Joint Venture Agreement

EXECUTION COPY


JOINT VENTURE FORMATION AGREEMENT


BY AND AMONG


NATIONSBANK N.A. (CAROLINAS),
NATIONSBANK OF FLORIDA, N.A., AND
NATIONAL BANCARD CORPORATION,


AND JOINED IN BY NATIONSBANK CORPORATION
AND FIRST FINANCIAL MANAGEMENT CORPORATION


April 2, 1995


TABLE OF CONTENTS ARTICLE 1: DEFINITIONS................................................... 2
1.1 Definitions.................................................... 2


ARTICLE 2: PURCHASE OF BUSINESS AND ASSETS............................... 10
2.1 Purchase of Business from Selling Banks........................ 10
2.2 Purchase of Terminal Rental Agreements......................... 11
2.3 Purchase of TMS and Certain Fixed Assets....................... 12
2.4 Price.......................................................... 12


ARTICLE 3: FORMATION OF THE PARTNERSHIP.................................. 13
3.1 Purpose of the Joint Venture................................... 13
3.2 Formation of the Partnership................................... 13
3.3 Business of the Partnership.................................... 13
3.4 Capital Contributions.......................................... 13
3.5 Contract Ownership............................................. 16
3.6 Indemnified Contracts.......................................... 17
3.7 Assumption of Certain Liabilities.............................. 19
3.8 Management of the Partnership.................................. 20
(a) Powers.................................................. 20
(b) Composition............................................. 20
(c) Resignations............................................ 20
(d) Vacancies............................................... 20
(e) Meetings................................................ 20
(f) Procedure............................................... 21
(g) Voting, Quorum and Action; Major Decisions............. 21
(h) Matters Reserved for the NB Sub......................... 21
(i) Veto Rights............................................. 22
(j) Special NB Sub Veto Rights.............................. 22
3.9 President and Controller....................................... 23
3.10 Name and Trademark............................................. 23


ARTICLE 4: INFORMATION AND SERVICES...................................... 23
4.1 Processing Information......................................... 24
4.2 Banking Services............................................... 24
4.3 NaBANCO Services............................................... 24
4.4 Pricing of Services............................................ 24
4.5 Card Activity.................................................. 26
4.6 Business Plan.................................................. 27


ARTICLE 5: EXCLUSIVITY AND TERRITORIES................................... 27
5.1 Exclusivity - Partnership Territory............................ 27
5.2 Exceptions from Exclusivity.................................... 28


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5.3 NaBANCO Sales.................................................. 28
5.4 National Merchants............................................. 29
5.5 Exclusivity-Expansion Territory................................ 30
5.6 Acquired Business.............................................. 33


ARTICLE 6: TERMINATION................................................... 34
6.1 Termination Events............................................. 34
6.2 Termination Notice............................................. 35
6.3 Additional Rights of Termination............................... 35
6.4 Effect on Capital Contribution Obligations..................... 37


ARTICLE 7: LIQUIDATION................................................... 37
7.1 Rights on Termination.......................................... 37
7.2 Partnership Liquidation........................................ 38
7.3 Non-Compete Covenant........................................... 40
7.4 On-Going Services.............................................. 40
7.5 Early Liquidation.............................................. 41
7.6 Termination Fee................................................ 41


ARTICLE 8: CASH ADVANCES................................................. 41
8.1 Purchase of Cash Advance Fees.................................. 41
8.2 Cash Advance Services.......................................... 42
8.3 Purchase Price Refund.......................................... 43
8.4 Purchase of Cash Advance Revenues by a NaBANCO Group Member.... 43


ARTICLE 9: NORFOLK; EMPLOYEES; BINs AND ICAs; OTHER MATTERS.............. 44
9.1 NB Group Merchant Operation and Conversion Expenses............ 44
9.2 Employees...................................................... 45
(a) Identification............................................ 45
(b) Severance Pay............................................. 45
(c) Benefits.................................................. 46
9.3 Transition Arrangements........................................ 47
9.4 NationsBank's BINs and ICAs.................................... 47
9.5 Payment System Indemnity....................................... 48
9.6 Special Fee.................................................... 48


ARTICLE 10: CLOSING....................................................... 48
10.1 Closing........................................................ 48


ARTICLE 11: REPRESENTATIONS AND WARRANTIES............................... 49
11.1 Representations and Warranties of NaBANCO...................... 49
(a) Corporate Organization.................................... 49
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(b) Capacity; Authorization................................... 49
(c) No Brokers................................................ 49
(d) No Violation.............................................. 49
(e) Regulatory Applications................................... 50
(f) Financial Information..................................... 50
11.2 Representations and Warranties of the Banks.................... 50
(a) Corporate Organization.................................... 50
(b) Capacity; Authorization................................... 50
(c) No Brokers................................................ 51
(d) No Violation.............................................. 51
(e) Regulatory Applications................................... 51
(f) Financial Information..................................... 51


ARTICLE 12: ADDITIONAL COVENANTS.......................................... 52
12.1 Regulatory and Other Approvals................................. 52
(a) Pursuit of Required Approvals............................. 52
(b) Cooperation............................................... 53
(c) Regulatory Applications................................... 53
12.2 Publicity...................................................... 53
12.3 Confidentiality................................................ 53
(a) Disclosure Limitation..................................... 53
(b) Confidentiality After Termination......................... 54
(c) Partnership Affected...................................... 54
(d) Survival.................................................. 54
12.4 Gain Recognition Election...................................... 54


ARTICLE 13: CONDITIONS PRECEDENT TO CLOSING............................... 54
13.1 Mutual Conditions to Obligation to
Close.......................................................... 54
(a) No Violations of Law, Litigation, Etc..................... 55
(b) Approvals................................................. 55
13.2 Additional Conditions to
Obligations of the NaBANCO Parties............................. 55
(a) Representations and Warranties, Etc....................... 55
(b) Authorization, Execution and
Delivery of Documents.......................................... 56
13.3 Additional Conditions to Obligations of the NB Parties......... 56
(a) Representations and Warranties, Etc....................... 56
(b) Authorization, Execution, and Delivery of Documents....... 56


ARTICLE 14: MISCELLANEOUS PROVISIONS..................................... 57
14.1 Notices........................................................ 57
14.2 No Agency...................................................... 58
14.3 Severability................................................... 59
14.4 Entire Agreement............................................... 59
14.5 Drafting Responsibility........................................ 59
14.6 Assignment and Succession; Assignments in Violation Void....... 59
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14.7 Expenses of Transaction........................................ 60
14.8 Waivers; Consents.............................................. 60
14.9 Further Assurances............................................. 60
14.10 Absence of Third-Party Beneficiaries........................... 60
14.11 Governing Law.................................................. 61
14.12 Alternative Dispute Resolution................................. 61
14.13 Counterparts................................................... 63


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LIST OF SCHEDULES
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Schedule 3.4A Summary of Capitalization Plan
Schedule 3.4B Pro Forma
Schedule 4.4 Included Services


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JOINT VENTURE FORMATION AGREEMENT


THIS JOINT VENTURE FORMATION AGREEMENT is entered into this 2nd day of April 1995, effective as of March 31, 1995, by and among NationsBank N.A. (Carolinas), NationsBank of Florida, N.A., both national banking associations (jointly and severally, the "Banks"), and National Bancard Corporation, a Florida corporation ("NaBANCO"). In addition, NationsBank Corporation, a North Carolina corporation ("NationsBank") that indirectly owns the Banks and directly or indirectly owns all of the Banks' Affiliates, and First Financial Management Corporation, a Georgia corporation ("FFMC") that owns NaBANCO and directly or indirectly owns all of NaBANCO's Affiliates, join in this Agreement for the purposes provided herein.


R E C I T A L S
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A. The "NB Group" and the "NaBANCO Group" (as defined below) wish to create a joint venture arrangement (the "Joint Venture") which will establish the partnership described below (the "Partnership") and will engage in other cooperative efforts.


B. The Partnership will be formed as a general partnership under Georgia law. The sole general partners of the Partnership will be NationsBank Merchant Services, a wholly-owned indirect subsidiary of the Banks which is a North Carolina partnership (the "NB Sub"), and NaBANCO Georgia, Inc., a wholly- owned subsidiary of NaBANCO which is a Georgia corporation (the "NaBANCO Sub") (the NB Sub and the NaBANCO Sub being collectively referred to as the "Partners"). The Partnership will conduct the business of the Joint Venture utilizing the personnel, customer contracts and other assets and services to be contributed by the Partners and provided by their Affiliates pursuant to this JV Agreement, the Partnership Agreement and certain other agreements described more fully herein.


C. FFMC and NationsBank are joining in this JV Agreement for purposes of agreeing that the NaBANCO Group and the NB Group, respectively, will comply with all of the provisions of this JV Agreement, will enter into the "Related Agreements" (as defined below) as applicable and will comply with all of the applicable provisions of the Related Agreements.


NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the Banks, NaBANCO, NationsBank and FFMC agree as follows:


A G R E E M E N T
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ARTICLE 1: DEFINITIONS - -----------------------


1.1 Definitions.
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For the purpose of this JV Agreement, the following definitions, whether in
the singular or in the plural, shall apply:


"Acquired Business" shall mean any Merchant Processing Business acquired by
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a Group member subsequent to the formation of the Partnership, if, but only
to the extent that, Merchant Processing Services are thereby provided to
Regional Merchants (other than Excepted Merchants in the case of a NaBANCO
Group Acquired Business) located within the Partnership Territory.


"Acquired Portfolio Purchase Price" shall mean, unless otherwise agreed to
---------------------------------
by the parties, a price equal to: 1.75 times the Annual Gross Profit if
the portfolio is purchased from a NB Group member; or the higher of (i)
1.75 times the Annual Gross Profit or (ii) the price (based on a multiple
of Annual Gross Profit) paid by the NaBANCO Group member for any such
portfolio if the portfolio is purchased from a NaBANCO Group member within
twelve months after it was purchased by the NaBANCO Group member; plus, in
each case one times terminal net rental income and net book value of
terminals and similar fixed assets, in each case based on the Regional
Merchants (other than Excepted Merchants in the case of a NaBANCO Group
Acquired Business) included in the portfolio purchased and located within
the Partnership Territory. The Annual Gross Profit and terminal net rental
income shall be computed using the same methodology set forth in Section
3.4(e), an agreed upon twelve-month period and the applicable merchant's
available operating history with the seller from which the acquiring Group
Member acquired the Acquired Business. For purposes of calculating the
Acquired Portfolio Purchase Price, Annual Gross Profit shall include
authorization fees received from merchants, net of related authorization
costs paid to third parties.


"Affected NB Employees" shall have the meaning set forth in Section 9.2(c).
---------------------


"Affiliate" of a Person shall mean another Person that directly, or
---------
indirectly through one or more intermediaries, Controls, or is Controlled
by, or is under common Control with, such Person.


"Agreed Value" shall have the meaning set forth in Section 3.4(d).
------------


"Agreement" shall mean with respect to any Person any contract, agreement,
---------
arrangement, commitment, lease, license, note, bond, indenture, mortgage,
deed of trust, lien, instrument or other understanding, whether written or
oral, to which such


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Person is a party or by which its properties or assets may be subject or
affected or under which it or its business, properties or assets receive
benefits.


"Annual Gross Profit" shall mean the gross revenue from the provision of
-------------------
Merchant Processing Services minus assessments, interchange fees, equipment
sales and rental revenue, and authorization fees associated with the
applicable Merchant Processing Business for a twelve-month period to be
determined by the parties, which period shall not end earlier than three
months preceding the date of the transfer; provided, however, that for
purposes of Section 7.2 only, such term shall include, rather than exclude,
the net equipment rental revenue from each applicable merchant. For
purposes of Sections 7.1 and 7.2 only, Annual Gross Profit shall include
authorization fees received from merchants, net of related authorization
costs paid to third parties. Annual Gross Profit shall not include manual
cash disbursement reimbursement fees (cash advances).


"Applicable Law" shall mean with respect to any party any federal, state,
--------------
local or foreign statute, law, ordinance, rule, regulation, order,
administrative interpretation, writ, injunction, directive, judgment,
decree or other requirement of any Governmental Authority applicable to
such party or to its business, properties or assets.


"Approvals" shall mean all approvals, consents, authorizations and similar
---------
actions that are necessary or required by any Governmental Authority, any
Card Association, or any other Person, in order to consummate the
transactions contemplated hereunder or under any of the Related Agreements.


"Asset Purchase Agreement" shall mean that certain Asset Purchase Agreement
------------------------
to be entered into by and among certain members of the NaBANCO Group and
certain members of the NB Group as provided in Article 2 of this Agreement,
which, in addition to providing for the purchase of certain assets by
members of the NaBANCO Group from the NB Group, shall also contain mutual
representations, warranties and indemnities (subject to mutually agreed
upon differences) from the NaBANCO Group and the NB Group with respect to
the assets each will contribute to the Partnership (excluding the assets
purchased by the NaBANCO Group from the NB Group in the case of the
representations, warranties and indemnities from the NaBANCO Group, and
including such assets in those given by the NB Group).


"Bankcard Merchant Processing Services" shall have the meaning set forth
-------------------------------------
under the definition of "Merchant Processing Business."


"Capitalization Plan" shall have the meaning set forth in Section 3.4(a).
-------------------


"Card Associations" shall mean Visa U.S.A., Visa International, MasterCard
-----------------
International, Interlink, Maestro and any other association or card issuer
having


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proprietary rights to and clearing and oversight responsibilities with
respect to any credit or debit card used to effect transactions processed
hereunder and shall also include any debit card network utilized to
authorize or settle any debit card used to effect transactions processed
hereunder and pursuant to the Sponsorship and Services Agreement.


"Card Association Rules" shall mean the by-laws, rules, regulations, orders
----------------------
and interpretations issued by the respective Card Associations applicable
to the performance of Merchant Processing Services and related matters, as
amended from time to time by the respective Card Associations.


"Cash Advance Fees" shall have the meaning set forth in Section 8.1.
-----------------


"Cash Advances" shall have the meaning set forth in Section 8.1.
-------------


"Closing" shall have the meaning set forth in Section 10.1.
-------


"Closing Date" shall have the meaning set forth in Section 10.1.
------------


"Control" or "Controlled" shall mean the ability of any Person, directly or
-----------------------
indirectly, to direct or cause the direction of the management or policies
of a Person, whether through ownership of voting securities, by contract or
otherwise.


"Dispute" shall mean any dispute arising out of or relating to this JV
-------
Agreement, a breach hereof, or the transactions contemplated hereby,
including any claim based on or arising from an alleged tort.


"Effective Date" shall have the meaning set forth in Section 10.1.
--------------


"Excepted Merchant" shall mean:
-----------------


(a) In the Initial Territory, existing NaBANCO merchants not contributed
to the Partnership at formation and, in any Expansion Territory, then
existing NaBANCO Merchants not purchased or contributed to the
Partnership in accordance with the provisions of Sections 5.5 and 5.6
hereof.


(b) MOTO Merchants except Permitted MOTO Merchants, provided, however,
that for purposes of exclusive rights of the Partnership to provide
services hereunder, business to business Permitted MOTO Merchants
shall not be restricted.


(c) NaBANCO merchants referred to NaBANCO by the Discover Card sales
force.


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(d) Any TeleCheck customer for which NaBANCO is providing the Merchant
Processing Business in the Initial Territory as of the Closing Date or
in any Expansion Territory at the time such territory becomes a
Partnership Territory.


(e) Any Regional Merchant to which NaBANCO (or any subsidiary of NaBANCO
which may be used to conduct any portion of NaBANCO's Merchant
Processing Business) provides Merchant Processing Services in
conjunction with services provided by any NaBANCO Affiliate so long
as: (i) such Merchant Processing Business is ancillary to such
Affiliate's primary business; (ii) the NaBANCO Sub has notified the NB
Sub of such services in the Initial and Expansion Territory, and (iii)
either (x) the total annualized bankcard volume sold in a calendar
year by all such Affiliates in the aggregate within the Partnership
Territory to merchants who are not otherwise Excluded Merchants does
not exceed nine percent (9%) of the bankcard volume processed by the
Partnership in the Partnership Territory in the preceding calendar
year or (y) NaBANCO takes appropriate steps to produce the same
economic results to the NB Sub as if any portion of such annualized
bankcard volume in excess of such nine percent (9%) limit had been
generated directly by the Partnership.


(f) Merchants that would ordinarily be Partnership merchants but that are
independent "sub-merchants" of an entity, the primary business of
which is not the Bankcard Merchant Processing Business, acquired by
any NaBANCO Group member. For example, Western Union Financial
Services, Inc. ("FSI") would be a National Merchant if NaBANCO were
providing the Merchant Processing Business to FSI. Now that NaBANCO
owns FSI, the individual Western Union agents are, or may be seen as
being "merchants." Notwithstanding the fact that such "merchants"
may well have annual sales volumes of under $100 million, they will
not be Partnership merchants.


"Excluded Merchants" shall mean in the Target Market, the Initial Territory
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and any Expansion Territory:


(a) National Merchants; and


(b) The United States Postal Service.


"Expansion Territory" shall mean any of the lower 48 states of the United
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States of America which is not already a Partnership Territory at the
applicable time.


"Expansion Territory Portfolio Purchase Price" shall mean, unless otherwise
--------------------------------------------
agreed to by the parties, 1.75 times the Annual Gross Profit of the
portfolios to be purchased from an NB Group member; or the higher of (i)
1.75 times the Annual Gross Profit


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or (ii) the price (based on a multiple of Annual Gross Profit) paid by a
NaBANCO Group member for any such portfolio if the portfolio is purchased
from a NaBANCO Group member within twelve months after it was purchased by
the NaBANCO Group member; plus, in each case one times terminal net rental
income and net book value of terminals and similar fixed assets, in each
case based on the Regional Merchants (other than Excepted Merchants in the
case of a portfolio acquired from a NaBANCO Group member) in the applicable
portfolio and located within the Expansion Territory. The Annual Gross
Profit and terminal net rental income shall be computed using the same
methodology set forth in Section 3.4(e) and an agreed upon twelve-month
period. For purposes of calculating the Expansion Territory Portfolio
Purchase Price, Annual Gross Profit shall include authorization fees
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