AGREEMENT AND PLAN OF MERGER
AMONG
PMT SERVICES, INC.,
PMT ILLINOIS ACQUISITION CORPORATION,
DATA TRANSFER ASSOCIATES, INC.
AND
XXXXXX X. XXXXXX, XXXXXXX X. XXXXXX
AND XXXX XXXXX
AS STOCKHOLDERS OF
DATA TRANSFER ASSOCIATES, INC.
DATED: JULY 25, 1996
TABLE OF CONTENTS
PAGE
----
RECITALS............................................................................. 1
ARTICLE 1 - THE MERGER............................................................... 1
1.1 The Merger........................................................... 1
1.2 The Closing.......................................................... 2
1.3 Effective Time....................................................... 2
ARTICLE 2 - ARTICLES OF INCORPORATION AND BYLAWS AND OFFICERS
AND DIRECTORS OF THE SURVIVING CORPORATION............................... 2
2.1 Articles of Incorporation............................................ 2
2.2 Bylaws............................................................... 2
2.3 Directors............................................................ 2
2.4 Officers............................................................. 2
ARTICLE 3 - CONVERSION OF DATA TRANSFER STOCK........................................ 2
3.1 Conversion of Shares................................................. 2
3.2 Fractional Shares.................................................... 3
3.3 Exchange of Certificates............................................. 3
3.4 Stock Splits, Etc. of PMT Common Stock............................... 4
3.5 Outstanding Options on Warrants...................................... 4
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF DATA TRANSFER.......................... 4
4.1 Existence; Good Standing; Corporate Authority; Compliance With Law... 4
4.2 Authorization, Validity and Effect of Agreements..................... 5
4.3 Capitalization....................................................... 5
4.4 Prior Sales of Securities............................................ 5
4.5 Subsidiaries......................................................... 5
4.6 Other Interests...................................................... 5
4.7 No Violation......................................................... 6
4.8 Financial Statements................................................. 6
4.9 Contracts............................................................ 6
4.10 No Material Adverse Changes.......................................... 7
4.11 Tax Matters.......................................................... 7
4.12 Employees and Fringe Benefit Plans................................... 8
4.13 Assets; Leaseholds................................................... 10
4.14 Lawfully Operating................................................... 11
4.15 No Subleases or Licenses............................................. 11
4.16 Power of Attorney.................................................... 11
4.17 Cash Flow of Merchant Accounts....................................... 11
4.18 No Litigation........................................................ 11
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4.19 Corporate Records.................................................... 12
4.20 No Defaults.......................................................... 12
4.21 Inventory............................................................ 12
4.22 Hazardous Substances................................................. 12
4.23 Labor Matters........................................................ 14
4.24 Pooling of Interests................................................. 14
4.25 No Brokers........................................................... 14
4.26 PMT Stock Ownership.................................................. 15
4.27 Full Disclosure...................................................... 15
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PMT
AND MERGER SUB........................................................... 15
5.1 Existence; Good Standing; Corporate Authority; Compliance With Law... 15
5.2 Authorization, Validity and Effect of Agreements..................... 16
5.3 Capitalization....................................................... 16
5.4 Subsidiaries......................................................... 16
5.5 Other Interests...................................................... 16
5.6 No Violation......................................................... 16
5.7 SEC Documents........................................................ 17
5.8 Litigation........................................................... 17
5.9 Taxes................................................................ 17
5.10 Absence of Certain Changes........................................... 17
5.11 No Brokers........................................................... 17
5.12 Data Transfer Stock Ownership........................................ 18
5.13 PMT Common Stock..................................................... 18
5.14 Pooling of Interests................................................. 18
5.15 Full Disclosure...................................................... 18
ARTICLE 6 - COVENANTS................................................................ 18
6.1 Covenants of PMT and Data Transfer................................... 18
6.2 Registration......................................................... 20
6.3 Blackout Period...................................................... 23
6.4 Covenants of Data Transfer........................................... 23
6.5 Covenants of PMT..................................................... 25
ARTICLE 7 - CONDITIONS............................................................... 26
7.1 Conditions to Each Party's Obligation to Effect the Merger........... 26
7.2 Conditions to Obligation of Data Transfer to Effect the Merger....... 28
7.3 Conditions to Obligation of PMT and Merger Sub to Effect the Merger.. 28
ARTICLE 8 - TERMINATION.............................................................. 29
8.1 Termination by Mutual Consent........................................ 29
8.2 Termination by Either PMT or Data Transfer........................... 30
8.3 Termination by Data Transfer......................................... 30
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8.4 Termination by PMT................................................... 30
8.5 Effect of Termination and Abandonment................................ 30
8.6 Extension; Waiver.................................................... 30
ARTICLE 9 - INDEMNIFICATION.......................................................... 31
(a) Indemnification by Controlling Data Transfer Stockholders............ 31
(b) Controlling Data Transfer Stockholders' Liability.................... 31
(c) Indemnification by PMT............................................... 31
(d) Conditions of Indemnification Pursuant to Sections 9(a) and 9(c)..... 32
(e) Release by the Controlling Data Transfer Stockholders................ 33
(f) Survival............................................................. 33
ARTICLE 10 - GENERAL PROVISIONS...................................................... 34
10.1 Survival............................................................. 34
10.2 Notices.............................................................. 34
10.3 Assignment, Binding Effect; Benefit.................................. 34
10.4 Entire Agreement..................................................... 34
10.5 Amendment............................................................ 35
10.6 Governing Law........................................................ 35
10.7 Counterparts......................................................... 35
10.8 Headings............................................................. 35
10.9 Interpretation....................................................... 35
10.10 Waivers.............................................................. 35
10.11 Incorporation of Exhibits............................................ 35
10.12 Severability......................................................... 36
10.13 Expenses............................................................. 36
10.14 Enforcement of Agreement............................................. 36
10.15 Press Releases....................................................... 36
10.16 No Third Party Beneficiaries......................................... 36
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), is executed as of
the 25th day of July, 1996, by and among PMT Services, Inc., a Tennessee
corporation ("PMT"), PMT Illinois Acquisition Corporation, a newly formed
Illinois corporation and wholly owned subsidiary of PMT ("Merger Sub"), and Data
Transfer Associates, Inc., an Illinois corporation ("Data Transfer") and Xxxxxx
X. Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxx Xxxxx, stockholders of Data Transfer
(individually, a "Controlling Data Transfer Stockholder" and, collectively, the
"Controlling Data Transfer Stockholders").
RECITALS
A. The Boards of Directors of PMT and Data Transfer each have
determined that a business combination between PMT and Data Transfer is in the
best interests of their respective companies and shareholders and presents a
opportunity for their respective companies to enhance the service provided to
consumers and achieve long-term strategic and financial benefits, and,
accordingly, have agreed to effect the merger provided for herein upon the terms
and subject to the conditions set forth herein.
B. For federal income tax purposes, it is intended that the merger
provided for herein shall qualify as a reorganization within the meaning of
Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"Code"), and for financial accounting purposes shall be accounted for as a
"pooling of interests."
C. PMT, Merger Sub, Data Transfer and the Controlling Data Transfer
Stockholders desire to make certain representations, warranties and agreements
in connection with the merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub shall
be merged with and into Data Transfer in accordance with this Agreement and the
separate corporate existence of Merger Sub shall thereupon cease (the "Merger").
Data Transfer shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall be a wholly
owned subsidiary of PMT. The Merger shall have the effects specified in Section
5/11.05 of the Illinois Business Corporation Act ("IBCA").
1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, a Professional Limited Liability
Company, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx, at 10:00 a.m.,
local time, on the first business day immediately following the day on which the
last to be fulfilled or waived of the conditions set forth in Article 7 shall be
fulfilled or waived in accordance herewith or (b) at such other time, date or
place as PMT and Data Transfer may agree. The date on which the Closing occurs
is hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all the conditions to the Merger set forth in
Article 7 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 8, the parties
hereto shall cause Articles of Merger meeting the requirements of Section
5/11.05 of the IBCA to be properly executed and filed in accordance with such
Section on the Closing Date. The Merger shall become effective at the time of
filing of the Articles of Merger or at such later time which the parties hereto
shall have agreed upon and designated in such filing as the effective time of
the Merger (the "Effective Time").
ARTICLE 2
ARTICLES OF INCORPORATION AND BYLAWS
AND OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles of Incorporation of
Merger Sub in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law.
2.2 Bylaws. The Bylaws of Merger Sub in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
2.3 Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time.
2.4 Officers. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
ARTICLE 3
CONVERSION OF DATA TRANSFER STOCK
3.1 Conversion of Shares. At the Effective Time, each of the
outstanding Data Transfer Shares (as defined below) shall be converted into the
number of shares of Common
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Stock, $.01 par value per share, of PMT (the "PMT Common Stock") determined by
dividing the Aggregate Issuable PMT Shares by the Outstanding Data Transfer
Shares. For purposes of this section, the capitalized terms shall have the
definitions set forth:
(a) "Aggregate Issuable PMT Shares" shall mean the PMT Base
Shares multiplied by a fraction, the numerator of which is the Outstanding
Data Transfer Shares and the denominator of which is the sum of Outstanding
Data Transfer Shares and the Dissenting Data Transfer Shares.
(b) "PMT Base Shares" shall mean 500,000 shares.
(c) "Outstanding Data Transfer Shares" shall mean all of the
issued and outstanding shares of each series of Data Transfer Common Stock
immediately prior to the Effective Time (including any shares which may
have been issued upon exercise of currently outstanding options or
warrants) less Dissenting Data Transfer Shares.
(d) "Dissenting Data Transfer Shares" shall mean outstanding
shares of Data Transfer Common Stock, the holders of which have perfected
their rights to dissent to the Merger under the IBCA.
3.2 Fractional Shares. In lieu of the issuance of fractional shares of
PMT Common Stock, each shareholder of Data Transfer, upon surrender of a
certificate which immediately prior to the Effective Time represented Data
Transfer Common Stock, shall be entitled to receive a cash payment (without
interest) equal to the fair market value of any fraction of a share of PMT
Common Stock to which such holder would be entitled but for this provision. For
purposes of calculating such payment, the fair market value of a fraction of a
share of PMT Common Stock shall be such fraction multiplied by the Average Price
of PMT Common Stock. The "Average Price" of PMT Common Stock shall mean the
average of the daily highest and lowest sale price of PMT Common Stock as traded
on the NASDAQ National Market ("NASDAQ") for the twenty (20) trading days which
end ten (10) days prior to the Closing Date.
3.3 Exchange of Certificates. After the Effective Time, each holder of an
outstanding certificate or certificates theretofore representing Outstanding
Data Transfer Shares (other than shares as to which dissenters rights have been
perfected and not withdrawn or otherwise forfeited under the IBCA) upon
surrender thereof, together with a completed letter of transmittal, to Xxxxxx
Xxxxxxx Xxxxxx & Xxxxx (the "Exchange Agent"), as exchange agent for PMT, shall
be entitled to receive in exchange therefor any payment due in lieu of
fractional shares and a certificate or certificates representing the number of
whole shares of PMT Common Stock into which such holders' Outstanding Data
Transfer Shares were converted in a manner reasonably satisfactory to Data
Transfer. Until so surrendered, each outstanding certificate representing
Outstanding Data Transfer Shares shall be deemed for all purposes to represent
the number of whole shares of PMT Common Stock into which the Outstanding Data
Transfer Shares
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theretofore represented shall have been converted. PMT may, at its option,
refuse to pay any dividend or other distribution, if any, payable to the holders
of shares of PMT Common Stock to the holders of certificates representing
Outstanding Data Transfer Shares until such certificates are surrendered for
exchange, provided, however, that, subject to the rights of PMT under its
charter, upon surrender and exchange of such Data Transfer certificates there
shall be paid to the record holders of the PMT stock certificate or certificates
issued in exchange therefor the amount, without interest, of dividends and other
distributions, if any, which have become payable with respect to the number of
whole shares of PMT Common Stock into which the Outstanding Data Transfer Shares
theretofore represented thereby shall have been converted and which have not
previously been paid. Under the terms of its credit agreements, PMT has agreed
not to pay any cash dividends.
3.4 Stock Splits, Etc. of PMT Common Stock. In the event PMT changes the
number of shares of PMT Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, recapitalization,
reorganization or any other transaction in which any security of PMT or any
other entity or cash is issued or paid in respect of the outstanding shares of
PMT Common Stock and the record date therefor is after the date of this
Agreement and prior to the Effective Time, the conversion ratio, as well as the
dollar amounts set forth in Sections 3.1(b) and 8.2, shall be proportionately
adjusted.
3.5 Outstanding Options on Warrants. Immediately prior to the Closing,
all outstanding options or warrants to purchase Data Transfer Common Stock will
be exercised to the extent exercisable and cancelled to the extent not
exercisable.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF DATA TRANSFER
Except as set forth in the disclosure letter delivered prior to the
execution hereof to PMT and attached hereto as Exhibit A (the "Data Transfer
Disclosure Letter"), Data Transfer and each of the Controlling Data Transfer
Stockholders severally represents and warrants to PMT that the statements
contained in this Article 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date.
4.1 Existence; Good Standing; Corporate Authority; Compliance With Law.
Data Transfer is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Illinois. Data Transfer is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
business, results of operations or financial condition of Data Transfer (a "Data
Transfer Material Adverse Effect"). Data Transfer has all requisite corporate
power and authority to own, operate and lease its properties and carry on its
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business as now conducted. Data Transfer is not in violation of any order of
any court, governmental authority or arbitration board or tribunal, or any law,
ordinance, governmental rule or regulation to which Data Transfer or any of its
properties or assets is subject, where such violation would have a Data Transfer
Material Adverse Effect. Data Transfer has obtained all licenses, permits and
other authorizations and has taken all actions required by applicable law or
governmental regulations in connection with its business as now conducted,
except where such failure to obtain the same would not have a Data Transfer
Material Adverse Effect.
4.2 Authorization, Validity and Effect of Agreements. Data Transfer has
the full corporate power and authority to execute and deliver this Agreement and
all agreements and documents contemplated hereby. The consummation by Data
Transfer of the transactions contemplated hereby has been duly authorized by all
requisite corporate action, including the required approvals by the Board of
Directors of Data Transfer and the holders of the outstanding shares of Data
Transfer Common Stock. This Agreement constitutes, and all agreements and
documents contemplated hereby (when executed and delivered pursuant hereto for
value received) will constitute, the valid and legally binding obligations of
Data Transfer, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
4.3 Capitalization. The authorized capital stock of Data Transfer
consists of 100,000 shares of common stock, $1.00 par value (the "Data Transfer
Common Stock"). As of the date hereof, there are issued and outstanding 1,000
shares of Data Transfer Common Stock. Data Transfer has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the shareholders of Data Transfer on any matter. All issued
and outstanding shares of Data Transfer Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. There
are no options, warrants, calls subscriptions, convertible securities, or other
rights, agreements or commitments which obligate Data Transfer to issue,
transfer or sell any shares of capital stock of Data Transfer.
4.4 Prior Sales of Securities. All offers and sales of Data Transfer
Common Stock prior to the date hereof were at all relevant times exempt from the
registration requirements of the Securities Act of 1933, as amended, and were
duly registered or the subject of an available exemption from the registration
requirements of the applicable state securities or Blue Sky laws, or the
relevant statutes of limitations have expired, or civil liability therefor has
been eliminated by an offer to rescind.
4.5 Subsidiaries. Data Transfer has no subsidiaries.
4.6 Other Interests. Except as set forth in the Data Transfer Disclosure
Letter, Data Transfer does not own directly or indirectly any interest or
investment in any corporation, partnership, joint venture, business, trust or
other entity.
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4.7 No Violation. After approval by requisite shareholder vote, neither
the execution and delivery by Data Transfer of this Agreement nor the
consummation by Data Transfer of the transactions contemplated hereby in
accordance with the terms hereof, will: (i) conflict with or result in a breach
of any provisions of the Articles of Incorporation or Bylaws of Data Transfer;
(ii) conflict with, result in a breach of any provision of or the modification
or termination of, constitute a default under, or result in the creation of
imposition of any lien, security interest, charge or encumbrance upon any of the
assets of Data Transfer pursuant to any material commitment, lease, contract, or
other material agreement or instrument to which Data Transfer is a party; or
(iii) violate any order, arbitration award, judgment, writ, injunction, decree,
statute, rule or regulation applicable to Data Transfer, the violation of which
would have a Data Transfer Material Adverse Effect.
4.8 Financial Statements. Data Transfer has delivered its unaudited
financial statements for the year ended December 31, 1995 and for the six month
period ended June 30, 1996 and will deliver promptly unaudited interim financial
statements for each month and quarter subsequent thereto if prepared prior to
the Closing Date. Each of the balance sheets provided to PMT (including any
related notes and schedules) fairly presents in all materials respects the
financial position of Data Transfer as of its date and each of the statements of
income, retained earnings and cash flows provided to PMT (including any related
notes and schedules) fairly presents in all material respects the results of
operations, retained earnings or cash flows of Data Transfer for the periods set
forth therein (subject, in the case of unaudited statements, to the omission of
footnotes and to normal year end audit adjustments which would not be material
in amount or effect) in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein. Such financial statements have been prepared from the
books and records of Data Transfer which accurately and fairly reflect in all
material respects the transactions and dispositions of the assets of Data
Transfer. As of June 30, 1996 or any subsequent date for which a balance sheet
is provided, Data Transfer did not have material liabilities, contingent or
otherwise, whether due or to become due, known or unknown, other than as
indicated on the balance sheet of such date or the notes thereto except for
those incurred in the ordinary course of business since the date of such balance
sheet. Data Transfer has adequately funded all accrued employee benefit costs
and such funding (to the date thereof) is reflected in the balance sheet, except
as to bonuses payable as a result of the Closing which will be reflected on the
Closing Balance Sheet.
4.9 Contracts. Schedule 4.9 lists all material contracts and other
agreements to which Data Transfer is a party including:
(a) any Independent Service Organizations ("ISO's") Agreements and any
Independent Training Organization ("ITO") Agreements (collectively
known as ISO/ITO Agreements);
(b) any agreements with authorization network vendors ("Vendor
Agreements");
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(c) all agreements with processing banks; or
(d) any agreements that limit the right of Data Transfer prior to the
Closing Date, or PMT, or its subsidiaries, after the Closing Date, to
engage in or to compete with any person in any business, including the
method by which any business may be conducted by Data Transfer prior
to the Closing Date, or by PMT, or its subsidiaries, after the Closing
Date.
Each contract listed in Schedule 4.9 is in full force and effect, each is a
legal, valid and binding contract, and there is no material default (or any
event which, with the giving of notice or lapse of time or both, would be a
material default) by Data Transfer, in the timely performance or any material
obligation to be performed or paid under such contract.
4.10 No Material Adverse Changes. Since June 30, 1996, there has not been
(i) any material adverse change in the financial condition, results of
operations, business, prospects, assets or liabilities (contingent or otherwise,
whether due or to become due, known or unknown), of Data Transfer, except for
changes in the ordinary course of business consistent with historical experience
resulting from the seasonal nature of Data Transfer's business: (ii) any
extraordinary dividend declared or paid or distribution made on the capital
stock of Data Transfer, or any capital stock thereof redeemed or repurchased;
(iii) any incurrence of long term debt in excess of $50,000; (iv) any salary,
bonus or compensation increases to any officers, employees or agents of Data
Transfer, other than customary increases; (v) any pending or threatened labor
disputes or other labor problems against or potentially affecting Data Transfer;
or (vi) any other transaction entered into by Data Transfer, except in the
ordinary course of business and consistent with past practice.
4.11 Tax Matters. Except as set forth in the Data Transfer Disclosure
Letter, Data Transfer has duly paid all Taxes and other charges (whether or not
shown on any Tax return) due or claimed to be due from it by federal, foreign,
state or local taxing authorities; and true and correct copies of all Tax
reports and returns relating to such Taxes and other charges for the fiscal
years from 1991 through 1995 have been heretofore delivered to PMT (other than
Data Transfer's 1995 federal income tax return for which an extension has been
filed). The reserves for Taxes contained in the financial statements and
carried on the books of Data Transfer (other than any reserve for deferred taxes
established to reflect timing differences between book and tax income) are
adequate to cover all Tax liabilities as of the date of this Agreement. Since
June 30, 1996, Data Transfer has not incurred any Tax liabilities other than in
the ordinary course of business; there are no Tax liens (other than liens for
current Taxes not yet due) upon any properties or assets of Data Transfer
(whether real, personal or mixed, tangible or intangible), and, except as
reflected in the financial statements, there are no pending or threatened
questions or examinations relating to, or claims asserted for, Taxes or
assessments against Data Transfer. Data Transfer has not granted or been
requested to grant any extension of the limitation period applicable to any
claim for Taxes or assessments with respect to Taxes. Data Transfer is not a
party to any Tax allocation or sharing agreement. If Data Transfer has ever
been a member of an affiliated group within the meaning of Section 1504 of the
Code filing a consolidated
7
federal income tax return (an "Affiliated Group"), each such Affiliated Group
has filed all Tax returns that it was required to file for each taxable period
during which Data Transfer was a member of the Affiliated Group, and has paid
all taxes owed by the Affiliated Group (whether or not shown on the Tax return)
for each taxable period during which Data Transfer was a member of the
Affiliated Group. Data Transfer has no liability for the Taxes of any
Affiliated Group under Treasury Regulation 1.1502-6 (or any similar provision of
state, local or foreign law). Data Transfer has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor or shareholder. For purposes
of this Agreement, "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Internal Revenue Code of 1986, as amended ("Code")), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or addition minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
4.12 Employees and Fringe Benefit Plans.
(a) The Data Transfer Disclosure Letter sets forth the names, ages and
titles of all members of the Board of Directors and officers of Data
Transfer and all employees of Data Transfer earning in excess of $50,000
per annum, and the annual rate of compensation (including bonuses) being
paid to each such member of the Board of Directors, officer and employee as
of the most recent practicable date.
(b) The Data Transfer Disclosure Letter lists each employment, bonus,
deferred compensation, pension, stock option, stock appreciation right,
profit-sharing or retirement plan, arrangement or practice, each medical,
vacation, retiree medical, severance pay plan, and each other agreement or
fringe benefit plan, arrangement or practice, of Data Transfer, whether
legally binding or not, which affects one or more of its employees,
including all "employee benefit plans" as defined by Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(collectively, the "Plans"). All Plans which are subject to Title IV of
ERISA or the minimum funding standards of Section 412 of the Code shall be
referred to as the "Pension Plans."
(c) For each Plan which is an "employee benefit plan" under Section
3(3) of ERISA, Data Transfer has delivered to the Buyer correct and
complete copies of the plan documents and summary plan descriptions, the
most recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts and funding agreements which implement each
such Plan.
(d) Data Transfer does not have any commitment, whether formal or
informal and whether legally binding or not, (i) to create any additional
such Plan; (ii) to modify
8
or change any such Plan; or (iii) to maintain for any period of time any
such Plan. The Data Transfer Disclosure Letter contains an accurate and
complete description of the funding policies (and commitments, if any) of
Data Transfer with respect to each such existing Plan.
(e) Data Transfer has no unfunded past service liability in respect of
any of its Plans; the actually computed value of vested benefits under any
Pension Plan of Data Transfer (determined in accordance with methods and
assumptions utilized by the Pension Benefit Guaranty Corporation ("PBGC")
applicable to a plan terminating on the date of determination) does not
exceed the fair market value of the fund assets relating to such Pension
Plan; neither Data Transfer nor any Plan nor any trustee, administrator,
fiduciary or sponsor of any Plan has engaged in any prohibited transactions
as defined in Section 406 of ERISA or Section 4975 of the Code for which
there is no statutory exemption in Section 408 of ERISA or Section 4975 of
the Code; all filings, reports and descriptions as to such Plans (including
Form 5500 Annual Reports, Summary Plan Descriptions, PBCG-1's and Summary
Annual Reports) required to have been made or distributed to participants,
the Internal Revenue Service, the United States Department of Labor and
other governmental agencies have been made in a timely manner or will be
made on or prior to the Closing Date; there is no material litigation,
disputed claim, governmental proceeding or investigation pending or
threatened with respect to any of such Plans, the related trusts, or any
fiduciary, trustee, administrator or sponsor of such Plans; such Plans have
been established, maintained and administered in all material respects in
accordance with their governing documents and applicable provisions of
ERISA and the Code and Treasury Regulations promulgated thereunder; there
has been no "Reportable Event" as defined in Section 4043 of ERISA with
respect to any Pension Plan that has not been waived by the Pension Benefit
Guaranty Corporation; and each Pension Plan and each Plan which is intended
to be a qualified plan under Section 401(a) of the Code has received,
within the last three years, a favorable determination letter from the
Internal Revenue Service.
(f) Data Transfer has complied in all material respects with all
applicable federal, state and local laws, rules and regulations relating to
employees' employment and/or employment relationships, including, without
limitation, wage related laws, anti-discrimination laws, employee safety
laws and COBRA (defined herein to mean the requirements of Code Section
4980B, Proposed Treasury Regulation Section 1.162-26 and Part 6 of Subtitle
B of Title I of ERISA).
(g) The consummation of the transactions contemplated by this
Agreement will not (i) result in the payment or series of payments by Data
Transfer to any employee or other person of an "excess parachute payment"
within the meaning of Section 280G of the Code, (ii) entitle any employee
or former employee of Data Transfer to severance pay, unemployment
compensation or any other payment, and (iii) accelerate the time of payment
or vesting of any stock option, stock appreciation right, deferred
compensation or other employee benefits under any Plan (including vacation
and sick pay).
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(h) None of the Plans which are "welfare benefit plans," within the
meaning of Section 3(1) of ERISA, provide for continuing benefits or
coverage after termination or retirement from employment, except for COBRA
rights under a "group health plan" as defined in Code Section 4980B(g) and
ERISA Section 607.
(i) Neither Data Transfer nor any "affiliate" of Data Transfer (as
defined in ERISA) has ever participated in or withdrawn from a multi-
employer plan as defined in Section 4001 (a)(3) of Title IV of ERISA, and
Data Transfer has not incurred and does not owe any liability as a result
of any partial or complete withdrawal by any employer from such a multi-
employer plan as described under Sections 4201, 4203, or 4205 of ERISA.
(j) No Pension Plan has been completely or partially terminated, nor
has any plan been instituted by the PBGC to terminate any such Pension
Plan; Data Transfer has not incurred, and does not presently owe, any
liability to the PBGC or the Internal Revenue Service with respect to any
Pension Plan including, but not by way of limitation, any liability for
PBGC premiums or excise taxes under Code Section 4971.
4.13 Assets; Leaseholds.
(a) Data Transfer owns the assets reflected on the June 30, 1996 Data
Transfer balance sheet (including any patents, copyrights, trade names,
service marks and other names and marks used in connection with its
business), with good and marketable title, free and clear of any and all
claims, liens, mortgages, options, charges, conditional sale or title
retention agreements, security interests, restrictions, easements, or
encumbrances whatsoever and free and clear of any rights or privileges
capable of becoming claims, liens, mortgages, options, charges, security
interests, restrictions, easements or encumbrances, except (i) for certain
of the assets which are encumbered by liens that Data Transfer has the
means to remove prior to the Effective Time, (ii) as shown on the title
insurance policies previously furnished to PMT, (iii) real property taxes
not yet due and payable, (iv) utility easements for utilities serving the
Property, and (v) minor imperfections of title which do not materially
affect the value and use of such assets.
(b) Data Transfer owns good and marketable leasehold title to the
premises leased by Data Transfer, free and clear of any and all claims,
liens, mortgages, options, charges, conditional sale or title retention
agreements, security interests, restrictions, easements, or encumbrances
whatsoever and free and clear of any rights or privileges capable of
becoming claims, liens, mortgages, options, charges, security interests,
restrictions, easements or encumbrances, except to the extent expressly set
forth in the leases. Following the Merger, Data Transfer will continue to
have all its rights under such leases for the premises now leased by Data
Transfer free and clear of any claims, liens, mortgages, options, charges,
security interests, restrictions, easements, rights, privileges and
encumbrances, except to the extent expressly set forth in the leases, and
the Merger will not result in any increase in rents or charges under any
lease.
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4.14 Lawfully Operating. To the best knowledge of Data Transfer, Data
Transfer has been and currently is conducting and each of the premises leased or
owned have been and now are being used and operated, in compliance in all
material respects with all statutes, regulations, bylaws, orders, covenants,
restrictions or plans of federal, state, regional, county or municipal
authorities, agencies or board applicable to the same.
4.15 No Subleases or Licenses. There are no subleases or licenses to use
all or any portion of the premises leased by Data Transfer, except as set forth
in the leases. The leases are valid, binding and enforceable in accordance with
the terms of each, and are in good standing. Data Transfer is not in default in
payment of rent, or in the performance of any of its material obligations under
the leases and, to the best of Data Transfer's knowledge after reasonable
investigation, no ground lessor to any such landlord or lessors is in default of
any ground lease. To the best knowledge of Data Transfer, the landlords or
lessors under the leases are not in breach of any of their Obligations under the
leases and no ground lessor to any such landlord or lessor is in default of any
ground lease. No state of facts exists which, after notice or lapse of time or
both, would result in a breach or default under the leases by Data Transfer.
The copies of the leases which Data Transfer has delivered to PMT are true,
correct and complete copies of the leases and Data Transfer has delivered to PMT
all amendments, modifications, letter agreements and instruments of whatever
form which relate to such leases (except correspondence sent or received in the
ordinary course of business, including percentage rent reports, which do not
alter the terms of the leases).
4.16 Power of Attorney. There are no outstanding powers of attorney
executed on behalf of Data Transfer.
4.17 Cash Flow of Merchant Accounts. Attached hereto as Schedule 4.17 is
Data Transfer's most recent Visa/Mastercard Settlement Report (the "Settlement
Report") issued by M & I Merchant Services. Since the date of the Settlement
Report, there has not been any material adverse change in the cash flow of the
merchant accounts with respect to which Data Transfer receives residual payments
from Data Transfer's processing banks (the "Merchant Accounts") taken as a
whole.
4.18 No Litigation. Except as set forth in the Data Transfer Disclosure
Letter, there are currently no pending, and the directors and executive officers
of Data Transfer are not aware of any threatened, lawsuits or administrative
proceedings or investigations against Data Transfer or to which its assets are
subject, which, if adversely determined, could have a material adverse effect on
the financial condition results of operations, business, prospects, assets, or
liabilities of Data Transfer. Data Transfer is not subject to any currently
existing order, writ, injunction, or decree relating to its operations.
4.19 Corporate Records. True and correct copies of the Articles of
Incorporation and bylaws of Data Transfer have been delivered to PMT. The
corporate minute books of Data Transfer submitted to PMT for review correctly
reflect all corporate action taken at all the
11
meetings (or by written consent in lieu thereof) of its directors and
shareholders and correctly record all resolutions thereof.
4.20 No Defaults. Data Transfer has in all material respects performed all
material obligations to be performed by it under all contracts, agreements, and
commitments to which it is a party, and there is not under any such contracts,
agreements, or commitments any existing default or event of default or event
which with notice or lapse of time or both would constitute a default, which
default would have a Data Transfer Material Adverse Effect.
4.21 Inventory. The inventories of Data Transfer consist solely of items
of quality and quantity useable and saleable in the ordinary course of business
and will be maintained at normal levels continuously until the Closing Date.
4.22 Hazardous Substances. For purposes of this Agreement, the following
terms shall have the following meanings:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. (S)(S) 9601 et seq.;
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating in any way to
any Environmental Law (for purposes of (i) and(ii) below, "Claims") or any
permit issued under any such Environmental Law, including without limitation:
(i) any and all Claims by governmental or regulatory authorities for
investigation, oversight, enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law;
and
(ii) any and all Claims by any third party seeking damages, response,
costs, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment;
"Environmental Law" means any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now in effect and as
amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to
the environment, health, or safety of hazardous, toxic or dangerous materials,
substances or wastes, including without limitation CERCLA; the Toxic Substances
Control Act, as amended, 15 U.S.C. (S)(S) 2601 et seq.; the Clean Air Act, as
amended, 42 U.S.C. (S)(S) 7401 et seq.; the Federal Water Pollution Control Act,
as amended, 33 U.S.C. (S)(S) 1251 et seq.; the Federal Insecticide, Fungicide,
and Rodenticide Act, as amended, 7 U.S.C. (S)(S) 136, et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. (S)(S) 1801 et seq.; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. (S)(S) 6901
12
et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S) 300f et seq.; the Clean
Water Act, as amended, 33 U.S.C. (S)(S) 1251, et seq.; and any similar state or
local law;
"Hazardous Materials" shall mean those materials listed in Section 101(14)
of CERCLA, as hereinafter defined, and any other substance defined as toxic or
hazardous under any federal, state or local law, rules, regulation, ordinance
code or policy, including, but not limited to:
(i) any petroleum or petroleum products, flammable explosives,
radioactive materials, asbestos, asbestos products, urea formaldehyde foam
insulation, polychlorinated biphenyls, including transformers or other
equipment that contain dielectric fluid containing detectible levels of
polychlorinated biphenyls, and radon gas;
(ii) any hazardous, toxic or dangerous waste, substance or material
defined as such in (or for purposes of) any current Environmental Law or
currently listed as such pursuant to any Environmental Law; and
(iii) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority:
"Improperly" means done in any manner that poses a threat to human health,
safety or the environment;
"Data Transfer Property" shall mean (i) any real property and improvements
presently owned, leased, used, operated or occupied by Data Transfer, and (ii)
any other real property and improvements at any previous time owned, leased,
used, operated or occupied by Data Transfer, but only as to the time owned,
leased, used, operated or occupied by Data Transfer;
"Release" means disposing, depositing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like, into or upon any land or water or air, or otherwise entering into the
environment.
To the best knowledge of Data Transfer:
(a) Hazardous Materials have not at any time been illegally or
Improperly generated, used, treated or stored on, or transported to or
from, any Data Transfer Property;
(b) No asbestos containing materials or other Hazardous Materials
have been installed in or affixed to structures on any Data Transfer
Property;
(c) Hazardous Materials have not at any time been disposed of or
otherwise Released on any Data Transfer Property;
13
(d) Data Transfer is currently, and has at all times in the past
been, in compliance with all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws with
respect to any Data Transfer Property;
(e) There are no past, pending or, to the knowledge of Data
Transfer, threatened Environmental Claims against Data Transfer or any Data
Transfer Property;
(f) There are no facts or circumstances, conditions or
occurrences on any Data Transfer Property or otherwise that could
reasonably be anticipated by Data Transfer:
(i) to form the basis of an Environmental Claim against Data
Transfer or any Data Transfer Property; or
(ii) to cause such Data Transfer Property to be subject to
any restrictions on the ownership, occupancy, use or
transferability of such Data Transfer Property under any
Environmental Law; and
(g) There are not now, nor have there been at any time, any
aboveground or underground storage tanks located on any Data Transfer
Property.
4.23 Labor Matters. Data Transfer is not a party to any collective
bargaining agreement and has not been the subject of any union activity or labor
dispute, and there have not been any strike of any kind called or threatened to
be called against Data Transfer. To the best knowledge of Data Transfer, Data
Transfer has not violated any applicable federal or state law or regulation
relating to labor or labor practices. Data Transfer has no liability to any of
its employees, agents, or consultants in connection with grievances by, or the
termination of, such employees, agents, or consultants.
4.24 Pooling of Interests. Data Transfer has not taken or failed to take
any action which, to the actual knowledge of the management and Board of
Directors of Data Transfer, would prevent the accounting for the Merger as a
pooling of interests in accordance with Accounting Principles Board Opinion No.
16, the interpretative releases issued pursuant thereto, and the pronouncements
of the SEC.
4.25 No Brokers. Data Transfer has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Data Transfer or PMT to pay any Finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby. Data Transfer is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
14
4.26 PMT Stock Ownership. Data Transfer does not own any shares of PMT
Common Stock or other securities convertible into PMT Common Stock.
4.27 Full Disclosure. All of the information provided by Data Transfer and
its representatives herein or in the Data Transfer Disclosure Letter are true,
correct, and complete in all material respects and no representation, warranty,
or statement made by Data Transfer in or pursuant to this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make such representation, warranty, or
statement not misleading to PMT. None of the executive officers of Data
Transfer has withheld from PMT or its representatives disclosure of any event,
condition, or fact that such officer knows, could materially adversely affect
the financial condition, results of operations, business, prospects, assets, or
liabilities of Data Transfer, other than business conditions affecting the
credit card services business generally.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PMT AND MERGER SUB
Except as set forth in the disclosure letter delivered at or prior to the
execution hereof to Data Transfer and attached hereto as Exhibit B (the "PMT
Disclosure Letter"), PMT and Merger Sub represent and warrant to Data Transfer
that the statements contained in this Article 5 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date.
5.1 Existence; Good Standing; Corporate Authority; Compliance With Law.
Each of PMT and Merger Sub is a corporation duly incorporated and validly
existing under the laws of the state of its incorporation. PMT is duly licensed
or qualified to do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which the character of
the properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the business, results of
operations or financial condition of PMT (a "PMT Material Adverse Effect"). PMT
has all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted. PMT nor any of its
properties or assets is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation to which PMT is subject, where such violation would have a
PMT Material Adverse Effect. PMT has ail licenses, permits and other
authorizations and has taken all actions required by applicable law or
governmental regulations in connection with its business as now conducted, where
the failure to obtain an such item or to take any such action would have a PMT
Material Adverse Effect.
5.2 Authorization, Validity and Effect of Agreements. Each of PMT and
Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all
15
agreements and documents contemplated hereby. The consummation by PMT and Merger
Sub of the transactions contemplated hereby has been duly authorized by all
requisite corporate action. This Agreement constitutes, and all agreements and
documents contemplated hereby (when executed and delivered pursuant hereto for
value received) will constitute, the valid and legally binding obligations of
PMT and Merger Sub, enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
5.3 Capitalization. The authorized capital stock of PMT consists of
40,000,000 shares of common stock, no par value ("PMT Common Stock") and
10,000,000 shares of preferred stock, $.01 par value (the "PMT Preferred
Stock"). As of the date of this Agreement, there were 31,730,633 shares of PMT
Common Stock issued and outstanding, and no shares of PMT Preferred Stock issued
and outstanding. PMT has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of PMT on any matter. All issued and outstanding shares of PMT
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. Other than as provided for in the PMT Disclosure
Letter, there are no options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligates PMT to
issue, transfer or sell any shares of capital stock of PMT.
5.4 Subsidiaries. PMT has no subsidiaries except for Merger Sub. Merger
Sub has been formed to effect the transactions contemplated by this Agreement.
The authorized capital stock of Merger Sub consists of 1,000 shares of Common
Stock, $.01 par value. Each of the outstanding shares of capital stock of
Merger Sub is duly authorized, validly issued, fully paid and nonassessable, and
is owned by PMT free and clear of all liens, pledges, security interests, claims
or other encumbrances. Merger Sub has not engaged in any activities other than
in connection with the transactions contemplated by this Agreement.
5.5 Other Interests. Neither PMT nor Merger Sub owns directly or
indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity.
5.6 No Violation. Neither the execution and delivery by PMT and Merger
Sub of this Agreement, nor the consummation by PMT and Merger Sub of the
transactions contemplated hereby in accordance with the terms hereof, will: (i)
conflict with or result in a breach of any provisions of the Charter or Bylaws
of PMT or Merger Sub; (ii) conflict with, result in a breach of any provision of
or the modification or termination of, constitute a default under, or result in
the creation or imposition of any lien, security interest, charge, or
encumbrance upon any of the assets of PMT or Merger Sub pursuant to any material
commitment, lease, contract, or other material agreement or instrument to which
PMT or Merger Sub is a party; or (iii) violate any order, arbitration award,
judgment, writ, injunction, decree, statute, rule, or regulation applicable to
PMT or Merger Sub.
16
5.7 SEC Documents. Prior to the date hereof, PMT has delivered to Data
Transfer copies of all of PMT's Annual Reports on Forms 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and
Exchange Commission ("SEC") since June 14, 1996, and its proxy statement dated
November 14, 1995 (the "PMT Reports"). The PMT Reports (i) were prepared in all
material respects in accordance with the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the rules and
regulations promulgated thereunder, and (ii) as of their respective dates, did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets included in or incorporated
by reference into the PMT Reports (including the related notes and schedules)
fairly presents the consolidated financial position of PMT as of its date and
each of the consolidated statements of income, retained earnings and cash flows
included in or incorporated by reference into the PMT Reports (including any
related notes and schedules) fairly presents the results of operations, retained
earnings or cash flows of PMT for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments which would
not be material in amount or effect) in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. These representations shall be deemed to be
made with respect to PMT Reports filed subsequent to the date hereof at the time
of their filing. PMT has made all filings required to be filed by PMT under the
0000 Xxx.
5.8 Litigation. There are no actions, suits or proceedings pending
against PMT or, to the actual knowledge of the executive officers of PMT,
overtly threatened in writing against PMT, at law or in equity, or before or by
any federal or state commission, board, bureau, agency or instrumentality, that
are reasonably likely to have a PMT Material Adverse Effect except as set forth
in the PMT Disclosure Letter.
5.9 Taxes. The provisions for taxes shown on the PMT financial statements
for the year ended July 31, 1995 are adequate to cover the liability of PMT for
all taxes (including employer income tax withholding, social security and
unemployment taxes) to the date thereof.
5.10 Absence of Certain Changes. Since June 14, 1995, there has not been
any material adverse change in the financial condition, results of operations,
business, prospects, assets or liabilities (contingent or otherwise, whether due
or to become due, known or unknown), of PMT, except for changes in the ordinary
course of business consistent with historical experience resulting from the
seasonal nature of PMT's business.
5.11 No Brokers. PMT has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of Data
Transfer or PMT to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby. PMT is
not aware of any claim for payment of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the
17
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
5.12 Data Transfer Stock Ownership. Neither PMT nor Merger Sub owns any
shares of capital stock of Data Transfer or other securities convertible into
capital stock of Data Transfer.
5.13 PMT Common Stock. The issuance and delivery by PMT of shares of PMT
Common Stock in connection with the Merger and this Agreement have been duly and
validly authorized by all necessary corporate action on the part of PMT. The
shares of PMT Common Stock to be issued in connection with the Merger and this
Agreement, when issued in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable.
5.14 Pooling of Interests. PMT has not taken or failed to take any action
which, to the actual knowledge of the executive officers of PMT, would prevent
the accounting for the Merger as a pooling of interests in accordance with
Accounting Principles Board Opinion No. 16, the interpretative releases issued
pursuant thereto, and the pronouncements of the SEC.
5.15 Full Disclosure. All of the information provided by PMT and its
representatives herein or in the PMT Disclosure Letter are true, correct and
complete in all material respects and no representation, warranty, or statement
made by PMT in or pursuant to this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty, or statement not misleading to
Data Transfer. None of the executive officers of PMT has withheld from PMT or
its representatives disclosure of any event, condition, or fact that such
officer knows could materially adversely affect the financial condition, results
of operations, business, prospects, assets, or liabilities of PMT, other than
business conditions affecting the credit card services business generally.
ARTICLE 6
COVENANTS
6.1 Covenants of PMT and Data Transfer. During the period from the date
hereof and continuing until the Effective Time (except as expressly contemplated
or permitted hereby, or to the extent that the other parties shall otherwise
consent in writing) each of PMT and Data Transfer covenants with the other that,
insofar as the obligations relate to it:
(a) Each of PMT and Data Transfer shall carry on their respective
businesses in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and shall use all reasonable efforts to
preserve intact their present business organizations, maintain their rights
and franchises and preserve their relationships with customers, suppliers
and others having business deals with them to the
18
end that their good will and ongoing businesses shall not be impaired in
any material respect at the Effective Time.
(b) From the date hereof to the Effective Time, each of Data
Transfer and PMT shall allow all designated officers, attorneys,
accountants and other representatives of the other access at all reasonable
times during regular business hours to the records and files,
correspondence, audits and properties, as well as to all information
relating to commitments, contracts, titles and financial position, or
otherwise pertaining to the business and affairs, of Data Transfer and PMT.
(c) PMT and Data Transfer shall cooperate and promptly prepare
and PMT shall, at PMT's expense, file with the SEC, as soon as practicable
after the Closing Date, a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"1933 Act"), with respect to the resale of the PMT Common Stock issuable
in the Merger. PMT and Data Transfer will cause the Registration Statement
to comply as to form in all material respects with the applicable
provisions of the 1933 Act, and the rules and regulations thereunder. PMT
shall use all reasonable efforts, and Data Transfer will cooperate with
PMT, to have the Registration Statement declared effective by the SEC by
December 31, 1996, or as promptly as practicable thereafter. PMT agrees to
use its best efforts to keep the Registration Statement effective for a
period of 150 days (plus any Blackout Period) after the effective date or
through April 30, 1997, whichever is later, and to promptly file amendments
to the Registration Statement or promptly file such reports and/or
statements required by the Securities Exchange Act of 1934 ("Exchange
Act"), as amended, to the extent necessary so that such Registration
Statement, including the Exchange Act reports and/or statements
incorporated therein, will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. PMT shall use its best efforts
to obtain prior to the effective date of the Registration Statement, and
prior to the effective date of any registration statement effected pursuant
to Section 6.2 hereof, all necessary state securities law or "Blue Sky"
permits or approvals required to carry out the transactions contemplated by
this Agreement. PMT agrees that the Registration Statement and each
amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of circumstances under which they were
made, not misleading; provided, however, that the foregoing shall not apply
to the extent that any such untrue statement of a material fact or omission
to state a material fact was made by PMT in reliance upon and in conformity
with information concerning Data Transfer furnished to PMT by Data Transfer
for use in the Registration Statement. Data Transfer agrees that the
information provided by it for inclusion in the Registration
Statement and each amendment or supplement thereto, at the time it is filed
or becomes effective, will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which
19
they were made, not misleading. No amendment or supplement to the
Registration Statement will be made by PMT or Data Transfer without the
approval of the other party. PMT will advise Data Transfer and each of the
holders of the PMT Common Stock issuable in the Merger, promptly after it
receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the PMT
Common Stock issued in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the
Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(d) Except as and to the extent required by law, PMT and Data
Transfer hereby agree not to disclose or use, and each shall cause its
representatives not to disclose or use, any confidential information with
respect to the other party hereto furnished, or to be furnished, by such
other party or their representatives in connection herewith at any time or
in any manner other than in connection with its evaluation of the Merger.
Except as required by law, and as set forth in this subparagraph (d),
neither Data Transfer nor its representatives shall make any public
statements regarding the Merger or this Agreement without the prior
approval of PMT. After reasonable prior notice to Data Transfer, PMT may
make such statements, disclosures and filings as it is advised by its
counsel are necessary or appropriate for a public company. In the event
the Merger is not effective for any reason, the confidentiality letter
agreement between PMT and Data Transfer shall remain in full force and
effect.
(e) PMT represents that it believes it is currently eligible to
utilize Form S-3 and currently believes there is no material non-public
information which would preclude it from filing a registration statement on
Form S-3. PMT agrees to use its best efforts to avoid any event that makes
PMT ineligible to use Form S-3 in accordance with this Agreement.
(f) PMT agrees to use its best efforts to file with the SEC in a
timely manner all reports and other documents required of PMT under the
1933 Act and the Exchange Act.
6.2 Registration.
(a) Beginning after April 30, 1997, PMT and Data Transfer agree that
if at any time thereafter PMT shall propose to file a registration
statement with respect to any of its Common Stock on a form suitable for a
secondary offering, it will give notice in writing to such effect to the
registered holders of the PMT shares of Common Stock to be issued in the
Merger (the "PMT Shares"), at least 30 days prior to such filing, and,
at the written request of any such registered holder, made within 10 days
after the receipt of such notice, will include therein at PMT's cost and
expense (except for the fees and expenses of counsel to such holders and
underwriting discounts and commissions,
20
attributable to the PMT Shares included therein) such of the PMT Shares as
such holders shall request; provided, however, that if the offering being
registered by PMT is underwritten and if no other outstanding Common Stock
of any selling shareholder of PMT is included therein and if the
representative of the underwriters certifies in writing that the inclusion
therein of the PMT Shares would materially and adversely affect the sale of
the securities to be sold by PMT thereunder, the public offering of the PMT
Shares included in such registration statement shall be delayed for a
period of 90 days after the commencement of the underwritten public
offering, provided that the representative of the underwriters certifies in
writing that such delayed offering would not materially and adversely
affect the sale of the securities to be sold by PMT or, if the
representative of the underwriters will not so certify, the Data Transfer
Shareholders shall not be permitted to participate in the registration.
PMT, at its own expense, will cause the prospectus included in such
registration statement to meet the requirements of the Securities Act until
the earlier of the date that is 270 days after the effective date of such
registration statement (or 365 days after such date if such offering of the
PMT Shares is delayed as set forth in this Section 6.2(a)) or until all
shares included therein have been sold.
(b) At the time any registration statement filed in accordance with
the provisions of Section 6.1(c) or 6.2(a) becomes effective, and at the
effective date of any post-effective amendment thereto, PMT will, at its
own expense, furnish to the holders of the PMT Shares included in such
registration statement pursuant to Section 6.1(c) or 6.2, an opinion of
PMT's counsel to the effect that the registration statement and the
prospectus contained therein, and each amendment or supplement thereto, as
of their respective effective or issue dates, comply as to form in all
material respects with the requirements of the Securities Act and the rules
and regulations thereunder. Such counsel shall also state that no facts
have come to the attention of such counsel that cause them to believe that
such registration statement, the prospectus contained therein, or any
amendment or supplement thereto, as of their respective effective or issue
dates, contains any untrue statement of any material fact or omits to state
any material fact necessary to make the statements therein not misleading
(except that no statement need be made with respect to any financial
statements, notes thereto or other financial or statistical data or other
expertized material contained therein). If for any reason PMT's counsel is
unable to make such statement, PMT shall so notify the Data Transfer
Shareholders and shall use its best efforts to remove expeditiously all
impediments to the rendering of such opinion.
(c) PMT shall promptly notify the participating holders of the PMT
Shares of the occurrence of any event as a result of which any current
prospectus included in a registration statement filed pursuant to this
Section 6.2 includes any misstatement of a material fact or omits to state
any material fact to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing, and shall promptly file amendments to the Registration Statement
or promptly file such reports and/or statements required by the Exchange
Act to the extent necessary so that such
21
registration statement, including the Exchange Act reports and/or
statements incorporated therein, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
circumstances under which they were made, not misleading.
(d) PMT's obligations under Section 6.2(a) with respect to each holder
of PMT Shares are expressly conditioned upon such holder's furnishing to
PMT in writing such information concerning such holder and the terms of
such holder's proposed offering as PMT shall reasonably request for
inclusion in the registration statement. In the case of each registration
effected pursuant to this Agreement, PMT shall indemnify each holder
thereof (and each underwriter for such holder and each person, if any, who
controls such underwriter within the meaning of the Securities Act) from
any loss, claim, damage or liability arising out of or based upon any
untrue statement of a material fact contained in such registration
statement or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except for any such statement or omission based on information furnished in
writing by such holder of PMT Shares expressly for use in connection with
such registration statement; and such holder shall indemnify PMT (and each
of its officers and directors who has signed such registration statement,
each director, each person, if any, who controls PMT within the meaning of
the Securities Act, each underwriter for PMT and each person, if any, who
controls such underwriter within the meaning of the Securities Act) and
each other such holder against any loss, claim, damage or liability arising
from any such statement or omission which was made in reliance upon
information furnished in writing to PMT by such holder of PMT Shares
expressly for use in connection with such registration statement.
(e) PMT shall furnish to each holder of PMT Shares such number of
copies of any prospectus (including any preliminary prospectus and any
amended or supplemented prospectus) in conformity with the requirements of
the 1933 Act, and such other documents, as such holder of PMT Shares may
reasonably request in order to effect the offering and sale of the PMT
Shares to be offered and sold, but only while PMT shall be required under
the provisions hereof to cause the registration statement to remain
current.
(f) The Company shall not be required to effect a registration under
this Agreement if in the written opinion of counsel to the Company, which
counsel and the opinion so rendered shall be reasonably acceptable to the
holders of PMT Shares requesting registration, such holders may sell
without registration under the 1933 Act all PMT Shares for which they
requested registration under the provisions of the 1933 Act and in the
quantity in which the PMT Shares were proposed to be sold, or if the
Company shall have obtained from the SEC a "no-action" letter to that
effect.
6.3 Blackout Period. PMT shall be entitled, once per registration
statement, to (i) postpone the filing or effectiveness of any Registration
Statement contemplated under Section
22
6.1(c) and Section 6.2 hereof; or (ii) if effective, elect that any such
Registration Statement not be useable and require the Data Transfer Shareholders
to suspend sales pursuant to the prospectus contained therein, for a reasonable
period of time, but not in excess of 60 days (a "Blackout Period"), if PMT
determines in good faith that the registration and distribution of the shares of
PMT Common Stock (or the use of the Registration Statement or related
prospectus) would interfere with any pending material acquisition, material
corporation reorganization or any other premature disclosure thereof. PMT shall
promptly give the Data Transfer Shareholders written notice of such termination,
containing a general statement of the reasons for such postponement or
restriction of use and an approximation of the anticipated delay.
6.4 Covenants of Data Transfer. Data Transfer covenants and agrees that
between the date hereof and continuing until the Effective Time (except as
expressly contemplated or permitted hereby, or to the extent that PMT shall
otherwise consent in writing):
(a) Prior to the Effective Time, Data Transfer agrees (a) that it
shall, and shall direct and use its best efforts to cause its directors,
officers, employees, shareholders, advisors, accountants and attorneys (the
"Representatives"), including such Representatives of any of Data
Transfer's affiliated entities or persons, not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger,
acquisition, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of Data Transfer (any such proposal or offer being hereinafter
referred to as a "Acquisition Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement a
Acquisition Proposal; (b)that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing and will
take the necessary steps to inform the individuals or entities referred to
above of the obligations undertaken in this Section 6.4(a).
(b) Data Transfer will make all normal and customary repairs,
replacements, and improvements to its facilities, will not dispose of any
assets (other than inventory in the ordinary course of business) other than
at fair market value and with the prior written consent of PMT, and without
limiting the generality of the foregoing or the covenants set forth in
6.1(a), Data Transfer will not, without the prior written consent of PMT
which consent shall not be unreasonably withheld with respect to the
matters set forth in (ix):
(i) change its Articles of Incorporation or bylaws or merge and
consolidate with or into any entity or obligate itself to do so;
(ii) other than a dividend in customary amounts payable prior to
Closing, declare, set aside or pay any cash dividend or other
distribution on or
23
in respect of shares of its capital stock, or any redemption,
retirement or purchase with respect to its capital stock or issue any
additional shares of its capital stock. Data Transfer may pay
reasonable fees and expenses related to the transaction contemplated
herein in accordance with a schedule of estimated fees and expenses
approved by PMT;
(iii) other than normal payments on loans for borrowed money,
discharge or satisfy any lien, charge, encumbrance or indebtedness
outside the ordinary course of business, except those required to be
discharged or satisfied;
(iv) authorize, guarantee or incur indebtedness aggregating in
excess of $50,000;
(v) make any capital expenditures or capital additions or
betterments, or commitments therefor, aggregating in excess of
$50,000;
(vi) loan funds to any person;
(vii) institute, settle or agree to settle any litigation,
action or proceeding before any court or governmental body;
(viii) mortgage, pledge or subject to any other encumbrance any
of its property or assets, tangible or intangible;
(ix) other than ordinary and customary raises for employees
authorize any compensation increases of any kind whatsoever for any
employee, provided Data Transfer shall pay owing or accrued deferred
compensation;
(x) enter into any material contract including leases and real
estate agreements; or
(xi) enter into any transaction outside the ordinary course of
business.
(c) [INTENTIONALLY OMITTED.]
(d) Without the prior written consent of PMT, Data Transfer shall not
take any action which would cause or tend to cause the conditions upon the
obligations of the parties hereto to effect the transactions contemplated
hereby not to be fulfilled; including without limitation, taking, causing
to be taken, or permitting or suffering to be taken or to exist any action,
condition or thing which would cause the representations and warranties
made by Data Transfer herein not to be true, correct and accurate as of the
Closing Date.
24
(e) Data Transfer shall not take any action that will result, directly
or indirectly, in a material adverse change in the value of the Merchant
Accounts taken as a whole since June 30, 1996.
(f) Data Transfer, prior to the Closing Date, shall have delivered its
audited financial statements for the year ended December 31, 1995 and its
unaudited statements for the six month period ended June 30, 1996, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein. Data Transfer shall promptly provide to PMT monthly and quarterly
financial statements of Data Transfer.
(g) Data Transfer, prior to the Closing Date, shall have arranged for
the cancellation or exercise of the outstanding options or warrants to
purchase Data Transfer Common Stock.
(h) From and after the date hereof and until the Effective Time, Data
Transfer shall not (i) knowingly take any action, or knowingly fail to take
any action, that would jeopardize the treatment of the Merger as a "pooling
of interests" for accounting purposes; (ii) knowingly take any action, or
knowingly fail to take any action, that would jeopardize qualification of
the Merger as a reorganization within the meaning of Section 368(a)(2)(E)
of the Code; or (iii) enter into any contract, agreement, commitment or
arrangement with respect to either of the foregoing.
(i) Data Transfer shall complete and file its federal and state income
tax returns for the calendar 1996 periods up to the Closing Date. PMT
shall provide reasonable assistance and financial information necessary for
Data Transfer or its agents to complete and file such income tax returns.
(j) Data Transfer shall accrue a liability, prior to Closing, for
distributions to its shareholders on a basis consistent with periodic
distributions declared and paid by Data Transfer in the historical
financial statements referenced herein. These distributions shall be in an
amount and form reasonably intended to allow the Data Transfer shareholders
to pay estimated income tax deposits attributable to the income flowing
through to the personal income tax returns of the Data Transfer
shareholders as a result of S- corporation status.
6.5 Covenants of PMT. PMT covenants and agrees that between the date
hereof and continuing until the Effective Time (except as expressly contemplated
or permitted hereby, or to the extent that Data Transfer shall otherwise consent
in writing):
(a) PMT shall promptly prepare and submit to the Nasdaq National
Market a listing application covering the shares of PMT Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to
the Effective Time, approval for the listing of such PMT Common Stock,
subject to official notice of issuance.
25
(b) PMT shall promptly send Data Transfer copies of all filings with
the SEC.
(c) Without the prior written consent of Data Transfer, PMT shall not
take any action which would cause or tend to cause the conditions upon the
obligations of the parties hereto to effect the transactions contemplated
hereby not to be fulfilled; including without limitation, taking, causing
to be taken, or permitting or suffering to be taken or to exist any action,
condition or thing which would cause the representations and warranties
made by PMT herein not to be true, correct and accurate as of the Closing
Date.
(d) From and after the date hereof and until the Effective Time, PMT
shall not (i) knowingly take any action, or knowingly fail to take any
action, that would jeopardize the treatment of the Merger as a "pooling of
interests" for accounting purposes; (ii) knowingly take any action, or
knowingly fail to take any action, that would jeopardize qualification of
the Merger as a reorganization within the meaning of Section 368(a)(2)(E)
of the Code; or (iii) enter into any contract, agreement, commitment or
arrangement with respect to either of the foregoing.
(e) To the extent PMT elects, for whatever reason or no reason, not to
retain any Data Transfer employees, for one year following the Closing
Date, PMT will not oppose such person's claim for unemployment benefits,
and PMT shall complete all appropriate questionnaires or claim forms
required by state officials in this regard. As of the date hereof, PMT has
made no representations, other than in good faith, regarding PMT's intent
to retain any Data Transfer employees.
(f) PMT agrees that after the Effective Time, it will indemnify any
person who has rights to indemnification from Data Transfer to the same
extent and on the same conditions as such person is entitled to
indemnification pursuant to Data Transfer's Articles of Incorporation or
Bylaws as in effect on the date of this Agreement.
(g) PMT shall report post-Merger combined results of Data Transfer and
PMT in a Current Report on Form 8-K no later than 30 days after the end of
the First full calendar month following the Effective Time if the
requirement for publication of 30 days post-Merger combined results shall
not have been satisfied in some other manner by such time in compliance
with applicable rules.
ARTICLE 7
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
26
(a) No action or proceeding shall have been instituted before a
court or other governmental body by any governmental agency or public
authority to restrain or prohibit the transactions contemplated by this
Agreement or to obtain an amount of damages or other material relief in
connection with the execution of the Agreement or the related agreements or
the consummation of the Merger; and no governmental agency shall have given
notice to any party hereto to the effect that consummation of the
transactions contemplated by this Agreement would constitute a violation of
any law or that it intends to commence proceedings to restrain consummation
of the Merger.
(b) The PMT Common Stock to be issued in the Merger shall have
been listed on the NASDAQ, and all necessary state securities law permits
or approvals shall have been obtained.
(c) PMT and Data Transfer shall have received an opinion of their
own counsel satisfactory to them, generally to the effects that (i) the
Merger qualifies as a reorganization under Section 368(a)(2)(E) of the
Code, (ii) no material gain or loss will be recognized by Data Transfer or
PMT as a result of the Merger, (iii) shareholders of Data Transfer who
receive in the Merger solely either PMT Common Stock or PMT Common Stock
and cash in lieu of fractional shares will recognize no gain or loss for
federal income tax purposes with respect to the PMT Common Stock received
in the Merger, and (iv) the Merger will not have a material adverse effect
on the federal income tax consequences of PMT; provided that the failure to
satisfy the requirements of clauses (ii) and (iv) of this subsection shall
constitute a condition to consummation of the Merger only if asserted by
PMT, and the failure to satisfy the requirements of clause (iii) of this
subsection shall constitute a condition to consummation of the Merger only
if asserted by Data Transfer.
(d) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement, including those required under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, shall have been obtained
or made, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Time and except where
the failure to have obtained or made any such consent, authorization,
order, approval, filing or registration would not have a material adverse
effect on the business of PMT and Data Transfer, taken as a whole,
following the Effective Time.
(e) PMT shall have received from Data Transfer copies of all
resolutions adopted by the Board of Directors and shareholders of Data
Transfer in connection with this Agreement and the transactions
contemplated hereby. Data Transfer shall have received from PMT and Merger
Sub copies of all resolutions adopted by the Board of Directors of each
respective company and the shareholders of Merger Sub in connection with
this Agreement and the transactions contemplated hereby.
27
7.2 Conditions to Obligation of Data Transfer to Effect the Merger. The
obligation of Data Transfer to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) PMT shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of PMT and Merger Sub contained in this
Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing Date, and Data Transfer shall have
received a certificate of the President or the Chief Financial Officer,
dated the Closing Date, certifying to such effect.
(b) From the date of this Agreement through the Effective Time, there
shall not have occurred any material change in the financial condition,
business, operations or prospects of PMT, that would have or would be
reasonably likely to have a PMT Material Adverse Effect other than any such
change that affects both Data Transfer and PMT in a substantially similar
manner.
(c) Data Transfer shall have received a written opinion, dated as of
the Closing Date, from the legal counsel of PMT, in form and substance
satisfactory to it, as to certain matters agreed upon by legal counsel of
PMT and Data Transfer.
(d) Prior to the Closing, Data Transfer shall not have notified PMT in
writing that Data Transfer's review of PMT's business, operations, and the
matters disclosed in the PMT Disclosure Letter has revealed matters
(described in reasonable detail) which in Data Transfer's reasonable
business judgment would adversely affect the business or operations of PMT.
7.3 Conditions to Obligation of PMT and Merger Sub to Effect the Merger.
The obligations of PMT and Merger Sub to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) Data Transfer shall have performed its agreements contained in
this Agreement required to be performed on or prior to the Closing Date and
the representations and warranties of Data Transfer contained in this
Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing Date, and PMT shall have received a
certificate of the President of Data Transfer, dated the Closing Date,
certifying to such effect.
(b) PMT shall be satisfied that the Merger will qualify for accounting
by PMT as a pooling of interests under generally accepted accounting
principles and under applicable rules and regulations of the SEC. In
connection therewith, PMT shall have received, on or before the Closing
Date, a letter from Price Waterhouse LLP (or any other accountants of PMT's
choosing) dated as of the Closing Date to the effect that the
28
transactions contemplated by this Agreement may be treated by PMT as a
"pooling of interests" for accounting purposes.
(c) [Intentionally omitted.]
(d) From the date of this Agreement through the Effective Time, there
shall not have occurred any material change in the financial condition,
business, operations or prospects of Data Transfer, other than any such
change that affects both Data Transfer and PMT in a substantially similar
manner.
(e) By or before the Closing Date, each of Xxxxxx X. Xxxxxx, Xxxxxxx
X. Xxxxxx and Xxxx Xxxxx of Data Transfer, will have executed a valid non-
competition agreement, with Data Transfer.
(f) PMT shall have received a written opinion, dated as of the Closing
Date, from the legal counsel of Data Transfer, in form and substance
satisfactory to it, as to certain matters agreed upon by legal counsel of
PMT and Data Transfer.
(g) Prior to the Closing, PMT shall not have notified Data Transfer in
writing that PMT's review of Data Transfer's business, operations, and the
matters disclosed in the Data Transfer Disclosure Letter has revealed
matters (described in reasonable detail) which in PMT's reasonable business
judgment would adversely affect the business or operations of Data
Transfer.
(h) Prior to the Closing, PMT shall have determined that the
consummation of the Merger meets all applicable requirements of any loan
agreements to which it is a party.
(i) In order to ensure that following the consummation of the Merger
certain directors and officers of Data Transfer shall not engage in certain
activities as specified in the noncompetition agreements, the directors of
Data Transfer shall have executed noncompetition agreements, in form and
substance satisfactory to PMT and the directors.
(j) The Dissenting Data Transfer Shares shall not exceed 10% of the
total number of outstanding shares of Data Transfer Common Stock.
ARTICLE 8
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval
29
of this Agreement by the shareholders of Data Transfer, by the mutual consent of
PMT and Data Transfer.
8.2 Termination by Either PMT or Data Transfer. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of either PMT or Data Transfer if (a) the Merger shall not have been consummated
by August 31, 1996, or (b) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable;
provided, that the party seeking to terminate this Agreement pursuant to this
clause (b) shall have used all reasonable efforts to remove such injunction,
order or decree.
8.3 Termination by Data Transfer. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the adoption and approval by the shareholders of Data Transfer, by action
of the Board of Directors of Data Transfer, if there has been a breach by PMT or
Merger Sub of any representation or warranty contained in this Agreement which
would have or would be reasonably likely to have a PMT Material Adverse Effect,
or (b) there has been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of PMT, which breach is not curable or,
if curable, is not cured within 30 days after written notice of such breach is
given by Data Transfer to PMT.
8.4 Termination by PMT. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, by action of the Board
of Directors of PMT, if (a) there has been a breach by Data Transfer of any
representation or warranty contained in this Agreement which would have or would
be reasonably likely to have an Data Transfer Material Adverse Effect, (b) there
has been a material breach of any of the covenants or agreements set forth in
this Agreement on the part of Data Transfer, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by PMT to Data Transfer, or (c) the Merger will not qualify for accounting
by PMT as a pooling of interests under generally accepted accounting principles
and under applicable rules and regulations of the SEC.
8.5 Effect of Termination and Abandonment. Upon termination of this
Agreement pursuant to this Article, this Agreement shall be void and of no other
effect, and there shall be no liability by reason of this Agreement or the
termination thereof on the part of any party hereto, or on the part of the
respective directors, officers, employees, agents or shareholders of any of
them.
8.6 Extension; Waiver. At any time prior to the Effective Time, any party
hereto, by action taken by its Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive
30
any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for the benefit of such
parry contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE 9
INDEMNIFICATION
(a) Indemnification by Controlling Data Transfer Stockholders. Subject to
the provisions of Sections 9(b), the Controlling Data Transfer Stockholders
shall severally indemnify, save and keep PMT (including Data Transfer following
the Merger) and its affiliates, successors and permitted assigns (the "PMT
Indemnitees"), harmless against and from, and will reimburse the PMT Indemnitees
on demand for, any liability, demands, claims, actions or causes of action,
assessments, losses, fines, penalties, costs, damages and expenses, including
reasonable attorneys' fees, disbursements and expenses (collectively,
"Damages"), sustained or incurred by any of the PMT Indemnitees at any time
after the Closing Date as a result of, arising out of or by virtue of, (i) any
misrepresentation, breach of any warranty or representation in any material
respect, or nonfulfillment of any agreement or covenant on the part of Data
Transfer or the Controlling Data Transfer Stockholders in any material respect,
whether contained in this Agreement or any Exhibit or Schedule hereto or thereto
or any written statement or certificate furnished or to be furnished to PMT
pursuant hereto or in any closing document delivered by Data Transfer or the
Controlling Data Transfer Stockholders to PMT in connection herewith, or (ii)
any final resolution, by settlement, adjudication, arbitration or otherwise, of
any litigation or other adversarial proceeding pending or threatened against
Data Transfer on the Closing Date as indicated in the DTA Disclosure Letter.
(b) Controlling Data Transfer Stockholders' Liability. In no event shall
the obligation of the Controlling Data Transfer Stockholders to indemnify PMT
Indemnitees pursuant to Section 9(a) hereof exceed $1.2 million. The
obligations of the Controlling Data Transfer Stockholders to indemnify PMT in
respect to any Damages shall be several and not joint. Subject to the
immediately preceding proviso, each Controlling Data Transfer Stockholder shall
be liable for his pro rata percentage (based on the number of shares of PMT
Common Stock received pursuant to Section 3.1 hereof) of Damages.
(c) Indemnification by PMT. Upon the terms and subject to the conditions
set forth in Section 9(d) hereof and this Section 9(c), PMT agrees to indemnify
and hold the Controlling Data Transfer Stockholders (the "Stockholder
Indemnitees") harmless against and from, and will reimburse the Stockholder
Indemnitees on demand for, any Damages sustained or incurred by any of the
Controlling Data Transfer Stockholder Indemnitees at any time after the Closing
Date as a result of, arising out of or by virtue of any misrepresentation,
breach of any warranty or representation in any material respect, or
nonfulfillment of any agreement or covenant on the part of PMT in any material
respect, whether contained in this Agreement or any Exhibit or Schedule hereto
or thereto, or any written statement or certificate furnished or to be furnished
31
to the Controlling Data Transfer Stockholders pursuant hereto or
in any closing document delivered by PMT to Data Transfer or the Controlling
Data Transfer Stockholders in connection herewith.
(d) Conditions of Indemnification Pursuant to Sections 9(a) and 9(c). (i)
Promptly following the receipt by an PMT Indemnitee or a Stockholder Indemnitee
(as defined in Section 9(c) herein) as the case may be, of notice of a demand,
claim, action, assessment or proceeding made or brought by a third party,
including a governmental agency (a "Third Party Claim"), the PMT Indemnitee or
Stockholder Indemnitee receiving the notice of the Third Party Claim (A) shall
promptly notify the Controlling Data Transfer Stockholders or PMT, as the case
may be, of its existence, setting forth the facts and circumstances of which
such PMT Indemnitee or Stockholder Indemnitee has received notice, and (B) if
the PMT Indemnitee or Stockholder Indemnitee giving such notice is a person
entitled to indemnification under this Section 9 (an "Indemnified Party"), such
Indemnified Party shall specify in such notice the basis hereunder upon which
the Indemnified Party's claim for indemnification is asserted.
(ii) The Indemnified Party shall, upon reasonable notice by the
Controlling Data Transfer Stockholders or PMT, as the case may be, tender the
defense of a Third Party Claim to the Controlling Data Transfer Stockholders or
PMT, as the case may be (the "Indemnifying Party"). If the Indemnifying Party
accepts responsibility for the defense of a Third Party Claim, then the
Indemnifying Party shall have the exclusive right to contest, defend and
litigate the Third Party Claim and shall have the exclusive right, in its
discretion exercised in good faith and upon the advice of counsel, to settle any
such matter, either before or after the initiation of litigation, at such time
and upon such terms as it deems fair and reasonable, provided that at least ten
days prior to any such settlement, it shall give written notice of its intention
to settle to the Indemnified Party. The Indemnified Party shall have the right
to be represented by counsel at its own expense in any defense conducted by the
Indemnifying Party.
(iii) If, in accordance with the foregoing provisions of this Section
9(d), an Indemnified Party shall be entitled to indemnification against a Third
Party Claim, and if the Indemnifying Party shall fail to accept the defense of a
Third Party Claim that has been tendered in accordance with this Section 9(d),
the Indemnified Party shall have the right, without prejudice to its right of
indemnification hereunder, in its discretion exercised in good faith and upon
the advice of counsel, to contest, defend and litigate such Third Party Claim,
and may settle such Third Party Claim, either before or after the initiation of
litigation, at such time and upon such terms as the Indemnified Party deems fair
and reasonable, provided at least ten days prior to any such settlement, written
notice of its intention to settle is given to the Indemnifying Party. If,
pursuant to this Section 9(d) the Indemnified Party so defends or settles a
Third Party Claim for which it is entitled to indemnification hereunder, as
hereinabove provided, the Indemnified Party shall be reimbursed by the
Indemnifying Party for the reasonable attorneys' fees and other expenses of
defending the Third Party Claim that is incurred from time to time, immediately
following the presentation to the Indemnifying Party of itemized bills for said
attorneys' fees and other expenses. No failure by the Indemnifying Party to
acknowledge in writing its indemnification obligations under this Section 9
shall relieve it of such obligations to the extent they exist.
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(iv) Notwithstanding the foregoing, in connection with any settlement
negotiated by the Indemnifying Party, no Indemnified Party shall be required to
(A) enter into any settlement (I) that does not include the delivery by the
claimant or plaintiff to the Indemnified Party of a release from all liability
in respect of such claim or litigation, or (II) if the Indemnified Party shall,
in writing to the Indemnifying Party within the ten day period prior to such
proposed settlement, disapprove of such settlement proposal (which settlement
proposal will not be unreasonably disapproved) and desire to have the
Indemnifying Party tender the defense of such matter back to the Indemnified
Party, or (B) consent to the entry of any judgment that does not include a full
dismissal of the litigation or proceeds against the Indemnified Party with
prejudice; provided, however, that should the Indemnified Party disapprove of a
settlement proposal pursuant to Clause (II) above, the Indemnified Party shall
thereafter have all of the responsibility for defending, contesting and settling
such Third Party Claim but shall not be entitled to indemnification by the
Indemnifying Party to the extent that, upon final resolution of such Third Party
Claim, the Indemnifying Party's liability to the Indemnified Party but for this
proviso exceeds what the Indemnifying Party's liability to the Indemnified Party
would have been if the Indemnifying Party were permitted to settle such Third
Party Claim in the absence of the Indemnified Party exercising its right under
Clause (II) above.
(e) Release by the Controlling Data Transfer Stockholders. Effective upon
the Closing, the Controlling Data Transfer Stockholders hereby release and
discharge PMT and its subsidiaries and each of its officers and directors from,
and agree and covenant that in no event will the Controlling Data Transfer
Stockholders commence any litigation or other legal or administrative proceeding
against, PMT, its Subsidiaries or any of their officers or directors, whether in
law or equity, relating to any and all claims and demands, known and unknown,
suspected and unsuspected, disclosed and undisclosed, for damages, suspected or
consequential, past, present and future, arising out of or in any way connected
with their ownership of the Data Transfer Shares prior to the Effective Time,
other than claims or demands arising out of or in any way connected with this
Agreement and the agreements and other documents contemplated hereby and the
transaction contemplated hereby and thereby; provided, however, that nothing
contained herein shall relieve any obligations of PMT to indemnify the
Controlling Data Transfer Stockholders pursuant to Section 9 hereof.
(f) Survival. All of the terms and conditions of this Agreement, together
with the representations, warranties and covenants contained herein or in any
instrument or document delivered or to be delivered pursuant to this Agreement,
shall survive the execution of this Agreement and the Closing Date
notwithstanding any investigation heretofore or hereafter made by or on behalf
of any party hereto; provided, however, that all representations and warranties,
and the agreements of the Controlling Data Transfer Stockholders and PMT to
indemnify each other set forth in this Section 9, shall survive and continue
for, and all claims with respect thereto shall be made prior to the end of, 12
months from the Closing Date, except for (i) the covenants contained in this
Section 9 which shall survive until, and all claims with respect thereto shall
be made within, 60 days after the expiration of the applicable statute of
limitations, and (ii) representations, warranties and indemnities for which an
indemnification claim shall be pending as of the end of the applicable period
referred to above, in which event such indemnities shall survive with respect to
such claim until the final disposition thereof, and (iii) the covenants
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set forth in subsection 9(a)(ii) above shall survive until 60 days after the
final resolution of all such litigation and claims.
ARTICLE 10
GENERAL PROVISIONS
10.1 Survival. The representations and warranties of the parties and the
Controlling Data Transfer Stockholders shall survive until the first anniversary
of the Closing Date.
10.2 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, by courier service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and first-
class postage prepaid), addressed as follows:
If to PMT or Merger Sub: If to Data Transfer:
Xxxxxxx X. Daily Xxxx Xxxxx
President President
PMT Services, Inc. Date Transfer Associates, Inc.
Two Maryland Farms, Suite 200 0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000 Xxx Xxxxxxx, Xxxxxxxx 00000
with a copy to: with a copy to:
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx Xxxxxx Xxxxxx Xxxxxx Ltd.
000 Xxxxx Xxxxxx, Xxxxx 0000 000 Xxxxx Xx Salle Street, 28th Floor
Nashville, Tennessee 37219-1760 Xxxxxxx, Xxxxxxxx 00000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
10.3 Assignment, Binding Effect; Benefit. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
10.4 Entire Agreement. This Agreement, the Exhibits, the Data Transfer
Disclosure Letter, the PMT Disclosure Letter, the confidentiality letter and any
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, discussions, negotiations, inducements and
understandings among the parties with respect thereto. No addition to or
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modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
10.5 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
shareholders of Data Transfer and PMT, but after any such stockholder approval,
no amendment shall be made which by law requires the further approval of
shareholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
10.6 Governing Law. The validity of this Agreement, the construction of
its terms and the determination of the rights and duties of the parties hereto
shall be governed by and construed in accordance with the laws of the United
States and those of the State of Illinois applicable to contracts made and to be
performed wholly within such state.
10.7 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
10.8 Headings. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
10.9 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
10.10 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
10.11 Incorporation of Exhibits. The Data Transfer Disclosure Letter, the
PMT Disclosure Letter and the Exhibits attached hereto and referred to herein
are hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
10.12 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
35
provisions of this Agreement or affecting the validity or enforceability of any
of the terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
10.13 Expenses. Each party to this Agreement shall bear its own expenses
in connection with the Merger and the transactions contemplated hereby;
provided, however, that if the Merger is not consummated for any reason other
than (a) a willful breach of this Agreement by Data Transfer; (b) the failure by
Data Transfer to satisfy the covenant set forth in Section 6.2(e); (c) Data
Transfer's taking or causing to be taken any action which it knows, after
reasonable inquiry to its independent accountants, would disqualify the
transaction as a pooling of interests; or (d) the failure of Data Transfer's
shareholders to approve the Merger, then PMT shall promptly reimburse Data
Transfer for its reasonable expenses incurred in connection with the preparation
and audit of Data Transfer's audited financial statements.
10.14 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.15 Press Releases. All press releases issued by PMT or Data Transfer
with respect to these transactions shall be in form reasonably approved by PMT
and Data Transfer.
10.16 No Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto and their
respective successors or assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf as of the day and year first written
above.
PMT SERVICES, INC.
ATTEST:
By:/s/ Xxxxxx X. Xxxxxxx By:/s/ Xxxxxxx X. Daily
------------------------ -----------------------------
Xxxxxxx X. Daily
President
PMT ILLINOIS ACQUISITION
CORPORATION
ATTEST:
By:/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Daily
------------------------ -----------------------------
Xxxxxxx X. Daily
President
DATA TRANSFER ASSOCIATES, INC.
ATTEST:
By: By:/s/ Xxxx Xxxxx
----------------------- -----------------------------
Xxxx Xxxxx
President
ATTEST: XXXXXX X. XXXXXX
By: /s/ Xxxxxx X. Xxxxxx
----------------------- -----------------------------
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ATTEST: XXXXXXX X. XXXXXX
By: /s/ Xxxxxxx Xxxxxx
------------------ ---------------------------
ATTEST: XXXX XXXXX
By:
----------------- --------------------------
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