is less
than [*], KeyBank shall reimburse NOVA for the amount of the shortfall. On
or before January 31, 2000, the amount of the payment (the "Year 2
Payment") due to KeyBank based on the actual Year 2 Merchant Business Gross
Revenue will be determined, and (x) if the Year 2 Payment exceeds the
Estimated Year 2 Payment, NOVA shall pay the amount of the
[*] CONFIDENTIAL TREATMENT REQUESTED.
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excess to KeyBank or (y) if the Year 2 Payment is less than the Estimated
Year 2 Payment, KeyBank shall reimburse NOVA the amount of the shortfall.
(c) YEAR 3 PAYMENT. On January 1, 2000, NOVA shall make a preliminary
payment to KeyBank in the amount of [*]. On or before December 31, 2000, an
estimate of the portion of the purchase price payable to KeyBank with
respect to the third year (the "Estimated Year 3 Payment") shall be
calculated based on an estimate of the Merchant Business Gross Revenue
attributable to the Company's Merchant Business during the year ended
December 31, 2000 ("Year 3"; the Merchant Business Gross Revenue
attributable to Year 3 being the "Year 3 Merchant Business Gross Revenue").
Specifically, the Estimated Year 3 Payment shall be an amount corresponding
to the appropriate level of estimated Year 3 Merchant Business Gross
Revenue, as listed in the Payment Table. On or before December 31, 2000,
(i) if the Estimated Year 3 Payment exceeds [*], NOVA shall pay the amount
of the excess to KeyBank or (ii) if the Estimated Year 3 Payment is less
than [*], KeyBank shall reimburse NOVA for the amount of the shortfall. On
or before January 31, 2001, the amount of the payment (the "Year 3
Payment") due to KeyBank based on the actual Year 3 Merchant Business Gross
Revenue will be determined, and (x) if the Year 3 Payment exceeds the
Estimated Year 3 Payment, NOVA shall pay the amount of the excess to
KeyBank or (y) if the Year 3 Payment is less than the Estimated Year 3
Payment, KeyBank shall reimburse NOVA the amount of the shortfall.
(d) CATCH-UP PAYMENT. In addition to the Year 1 Payment, Year 2
Payment, and Year 3 Payment, NOVA shall make an additional payment to
KeyBank (the "Catch-Up Payment"), to the extent that the sum of the Year 1
Payment, the Year 2 Payment, and the Year 3 Payment is less than the Total
Payment due to KeyBank, based on the sum of the Year 1 Merchant Business
Gross Revenue, Year 2 Merchant Business Gross Revenue, and Year 3 Merchant
Business Gross Revenue, as set forth in the following table:
MERCHANT BUSINESS GROSS REVENUE TOTAL PAYMENT DUE TO KEYBANK
EARNED DURING 3 YEARS
--------------------------------------------------------------------------------
Equal to or exceeding $189,150,000 [*]
--------------------------------------------------------------------------------
Less than $189,150,000, but equal to [*]
or exceeding $160,050,000
--------------------------------------------------------------------------------
Less than $160,050,000, but equal to [*]
or exceeding $116,400,000
--------------------------------------------------------------------------------
Less than $116,400,000 [*]
--------------------------------------------------------------------------------
Any such Catch-Up Payment will be due on or before January 31, 2001. If
the sum of the Year 1 Payment, the Year 2 Payment, and the Year 3 Payment
[*] CONFIDENTIAL TREATMENT REQUESTED.
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equals the total payment due to KeyBank, based on the sum of the Year 1
Merchant Business Gross Revenue, Year 2 Merchant Business Gross Revenue,
and Year 3 Merchant Business Gross Revenue, as set forth in the foregoing
table, no Catch-Up Payment will be due.
(e) "Merchant Business Gross Revenue" means, with respect to any given
period of time, all revenue sources of the Company's Merchant Business,
including but not limited to training fees, set up fees, terminal rental
and lease fees and the actual gross discount and Transaction fees generated
by the Company's Merchant Business during such period of time; except that,
in the event of any material decrease in discounts resulting from a
decrease in interchange fees mandated by the Credit Card Associations,
"Merchant Business Gross Revenue" will include, with respect to any given
period of time, the gross discounts that would have been generated by the
Company's Merchant Business during such period of time if there had not
been such decrease in the interchange fees and discounts.
(f) In no event will the aggregate Purchase Price exceed [*].
(g) Notwithstanding the foregoing, in the event that, pursuant to
Section 15.01 of the Operating Agreement, KeyBank Sub purchases NOVA's
Membership Interest or NOVA purchases KeyBank Sub's Membership Interest
before December 31, 2000, the Purchase Price will be determined in
accordance with Section 15.01(e) of the Operating Agreement.
4.04 TIME AND PLACE OF CLOSING. The Closing will take place at 10:00 a.m.
on the Closing Date and shall be effective as of the close of business on the
Closing Date. Subject to the terms and conditions of this Agreement, unless
otherwise mutually agreed upon in writing by an executive officer of each of
NOVA and KeyBank, the parties shall use their reasonable efforts to cause the
Closing Date to occur at the earliest practicable date in 1998, but not later
than the later of (i) January 31, 1998, or (ii) the third (3rd) Business Day
following the effective date (including expiration of any applicable waiting
period) of the last required Consent of any Regulatory Authority (having
authority over and approving or exempting the transactions contemplated by this
Agreement). The place of Closing shall be at the offices of KeyBank, 000 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxx 00000, or such other place as may mutually be agreed
upon by NOVA and KeyBank.
4.05 DEFAULT BY ANY PARTY HERETO AT THE CLOSING. If KeyBank (or KeyBank
Sub or POSSI) or NOVA shall fail or refuse to consummate either the KeyBank
Contribution or the NOVA Company Interest Purchase in accordance with Section
4.02 above, other than as may result from the exercise of a party's rights under
this Agreement, or if the parties shall fail or refuse to consummate any of the
other transactions described in this Agreement that are to be consummated prior
to or on the Closing Date, the non-defaulting party, at its option and without
prejudice to its rights against any defaulting party, may either (i)
unilaterally delay the Closing while taking appropriate remedial action, or (ii)
refuse to consummate such transactions and thereby terminate all of its
obligations hereunder without any Liability. The parties hereto acknowledge
that the NOVA Company Interest Purchase and the KeyBank Contribution, together
[*] CONFIDENTIAL TREATMENT REQUESTED.
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with the 754 Election, the Recognition of Gain Election and the Election Out of
Installment Method are unique and otherwise not available and agree that, in
addition to any other remedies, the non-defaulting party may invoke any
equitable remedies to enforce delivery or consummation of the NOVA Company
Interest Purchase, the KeyBank Contribution or the 754 Election, the Recognition
of Gain Election and the Election Out of Installment Method, as the case may be,
including, without limitation, any action or suit for specific performance.
ARTICLE V
CERTAIN KEYBANK RESPONSIBILITIES AND COMMITMENTS
5.01 REGULATORY APPROVALS.
(a) For KeyBank. KeyBank shall be responsible, at its own expense, for
-----------
obtaining all Consents of Regulatory Authorities required for it (or
KeyBank Sub or POSSI) to participate in a limited liability company of the
type described in this Agreement or as otherwise are necessary for KeyBank
(or KeyBank Sub or POSSI) to consummate the transactions hereby
contemplated, including but not limited to the Consents of Regulatory
Authorities identified on Schedule 2.15(a) attached hereto.
----------------
(b) For NOVA. KeyBank shall reasonably cooperate with NOVA and provide
--------
such information and/or assistance as KeyBank can reasonably provide to
assist NOVA in obtaining any and all required Consents of Regulatory
Authorities as provided under Section 6.01 hereof.
5.02 SERVICES AGREEMENT. At the Closing, KeyBank shall enter into a
Services Agreement with the Company in the form of Exhibit 5.02 attached hereto.
------------
ARTICLE VI
CERTAIN NOVA RESPONSIBILITIES AND COMMITMENTS
6.O1 REGULATORY APPROVAL(S).
(a) NOVA shall be responsible, at its own expense, for obtaining all
Consents of Regulatory Authorities required for it to participate in a
limited liability company of the type described in this Agreement or as
otherwise are necessary for NOVA to consummate the transactions hereby
contemplated, including but not limited to the Consents of Regulatory
Authorities identified on Schedule 1.06(a) attached hereto.
----------------
(b) NOVA shall reasonably cooperate with KeyBank and provide such
information and/or assistance as NOVA can reasonably provide to assist
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KeyBank in obtaining any and all required Consents of Regulatory
Authorities as provided under Section 5.01 hereof.
6.02 PROCESSING AGREEMENT. At the Closing, NOVA shall enter into a
Processing Agreement with the Company in the form of Exhibit 6.02 attached
------------
hereto.
ARTICLE VII
CONDUCT OF BUSINESS PENDING
CONSUMMATION; ADDITIONAL AGREEMENTS
7.01 COVENANTS OF NOVA CORP AND NOVA. From the date of this Agreement
until the earlier of the Closing or the termination of this Agreement, except as
expressly contemplated by this Agreement, neither NOVA Corp nor NOVA shall take
any action which would materially and adversely affect the ability of any party
to obtain any Consents required for the transactions contemplated hereby without
imposition of a Burdensome Condition, or which would materially and adversely
affect the ability of any party to perform its obligations under this Agreement.
7.02 COVENANTS OF KEYBANK. From the date of this Agreement until the
earlier of the Closing or the termination of this Agreement, except as expressly
contemplated by this Agreement:
(a) KeyBank shall, and shall cause POSSI to, (i) engage in the KeyBank
Merchant Business only in the usual, regular and ordinary course and (ii)
use reasonable commercial efforts to preserve intact the KeyBank Merchant
Business organization and Assets.
(b) KeyBank shall take, and shall cause KeyBank Sub, POSSI and the
Company to take, all necessary and appropriate actions required by Article
IV of this Agreement, including the execution, delivery and performance by
the Company of the Company Supplement and the performance by the Company of
its obligations under this Agreement and the Company Supplement.
(c) Neither KeyBank, KeyBank Sub, POSSI nor the Company shall do or
agree or commit to do any of the following:
(i) impose, or suffer the imposition of, any Lien on the KeyBank
Merchant Assets or permit any such Lien to exist (other than Liens
in effect as of the date hereof that are specifically disclosed as
Liens in the Schedules hereto); or
(ii) sell, lease, mortgage or otherwise dispose of any KeyBank
Merchant Asset other than in the ordinary course of business; or
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(iii) commence any Litigation relating to the KeyBank Merchant
Business other than in accordance with past practice or settle any such
Litigation involving any restrictions upon the operations of the
KeyBank Merchant Business; or
(iv) except in the ordinary course of business, modify, amend,
terminate or enter into any material Contract that will become in whole
or in part an Assumed Liability hereunder, or waive, release,
compromise or assign any material rights or claims relating to the
KeyBank Merchant Business; or
(v) cause or allow the Company to incur any indebtedness, make
any distributions, add any additional Members, allow any Member to make
any additional contributions of capital to the Company, or make or
allow any transfer of its Membership Interests.
7.03 ADVERSE CHANGES IN CONDITION. KeyBank and NOVA will each promptly
give written notice to the other party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it which (i) is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on it or (ii) would cause or constitute a material breach of any of its
representations, warranties or covenants contained in this Agreement or any
other Operative Document, and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.04 ANTITRUST NOTIFICATIONS. To the extent required by the HSR Act, the
parties hereto will promptly file with the United States Federal Trade
Commission and the United States Department of Justice the notification and
report form required for the transactions contemplated hereby and any
supplemental or additional information which may reasonably be requested in
connection therewith pursuant to the HSR Act and will comply in all material
respects with the requirements of the HSR Act. Filing fees incurred in
connection with the HSR Act shall be paid fifty percent (50%) by KeyBank and
fifty percent (50%) by NOVA, with NOVA paying the $45,000 HSR Act filing fee on
behalf of NOVA and KeyBank, and KeyBank will reimburse NOVA, by wire transfer on
the same day NOVA pays the fee, in the amount of $22,500.
7.05 AGREEMENT AS TO EFFORTS TO CONSUMMATE.
(a) Subject to the terms and conditions of this Agreement, each party
agrees to use its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate and make effective, as soon
as practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to
lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the
conditions referred to in Article VIII of this Agreement; provided, that
nothing herein shall preclude any party from exercising its rights under
-17-
this Agreement. Each party shall use its reasonable efforts to obtain all
Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
(b) Notwithstanding the conditions to Closing set forth in Article VIII
below, if any required Consent under any Contract to be assigned to and
assumed by the Company hereunder is not obtained by the Closing Date, and
the parties hereto waive such Consent and proceed with the Closing, each
party shall nevertheless continue to pursue such Consents, and, at the
request of the Company, each party shall cooperate with the Company in any
reasonable arrangement designed to provide to the Company the benefits and
burdens of any such Contract or the Assets relating thereto. Nothing
contained in this Agreement or any Assignment and Assumption Agreement
shall be deemed to constitute any assignment or attempted assignment by any
party of any Contract if any assignment or attempted assignment would
constitute a Default thereunder. Each party shall use its reasonable
efforts to execute all agreements to which it is intended to be a party in
connection with the transactions contemplated hereby, including the Company
Supplement and all other Operative Documents.
7.06 INVESTIGATION AND CONFIDENTIALITY. Prior to the Closing, each party
shall keep the other parties advised of all material developments relevant to
its Merchant Business, and to the consummation of the KeyBank Contribution and
the NOVA Company Interest Purchase, and shall permit the other parties to make
or cause to be made such investigation of the Merchant Business and properties
of it and its financial and legal conditions as the other parties reasonably
requests, provided that such investigation shall be reasonably related to the
transactions contemplated hereby and shall not unreasonably interfere with
normal operations. No investigation by a party shall affect the representations
and warranties of the other parties.
7.07 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, neither KeyBank, nor any Affiliate or
Representative thereof, shall, at any time on or after the date hereof and until
the earlier of the Closing or the termination of this Agreement in accordance
with its terms, directly or indirectly, solicit any Acquisition Proposal by any
Person or furnish any non-public information about the KeyBank Merchant Business
that it is not legally obligated to furnish, negotiate with respect to, or enter
into any Contract with respect to, any Acquisition Proposal. KeyBank shall
promptly notify NOVA in the event KeyBank receives an Acquisition Proposal.
7.08 KEYBANK MERCHANT BUSINESS EMPLOYEES.
(a) The KeyBank Merchant Business employees identified on Schedule
--------
7.08 attached hereto will be offered employment by the Company, such
----
employment to be effective at the Closing Date. Except as provided in this
Section 7.08, the offers of such employment shall be made at such time, in
such manner and pursuant to such terms and conditions of employment as may
be agreed upon by KeyBank and NOVA. Without limiting the foregoing:
-18-
(i) From the Closing through December 31, 1998, the Company shall
pay each Company Employee the same base salary as was paid by KeyBank
to the Company Employee immediately prior to the Closing, subject to
normal merit adjustments. Merit adjustments will be effective April 1,
1998. From the Closing through December 31, 1998, the Company shall
provide to each Company Employee the same level of incentive
compensation opportunity as is provided under KeyBank's 1998 Incentive
Compensation Plan, a copy of which is attached as Exhibit 7.08(a)(i).
------------------
(ii) With respect to all benefits provided by the Company to the
Company Employees, credit shall be given for periods of employment with
KeyBank (or any predecessor to or Affiliate of KeyBank) for all
purposes, including eligibility, vesting, and seniority, but excluding
benefit accrual.
(iii) The Company shall provide the same group medical and dental
benefits to all Company Employees as are provided to NOVA employees
under its group medical and dental plans, except that (A) any waiting
period will be waived, (B) any limitation relating to preexisting
conditions will be waived and (C) the "in network" level of benefits
will be available to all Company Employees in areas where network
providers are not reasonably available, regardless of the providers
used by such Company Employees.
(iv) The Company shall provide to all full-time Company Employees at
least the same number of vacation days (up to a maximum of 20 days) per
year as they were entitled to receive from KeyBank immediately prior to
the Closing.
(v) The Company shall provide the same tuition reimbursement
benefits provided by KeyBank to Company Employees who were enrolled in
KeyBank's tuition reimbursement program immediately prior to the
Closing and who are scheduled to graduate on or before December 31,
1999.
(vi) If, during the twelve (12) month period following the Closing
Date, any Company Employee is terminated as a "Result of Reduction in
Staff," and not as as result of "Discharge for Cause" or "Voluntary
Resignation," as those terms are defined in the 1998 KeyCorp Separation
Pay Plan, which is attached hereto as Exhibit 7.08(a)(vi), such Company
-------------------
Employee shall be entitled to, and the Company shall pay, such
separation pay and benefits as is set forth in the 1998 KeyCorp
Separation Pay Plan (subject to mutually agreed upon modifications).
(b) Subject to Section 7.08(a), during the term of this Agreement,
unless the parties otherwise agree, the compensation and benefits provided
by the Company to the Company Employees will, in the aggregate, be not less
favorable to such employees than the compensation and benefits currently
provided, in the aggregate, by NOVA to its employees at similar levels and
with similar responsibilities.
-19-
(c) With respect to all KeyBank Merchant Business employees not
identified on Schedule 7.08, NOVA will provide such employees the
-------------
opportunity to apply for positions of similar responsibility with NOVA or
the Company and, if any applications are accepted, such employees will be
provided a reasonable relocation package in the event that employment with
NOVA or the Company requires such employees to be relocated to Knoxville,
Tennessee or any other location of NOVA or the Company.
(d) After the Closing, to the extent that KeyBank owes to Company
Employees incentive compensation for the calendar year ended December 31,
1997, the Company will pay such incentive compensation to the Company
Employees, and KeyBank will reimburse the Company for the amount of the
payment.
7.09 TERMINATION OF CERTAIN RETAINED THIRD PARTY AGREEMENTS. The parties
hereto acknowledge and agree that the Retained Third Party Agreements specified
on Schedule 7.09 or the services provided thereunder shall be terminated by
--------------
KeyBank insofar as they relate to the KeyBank Merchant Business; KeyBank shall
consult with NOVA regarding the terms of any such termination. The Company
shall reimburse KeyBank for any losses, expenses, charges, penalties,
Liabilities or fees (collectively, "Termination Fees") associated with,
resulting from, or arising out of, the termination, non-renewal, or other
discontinuance of any of such Retained Third Party Agreements; provided that,
notwithstanding anything to the contrary herein or in any other Operative
Document, in no event shall the Company's aggregate financial liability or
responsibility for such Termination Fees exceed $4,000,000. Any and all
Termination Fees in excess of $4,000,000 shall be the sole responsibility of,
and incurred and paid by, KeyBank.
7.10 RESERVE ACCOUNTS. To the extent assignable, KeyBank will, within
nine (9) months after the Closing Date, transfer to the Company any amounts
remaining in reserve accounts established and maintained by Merchants or Agent
Banks and held by KeyBank in connection with the Assigned Merchant Agreements or
Assigned Agent Bank Agreements. To the extent that any such reserve accounts
are not assignable, KeyBank will cooperate reasonably with the Company in
devising a method of transferring the benefits of the reserve accounts to the
Company.
7.11 WORKING CAPITAL REQUIREMENTS. Unless and until other financing can
be arranged (but in no event longer than six months after the Closing Date),
NOVA will lend to the Company and POSSI all funds necessary to meet their normal
working capital requirements. The interest rate or rates charged by NOVA to the
Company and POSSI will, from time to time, be the same as the interest rate or
rates charged to NOVA under its principal credit facility for loans made to NOVA
at the same time or times as the loans are made by NOVA to the Company. To the
extent permitted by NOVA's principal bank lender, the loans by NOVA to the
Company and POSSI will be unsecured. At the Closing, the Company, POSSI and
NOVA will execute and deliver a credit agreement, containing commercially
reasonable terms, governing the loans by NOVA to the Company and POSSI (the
"Credit Agreement").
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ARTICLE VIII
CONDITIONS TO CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each party to perform this Agreement and consummate the
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by KeyBank and NOVA pursuant to Section
13.01 of this Agreement.
(a) Regulatory Approval. All material Consents of, filings and
-------------------
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the transactions contemplated by this
Agreement shall have been obtained or made and shall be in full force and
effect, and all waiting periods required by Law shall have expired. No
such Consent shall be conditioned or restricted by a Burdensome Condition.
(b) Third-Party Consents and Approvals. In addition to the Consent of
----------------------------------
Regulatory Authorities referenced in Section 8.01(a) above, each party
shall have obtained all material third-party Consents required for
consummation of the KeyBank Contribution and the NOVA Company Interest
Purchase. No such Consent shall be conditioned or restricted by a
Burdensome Condition.
(c) Legal Proceedings. No court, governmental authority or Regulatory
-----------------
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
materially restricts or makes illegal consummation of any of the
transactions contemplated by this Agreement.
8.02 CONDITIONS TO CLOSING.
(a) In addition to the conditions set forth in Section 8.01 hereof,
the consummation by KeyBank of the transactions contemplated hereby is
subject to the following conditions, unless waived in writing by KeyBank:
(i) The warranties and representations of NOVA Corp and NOVA
contained in this Agreement shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though
made on the Closing Date, and NOVA Corp and NOVA shall have performed
and complied in all material respects with the obligations required by
this Agreement to be performed or complied with by them at or prior to
the Closing Date, and an executive officer of each of NOVA and NOVA
Corp shall deliver a certificate to KeyBank at the Closing certifying
as such (the "NOVA Closing Certificates", the form of which is attached
as Exhibit 8.02(a)); and
---------------
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(ii) NOVA shall have made the deliveries contemplated by Section
8.04 hereof.
(b) In addition to the conditions set forth in Section 8.01 hereof, the
consummation by NOVA Corp and NOVA of the transactions contemplated hereby
is subject to the following conditions, unless waived in writing by NOVA:
(i) The warranties and representations of KeyBank contained in
this Agreement shall be true and correct in all material respects as of
the date when made and as of the Closing Date as though made on the
Closing Date, and KeyBank shall have performed and complied in all
material respects with the obligations required by this Agreement to be
performed or complied with by it at or prior to the Closing Date, and
an executive officer of KeyBank shall deliver a certificate to NOVA at
the Closing certifying as such (the "KeyBank Closing Certificate", the
form of which is attached as Exhibit 8.02(b)); and
---------------
(ii) KeyBank shall have made the deliveries contemplated by
Section 8.03 hereof.
8.03 DELIVERIES BY KEYBANK. KeyBank shall deliver or cause to be
delivered to NOVA and/or the Company (as applicable), at or prior to the Closing
Date, the following, all in form reasonably satisfactory to NOVA's counsel:
(a) Such certificates and documents of officers of KeyBank and public
officials as shall be reasonably requested by NOVA's counsel to establish
the existence and good standing of KeyBank, KeyBank Sub and the Company and
the due corporate power and corporate authorization of KeyBank, KeyBank
Sub, POSSI and the Company to execute and deliver this Agreement and the
other Operative Documents and to consummate the transactions contemplated
hereby and thereby;
(b) The Assignment and Assumption Agreements, duly executed by KeyBank,
KeyBank Sub and POSSI;
(c) The Services Agreement, duly executed by KeyBank;
(d) The Operating Agreement, duly executed by KeyBank Sub;
(e) An opinion of Xxxxxxxx Xxxx & Xxxxx LLP, counsel to KeyBank, in
form and substance reasonably satisfactory to NOVA and its counsel;
(f) The Company Supplement, duly executed by the Company;
(g) The KeyBank Closing Certificate;
-22-
(h) The Credit Agreement, duly executed by the Company;
(i) The Guaranty and Agreement to Comply, duly executed by KeyBank; and
(j) Any other instruments and documents required by this Agreement or
any other Operative Document to be delivered by KeyBank to NOVA or the
Company, including without limitation those documents necessary to complete
the formation of the Company as provided herein, and such other instruments
and documents which NOVA or its counsel may reasonably request consistent
with the provisions hereof and thereof.
8.04 DELIVERIES BY NOVA. NOVA shall deliver or cause to be delivered to
KeyBank or the Company (as applicable), at or prior to the Closing, the
following, all in form reasonably satisfactory to KeyBank's counsel:
(a) Such certificates and documents of officers of NOVA and public
officials as shall be reasonably requested by KeyBank's counsel to
establish the existence and good standing of NOVA Corp and NOVA and the due
corporate power and corporate authorization of NOVA Corp and NOVA to
execute and deliver this Agreement and the other Operative Documents and to
consummate the transactions contemplated hereby and thereby;
(b) The Processing Agreement, duly executed by NOVA;
(c) The Operating Agreement, duly executed by NOVA;
(d) The Credit Agreement, duly executed by NOVA;
(e) An opinion of Long Xxxxxxxx & Xxxxxx LLP, counsel to NOVA, in form
and substance reasonably acceptable to KeyBank, NOVA, and their respective
counsel;
(f) The NOVA Closing Certificates; and
(g) Any other instruments and documents required by this Agreement or
any other Operative Document to be delivered by NOVA to KeyBank or the
Company, including without limitation such instruments and documents which
KeyBank or its counsel may reasonably request consistent with the
provisions hereof and thereof.
8.05 DELIVERIES BY THE COMPANY. At the Closing, and upon consummation
of the NOVA Company Interest Purchase, KeyBank and NOVA shall cause the Company
to deliver to NOVA or KeyBank (as applicable) the following:
(a) The Assignment and Assumption Agreements, duly executed by the
Company;
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(b) The Services Agreement, duly executed by the Company;
(c) The Processing Agreement, duly executed by the Company;
(d) The Credit Agreement, duly executed by the Company; and
(e) Any other instruments and documents required by this Agreement or
any other Operative Document to be delivered by the Company to NOVA or
KeyBank, and such other instruments and documents which NOVA or KeyBank may
reasonably request consistent with the provisions hereof.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-------------------------------------------
INDEMNIFICATION
---------------
9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by KeyBank and NOVA in this Agreement shall survive until March
31, 1999; provided that, if one party gives the other parties written notice
identifying a breach of any such representation or warranty before March 31,
1999, the matter identified in the notice will survive until it is resolved in
accordance with the provisions hereof.
9.02 KEYBANK'S OBLIGATION TO INDEMNIFY. Subject to the limitations in
Sections 9.01 and 9.05, from and after the date hereof, KeyBank shall indemnify,
defend and hold harmless the NOVA Entities and the Company, and their respective
directors, officers, employees and Representatives, from and against any and all
actions, claims, losses, Credit Losses, Chargebacks, costs, Liabilities,
damages, deficiencies, diminution in value, and expenses (including reasonable
attorneys' fees and other costs of litigation) (collectively, "Claims")
resulting from or arising out of any misrepresentation, breach of, or inaccuracy
in, any of the representations or warranties made by KeyBank in this Agreement
or the breach by KeyBank of any of its obligations under this Agreement.
9.03 NOVA CORP AND NOVA'S OBLIGATION TO INDEMNIFY. Subject to the
limitations in Sections 9.01 and 9.05, from and after the date hereof, NOVA Corp
and NOVA shall jointly and severally indemnify, defend and hold harmless the Key
Entities and the Company, and their respective directors, officers, employees
and Representatives, from and against any and all Claims resulting from or
arising out of any misrepresentation, breach of, or inaccuracy in, any of the
representations or warranties made by NOVA Corp or NOVA in this Agreement or the
breach by NOVA Corp or NOVA of any of its obligations under this Agreement.
9.04 PROCEDURE FOR THIRD-PARTY CLAIMS. Promptly after a party to whom an
indemnification obligation is owed hereunder (an "Indemnified Party") receives
notice of the commencement of any action or proceeding (a "Proceeding") in
respect of which indemnification may be sought hereunder, the Indemnified Party
will notify the party that is obligated to indemnify hereunder (an "Indemnifying
-24-
Party"); but the omission so to notify the Indemnifying Party shall not relieve
the Indemnifying Party from any obligation hereunder unless, and only to the
extent that, such omission results in the Indemnifying Party's forfeiture of
substantive rights or defenses. If any such Proceeding shall be brought against
the Indemnified Party, the Indemnifying Party shall, upon written notice given
within a reasonable period of time following the Indemnified Party's notice to
the Indemnifying Party of any such Proceeding, be entitled to assume the defense
thereof at its own expense with counsel chosen by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party; provided that any Indemnified
Party may, at its own expense, retain separate counsel to participate in such
defense. Notwithstanding the foregoing, the Indemnifying Party shall not,
without the prior written consent of the Indemnified Party, settle, compromise
or consent to the entry of any judgment in any pending or threatened Proceeding
unless the settlement, compromise or judgment entry includes an unconditional
release of the Indemnified Party hereunder from all liability arising out of
such Proceeding.
9.05 DEDUCTIBLE; CAP. Notwithstanding the foregoing, no party will be
required to indemnify any other parties for any Claims with respect to a breach
of the representations and warranties hereunder unless the aggregate amount of
such Claims to which such party is obligated to indemnify exceeds $250,000.
Once the aggregate amount of such Claims exceeds $250,000, the amount of
indemnification that the party is required to pay hereunder will be limited to
the excess of the aggregate amount of the Claims over $250,000; except that, no
such limitation will apply to Claims caused by the fraud of the party required
to pay the indemnification. No party will be required to pay indemnification
hereunder in excess of [*].
ARTICLE X
CONFIDENTIAL INFORMATION; BOOKS AND RECORDS
-------------------------------------------
10.01 CONFIDENTIAL INFORMATION.
(a) All technical or business information, including but not limited
to customer data, marketing plans, customer lists, customer information,
customer account numbers, the status of any account, pricing information,
computer access codes, instruction and/or procedural manuals and financial
data of any party ("Confidential Information") furnished or disclosed by
the other parties or obtained by a party from the Company shall be deemed
the property of the disclosing party or the Company, as applicable, and,
when in tangible form, shall be returned by the receiving party to the
disclosing party or the Company, as applicable, upon request along with any
copies as may be authorized herein.
(b) "Confidential Information" shall not include: (1) information
previously known to the receiving party free of any obligation to keep it
confidential; (2) information that has been or subsequently is made
public, through no wrongful act of the receiving party; or (3) information
that is received from a third party without restriction and without breach
of this Agreement.
[*] CONFIDENTIAL TREATMENT REQUESTED.
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(c) Each shall hold Confidential Information in confidence and shall
not disclose Confidential Information to anyone except such of its
employees and Representatives to whom such disclosure is necessary for the
purpose of the performance of this Agreement or for the purposes set forth
in Section 10.01(b) or 10.01(c) of the Operating Agreement, except in the
following circumstances: (1) as required by the Payment Networks; (2) as
required by Law, regulation or Regulatory Authority; or (3) to defend
against a claim brought against the party. Each party shall appropriately
notify each employee and Representative to whom Confidential Information is
disclosed that any such disclosures are made in confidence and must be kept
in confidence by such employee or Representative.
(d) If the transactions contemplated by this Agreement are not
consummated, the parties shall maintain the confidentiality of
Confidential Information, and such Confidential Information shall not be
used to the detriment of the disclosing party or otherwise in any manner,
and all such Confidential Information in tangible form (including copies
and extracts thereof) shall be returned to the disclosing party immediately
upon its written request.
(e) The obligations of the parties hereunder shall survive and be
enforceable by temporary and permanent injunctive relief against the
breaching party and its directors, officers, employees and Representatives
notwithstanding any termination of this Agreement.
10.02 CONFIDENTIALITY OF AGREEMENT.
(a) Except as required by Law or the Payment Network Regulations or as
permitted by Section 10.01(b) or 10.01(c) of the Operating Agreement, each
party shall keep confidential and not disclose, and shall cause its
officers, employees, and Representatives to keep confidential and not
disclose, any of the terms and conditions of this Agreement or any other
Operative Document to any third party without the prior written consent of
the other parties to this Agreement and the other Operative Documents. In
the event that disclosure is required, each party will consult with the
other parties prior to issuing any press release or otherwise making any
public statement with respect to the transactions contemplated by this
Agreement.
(b) The obligations of the parties hereunder shall survive and be
enforceable by temporary and permanent injunctive relief against the
breaching party and its directors, officers, employees and Representatives
notwithstanding any termination of this Agreement.
10.03 BOOKS AND RECORDS.
(a) As soon after the Closing Date as is practicable, and in no event
later than the Transition Date, KeyBank shall deliver to NOVA, for and on
behalf of the Company, originals in its possession of all Assigned Merchant
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Agreements, Assigned Agent Bank Agreements, Assigned Agent Bank Merchant
Agreements, Assigned Third Party Agreements, and related documentation.
Upon the Company's reasonable request, KeyBank shall cause to be delivered
to the Company any or all other original books, records and/or
documentation relating to the Contributed Assets as are reasonably related
to the KeyBank Merchant Business or the enforcement of the Company's rights
with respect to the Contributed Assets. In each case, however, the books
and records relating to the Contributed Assets for the period prior to the
Closing Date, wherever located, that are held by a party hereto or under
the control of a party hereto (the "Inspected Party") shall be open for
inspection by the other parties, and such other parties' authorized agents
and representatives and regulators may, at such other parties' own expense,
make such copies of any excerpts from such books, records and documents as
it shall reasonably deem necessary; provided that any such inspection: (i)
shall be conducted during normal business hours from time to time
reasonably established by the Inspected Party; (ii) shall, if the Inspected
Party so requests, be conducted in the presence of an officer or designated
representative of the Inspected Party; and (iii) shall be conducted in
accordance with reasonable security programs and procedures from time to
time established by the Inspected Party, including but not limited to such
confidentiality agreements as the Inspected Party may reasonably request.
(b) All books and records relating to the Contributed Assets shall be
maintained by the Company or by KeyBank, as the case may be, for a period
of seven (7) years after the termination of the Operating Agreement, unless
the parties shall, applicable Law permitting, agree upon a shorter period;
provided that, in the event, as of the end of such period, any taxable year
of the Company, NOVA or KeyBank is still under examination or open for
examination by any taxing authority and that party has given notice of that
fact to the other party, such books and records shall be maintained (or,
alternatively, delivered by the Inspected Party to the other party) until
the date, determined reasonably and in good faith, specified for
maintenance of such records in such notice. Prior to the destruction of
any books and records relating to the Contributed Assets, the party in
possession of such books and records shall offer them to the other party
hereto.
ARTICLE XI
MEDIATION AND ARBITRATION OF DISPUTES
11.01 MEDIATION AND ARBITRATION.
(a) In the event of any dispute, claim, question or disagreement
arising out of or relating to this Agreement, other than a matter for which
a party is entitled to seek specific performance or injunctive relief as
expressly provided herein, the parties shall use reasonable efforts to
settle such dispute, claim, question or disagreement. To this end, they
shall consult and negotiate with each other, in good faith, and,
-27-
recognizing their mutual interests, attempt to reach a just and equitable
solution satisfactory to both parties. If settlement is not reached
within thirty (30) days after written notice of the dispute, claim,
question or disagreement is first given by one party to the other parties,
the Chief Executive Officers, Chief Financial Officers or other comparable
executive officers of KeyBank and NOVA shall consult with each other in an
effort to resolve the matter (provided that in no event shall the officers
designated by each party be Committee Members).
(b) If the parties do not reach such a solution within a period of
thirty (30) days after the matter is referred to the executive officers for
resolution, then the parties agree first to endeavor in good faith to
amicably settle their dispute by mediation in accordance with the CPR Model
Procedure for Mediation of Business Disputes, promulgated by the Center for
Public Resources, New York City.
(c) If mediation is unsuccessful within a reasonable time after
commencement of mediation, but not in any event more than sixty (60) days
thereafter, the mediator shall so certify, and the dispute shall be
submitted to binding arbitration conducted in accordance with the CPR Rules
for Non-Administered Arbitration of Business Disputes. Any controversy or
dispute shall be arbitrated by a single arbitrator either mutually agreed
upon by the parties or, absent agreement, appointed in accordance with the
aforesaid CPR rules. No mediator under subsection (b) above may serve as
an arbitrator. The arbitration shall be governed by the United States
Arbitration Act, 9 USC (S)(S)1-16, and judgment upon the award may be
entered by any court having jurisdiction thereof. The arbitrator shall have
case management authority and shall resolve the controversy in a final
award within 180 days from commencement of the arbitration action. All
questions of arbitrability shall be resolved by the arbitrator appointed
pursuant to this clause. The prevailing parties shall be entitled to
receive an award of attorneys' fees incurred in connection with the
arbitration and judicial proceedings related thereto. There shall be no
appeal from the arbitral award, except for fraud committed by the
arbitrator(s) in carrying out his duties under the aforesaid rules;
otherwise the parties irrevocably waive their rights to judicial review of
the claim or controversy.
(d) Unless otherwise agreed by the parties, the situs for dispute
resolution shall be Washington, D.C.
(e) In the event that the Center for Public Resources no longer
promulgates rules as set forth above, then the mediation or binding
arbitration shall be administered under the rules of the American
Arbitration Association or such other recognized rules for resolution of
disputes as the parties may mutually agree.
-28-
ARTICLE XII
TERM AND TERMINATION
12.01 TERM. This Agreement shall take effect on the date hereof and
remain in effect for so long as the Operating Agreement remains in effect or
until terminated pursuant to Section 12.02 hereof.
12.02 TERMINATION IF CLOSING DOES NOT OCCUR. This Agreement and the
transactions contemplated hereby may be terminated at any time prior to the
Closing, as follows:
(a) By written consent of both KeyBank and NOVA.
(b) By either party if the other party shall have failed to satisfy any
of the conditions set forth in Article VIII hereof that it is required to
satisfy, and such other party is unwilling or unable to satisfy such
conditions on or before June 30, 1998.
(c) By either KeyBank or NOVA if the Closing has not occurred by June
30, 1998.
12.03 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 12.02, this Agreement shall become void and have
no effect, except that the provisions of Articles IX, XI, and XIII, and Sections
10.01 and 10.02 shall survive any such termination.
ARTICLE XIII
MISCELLANEOUS
13.01 AMENDMENTS AND WAIVERS. Except as otherwise expressly provided
herein, this Agreement shall not be amended, modified or waived in any fashion
except by an instrument in writing signed by the parties hereto. Waiver by a
party of any breach of this Agreement by any other party shall not be effective
unless in writing, and no such waiver shall operate or be construed as the
waiver of the same or another breach on a subsequent occasion.
13.02 NONASSIGNABILITY. All terms and provisions of this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may not be assigned
by any party without the prior written consent of the other parties; provided
that such consent shall not be required (a) for the assignment by any party of
its rights and privileges hereunder to a person or entity controlling,
controlled by or under common control with such party (it being understood that
no such assignment shall relieve the assigning party of its duties or
obligations hereunder), or (b) for the assignment and delegation by any party of
-29-
its rights, privileges, duties and obligations hereunder to any person into or
with which the assigning party shall merge or consolidate or to which the
assigning party shall sell all or substantially all of its assets, provided that
the assignee formally agrees in writing to assume all the rights and obligations
of the assigning party under this Agreement and the other Operative Documents.
13.03 NO THIRD PARTY BENEFICIARIES. This Agreement is not for the
benefit of any other person, and no other person shall have any rights against
the parties hereunder.
13.04 RULES OF CONSTRUCTION. The headings in this Agreement are inserted
only as a matter of convenience and in no way affect the terms or intent of any
provision of this Agreement. All defined phrases, pronouns, and other
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the actual identity of the organization, person or persons
may require. No provision of this Agreement shall be construed against any
parties hereto by reason of the extent to which such parties or its counsel
participated in the drafting hereof.
13.05 CHOICE OF LAW. This Agreement is made and entered into under the
Laws of the State of Delaware, and the Laws of that State applicable to
agreements made and to be performed entirely thereunder (without giving effect
to the principles of conflicts of Laws thereof) shall govern the validity and
interpretation hereof and the performance by parties hereto of their respective
duties and obligations hereunder.
13.06 SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be contrary to the internal Laws of Delaware or any other applicable Law,
at the present time or in the future, such provision shall be deemed null and
void, but shall not affect the legality of the remaining provisions of this
Agreement. This Agreement shall be deemed to be modified and amended so as to
be in compliance with applicable Law, and this Agreement shall then be construed
in such a way as will best serve the intention of the parties at the time of the
execution of this Agreement.
13.07 COUNTERPARTS: DELIVERY. This Agreement may be executed in one or
more counterparts. Each such counterpart shall be considered an original and
all of such counterparts shall constitute a single agreement binding all the
parties as if all had signed a single document. The parties acknowledge that
delivery of executed counterparts of this Agreement may be effected by a
facsimile transmission or other comparable means, with an original document to
be delivered promptly thereafter.
13.08 ENTIRE AGREEMENT. This Agreement (including any exhibits or
attachments hereto), taken together with the other Operative Documents,
constitutes the entire agreement among the parties. This Agreement and the
other Operative Documents supersede all prior and contemporaneous agreements,
statements, understandings, and representations of the parties. There are no
representations, warranties, agreements, arrangements, or understandings, oral
or written, between the parties relating to the subject matter of this Agreement
which are not fully expressed herein. The parties agree that the traditional
formulation of the parol evidence rule (whereby extrinsic evidence may not be
used to vary or contradict the unambiguous terms of a document that represents a
-30-
final and complete expression of the parties' agreement) shall govern in any
action or preceding that may ensue concerning this Agreement.
13.09 LAST DAY FOR PERFORMANCE OTHER THAN A BUSINESS DAY. In the event
that the last day for performance of an act or the exercise of a right hereunder
falls on a day other than a Business Day, then the last day for such performance
or exercise shall be the first Business Day immediately following the otherwise
last day for such performance or such exercise.
13.10 NOTICES. All notices, requests, consents, or other communications
required or permitted to be given under this Agreement shall be in writing, may
be delivered in person, by overnight air courier, by facsimile with confirmation
of receipt, or by certified or registered mail (return receipt requested with
all fees prepaid), and shall be deemed to have been duly given and to have
become effective upon the date actually delivered to the parties or their
assignees at the following addresses:
If to KeyBank: KeyBank National Association
000 Xxxxxx Xxxxxx, 0xx xxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xx. Xxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to: KeyCorp
(which shall not 127 Public Square, 2nd floor
constitute notice) Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to: KeyCorp
(which shall not 000 Xxxxxx Xxxxxx, 0xx xxxxx
constitute notice) Xxxxxxxxx, Xxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
If to NOVA Corp: NOVA Corporation
Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Vice Chairman & Chief Financial Officer
Facsimile No.: (000) 000-0000
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with a copy to: Long Xxxxxxxx & Xxxxxx LLP
(which shall not SunTrust Plaza, One Peachtree Center
constitute notice) 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
If to NOVA: NOVA Information Systems, Inc.
Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Vice Chairman & Chief Financial Officer
Facsimile No.: (000) 000-0000
with a copy to: Long Xxxxxxxx & Xxxxxx LLP
(which shall not SunTrust Plaza, One Peachtree Center
constitute notice) 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
The persons or addresses to which mailings or deliveries shall be made may be
changed from time to time by notice given pursuant to the provisions of this
section.
13.11 WAIVER OF JURY TRIAL. The parties hereto hereby waive their
respective right to trial by jury of any cause of action, claim, counterclaim or
cross-complaint in any action, proceeding and/or hearing brought by any party
against another on any matter whatsoever relating to, resulting from, arising
out of, or in any way connected with this Agreement, or any amendment or breach
hereof, including, without limitation, any claim or injury or damage, or the
enforcement of any remedy under any Law.
13.12 EXPENSES. Except as otherwise specifically provided in this
Agreement, each party shall bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and applicable fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel.
13.13 FURTHER ASSURANCES. The parties hereto from time to time after
execution of this Agreement, without further consideration, shall execute and
deliver, as appropriate, such documents and take such actions as may be
reasonably necessary or proper to carry out and consummate the transactions
contemplated by this Agreement.
13.14 FORCE MAJEURE. No party shall be liable for Defaults or delays
due to acts of God or the public enemy, acts or demands of government or any
government agency, strikes, fires, flood, accident, or other unforeseeable
causes beyond its control and not due to its fault or negligence. Each party
-32-
shall notify the other of the cause of such delay within five (5) days after the
beginning thereof.
13.15 BROKERS AND FINDERS. Except for Xxxxx Xxxxxx Inc., each of the
parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, brokerage fees,
commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by any party, such party agrees to indemnify and
hold the other parties harmless of and from any Liability in respect of such
claim.
13.16 RELATIONSHIP OF PARTIES. Nothing contained in this Agreement
shall be construed as constituting a partnership or agency relationship between
the parties hereto. Prior to the Closing Date, the relationship of the parties
shall be that of prospective seller (KeyBank) and prospective purchaser (NOVA).
On and after the Closing Date, the relationship of the parties one to another
for all purposes shall be that of independent members of a limited liability
company.
13.17 PUBLICITY. Each party will consult with the other party prior to
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated by this Agreement, and will not issue any such
release or make any such statement over the reasonable objection of the other
party, except as required by Law.
[signature page to follow]
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IN WITNESS WHEREOF the undersigned hereto execute this Agreement.
"KEYBANK":
KeyBank National Association
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------
Title: Executive Vice President
----------------------------
"NOVA":
NOVA Information Systems, Inc.
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------
Title: CFO
----------------------------
"NOVA CORP":
NOVA Corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------
Title: CFO
----------------------------
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INDEX OF SCHEDULES
TO AGREEMENT RESPECTING A
LIMITED LIABILITY COMPANY
SCHEDULE DESCRIPTION
-------- -----------
1.06(a) NOVA Required Consents of Regulatory Authorities
1.06(b) NOVA Required Consents of Third Parties
1.07 NOVA Litigation
1.08 NOVA Permits
2.06 KeyBank Liens
2.08 KeyBank Credit Card and Debit Card Sales Volume
2.09 List of Agent Bank Agreements
2.11 List of Trade Associations
2.13 KeyBank Top Merchants
2.14 EFT Networks
2.15(a) KeyBank Required Consents of Regulatory Authorities
2.15(b) KeyBank Required Consents of Third Parties
2.16 KeyBank Litigation
2.17 KeyBank Permits
2.19 KeyBank Exceptions to Agreements in Full Force and Effect
2.20(a) Retained Third Party Agreements
2.20(b) Assigned Third Party Agreements
2.22(a) KeyBank Sales and Marketing Employees
-i-
2.22(b) KeyBank Employment Agreements; Collective Bargaining
2.24 KeyBank Computer Software and Databases
4.02(a) Capital Accounts of KeyBank and KeyBank Sub
7.08 KeyBank Merchant Business Employees to Be Hired by the Company
7.09 Retained Third Party Agreements to Be Terminated
-ii-
INDEX OF EXHIBITS
TO AGREEMENT RESPECTING A
LIMITED LIABILITY COMPANY
EXHIBIT DESCRIPTION
------- -----------
A Definitional Supplement
2.10 Form of Merchant Agreements
4.01 Certificate of Formation
4.01(d) Company Supplement
4.01(e) Guaranty and Agreement to Comply
4.02(a) Assignment and Assumption Agreements
4.02(b) Xxxx of Sale
4.02(c) Operating Agreement
5.02 Services Agreement
6.02 Processing Agreement
7.08(a)(i) KeyBank's 1998 Incentive Compensation Plan
7.08(a)(vi) 1998 KeyCorp Separation Pay Plan
8.02(a) NOVA and NOVA Corp Closing Certificates
8.02(b) KeyBank Closing Certificate
