Document:

EXB 10.2 - 9.30.2011

Exhibit 10.2

MASTERCARD SETTLEMENT AND JUDGMENT SHARING AGREEMENT

WHEREAS, this MasterCard Settlement and Judgment Sharing Agreement (“Agreement”) applies to the undersigned parties (each a “Signatory,” and together the “Signatories”), who have been or may be named as defendants in the Interchange Litigation as that term is defined in Paragraph 1 below; 
WHEREAS, the plaintiffs in the Interchange Litigation (the “Claimants”) have asserted or may assert claims based on (i) certain alleged rules, policies, practices, procedures, and activities of MasterCard International Incorporated and MasterCard Incorporated (collectively, “MasterCard”); (ii) certain alleged rules, policies, practices, procedures, and activities of Visa U.S.A. Inc. (“Visa USA”), Visa International Service Association (“Visa International”) and Visa Inc. (“Visa Inc.”) (collectively, “Visa”); and (iii) certain alleged activities of Visa, MasterCard, and other Signatories as they relate to the foregoing rules, policies, practices, procedures and activities; and
WHEREAS the Signatories seek to apportion certain potential liabilities that may be incurred in the Interchange Litigation (i) in the event of one or more Settlements (as defined in Subparagraph 3(c) below) or (ii) in the event of one or more Final Judgments (as defined in Subparagraph 4(b) below); 
 NOW, THEREFORE, intending to be bound, and in consideration of the mutual covenants and agreements contained herein, the Signatories hereby agree, as of the Effective Date as defined in Paragraph 19 below, as follows:
		
	1.
	Definition of Interchange Litigation.  For the purposes of this Agreement, “Interchange Litigation” refers to (i) the putative class actions (the “Class Action”) in In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 1:05-md-1720-JG-JO (“MDL 1720”); (ii) the actions by individual plaintiffs that as of the Effective Date have been transferred to MDL 1720 for coordinated or consolidated pretrial proceedings (the “Individual Plaintiff Actions”); (iii) any actions by one or more of the entities listed on Attachment 1, or by their direct or indirect parents, subsidiaries, predecessors, successors, assigns, or affiliates, that assert claims against one or more Signatories, or their respective parents, subsidiaries, predecessors, successors, assigns, or affiliates, similar to those asserted in the Individual Plaintiff Actions and which are commenced on or before the last date on which Settlements or Final Judgments have occurred in all of the Individual Plaintiff Actions (“Subsequent Individual Plaintiff Actions”); and (iv) any action other than those within (i), (ii), and (iii) above in this paragraph that falls within definitions 4(i), 4(ii), or 5 of Schedule A to the Visa LSA or that challenges the agreements leading up to or the consummation of the MasterCard initial public offering and is transferred for coordinated or consolidated pre-trial proceedings at any time after the Effective Date to MDL 1720 by the Judicial Panel on Multidistrict Litigation or otherwise included at any time after the Effective Date in MDL 1720 by order of any court of competent jurisdiction (“Opt-Out Actions”).  (A plaintiff asserting claims that constitute an Individual Plaintiff Action, Subsequent Individual Plaintiff Action, or Opt-Out Action is referred to herein as an “Individual Plaintiff.”)  For the avoidance of doubt, the Settlement-Sharing Payment Obligations and Judgment-Sharing Payment Obligations 

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(as set forth in Paragraphs 3 and 4 respectively below) under this Agreement apply to every action included in the Interchange Litigation as defined herein, regardless of whether a Signatory has been named as a defendant in a particular action.  
2.Judgment Sharing and Settlement Sharing Agreement.  This Agreement shall operate as both a judgment sharing agreement and as a settlement sharing agreement.
3.Signatories' Settlement-Sharing Payment Obligations.  In the event of either (i) a Settlement of All Claims (as defined in Subparagraph 3(a) below) in the Class Action, any Individual Plaintiff Actions, or any Subsequent Individual Plaintiff Actions, or (ii) a Settlement of MasterCard-Related Claims Only (as defined in Subparagraph 3(b) below) in any action in the Interchange Litigation (including any Opt-Out Action), the Signatories agree that the total value of the Monetary Portion (as defined in Subparagraph 3(f) below) of any such settlement of such claims shall be allocated among the Signatories for payment by each of them as set forth in this Paragraph below for the purpose of establishing a Signatory's Settlement-Sharing Payment Obligation under this Agreement (as to each Signatory, its “Settlement-Sharing Payment Obligation”).  For the avoidance of doubt, it is not intended that this Agreement shall create any obligation for any Signatory to enter into any Settlement; it is intended, however, that this Agreement shall establish a Settlement-Sharing Payment Obligation of each Signatory in the event of a Settlement of All Claims or a Settlement of MasterCard-Related Claims Only as defined below.  
a.Settlement of All Claims.  Other than as to settlements that are covered by Subparagraph 3(b) below, in the event of either (i) a Settlement (as defined in Subparagraph 3(c) below) of all claims in the Class Action that is agreed to by all Signatories (with the exception of any Signatory that has entered into a Partial Settlement (as defined in Subparagraph 3(c) below) of, or has otherwise received a release of, all claims asserted against it in the Class Action), or (ii) a Settlement by an Individual Plaintiff (other than an Individual Plaintiff in an Opt-Out Action) of all claims that it asserts in each and every action in the Interchange Litigation and that is agreed to by all Signatories (with the exception of any Signatory that has entered into a Partial Settlement of, or has otherwise received a release of, all claims asserted against it by that Individual Plaintiff) (each of the foregoing constituting a “Settlement of All Claims”), each Signatory hereto shall have a “Settlement-Sharing Payment Obligation” under this Agreement with respect to the Monetary Portion of such a Settlement that shall be calculated as follows:  (A) as provided under the terms of the Omnibus Agreement Regarding Interchange Litigation Judgment Sharing And Settlement Sharing dated as of February 7, 2011 (“Omnibus Agreement”), the total value of the Monetary Portion of the Settlement agreed to be paid (“Total Settlement Amount”) shall be divided into a “MasterCard Portion” and a “Visa Portion” using the following percentages: MasterCard Portion:  33.3333%, and Visa Portion:  66.6667%; (B) the MasterCard Portion of the Settlement shall be allocated among each of the Signatories according to percentages for each Signatory set forth in Table 1 below (provided that, in the event that one or more Partial Settlements (as defined below) occur prior to a Settlement of All Claims, such that the agreement of the Settling Signatory to the Settlement of All Claims is not required hereunder, the percentage share listed in Table 1 for each Signatory participating in the Settlement of All Claims shall be adjusted as provided in Subparagraph 3(d) below); and (C) the Visa Portion of the Settlement shall be allocated as a “Visa Litigation Obligation” in accordance with Sections 3(a) and 3(b) of the Visa LSA (as defined in Subparagraph 6(d) below) and treated as a Visa Litigation Obligation under the Visa LSA and as being exclusive of any “JSA MasterCard Portion” as that term is used in Section 3 of the Visa LSA, notwithstanding any contrary provisions in the Visa LSA or the Visa JSA (including without limitation Section 12 of the Visa JSA).  For the purposes of clarity, in the event of a Settlement of All Claims by all Signatories, MasterCard's Settlement-Sharing Payment Obligation under this Agreement shall be 12% (which is equivalent to 36.0000% of 33.3333%) of the Total Settlement Amount.

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Table 1
	
			
	Bank of America N.A.
	****
	

	Barclays Bank Delaware
	****
	

	Capital One Bank
	****
	

	Chase Bank USA N.A.
	****
	

	Citibank South Dakota N.A.
	****
	

	Fifth Third Bank
	****
	

	First National Bank of Omaha
	****
	

	HSBC Finance Corporation
	****
	

	PNC Bank, National Association
	****
	

	SunTrust Bank Atlanta
	****
	

	Wells Fargo Bank N.A.
	****
	

	Texas Independent Bankshares
	****
	

	MasterCard
	36.0000
	%

 
b.Settlement of MasterCard-Related Claims Only.  In the event of either (i) a Settlement of all MasterCard-Related Claims in the Class Action that is agreed to by all Signatories (with the exception of any Signatory that has entered into a Partial Settlement of, or has otherwise received a release of, all MasterCard-Related Claims asserted against it in the Class Action) or (ii) a Settlement by an Individual Plaintiff of all MasterCard-Related Claims asserted by it in an Individual Plaintiff Action, a Subsequent Individual Plaintiff Action, or an Opt-Out Action that is agreed to by all Signatories (with the exception of any Signatory that has entered into a Partial Settlement of, or has otherwise received a release of, all MasterCard-Related Claims asserted against it by that Individual Plaintiff) (each of the foregoing constituting a “Settlement of MasterCard-Related Claims Only”) each Signatory shall have a Settlement-Sharing Payment Obligation under this Agreement with respect to the Monetary Portion of such a Settlement that shall be calculated according to percentages set forth in Table 1 above, provided that, in the event that one or more Partial Settlements (as defined below) occur prior to a Settlement of MasterCard-Related Claims Only, such that the agreement of the Settling Signatory to the Settlement of MasterCard-Related Claims Only is not required hereunder, the percentage share listed in Table 1 for each Signatory participating in the payment of the Settlement of MasterCard-Related Claims Only shall be adjusted as provided in Subparagraph 3(d) below.  
c.Definition of Settlement and Partial Settlement. “Settlement” refers to a written settlement agreement that compromises, settles, and releases claims that are asserted in the Interchange Litigation.  A “Partial Settlement” refers to a Settlement by any Signatory (or by any of a Signatory's parents, subsidiaries, predecessors, successors, assigns, affiliates, or any other person or entity obtaining a release of the Signatory) that has been agreed to by less than all Signatories (excluding any Signatories who have previously received a full release or the benefit of a full release of all claims asserted by the settling Claimant).  Each Signatory agrees to provide such notice promptly after the execution of such a settlement agreement by all parties to that agreement in accordance with the notice provision in Paragraph 29 below.
d.Adjustment of Table 1 Percentages.  In the event that one or more Partial Settlement(s) (as defined above) occurs prior to a Settlement of All Claims with the same Claimant(s) as the Partial Settlement(s), such that the agreement of the Settling Signatory to the Settlement of All Claims is not required hereunder, the percentage share listed in Table 1 for each Signatory participating in the Settlement of All Claims shall be increased by an identical multiple such that the sum of the percentages 

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for all Signatories participating in the Settlement of All Claims with the same Claimant(s) is equal to 100% of the MasterCard Portion.  In the event that one or more Partial Settlement(s) (as defined above) occurs prior to a Settlement of MasterCard-Related Claims Only with the same Claimant(s) as the Partial Settlement(s), such that the agreement of the Settling Signatory to the Settlement of MasterCard-Related Claims Only is not required hereunder, the percentage share listed in Table 1 for each Signatory participating in the payment of the Settlement of MasterCard-Related Claims Only with the same Claimant(s) shall be increased by an identical multiple such that the sum of the percentages for all Signatories participating in the Settlement of MasterCard-Related Claims Only is equal to 100%.
e.Definitions of MasterCard-Related Claims, Visa-Related Claims, and Inter-Network Claims.
i.“MasterCard-Related Claims” refers to any claims that are or may be asserted in the Interchange Litigation as to which MasterCard and/or some or all of the Signatory banks are alleged to be liable solely by virtue of the conduct of or participation in the MasterCard payment system.
ii.“Visa-Related Claims” refers to any claims that are or may be asserted in the Interchange Litigation as to which Visa and/or some or all of the Signatory banks are alleged to be liable solely by virtue of the conduct of or participation in the Visa payment system. 
iii.“Inter-Network Claims” refers to any claims that are or may be asserted in the Interchange Litigation as to which MasterCard and Visa are alleged to have joint liability or as to which the liability of a Signatory is alleged to arise from alleged anticompetitive conduct jointly undertaken by or through Visa and MasterCard. 
f.Definition of Monetary Portion.  “Monetary Portion” means the money agreed to be paid in any settlement in respect of claims for compensatory, punitive, treble, or other damages, court costs, attorneys' fees, or expenses, including any interest thereon.  For the avoidance of doubt, “Monetary Portion” shall exclude the cost or value of or any payment for any other consideration or relief provided in the settlement, including without limitation any rate, fee, marketing, or support agreements.
4.Signatories' Judgment-Sharing Payment Obligations.
a.In the event one or more Signatories litigates one or more of the actions or claims in the Interchange Litigation to a Final Judgment (as defined in Subparagraph 4(b) below), and that Final Judgment results in a Monetary Award (as defined in Subparagraph 4(c)), the Signatories agree that, subject to Subparagraph 4(a)(iv) below, each Signatory's payment obligation with respect to the total value of the Monetary Award (as to each Signatory, its “Judgment-Sharing Payment Obligation”) shall be as follows:  
i.With respect to the amount of any Monetary Award (or portion thereof) that is assigned in some discernible manner solely to conduct of or participation in the MasterCard payment system, that amount shall be deemed assigned to MasterCard-Related Claims and each Signatory's Judgment-Sharing Payment Obligation with respect to that amount of the Monetary Award shall be calculated according to the percentages set forth on Table 1 above.
ii.With respect to the amount of any Monetary Award (or portion thereof) that is assigned in some discernible manner solely to conduct of or participation in the Visa payment system, that amount shall be deemed assigned to Visa-Related Claims and this Agreement does not allocate to any Signatory a Judgment-Sharing Payment Obligation with respect to that amount of the Monetary Award.
iii.To the extent the amount of any Monetary Award (or portion thereof) is not assigned in some discernible manner solely to conduct of or participation in either (a) the MasterCard payment system as set forth in Subparagraph 4(a)(i) above or (b) the Visa payment system as set forth in Subparagraph 4(a)(ii) above, that amount shall be deemed assigned to Inter-Network Claims and each Signatory's Judgment-Sharing Payment Obligation under this Agreement with respect to that amount shall be calculated as follows: (x) the amount of any Monetary Award (or portion thereof) that is assigned to 

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any Inter-Network Claims shall be divided into a “MasterCard Portion” and a “Visa Portion” using the percentages set forth in Subparagraph 3(a) above; and (y) the MasterCard Portion of which shall be allocated for payment among the Signatories according to the percentages set forth on Table 1 above.  For the avoidance of doubt, the Signatories expressly agree that MasterCard's Judgment-Sharing Payment Obligation with respect to the Visa Portion of the amount of any Monetary Award (or portion thereof) that is assigned to any Inter-Network Claims shall be 0.00%.    
iv.For the avoidance of doubt, the Signatories intend that the Judgment-Sharing Payment Obligations under this Agreement of any Settling Signatory (as defined in this Subparagraph below) shall be deemed to be fully satisfied with respect to such settled claims only if the Settling Signatory has entered into a Setoff Agreement that complies with the provisions of Paragraph 6 below.  In the event that any Settling Signatory does not obtain a Setoff Agreement as provided under Paragraph 6, any such Settling Signatory will continue to have Judgment-Sharing Payment Obligations under this Agreement as to any MasterCard-Related Claims and any Inter-Network Claims calculated according to Subparagraphs 4(a)(i) and (iii) above.  For the purposes of this Agreement, “Settling Signatory” refers to any Signatory that settles or otherwise obtains a release or the benefit thereof (including by virtue of settlement by any of the Signatory's parents, subsidiaries, predecessors, successors, assigns, affiliates or by any other Signatory, person or entity obtaining a release of the Signatory) of one or more actions or claims other than as part of a Settlement of All Claims or a Settlement of MasterCard-Related Claims Only.
b.For purposes of this Agreement, “Final Judgment” means a judgment (including any award of compensatory, punitive, treble, or other damages, court costs, attorneys' fees, or expenses, including any interest thereon) entered by a court upon the conclusion of a trial or summary judgment proceedings in the Interchange Litigation, or any other procedural vehicle other than a Settlement (as defined in Subparagraph 3(c) above) by means of which a court enters final judgment on any of Claimants' claims, which judgment (a) is immediately enforceable and has not been stayed pending appeal or (b) becomes final after exhaustion of all appeals or other judicial review or expiration of the time to obtain further judicial review.  
c.For purposes of this Agreement, “Monetary Award” means the amount of any award of damages or other monetary compensation to a Claimant awarded by a court or jury in the Interchange Litigation, including any award of compensatory, punitive, treble, or other damages, court costs, attorneys' fees, or expenses, including any interest thereon, before any offset or reduction by operation of law on account of settlement payments by any other entity that do not comply with the provisions of Paragraph 6 of this Agreement.  For the avoidance of doubt, “Monetary Award” shall not include the cost or value of any injunctive, equitable, or declaratory relief.  In the event that (a) a competent court or arbitrator finally determines that one or more of the provisions in Paragraph 6 of this Agreement is ineffective or unenforceable, or (b) a Settling Signatory does not fully comply with the provisions of Paragraph 6 of this Agreement, any payments to a Claimant by such Settling Signatory shall, to the extent and in the amount that such payments reduce the amount of a Monetary Award that may be enforced against other Signatories, be deemed partial payments by such Settling Signatory of its Judgment-Sharing Payment Obligation.
5.Payment Mechanism.  Subject to Paragraph 6 of this Agreement, within eight calendar days after (a) entry of a Final Judgment, (b) the entry of an order requiring that payment be made as part of a Settlement of the Class Action, or (c) the execution by all parties thereto of any Settlement of any Individual Plaintiff Action, Subsequent Individual Plaintiff Action, or Opt-Out Action, each Signatory hereto shall cause the amount of its Settlement-Sharing Payment Obligation or Judgment-Sharing Payment Obligation (as applicable) under this Agreement to be paid, by wire transfer, into a segregated escrow account (the “MasterCard-Related Payment Escrow Account”) to be established for the receipt of 

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such funds from the Signatories and for the payment of the Settlement or Final Judgment to be paid by Signatories to Claimants in accordance with this Agreement.  Notwithstanding the foregoing, (i) the Signatories may provide in a Settlement agreement for an alternative mechanism for the timing of the Signatories' payment of any Settlement-Sharing Payment Obligation under this Agreement, or (ii) in the event that a stay is granted with respect to the Monetary Portion (or portion thereof) of any Final Judgment, then the time contemplated for the Signatories to satisfy its Judgment-Sharing Payment Obligation with respect to that Monetary Award (or portion thereof) shall run from the date on which the stay is lifted.
6.Partial Settlement.  Nothing in this Agreement should be construed as precluding any Signatory's authority to settle, at its sole discretion, any claims asserted against it.  
a.A Settling Signatory will have no Judgment-Sharing Payment Obligations under this Agreement with respect to the claims settled by such Settling Signatory if, and only if, the settlement agreement with the Claimant includes the following provisions (a “Setoff Provision”) with respect to those claims: (i) a provision pursuant to which each settling Claimant agrees not to collect as a result of a judgment from any other Signatory, any other defendant in the Interchange Litigation, or any affiliates of the foregoing, an amount equal to the greater of  the following (x) and (y) (with the amounts set forth in (x) to be allocated as set forth therein): (x) to the extent a Claimant settles, compromises or releases (a) any MasterCard-Related Claims against the Settling Signatory, the judgment-sharing payment obligations of the Settling Signatory with respect to MasterCard-Related Claims under all Sharing Agreements to which the Settling Signatory is a party (however those claims are described therein), and (b) any Inter-Network Claims against the Settling Signatory, the judgment-sharing payment obligations of the Settling Signatory with respect to Inter-Network Claims under all Sharing Agreements to which the Settling Signatory is a party (however those claims are described therein), or (y) the amount paid by the Settling Signatory to the Claimant; and (ii) a provision stating that the other Signatories to this Agreement, and other signatories to the Omnibus Agreement, and any affiliates of the foregoing, are intended third party beneficiaries of the Setoff Provision.  For the avoidance of doubt, the Setoff Provision shall provide that the agreement of the settling Claimant(s) not to collect the greater of the Settling Signatory's judgment-sharing payment obligation or the amount paid by the Settling Signatory to the Claimant from any other Signatory or other party in the Interchange Litigation shall apply to the full amount of any Monetary Award (including any trebling) against one or more non-Settling Signatories even if the Settling Signatory is not identified as a responsible party in the Final Judgment.
b.In the event that a competent court or arbitrator finally determines that one of the foregoing provisions in this Paragraph is ineffective or unenforceable in whole or in part, or if the Settling Signatory does not include in its settlement agreement the provisions required by this Paragraph, the Settling Signatory will be obligated to satisfy its Judgment-Sharing Payment Obligations as required pursuant to Paragraph 4 of this Agreement.
c.Notwithstanding anything in this Agreement to the contrary, payments to a Claimant by a Settling Signatory shall be deemed payments by such Settling Signatory pursuant to this Agreement to the extent and in the amount that such payments reduce the amount of a Final Judgment with respect to any MasterCard-Related Claims or Inter-Network Claims that may be enforced against other Signatories.
d.For the purposes of this Agreement, “Sharing Agreements” refers collectively to (i) this Agreement, (ii) the Omnibus Agreement, (iii) the Interchange Judgment Sharing Agreement dated as of July 1, 2007, among Visa USA, Visa International, Visa Inc. and various financial institutions, as amended and restated in the Amended and Restated Judgment Sharing Agreement dated as of December 16, 2008, and as amended and to which the parties consented to amendment on February 7, 2011 in the “Consent to Amendment of Interchange Judgment Sharing Agreement” (the “Visa JSA”); and (iv) the Loss Sharing Agreement dated as of July 1, 2007, among Visa Inc., Visa International, Visa USA, and 

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various financial institutions, as amended and restated in the Amended and Restated Loss Sharing Agreement dated as of December 16, 2008, and as amended and to which the parties consented to amendment on February 7, 2011 in the “Consent to Amendment of Loss Sharing Agreement” (the “Visa LSA”).  The Visa JSA and Visa LSA are referred to collectively herein as the “Visa Agreements.”
7.Negotiation of Take-Down and Reverter Provisions.  In connection with any potential Settlement of All Claims asserted in the Class Action by all Signatories named as defendants in the Class Action at that time  (a “Class Action Settlement”) or any Settlement of the Class Action with respect to MasterCard-Related Claims Only (“MasterCard-Related Claims Only Class Action Settlement”), the Signatories agree to use their Reasonable Best Efforts (as defined in Subparagraph 7(c) below) to include provisions in any such settlement agreement with respect to such actions (“Class Action Settlement Agreement”) as set forth in Subparagraphs 7(a) and 7(b) below.
a.Take-Down Provision.  The Signatories agree to use their Reasonable Best Efforts to include in any Class Action Settlement Agreement a provision (the “Take-Down Provision”) whereby, in the event of such a Class Action Settlement (or MasterCard-Related Claims Only Class Action Settlement, as applicable), the aggregate total amount of the Monetary Portion of the Class Action Settlement (or of the MasterCard-Related Claims Only Class Action Settlement, as applicable) that would have been distributed to any Claimants that elect to opt out of the class (“Opt-Out Plaintiffs”) if those Opt-Out Plaintiffs had instead elected to remain members of the class and receive distributions under the Class Action Settlement (or of the MasterCard-Related Claims Only Class Action Settlement, as applicable) shall be deducted from the Monetary Portion of the Class Action Settlement (or of the MasterCard-Related Claims Only Class Action Settlement, as applicable) to be paid under the Class Action Settlement Agreement (“Total Fund”).
b.Reverter Provision.  The Signatories agree to use their Reasonable Best Efforts to include in any Class Action Settlement Agreement a provision (the “Reverter Provision”) whereby any Monetary Portion of the Class Action Settlement (or MasterCard-Related Claims Only Class Action Settlement, as applicable) allocated to members of the class that fail to file a claim form within the time period prescribed in the order approving the Class Action Settlement Agreement (“Non-Filing Class Members”), as well as any interest that has accrued on that Monetary Portion (collectively, the “Reverter Funds”), shall be deducted from the Total Fund, and returned to the settling Signatories in proportion to each such Signatory's contribution.
c.Meaning of Reasonable Best Efforts.  As used herein, the obligation to use Reasonable Best Efforts shall mean the obligation of each Signatory to engage in good faith negotiation with the class plaintiffs and make a reasonable, diligent and good faith effort to obtain both a Take-Down Provision and a Reverter Provision in a Class Action Settlement Agreement.  In doing so, a Signatory shall be permitted to take actions that are consistent with its own interests and shall not be required to take actions that are futile or involve significant disproportionate costs to such Signatory.  
8.  Establishment and Administration of the MasterCard-Related Payment Escrow Account.  
a.The Signatories agree to establish pursuant to a customary form of escrow agreement reasonably acceptable to the Signatories a MasterCard-Related Payment Escrow Account.  The MasterCard-Related Payment Escrow Account shall be administered by an “Administrator.”  The Administrator shall be designated by the Signatories by a simple “per capita” majority vote of the Signatories.  The Signatories, at any time, by a simple “per capita” majority vote of the Signatories, may terminate the Administrator and, in that event, or in the event that the Administrator resigns, the Signatories shall, by a simple “per capita” majority vote of the Signatories, designate another Administrator.  The Administrator shall administer the provisions of this Agreement and the funds contributed under it in accordance with the terms and provisions of the escrow agreement establishing the MasterCard-Related Payment Escrow Account.  Signatories and their counsel shall cooperate with the 

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Administrator to facilitate the exercise of the Administrator's duties.  The Administrator is authorized to pay from the MasterCard-Related Payment Escrow Account  all expenditures as provided in the escrow agreement.  The Administrator's duties shall include (a) filing tax returns and all other documents required by the Internal Revenue Service or any state or local taxing authority in connection with the MasterCard-Related Payment Escrow Account and (b) paying from the MasterCard-Related Payment Escrow Account (as appropriate) any Tax Expenses with respect to such Escrow Account.  For the purposes of this Agreement, “Tax Expenses” means all taxes on the income earned in the MasterCard-Related Payment Escrow Account, and all fees and expenses incurred in connection with such taxation (including, without limitation, any tax penalties and expenses of tax attorneys and accountants). 
b.The Signatories agree that the funds in the MasterCard-Related Payment Escrow Account shall be free and clear of all liens, security interests, encumbrances, pledges, mortgages, rights, options and claims of any kind and of any person or entity (including any participation interests and any consent rights), whether written or oral, vested or unvested, contingent or outright.  In furtherance and not in limitation of the foregoing, none of the funds in any the MasterCard-Related Payment Escrow Account shall be subject to any claims by or of creditors of any of the Signatories or any affiliates thereof.  Each Signatory hereby warrants and represents that neither the Signatory nor any of its affiliates (other than any of their portfolio companies and subsidiaries thereof) has been declared bankrupt or insolvent, has made any general assignment, arrangement or composition with or for the benefit of its creditors, or is or will be within ninety (90) days of the date of this Agreement, the subject of any bankruptcy, insolvency, receivership, winding-up, dissolution or liquidation or similar proceedings or processes, whether voluntary or involuntary, that would impact the funds in the MasterCard-Related Payment Escrow Account.  
9.Effect on Other Potential Claims as Between the Signatories.  This Agreement is in lieu of any other rights of contribution, indemnity, reimbursement, or sharing, including, without limitation, (i) any rights that any Signatory might otherwise have to seek indemnity or contribution from any other Signatory in connection with the Interchange Litigation, and (ii) any other claims, suits, or causes of action, among or between the Signatories (including the Signatories' direct or indirect parents, subsidiaries, predecessors and successors) in connection with the Interchange Litigation.  Notwithstanding the foregoing, nothing in this Agreement affects any potential claims or obligations between Signatories that may arise under the Visa LSA, the Visa JSA, or the Omnibus Agreement.
10.Third Parties.  This Agreement is made and shall be binding on and inure solely to the benefit of the Signatories and their respective direct or indirect parents, subsidiaries, predecessors, successors or permitted assigns, but otherwise confers no rights or defenses upon any non-Signatory.  Except as provided below, a Signatory may not assign any of its obligations under this Agreement to another person or entity without the written consent of each other Signatory.   If, after the Effective Date, any person or entity that is a non-Signatory, as a result of any merger, purchase of assets, reorganization or other transaction, acquires or succeeds to all or substantially all of the business or assets of a Signatory (the “Acquired Signatory”), then such Acquired Signatory shall, as a condition precedent to the effectiveness of any such merger, purchase of assets, reorganization or other transaction, obligate in writing such acquiring person or entity to be bound by, and honor all of, the provisions of this Agreement and shall take all necessary steps to ensure that such person or entity is bound by the same payment obligations and all other obligations of the Acquired Signatory as provided for in this Agreement.  
11.Effect of Overturned, Modified, or New Judgment.  If (i) a Monetary Award (or portion thereof) is modified at any time after it becomes part of a Final Judgment and, as so modified (the “Modified Award”), becomes final after exhaustion of all appeals or other judicial review or expiration of the time to obtain further judicial review, or (ii) after a Final Judgment is vacated or overturned, a new Monetary Award (“New Award”) is subsequently entered as part of a Final Judgment, then the sharing obligations of 

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each Signatory shall be recalculated under the terms of this Agreement to reflect the Modified Award or New Award, as applicable.
12.Repayment as a Result of Reversal, Vacatur, or Modification of a Final Judgment. If a Claimant received payment from a Signatory based on a Monetary Award (or portion thereof) in the Interchange Litigation and the Claimant is no longer entitled to some or all of that payment as a result of the reversal, vacatur or modification of a Monetary Award in a Final Judgment (an “Undue Payment”), and if a Signatory later succeeds in recovering the Undue Payment in whole or in part, such recovery (including any interest recovered) shall be taken into account for purposes of determining the sharing, indemnity and contribution obligations arising under this Agreement.  Unless and until an Undue Payment is recovered by a Signatory, however, the Undue Payment shall be treated as a payment towards the satisfaction of a Monetary Award for purposes of this Agreement, provided that the Undue Payment was made in satisfaction or partial satisfaction of what was, at the time the payment was made, a Monetary Award as defined by this Agreement.
13.No Admission of Liability.  Nothing contained herein is intended to be, nor shall be deemed to be, an admission of any liability to anyone or an admission of the existence of facts upon which liability could be based other than to the Signatories pursuant to the terms of this Agreement.
14.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts entered into and to be performed entirely within the State of New York.  All Signatories hereby agree that this Agreement is consistent with public policy and hereby covenant and agree not to make any assertion to the contrary.
15.Confidentiality.  No Signatory shall divulge any of the terms of this Agreement to a third party except as is reasonably required (a) to enable such Signatory's directors, officers, employees, auditors and attorneys to carry out their responsibilities hereunder, (b) to comply with the requirements of applicable law or rule, or with a court order or regulatory examination, investigation or request (including, without limitation, any examination, action, or request of the Office of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System), (c) to comply with the requirements of any stock exchange or other self-regulatory organization as that term is defined at 15 U.S.C. § 78c(a)(26), or (d) to prosecute or defend an action arising out of this Agreement.
16. Joint Authorship.  This Agreement shall be treated as though it was jointly drafted by all Signatories, and any ambiguities shall not be construed for or against any Signatory on the basis of authorship.
17.Entire Agreement.  This MasterCard Settlement and Judgment Sharing Agreement, together with the Omnibus Agreement, constitutes the entire and only agreements among the undersigned parties with respect to the subject matter hereof and any other representation, promise, or condition in connection therewith shall not be binding upon any of the Signatories, except to the extent set forth herein or in the Omnibus Agreement.  This Agreement shall not be amended or modified except by a written amendment executed by an authorized representative of each Signatory.
18.Execution in Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute but one instrument.  
19.Effective Date.  This Agreement shall be effective as of the date on which (a) all entities listed on the signature pages hereto have executed the Agreement; and (b) all entities listed on the signature pages thereto have executed each of the Omnibus Agreement, Consent to Amendment of Interchange Judgment Sharing Agreement, and Consent to Amendment of Loss Sharing Agreement (the “Effective Date”). 
20.Disputes to be Arbitrated.  Any dispute arising out of or relating to this Agreement, including but not limited to a dispute relating to the breach, enforceability,  interpretation, application, or scope of any aspect of this Agreement (including, without limitation, a dispute relating to the breach, enforceability, interpretation, application, or scope of any aspect of this arbitration clause), or a dispute referring or 

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relating to the amount of any payment obligation created by this Agreement, shall be finally resolved by arbitration in accordance with the Center for Public Resources (“CPR”) Rules for Non-Administered Arbitration in effect on the date of this Agreement, by Prof. Eric Green or Hon. Edward Infante (Ret.) or, if both of the foregoing are unavailable, by one independent and impartial arbitrator to be agreed upon by the disputants or, in the absence of such an agreement, appointed by the CPR.  The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof.  The place of arbitration shall be New York, New York, unless otherwise agreed by the parties to the arbitration.
21.Remedies in Arbitration.  In the event of a dispute about the existence or amount of a payment obligation created under this Agreement, the Arbitrator shall award the prevailing party its reasonable attorneys' fees and costs.  In addition, if the Arbitrator finds that any Signatory(ies) or its affiliate(s) underpaid or declined to pay a sum that it was obliged to pay any other Signatory(ies) under the terms of this Agreement, the Arbitrator shall award that other Signatory(ies) interest on the unpaid or underpaid payment at the prime rate as published in the Wall Street Journal on the date that the unpaid or underpaid payment was due (or, if the actual cost of replacement funds was greater than the prime rate, the prevailing party's actual cost of replacement funds), running from the date that the unpaid amount was required to be paid under this Agreement until such amount is paid.
22.No Waiver.  Failure to insist on compliance with any term or provision contained in this Agreement shall not be deemed a waiver of that term or provision, nor shall any waiver or relinquishment of any right or power contained in this Agreement at any one time or more times be deemed a waiver or relinquishment of any right or power at any other time or times.
23.Severability.  The provisions of this Agreement are severable, and if any provision of this Agreement is determined by a court or arbitrator of competent jurisdiction or agreed by the Signatories to be invalid, void or unenforceable, this shall not affect the validity or enforceability of the remainder of this Agreement or any other provision, and this Agreement may be enforced as if any such invalid, void or unenforceable provision were stricken.
24.Further Actions.  Each party hereto agrees to take any and all actions reasonably necessary in order to effectuate the intent, and to carry out the provisions, of this Agreement, including without limitation negotiating in good faith to conform this Agreement as necessary to accomplish its purposes.
25.Authority of Signatory.  Each of the undersigned individuals signs on behalf of, and represents and warrants that he or she has the authority and authorization to sign on behalf of and bind, the corporations, banks, companies, or entities identified immediately above his or her signature, and upon such execution this Agreement shall as of the Effective Date be a valid and binding obligation of such entity.
26.Signatory's Opportunity to Obtain Legal Advice.  Each Signatory represents and warrants that it has had an opportunity to seek and has sought independent legal advice from attorneys of its choice and other advice from such accountants and other professionals as it deems appropriate, in each case with respect to the advisability of executing this Agreement, and such Signatory has carefully read this Agreement and has made such investigation of the facts pertaining to this Agreement as it deems necessary.
27.Additional Signatories.  This Agreement may be amended to include additional Signatories only if each Signatory to this Agreement consents in writing.
28.Effect of More Favorable Agreement.  Each of MasterCard International Incorporated and MasterCard Incorporated hereby represents and warrants to each Signatory as of the date hereof that, except for this Agreement, and the Omnibus Agreement Regarding Interchange Litigation Judgment Sharing and Settlement Sharing, none of MasterCard International Incorporated or MasterCard Incorporated is a party as of the date hereof to any agreement with any other person with respect to the sharing of any Final Judgment in the Interchange Litigation or global settlement in the Interchange 

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10

Litigation within the scope of this Agreement.  In the event that at any time after the date hereof MasterCard International Incorporated or MasterCard Incorporated enters into any agreement with any member of MasterCard named as a defendant in any action in the Interchange Litigation relating to such member's obligations with respect to the Interchange Litigation on terms that are more favorable, in the aggregate, than the terms contained in this Agreement (any such agreement, an “Alternative  Agreement”), then MasterCard International Incorporated or MasterCard Incorporated shall disclose the existence and terms of such Alternative Agreement to all Signatories within five (5) days after entering into such Alternative Agreement and shall offer to each Signatory the right to substitute the terms of the Alternative Agreement for the terms of this Agreement, or shall offer to enter into an amendment to this Agreement in order to provide each Signatory with the benefit of any more favorable terms contained in such Alternative Agreement.
29.Notice.  All notices required or permitted under this Agreement shall be in writing and delivered by any method providing proof of delivery, including facsimile.  Any notice shall be deemed to have been given on the date of delivery.  Notices shall be delivered to the Signatories at the addresses set forth next to the signature blocks below unless and until a different address has been designated in writing by a Signatory.
30.Miscellaneous.  For the purposes of this Agreement, to the extent any Signatory is required to obtain a “release” of another Signatory, any such release shall also include each Signatory's parents, subsidiaries, predecessors, successors, assigns and affiliates within the scope of the release.

[SIGNATURE PAGES FOLLOW]

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CONFIDENTIAL TREATMENT REQUESTED
BY MASTERCARD INCORPORATED
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IN WITNESS WHEREOF, the undersigned parties have caused the execution of this Agreement.
Bank of America, N.A., 
MBNA America (Delaware),
FIA Card Services N.A. (f/k/a Bank of America, N.A. (USA) 
and MBNA America Bank, N.A.),
Bank of America Corporation, and
NB Holdings Corporation

By:    /s/ Joe Price        
Name:    Joe Price    
Title:    President, Consumer and Small Business Banking
Dated      January 31, 2011

BA Merchant Services LLC (f/k/a National Processing, Inc.)

By:    /s/ JoAnn P. Carlton        
Name:    JoAnn P. Carlton    
Title:    General Counsel & Secretary
Dated      January 31, 2011

Barclays Bank plc, Barclays Financial Corp., and Barclays Bank Delaware

By:    /s/ Clinton W. Walker        
Name:    Clinton W. Walker    
Title:    Secretary, Barclays Bank Delaware
Dated      January 27, 2011

Capital One Bank, (USA), N.A., Capital One, F.S.B., Capital One, N.A., Capital One Financial Corporation

By:    /s/ Michael Wassemer        
Name:    Michael Wassemer    
Title:    Executive Vice President

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CONFIDENTIAL TREATMENT REQUESTED
BY MASTERCARD INCORPORATED
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Dated      January 27, 2011

Chase Bank USA, N.A.

By:    /s/ Gordon Smith        
Name:    Gordon Smith    
Title:    CEO Card Services
Dated      January 31, 2011

Citibank (South Dakota), N.A., Citibank, N.A., Citicorp, and Citigroup, Inc.

By:    /s/ Jud Linville        
Name:    Jud Linville    
Title:    Authorized Signatory
Dated      February 1, 2011

Fifth Third Bancorp

By:    /s/ James R. Hubbard        
Name:    James R. Hubbard    
Title:    Senior Vice President and Chief Legal Officer
Dated      January 28, 2011

First National of Nebraska, Inc. and First National Bank of Omaha

By:    /s/ Nicholas W. Baxter        
Name:    Nicholas W. Baxter    
Title:    Senior Vice President
Dated      January 27, 2011

HSBC Finance Corporation   

By:    /s/ Brian D. Hughes        

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Name:    Brian D. Hughes    
Title:    Executive Vice President
Dated      January 28, 2011

HSBC Bank USA, N.A.

By:    /s/ Irene M. Dorner        
Name:    Irene M. Dorner    
Title:    President and CEO
Dated      February 3, 2011

HSBC North America Holdings Inc.

By:    /s/ Patrick Burke        
Name:    Patrick Burke    
Title:    CEO - HSBC Finance Corp.
Dated      January 28, 2011

HSBC Bank plc

By:    /s/ Peter Keenan        
Name:    Peter Keenan    
Title:    Head of Customer Propositions
Dated      February 2, 2011

HSBC Holdings plc

By:    /s/ Richard E.T. Bennett        
Name:    Richard E.T. Bennett    
Title:    Group General Counsel
Dated      

JPMorgan Chase & Co.

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By:    /s/ Stephen M. Cutler        
Name:    Stephen M. Cutler    
Title:    General Counsel
Dated      January 31, 2011

JPMorgan Chase Bank, N.A., as acquirer of certain assets and liabilities of Washington Mutual Bank from the Federal Deposit Insurance Corporation acting as receiver

By:    /s/ Stephen M. Cutler        
Name:    Stephen M. Cutler    
Title:    General Counsel
Dated      January 31, 2011

MasterCard Incorporated, 
MasterCard International Incorporated

By:    /s/ Noah J. Hanft        
Name:    Noah J. Hanft        
Title:    General Counsel and Chief Franchise Integrity Officer
Dated      January 31, 2011

The PNC Financial Services Group, Inc., successor by merger to National City Corporation 

By:    /s/ Joseph C. Guyaux        
Name:    Joseph C. Guyaux    
Title:    President
Dated      January 26, 2011

PNC Bank, National Association, successor by merger to National City Bank and National City Bank of Kentucky

By:    /s/ Joseph C. Guyaux        

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BY MASTERCARD INCORPORATED
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Name:    Joseph C. Guyaux    
Title:    President
Dated      January 26, 2011

Suntrust Banks Inc.

By:    /s/ Michelle Arauz        
Name:    Michelle Arauz    
Title:    First Vice President
Dated      January 31, 2011

Texas Independent Bancshares, Inc.

By:    /s/ Charles T. Doyle        
Name:    Charles T. Doyle    
Title:    Chairman
Dated      January 26, 2011

Wells Fargo & Co.
Wells Fargo Bank N.A.

By:    /s/ Kevin A. Rhein        
Name:    Kevin A. Rhein    
Title:    Executive Vice President
Dated      January 27, 2011
ATTACHMENT 1
1.    The Great Atlantic & Pacific Tea Company, Inc. (“A&P”)
2.      H.E. Butt Grocery Stores, Inc. (“H.E.B.”)

EXECUTION COPY
CONFIDENTIAL TREATMENT REQUESTED
BY MASTERCARD INCORPORATED
16Unassociated Document

EXHIBIT 10.1

 

CONVERSION AND VOTING AGREEMENT

 

THIS CONVERSION AND VOTING AGREEMENT, dated as of October 27, 2011 (this “Agreement”), is entered into between BMO Bankcorp, Inc. (f/k/a Harris Bankcorp, Inc.), a Delaware corporation (the “Investor”), and Virtus Investment Partners, Inc., a Delaware corporation (the “Company”).

 

RECITALS:

 

WHEREAS, immediately prior to the execution of this Agreement, the Investor is the record and beneficial owner of 35,217 shares of Series B Voting Convertible Preferred Stock, par value $0.01 per share, of the Company (the “Series B Preferred Stock”), which constitutes all of the outstanding shares of the Series B Preferred Stock; and

 

WHEREAS, the Company and the Investor desire the conversion (the “Conversion”) of all the shares of the Series B Preferred Stock into shares of common stock of the Company, par value $0.01 per share (the “Common Stock”), and that the Board of Directors of the Company (the “Company Board”) declare and pay a final dividend in respect of the Series B Preferred Stock out of funds of the Company lawfully available therefor, each on the terms and subject to the conditions set forth in this Agreement; and

 

WHEREAS, the disinterested members of the Company Board (excluding any designees or nominees of the Investor on the Company Board), having determined that the transactions provided for in this Agreement are advisable and fair to the Company and its stockholders, have approved the transactions provided for in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as set forth in this Agreement.

 

ARTICLE I

DEFINITIONS

 

Section 1.1. Certain Definitions.  Initially capitalized terms used and not defined herein have the respective meanings ascribed to them in the Certificate of Designations.  In addition, for purposes of this Agreement, the following terms have the meanings ascribed to them in this Section 1.1 when used in this Agreement with initial capital letters.

 

(a) “Certificate of Designations” means the Certificate of Designations of Series A Non-Voting Convertible Preferred Stock and Series B Voting Convertible Preferred Stock of the Company.

 

(b) “Excess Securities” means any shares of Common Stock or other voting securities of the Company held by the Investor or any of its Affiliates that represent in excess of 24.0% of the total voting power of the Common Stock Outstanding, solely to the extent that such excess arises as a result of any redemption or repurchase of shares of Common Stock or other voting securities by the Company.

 

  

  

  

 

(c) “Investment Agreement” means the Investment and Contribution Agreement, dated as of October 30, 2008, by and among the Company, Phoenix Investment Management Company, the Investor and, for limited purposes, The Phoenix Companies, Inc.

 

ARTICLE II

DIVIDEND; CONVERSION OF SHARES

 

Section 2.1. Dividend; Conversion of Series B Preferred Stock.

 

(a) Dividend.   Notwithstanding anything to the contrary contained in the Certificate of Designations, the Company has declared, subject only to the execution and delivery of this Agreement, a cash dividend (the “Special Dividend”) in respect of all outstanding shares of Series B Preferred Stock, payable on October 31, 2011, in the aggregate amount of $8,072,937 (which the parties hereby agree is the sum of (x) $939,120 accrued but unpaid Dividends payable in respect of the Series B Preferred Stock under the Certificate of Designations through (and including) October 31, 2011, plus (y) $7,133,817 in respect of the net present value of all Dividends that would otherwise have been due and payable in respect of the Series B Preferred Stock from (and including) November 1, 2011 until October 31, 2014, which is the first date on which the Series B Preferred Stock would have been redeemable by the Company under the Certificate of Designations if not earlier converted into shares of Common Stock).  The Special Dividend shall be paid by wire transfer of immediately available funds during normal business hours on October 31, 2011 to the bank account designated by the Investor to the Company in writing prior to October 29, 2011.

 

(b) Conversion.  Subject only to the Investor’s receipt of the Special Dividend from the Company on or prior to October 31, 2011, the Investor hereby irrevocably exercises its right to convert all of the shares of Series B Preferred Stock into shares of Common Stock in accordance with the terms of Section 7(a) of the Certificate of Designations, with such Conversion to be effective upon the later of (i) November 1, 2011, or (ii) the date of expiration (or earlier termination) of the applicable waiting period in respect of the HSR Filings (“HSR Approval”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) (and the Conversion shall be deemed to have automatically occurred upon the later of such date described in clause (i) or clause (ii) without any need for further action on the part of the Investor).

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.1. Representations and Warranties of the Company.  The Company hereby represents and warrants to the Investor the accuracy of each of the statements set forth in this Section 3.1.

 

(a) Organization; Authorization.  The Company is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to execute and deliver this Agreement and perform its obligations hereunder. The Company has the power and authority to execute, deliver and perform the terms and provisions of this Agreement and has taken all action necessary to authorize the execution, delivery and performance by it of this Agreement and to consummate the Transactions. No other corporate proceeding on the part of the Company or its stockholders is necessary for such authorization, execution, delivery and consummation of the Transactions. The Company has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by the Investor, this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditor’s rights, and to general equitable principles).

 

  

  

  

 

(b) Common Stock.  An adequate number of shares of Common Stock to effect the conversion of Series B Preferred Stock into Common Stock as contemplated herein have been duly authorized and adequately reserved.  The shares of Common Stock, when issued and delivered in accordance with the terms of this Agreement and the Certificate of Designations, will have been duly and validly issued and will be fully paid and nonassessable and the issuance thereof will not have been subject to any preemptive or similar rights or made in violation of any applicable law.

 

(c) No Violation; Consents.  The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Transactions do not and will not violate, conflict with, result in a breach of or contravene in any material respect any applicable law.  The execution, delivery and performance by the Company of this Agreement and the consummation of the Transactions will not (i)(A) violate, conflict with, result in a breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any contract or agreement to which the Company is a party or by which the Company is bound or to which any of its assets is subject, or (B) result in the right of termination, acceleration of or creation or imposition of any mortgage, pledge, lien, security interest, claim, restriction, charge or encumbrance of any kind (a “Lien”) upon any of its properties or assets, except for any such violations, conflicts, breaches, defaults or Liens that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of it to timely perform its obligations under this Agreement and (ii) conflict with or violate any provision of the certificate of incorporation or bylaws or other governing documents of the Company.

 

Section 3.2. Representations and Warranties of the Investor.  The Investor hereby represents and warrants to the Company the accuracy of each of the statements set forth in this Section 3.2.

 

(a) Organization; Authorization.  The Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite corporate power and authority to execute and deliver this Agreement and perform its obligations hereunder. The Investor has the power and authority to execute, deliver and perform the terms and provisions of this Agreement, and has taken all action necessary to authorize the execution, delivery and performance by it of this Agreement and to consummate the Transactions. No other corporate proceeding on the part of the Investor or its stockholders is necessary for such authorization, execution, delivery and consummation of the Transactions. The Investor has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by the Company, this Agreement constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditor’s rights, and to general equitable principles).

 

  

  

  

 

(b) No Violation; Consents.  The execution, delivery and performance by the Investor of this Agreement and the consummation by the Investor of the Transactions do not and will not violate, conflict with, result in a breach of or contravene in any material respect any applicable law.  The execution, delivery and performance by the Investor of this Agreement and the consummation of the Transactions will not (i)(A) violate, conflict with, result in a breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any contract or agreement to which the Investor is a party or by which the Investor is bound or to which any of its assets is subject, or (B) result in the right of termination, acceleration of or creation or imposition of any Lien upon any of its properties or assets, except for any such violations, conflicts, breaches, defaults or Liens that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of it to timely perform its obligations under this Agreement and (ii) conflict with or violate any provision of the certificate of incorporation or bylaws or other governing documents of the Investor.

 

(c) Non-Reliance.  The Investor acknowledges that (i) the Company has not given it any investment advice or opinion on whether the Transactions are prudent and (ii) it has, or has access to, such information as it deems appropriate under the circumstances concerning, among other things, the Company’s business and financial condition to make an informed decision regarding the Transactions.

 

ARTICLE IV

VOTING

 

Section 4.1. Irrevocable Proxy.  (a) The Investor hereby irrevocably constitutes and appoints the duly-appointed Secretary of the Company from time to time (the “Proxy Holder”) as the sole and exclusive proxy for the Investor, with full power of substitution, resubstitution and revocation, to attend all meetings of stockholders of the Company, to cast all votes that the undersigned is entitled to cast with respect to the Excess Securities, and to otherwise represent the undersigned with respect to the Excess Securities with all powers that the undersigned would have if personally present at any meeting of stockholders of the Company, in each case, in a manner that is proportionate to the manner in which all holders of shares of voting securities vote in respect of any given matter (other than those shares of voting securities held by the Investor or any of its Affiliates).  The Investor irrevocably appoints the Proxy Holder, with full power of substitution, appointment and revocation, in its name, place and stead, as the undersigned’s true and lawful representative, attorney-in-fact and agent, to make, execute, sign, acknowledge, verify, swear to and deliver any consent of stockholders of the Company with respect to the Excess Securities and to do and perform each and every act and thing as fully as the undersigned might or could do as a holder of the Excess Securities, in each case, in a manner that is proportionate to the manner in which all holders of shares of voting securities vote in respect of any given matter (other than those shares of voting securities held by the Investor or any of its Affiliates).  This proxy and power-of-attorney are expressly limited to the Excess Shares, and no rights are granted with respect to any shares other than the Excess Shares.

 

  

  

  

 

(b) The Investor affirms that the foregoing proxy and power-of-attorney are given in connection with the Transactions and that the proxy and power-of-attorney are each coupled with an interest.  Such proxy and power of attorney each will be irrevocable and be effective for so long as permitted under the laws of the State of Delaware.

 

Section 4.2. Notification.  (a)  From and after the date of the Conversion, and for so long as the Investor has the right to nominate the Investor Designate (as such term is defined in the Investment Agreement) in accordance with the terms of the Investment Agreement, the Company shall provide not less than five Business Days prior notice to the Investor of its intention to redeem or repurchase shares of Common Stock or other voting securities by the Company if, to the knowledge of the Company, such redemption or repurchase could result in the Investor and its Affiliates holding shares of Common Stock or other voting securities of the Company representing in excess of 24.0% of the total voting power of the Common Stock Outstanding.

 

(b) From and after the date of the Conversion, and for so long as the Investor has the right to nominate the Investor Designate in accordance with the terms of the Investment Agreement, the Investor shall provide not less than five Business Days prior notice to the Company of its or any of its Affiliates’ intention to acquire any shares of Common Stock or other voting securities of the Company if, to the knowledge of the Investor, such acquisition could result in the Investor and its Affiliates holding shares of Common Stock or other voting securities of the Company representing in excess of 24.0% of the total voting power of the Common Stock Outstanding; provided, however, that the foregoing requirement shall not require the Investor to provide notice of its or any of its Affiliates’ intention to acquire any shares of Common Stock or other voting securities of the Company on behalf of any entity that is not the Investor or an Affiliate of the Investor and so long as neither the Investor nor any of its Affiliates will have beneficial ownership of, or the discretion to vote, such shares for regulatory purposes.  Such notice shall set forth the aggregate number of shares of Common Stock or voting securities of the Company to be acquired by the Investor or its Affiliates and the aggregate number of shares of Common Stock or other voting securities of the Company held by the Investor and its Affiliates after giving effect to such acquisition.

 

ARTICLE V

ADDITIONAL AGREEMENTS OF THE PARTIES

 

Section 5.1. Filings

 

(a) The Investor shall use its reasonable best efforts to promptly (i) obtain any consents, approvals or other authorizations, and make any filings and notifications required in connection with the Transactions under the HSR Act, (ii) make any other submissions required in connection with the Transactions under the HSR Act and (iii) take or cause to be taken all other actions necessary, proper or advisable consistent with this Section 5.1 to cause the expiration of the applicable waiting periods as soon as practicable.  The Company shall use reasonable best efforts to cooperate with the Investor in connection with the making of all such filings and notifications, including making any filings required of it.

 

  

  

  

 

(b) The Investor agrees to make, or cause to be made, an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the Transactions (the “HSR Filing”) as promptly as practicable.  The Investor shall pay, or cause to be paid, all filing or other fees incurred in connection with the HSR Filing.

 

Section 5.2. Disclosure.  All public announcements or public disclosures relating to the Transactions shall be made only if mutually agreed upon by the Company and the Investor, except to the extent such disclosure is, in the opinion of counsel, required by law or by stock exchange regulation.

 

Section 5.3. Restriction on Transfer.

 

(a) During the period commencing upon the execution of this Agreement and continuing until the first to occur of (i) the occurrence of the Conversion or (ii) the filing of the CoD Amendment by the Company, the Investor shall not, directly or indirectly, transfer, sell, assign or otherwise dispose of (“Transfer”) any shares of Series B Preferred Stock to any transferee (including without limitation an Affiliate of the Investor), other than to a transferee that first agrees in a written agreement with the Company, in form and substance reasonably acceptable to the Company, to be bound by all of the obligations of the Investor set forth in this Agreement and to expressly make all of the waivers of the Investor set forth in this Agreement.  Notwithstanding the foregoing, if HSR Approval is not received by the Investor on or prior to the 35th day following the date hereof, the Investor shall thereafter be permitted to Transfer all or any portion of the Common Stock underlying the Series B Preferred Stock pursuant to the terms of an underwritten registered offering of Common Stock, or one or more sales effected pursuant to Rule 144 of the Securities Act of 1933, as amended, in each case, in connection with which the Investor delivers shares of Series B Preferred Stock to the participating underwriter(s) or dealer(s) to be converted into Common Stock in connection with the closing of such offering or settlement of such sales (and such shares of Series B Preferred Stock are actually converted into Common Stock on or prior to such closing).  For the avoidance of doubt, any restrictions on Transfer contained in this Section 5.4(a) shall be in addition to (and not in lieu of) any other restrictions on Transfer in respect of the Series B Preferred Stock contained in the Investment Agreement.

 

(b) Stop Transfer; Legend.  The Investor agrees that it will promptly after the date hereof surrender to the Company all certificates representing the Series B Preferred Stock, and the Company will place the following legend on such certificates in addition to any other legend required thereon:

 

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND CONVERSION AS SET FORTH IN A CONVERSION AND VOTING AGREEMENT, DATED AS OF OCTOBER 27, 2011, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH. ANY TRANSFER NOT IN COMPLIANCE WITH SUCH AGREEMENT SHALL BE VOID.”

 

  

  

  

 

Section 5.4. Waivers and Modification of Rights Under Certificate of Designations.

 

(a) Dividends.  Subject only to its receipt of the Special Dividend on or prior to October 31, 2011, the Investor hereby irrevocably waives (the “Dividend Waiver”), on its own behalf and on behalf of any transferee of the Series B Preferred Stock, all rights to Dividends otherwise payable on or in respect of the Series B Preferred Stock pursuant to the Certificate of Designations (other than with respect to Participating Dividends, and other than the Special Dividend), and the Investor hereby acknowledges and agrees that Dividends shall cease to accrue from (and including) November 1, 2011, and that, notwithstanding anything contained in the Certificate of Designations to the contrary, no holder of Series B Preferred Stock shall hereafter be entitled to receive, and the Company shall not be obligated to pay, any Dividends in respect of the Series B Preferred Stock (other than the Special Dividend and the Participating Dividends).

 

(b) Voting.  Subject only to its receipt of the Special Dividend on or prior to October 31, 2011, the Investor hereby irrevocably waives (the “Voting Waiver”), on its own behalf and on behalf of any transferee, commencing on (and including) November 1, 2011, any and all voting rights of the holders of Series B Preferred Stock set forth in Sections 6(c), 6(d)(iii) and 6(e) of the Certificate of Designations.

 

(c) Series B Director.  Subject only to its receipt of the Special Dividend on or prior to October 31, 2011, the Investor hereby irrevocably agrees to cause the Series B Director to resign from the Company Board, effective as of the close of business on October 31, 2011, and hereby irrevocably waives, on its own behalf and on behalf of any transferee, any right to appoint a Series B Director, commencing on (and including) November 1, 2011 (such waiver, together with the Dividend Waiver and the Voting Waiver, the “Waived Terms”).  Immediately upon the resignation of the Series B Director, the number of directors constituting the Company Board shall be decreased by one, and thereafter, the holders of the Series B Preferred Stock shall not be entitled to nominate the Series B Director or any substitute nominee under the Certificate of Designations.

 

(d) Amendment to Certificate of Designations.  In the event that the Conversion has for any reason not occurred by March 31, 2012, the Investor hereby irrevocably consents and agrees, on its own behalf and on behalf of any transferee, to the adoption, execution and filing by the Company of an amendment to the Certificate of Designations to remove the Waived Terms from the terms of the Series B Preferred Stock contained therein (the “CoD Amendment”).

 

ARTICLE VI

MISCELLANEOUS

 

Section 6.1. Entire Agreement; Effect on Investment Agreement.  This Agreement (including all agreements entered into pursuant hereto and thereto and all certificates and instruments delivered pursuant hereto and thereto) constitutes the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written, with respect to the subject matter hereof.  For the avoidance of doubt, except as expressly set forth herein, the provisions of the Investment Agreement, including the registration rights set forth on Annex A thereto, are and shall remain in full force and effect in accordance with the terms thereof.

 

  

  

  

 

Section 6.2. Modifications and Amendments.  No amendment, modification or termination of this Agreement shall be binding upon any other party unless executed in writing by each of the parties hereto.

 

Section 6.3. Waiver and Extensions.  Any party to this Agreement may waive any condition, right, breach or default that such party has the right to waive, provided that such waiver will not be effective against the waiving party unless it is in writing, is signed by such party, and specifically refers to this Agreement.

 

Section 6.4. Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

Section 6.5. GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

 

Section 6.6. WAIVER OF JURY TRIAL.  EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.6.

 

Section 6.7. Notices.  All notices, demands, requests, consents, approvals or other communications required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice. Notice shall be deemed given on the date of service or transmission if personally served or transmitted by facsimile. Notice otherwise sent as provided herein shall be deemed given on the next business day following delivery of such notice to a reputable air courier service.

 

  

  

  

 

To the Company:

 

Virtus Investment Partners, Inc.

100 Pearl St., 9th Floor

Hartford, Connecticut 06103

Attention:  Mark Flynn

Telephone:  (860) 263-4795

Fax: (860) 246-7965

with copies to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attn:  Robert Goldbaum

Telephone:  (212) 373-3000

Fax:  (212) 757-3990

To the Investor:

 

BMO Bankcorp, Inc.

111 W. Monroe Street

Chicago, Illinois 60603

Attn: Linda VanDenburgh

Telephone: (312) 461-5920

Fax: (312) 765-8106

with a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attn:  Robert Buckholz

Telephone:  (212) 558-4000

Fax:            (212) 291-9018

or to such other address or addresses as shall be designated in writing.  All notices shall be effective when received.

 

Section 6.8. Assignment; No Third-Party Beneficiaries.  This Agreement and the rights, duties and obligations hereunder may not be assigned or delegated by the Company without the prior written consent of the Investor, and may not be assigned or delegated by the Investor without the Company’s prior written consent. Except as set forth above, any assignment or delegation of rights, duties or obligations hereunder made in violation of this Section 6.8 shall be void and of no effect. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and their respective successors and permitted assigns. This Agreement is not intended to confer any rights or benefits on any Persons other than as expressly set forth in this Section 6.8.

 

  

  

  

 

Section 6.9. Severability.  This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

Section 6.10. Specific Performance.  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms.  It is accordingly agreed that the parties shall be entitled to seek specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity.

 

 (Signatures are on the following pages)

 

  

  

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	 	

VIRTUS INVESTMENT PARTNERS, INC.

	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ George R. Aylward	 
	 	Name:  	George R. Aylward	 
	 	Title:	President and CEO	 
	 	 	 	 

 

  

  

  

 

	 	

BMO BANKCORP, INC.

	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Pamela C. Piarowski	 
	 	Name:  	Pamela C. Piarowski	 
	 	Title:	Senior Vice President and CFO

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