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EXHIBIT 2.0
EXECUTION COPY
PURCHASE AGREEMENT
BETWEEN
NEW VALLEY CORPORATION
and
FIRST FINANCIAL MANAGEMENT CORPORATION
DATED AS OF
OCTOBER 20, 1994
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TABLE OF CONTENTS
Page
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ARTICLE I. PURCHASE AND SALE OF SHARES AND RELATED ASSETS; TREATMENT OF EXCLUDED ASSETS AND SHARED ASSETS
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1.1. Related Assets; Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3. Shared Assets and Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4. Permitted Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5. Intercompany Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II. PURCHASE PRICE AND ASSUMPTION OF LIABILITIES
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2.1. Purchase Price and Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2. Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3. Liabilities Not Assumed by Purchaser or FSI . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4. Certain Other Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5. Pension Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7. Deferred Closing Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER
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3.1. Corporate Organization; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2. Capitalization of FSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3. Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4. Authorization, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.6. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7. Service Marks, Trademarks, Trade Names, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.8. Leases and Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.10. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11. Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.12. Consents and Approvals of Governmental Authorities . . . . . . . . . . . . . . . . . . . . . . . . 21
3.13. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.14. Good Title Conveyed, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.15. Government Licenses, Permits and Related Approvals . . . . . . . . . . . . . . . . . . . . . . . . 23
3.16. Conduct of Business in Compliance with Regulatory Requirements . . . . . . . . . . . . . . . . . . 23
3.17. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.19. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.20. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.21. Conduct of Business by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.22. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.23. Pension Plan Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.24. Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.25. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER
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4.1. Corporate Organization; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2. Authorization, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.4. Commitments for the Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.5. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.6. Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V. COVENANTS AND AGREEMENTS OF THE PARTIES
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5.1. Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3. Access to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.5. Instruments of Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.6. Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.7. Compliance with WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VI. EMPLOYEE MATTERS
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6.1. Covered Employees; Prior Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2. Benefits, Compensation and Working Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.3. Vacation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.4. Incentive Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.5. Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.6. Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.7. Purchaser's Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.8. Plans Subject to Collective Bargaining Agreements . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9. Obligations of Purchaser and Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.10. Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII. BANKRUPTCY MATTERS
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7.1. Confirmation and Sale Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2. Certain Bankruptcy Undertakings by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3. Certain Bankruptcy Undertakings by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII. TERMINATION
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8.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
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9.1. Conditions to the Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2. Conditions to the Obligation of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE X. SURVIVAL; INDEMNIFICATION; LIQUIDATED DAMAGES
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10.1. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.3. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.4. Treatment of Claims for Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.5. Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XI. MISCELLANEOUS
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11.1. Public Announcements; Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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11.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.4. Binding Effect; No Assignment; No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . 49
11.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.7. Construction and Representation by Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.9. Tax Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.10. Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies . . . . . . . . . . . . 52
11.11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XII. DEFINITIONS
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12.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
EXHIBITS
Exhibit A Pro Forma Balance Sheet
Exhibit B-1 Services Agreement
Exhibit B-2 Consulting Services Agreement
Exhibit B-3 Pension and Retiree Benefits Administration Services Agreement
Exhibit C-1 Trademark License Agreement
Exhibit C-2 Service Mark License Agreement
Exhibit C-3 Trademark License Agreement
Exhibit D Sales and Marketing Agreement
Exhibit E Financial Statements
(a) Audited Seller Financial Statements
(b) Audited FSI Financial Statements
(c) Unaudited Seller June 30, 1994 Financial Statements
(d) Unaudited FSI June 30, 1994 Financial Statements
Exhibit F-1 Bill of Sale -- Closing
Exhibit F-2 Bill of Sale -- Prior to Closing
Exhibit F-3 Bill of Sale -- Second Closing
Exhibit G Instrument of Assumption
Exhibit H Opinion of John C. Walters
Exhibit I Opinion of Mudge Rose Guthrie Alexander & Ferdon
Exhibit J Opinion of Purchaser's Counsel
Exhibit K Escrow Agreement
Exhibit L Form of Sale Order
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TABLE OF CONTENTS (Continued)
SCHEDULES
1.0 Related Assets
1.1 Permitted Liens
1.2 Excluded Assets
1.3 Shared Assets
1.5 Intercompany Claims
2.2 Liabilities Assumed
3.3 FSI Subsidiaries
3.7 Intellectual Property
3.8 Leases
3.9 Taxes
3.10 Insurance
3.11 Benefit Plans
3.12 Consents and Approvals of Governmental Authorities
3.13 Violations
3.15 Licenses
3.16 Compliance with Law
3.17 Litigation
3.18 Environmental Matters
3.19 Undisclosed Liabilities
3.20 Contracts
3.21 Conduct of Business by Purchaser
3.24 Labor Relations
6.1 Excluded Employees; Employment Contracts
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PURCHASE AGREEMENT (the "Agreement") dated as of October 20,
1994 by and between NEW VALLEY CORPORATION, a New York corporation ("Seller"),
and FIRST FINANCIAL MANAGEMENT CORPORATION, a Georgia corporation
("Purchaser").
RECITALS:
WHEREAS, Seller is a debtor and debtor in possession in a case
(the "Case") filed in the United States Bankruptcy Court for the District of
New Jersey (the "Bankruptcy Court") entitled "In re New Valley Corporation,
Debtor," Case No. 91-27704 NW, under Chapter 11, Title 11 of the United States
Bankruptcy Code (the "Bankruptcy Code");
WHEREAS, Seller operates its business and manages its
properties as a debtor in possession in accordance with sections 1107(a) and
1108 of the Bankruptcy Code;
WHEREAS, Seller owns all of the issued and outstanding shares
of common stock (the "Shares"), par value $.01 per share, of Western Union
Financial Services, Inc., a Delaware corporation ("FSI");
WHEREAS, Seller and FSI own all of the assets related to and
are engaged in the business of providing (i) domestic and international money
transfer services, bill payment services, telephone cards, money orders and
bank card services (the "Business") and (ii) messaging services to individuals
and high volume commercial users including, without limitation, Mailgram,
Telegram, Cablegram, Priority Letter, Action Hotline, Automated Voice Telegram,
Commercial Telegram, Custom Letter, and Opiniongram (the "Messaging Services
Business");
WHEREAS, Seller desires to sell and transfer, and Purchaser
desires to purchase and acquire, all of the Shares and all of Seller's and its
affiliates' (other than FSI and its subsidiaries') right, title and interest in
and to all of the assets and properties of Seller and such affiliates which, as
of the Closing Date, relate in any way to the Business, including without
limitation the assets listed in Schedule 1.0 (collectively, the "Related
Assets"), and Purchaser is willing to assume certain liabilities associated
with the Shares and the Related Assets, all on the terms and subject to the
conditions set forth in this Agreement (the acquisition of the Shares and the
Related Assets by Purchaser on such terms and conditions being hereinafter
referred to as the "Acquisition");
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WHEREAS, by order dated July 7, 1994 (the "Procedures Order")
the Bankruptcy Court has set forth certain procedures (the "Solicitation
Procedures") for the public auction and sale of the Business, the Shares and
the Related Assets pursuant to the Procedures Order;
WHEREAS, Seller and other parties in interest (the "Plan
Proponents") have filed on or prior to the date of the Procedures Order plans
of reorganization and disclosure statements with the Bankruptcy Court;
WHEREAS, pursuant to the Procedures Order and the Solicitation
Procedures Purchaser has previously deposited $10 million in cash with Seller
to be applied toward the Purchase Price payable pursuant to Section 2.1; and
WHEREAS, consistent with the Procedures Order, Seller wishes
to carry out the transactions contemplated by this Agreement pursuant to an
amended plan of reorganization (the "Amended Plan") filed by a Plan Proponent
and, to the extent required, an amended disclosure statement (the "Amended
Disclosure Statement"), in each case based on and incorporating the
transactions contemplated by this Agreement, and to consummate the transactions
contemplated hereby as promptly as practicable.
NOW, THEREFORE, in consideration of the respective premises,
mutual covenants and agreements of the parties hereto, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I. PURCHASE AND SALE OF SHARES AND RELATED ASSETS; TREATMENT
OF EXCLUDED ASSETS AND SHARED ASSETS.
1.1. RELATED ASSETS; PURCHASE OF SHARES. Upon the terms and
subject to the conditions of this Agreement, on the closing date of the
purchase by Purchaser of the Shares pursuant to the Acquisition (the "Closing
Date"), Seller shall sell and transfer to Purchaser, or its designated
affiliates (any references herein to Purchaser being deemed to include such
designated affiliates unless the context indicates otherwise), and Purchaser,
subject to the provisions of Section 2.7, shall purchase and acquire from
Seller, the Shares and the Related Assets owned by it or any of its
subsidiaries (other than FSI or any FSI Subsidiary, as defined below),
including, without limitation, all interests owned by Seller and any of its
subsidiaries or affiliates (other than FSI or any FSI Subsidiary) in the
Western Union Name and Trademark (as defined below) and Seller shall cause each
of its affiliates (other than FSI and its subsidiaries) which owns any of the
Related Assets to transfer, sell and assign such Related Assets to Purchaser,
in each case free and clear of all liens, encumbrances, claims (as
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"claim" is defined in Section 101(5) of the Bankruptcy Code), security
interests of whatever kind or nature, mortgages, pledges, charges, licenses,
options, rights-of-recovery, judgments, orders and decrees of any court or
foreign or domestic governmental entity, interest, tax (including foreign,
state and local taxes), in each case, of any kind or nature, whether secured or
unsecured, choate or inchoate, filed or unfiled, scheduled or unscheduled,
noticed or unnoticed, recorded or unrecorded, contingent or non-contingent,
material or non-material, known or unknown and including all claims based on
any theory that Purchaser is a successor, transferee or continuation of Seller
or the business of Seller (collectively, "Liens" and each a "Lien") whether
arising prior to or subsequent to the date of the filing of the Chapter 11
petition of Seller, other than, in the case of the Related Assets only, the
Liens set forth in Schedule 1.1 ("Permitted Liens") (the consummation of such
transactions other than the transfers at the Second Closing referred to in
Section 2.7, if applicable, being hereinafter referred to as the "Closing").
It is the intention of the parties that, after giving effect to the sale of the
Shares and the Related Assets and the transfer of the Excluded Assets (as
defined below), Purchaser shall own, either directly or through ownership of
FSI and the FSI Subsidiaries, all interests owned by Seller and its
subsidiaries and affiliates as of the date of this Agreement and through the
Closing (and, if applicable, the Second Closing) in and to all Marks (as
defined below) incorporating the words "Western Union," regardless of when such
Marks were created, whether alone or in conjunction with other words, and
associated goodwill, as used in connection with the Business or otherwise (all
such Marks being hereafter referred to as the "Western Union Name and
Trademark"), subject to the licenses and other agreements set forth in Schedule
3.7(a), and shall own or have an interest in all of the assets and properties
reflected on the June 30, 1994 Pro Forma Combined Balance Sheet (the "Pro Forma
Balance Sheet") attached hereto as Exhibit A (other than for changes in such
assets and properties pursuant to this Agreement or as may occur after the date
of such Pro Forma Balance Sheet in the ordinary course of the Business and
consistent with the terms of this Agreement).
1.2. EXCLUDED ASSETS. Upon the terms and subject to the
conditions of this Agreement, prior to the Closing Date, Seller shall cause FSI
to transfer and assign to Seller or an affiliate all of the assets and
properties owned by it which are used exclusively in the conduct of the
Messaging Services Business (the "Excluded Assets") (all of which assets are
listed in Schedule 1.2), pursuant to the Bill of Sale attached as Exhibit F-2,
free and clear of all Liens in favor of, or arising through, FSI or an FSI
Subsidiary and Seller shall assume and be responsible for all liabilities and
obligations (whether fixed, contingent, matured or unmatured, known or unknown,
liquidated or unliquidated) related to the Excluded Assets. The parties hereto
understand and agree that if any Excluded Assets cannot be transferred to
Seller at or prior to the Closing Date by reason of any required consent or
approval
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not being obtained, FSI and Purchaser will use reasonable efforts to transfer
to Seller the benefits and burdens of such Excluded Assets so that Seller may
enjoy the use of such Excluded Assets.
1.3. SHARED ASSETS AND RELATED AGREEMENTS. The assets and
properties of FSI or Seller (including the Related Assets) which following the
Closing Date (and, if applicable, the Second Closing) shall be used in the
conduct of both the Business and the Messaging Services Business and listed in
Schedule 1.3 are hereinafter referred to as the "Shared Assets". The Shared
Assets shall be subject to (i) a Services Agreement in the form of Exhibit B-1
and (ii) a Trademark License Agreement in the form of Exhibit C-1, both of
which shall be executed at the Closing. In addition, at the Closing (or, if
applicable, the Second Closing), the parties shall execute (1) a Consulting
Services Agreement in the form of Exhibit B-2, (2) a Pension and Retiree
Benefits Administration Services Agreement in the form of Exhibit B-3, (3) a
Sales and Marketing Agreement in the form of Exhibit D, (4) a Service Mark
License Agreement in the form of Exhibit C-2, and (5) if Purchaser elects to
acquire Seller's Marks (as defined below) in a Second Closing pursuant to
Section 2.7, a Trademark License Agreement in the form of Exhibit C-3. The
foregoing agreements, with such changes therein as Purchaser and Seller may
agree to as of the Closing Date (and, if applicable, the Second Closing), are
hereinafter referred to as the "Related Agreements". Seller agrees to comply
with all of its obligations under the Related Agreements.
1.4. PERMITTED DIVIDEND. On or prior to the Closing Date,
Seller may cause FSI to declare and pay to Seller a dividend, or otherwise to
distribute to Seller, an amount in cash equal to $117,895,434 (the "Permitted
Dividend"). Seller hereby agrees that Purchaser shall be entitled to deduct
from the portion of the Purchase Price to be paid to Seller at the Closing (or,
if not determined until after the Closing, shall receive a refund from Seller
of a portion of the Purchase Price equal to) the amount, if any, by which the
aggregate amount of dividends or other distributions or payments paid or made
by FSI or any of its subsidiaries to Seller or any of its affiliates after June
30, 1994 in respect of its capital stock or otherwise (other than pursuant to
Section 1.2 and the last sentence of Section 1.5) exceeds the amount of the
Permitted Dividend.
1.5. INTERCOMPANY ACCOUNTS. The balance of all intercompany
accounts between Seller and its affiliates other than FSI and the FSI
Subsidiaries, on the one hand, and FSI and the FSI Subsidiaries, on the other
hand (the "Intercompany Accounts"), as of June 30, 1994 on a pro forma basis
and on an actual basis will not be settled but will be contributed to capital
of FSI at or prior to the Closing. Except as set forth in Schedule 1.5, from
and after July 1, 1994, FSI and the FSI Subsidiaries have not made and, after
the date of this Agreement, shall not make any payments or transfers, or incur
any liabilities to Seller or any of its
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subsidiaries (other than FSI or the FSI Subsidiaries) except as permitted by
Sections 1.2, 1.4 or 11.9 or as reimbursement for expenses incurred in the
ordinary course of business and recorded in the Intercompany Accounts;
provided, however, that expenses incurred by FSI in the amount of not less than
$200,000 per month for each month after June 1994 shall be allocated to Seller
as "Corporate Overhead", consistent with Seller's practice for the six months
ended June 30, 1994 and royalties or other charges in respect of the use by FSI
and the FSI Subsidiaries of any Related Assets, interest on Intercompany
Accounts, revenue sharing payments and processing fees shall each be consistent
with such charges made during the six months ended June 30, 1994. The balance
of the Intercompany Accounts as so determined shall be paid in full on the
Closing Date, or as soon as practicable thereafter, and Seller shall pay to FSI
at or prior to the Closing the amount of any transfers set forth in Schedule
1.5.
ARTICLE II. PURCHASE PRICE AND ASSUMPTION OF LIABILITIES.
2.1. PURCHASE PRICE AND ADJUSTMENTS. (a) At the Closing, in
consideration for the sale to Purchaser of the Shares and the Related Assets,
and subject to Section 2.7, (i) Purchaser shall pay to Seller $1,193,223,000
(the "Purchase Price"), of which $893,223,000 less the sum of (x) the amount of
the $10 million good faith deposit previously deposited with Seller, (y) any
interest actually earned thereon, and (z) the amount of $45 million (the
"Escrowed Funds") which shall be paid by Purchaser to the Escrow Agent (as
named in the Escrow Agreement, as defined below) shall be paid in cash and
$300,000,000 shall be paid by the assumption by Purchaser of the Western Union
Pension Plan; and (ii) FSI and/or Purchaser, as applicable, shall assume the
Assumed Liabilities (including the Western Union Pension Plan) as described in
Section 2.2. The cash portion of the Purchase Price to be paid at Closing
shall be paid by wire transfer of immediately available funds, to such account
or accounts of Seller as may be designated by Seller. The Escrowed Funds shall
be held and paid pursuant to the provisions of an escrow agreement,
substantially in the form attached as Exhibit K hereto (the "Escrow
Agreement").
(b) The Purchase Price shall be subject to adjustment
as follows:
(1) Seller has prepared (or caused to be prepared) the
Pro Forma Balance Sheet which is a consolidated balance sheet of FSI
and its subsidiaries as of June 30, 1994, which: (A) is adjusted to
give effect to an assumed contribution by Seller of the Related Assets
to FSI, to an assumed assumption by FSI of the Assumed Liabilities
(other than the Pension Plan liability described in Section 2.2(a)),
to the payment of an assumed dividend in the amount of $87,895,434 as
of June 30, 1994 (rather than a payment of the Permitted Dividend) and
to
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the other transactions contemplated by this Agreement, including the
contribution to capital of FSI of all Intercompany Accounts as of June
30, 1994, the transfer of the Excluded Assets by FSI to Seller, and
the assumption by Seller of the Excluded Liabilities; (B) reflects
consolidated Total Assets (as defined below) and consolidated Total
Liabilities (as defined below); (C) has been prepared using accounting
practices consistent with those followed on an annual basis at each
December 31, without regard to those followed on an interim basis; (D)
otherwise has been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the balance
sheets of FSI and its subsidiaries as of December 31, 1993 and June
30, 1994 included in Exhibit E; and (E) fairly presents the
consolidated financial position of FSI and its subsidiaries at June
30, 1994, after making the foregoing adjustments and all other
adjustments that are necessary for a fair presentation of the
consolidated financial position of FSI and its subsidiaries at that
date. The Pro Forma Balance Sheet does not reflect any liability
which may result under the Shareholders Agreement between FSI and
Elektra, S.A. de C.V. if such Shareholders Agreement is not affirmed
by FSI after the execution of this Agreement (which liability
Purchaser acknowledges is not an obligation of Seller). For the
purposes hereof, Total Liabilities" and "Total Assets" are defined in
accordance with generally accepted accounting principles; provided,
however, that Total Liabilities do not include any liability in
respect of the Western Union Pension Plan or the Excluded Liabilities
(as defined below); and provided, furthe, that Total Assets do not
include the Excluded Assets and do not include any assets reflected in
the Pro Forma Balance Sheet at values in excess of their historical
cost less amortization; andprovided, further, that: (x) the amount of
any reserve, liability or similar item on the Pro Forma Balance Sheet
determined by any estimation methodology (the Methodology") has been
determined by use of the same Methodology used in determining the
amount included in the balance sheet of FSI and its subsidiaries as of
December 31, 1993 included in Exhibit E; (y) Total Assets do not
include any capitalized transaction costs incurred in connection with
the Acquisition, all of which, if any, incurred by FSI prior to June
30, 1994 have been expensed by FSI prior to June 30, 1994; and (z) the
Pro Forma Balance Sheet reflects full and adequate reserves against
(1) all unpaid Federal, state, local or foreign taxes (including any
interest, penalties or additions to tax that may become payable in
respect thereof) assessed against or payable by FSI with respect to
any period ending on or before June 30, 1994 and (2) unpaid or vested
sales or other incentive compensation for Covered Employees which is
earned through June 30, 1994.
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(2) Seller shall cause its independent certified
public accountants, Price Waterhouse ("Seller's Accountants"), to
audit the Pro Forma Balance Sheet and Seller shall deliver to
Purchaser within sixty (60) days after the date of this Agreement
Seller's Accountants' draft audit report with respect thereto
(together with the Pro Forma Balance Sheet), which report shall state
that the Pro Forma Balance Sheet has been audited in accordance with
generally accepted auditing standards and that the Pro Forma Balance
Sheet has been prepared in accordance with the basis of accounting
described in the notes thereto and the provisions of Section
2.1(b)(1). Purchaser's representatives, including its independent
accountants, (which shall be a "Big Six" accounting firm or other
accounting firm acceptable to Seller) ("Purchaser's Accountants"),
shall be entitled to review all workpapers of Seller's Accountants and
supporting evidence relating to such audit subject to appropriate
indemnification arrangements for the benefit of Seller's Accountants.
(3) Within forty-five (45) days after its receipt of
the Pro Forma Balance Sheet and the draft audit report of Seller's
Accountants or, if later, thirty (30) days after the Closing Date,
Purchaser shall notify Seller whether it accepts or disputes the
accuracy of the Pro Forma Balance Sheet. If Purchaser accepts the Pro
Forma Balance Sheet, Seller's Accountants shall be requested to issue
their final audit report thereon and the Pro Forma Balance Sheet shall
be deemed to be the audited pro forma balance sheet of FSI as of June
30, 1994 (the "Audited Pro Forma Balance Sheet"). If Purchaser
disputes the accuracy of the Pro Forma Balance Sheet, it shall in such
notice set forth in reasonable detail those items that Purchaser
believes are not fairly presented and the reasons for its opinion.
The parties shall then meet and in good faith use their best efforts
to try to resolve their disagreements over the disputed items on the
Pro Forma Balance Sheet. If the parties resolve their disagreements
in accordance with the foregoing sentence, the Pro Forma Balance Sheet
with those modifications to which the parties shall have agreed shall
be deemed to be the Audited Pro Forma Balance Sheet. If the parties
have not resolved their disagreements over the disputed items on the
Pro Forma Balance Sheet within thirty (30) days after Purchaser's
notice of dispute, the parties shall forthwith jointly select an
independent "Big Six" firm (or other firm acceptable to both parties)
of certified public accountants and such firm shall make a binding
determination of those disputed items in accordance with this
Agreement within ninety (90) days of its selection, and the Pro Forma
Balance Sheet with those modifications determined by such third
accounting firm shall be deemed to be the Audited Pro Forma Balance
Sheet. The determination of such third accounting firm shall not be
subject to judicial review. The fees and expenses of Purchaser's
Accountants
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shall be paid by Purchaser, the fees and expenses of Seller's
Accountants (including audit fees) shall be paid by Seller and the
fees and expenses of any third accounting firm shall be shared equally
by both parties.
(4) If FSI's consolidated Total Assets reflected in
the Audited Pro Forma Balance Sheet do not exceed FSI's consolidated
Total Liabilities reflected therein by at least $15.0 million, the
amount by which the sum of FSI's consolidated Total Liabilities plus
$15.0 million exceeds FSI's consolidated Total Assets shall be
deducted from the Purchase Price and paid by Seller to Purchaser
within two (2) business days after the Audited Pro Forma Balance Sheet
has been determined by wire transfer of immediately available funds to
such account or accounts as may be designated by Purchaser.
(5) If FSI's consolidated Total Assets reflected in the
Audited Pro Forma Balance Sheet exceed FSI's consolidated Total
Liabilities reflected therein by more than $15.0 million, the amount
of such excess shall be added to the Purchase Price and paid by
Purchaser to Seller within two (2) business days after the Audited
Closing Date Balance Sheet has been determined by wire transfer of
immediately available funds to such account or accounts as may be
designated by Seller.
(6) All amounts payable by Seller to Purchaser or by
Purchaser to Seller pursuant to this Section 2.1(b) shall bear
interest for the period from the Closing Date to the date of payment
of such amounts at the rate announced from time to time by Citibank,
N.A. as its base rate.
2.2. ASSUMPTION OF LIABILITIES. At and effective as of the
Closing, FSI and/or Purchaser, as applicable, shall assume or continue to be
responsible for, as the case may be, the following obligations and liabilities
(the "Assumed Liabilities") of Seller pursuant to the Instrument of Assumption
attached as Exhibit G:
(a) PENSION PLAN. Purchaser or a wholly-owned
subsidiary of Purchaser will adopt and become the plan sponsor of the Western
Union Pension Plan (as defined in the Amended Plan) and the trust thereunder,
including any plans and trusts resulting from the division of the Western Union
Pension Plan pursuant to Section 6.6(g), except that Seller shall remain liable
for and shall indemnify and hold Purchaser and FSI and its subsidiaries
harmless against any excise tax under Chapter 43 of the Internal Revenue Code,
as amended (the "Code") asserted with respect to contributions made by Seller,
FSI or Purchaser or omitted to be made to any plan of Seller or its affiliates
and any prohibited transactions during or for any plan year prior to January 1,
1995, except any excise tax imposed for failure to make the minimum
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contribution with respect to the 1994 plan year. Purchaser and FSI shall be
liable for and shall indemnify and hold Seller and its subsidiaries harmless
against any such excise tax asserted with respect to contributions made to the
Western Union Pension Plan and any prohibited transactions during or for any
plan year commencing on or after January 1, 1995, and for any excise tax
imposed for failure to make the minimum contribution with respect to the 1994
plan year.
(b) CERTAIN LIABILITIES. Purchaser or FSI or another
affiliate of Purchaser will assume the liabilities listed in Schedule 2.2
associated with the Related Assets.
(c) COLLECTIVE BARGAINING AGREEMENTS. FSI shall
assume all of Seller's obligations in respect of active employees of the
Business under Seller's collective bargaining agreements (the "Collective
Bargaining Agreements") with the Communications Workers of America (the "CWA").
2.3. LIABILITIES NOT ASSUMED BY PURCHASER OR FSI. Except as
expressly assumed hereunder, neither Purchaser, FSI, nor any subsidiary of
either of them, shall assume or have any responsibility for or otherwise become
liable for any liabilities (whether fixed, contingent, matured or unmatured,
known or unknown, liquidated or unliquidated) of Seller (the "Excluded
Liabilities"), including without limitation, (a) the Reno, Nevada Customer
Service Center lease, (b) any liability of Seller to any of its creditors or
shareholders, (c) any liability to the extent associated with the conduct of
the Messaging Services Business (including without limitation, any liability to
its employees under the Collective Bargaining Agreements or otherwise), (d) any
liability associated with the Datek litigation referred to in Note G to
Seller's financial statements for the quarter ended June 30, 1994 (the "Datek
Litigation"), (e) any federal, state, local or foreign tax liabilities
(including interest and penalties) attributable to the income of FSI and its
subsidiaries included in Seller's consolidated federal and consolidated,
combined or unitary state tax returns for all periods through the Closing Date,
(f) any liability related to the Excluded Assets, (g) any liability resulting
from the failure by Seller or FSI prior to, or with respect to periods ending
on or prior to, the Closing Date properly to fund, maintain or make payments
pursuant to any benefit plans or arrangements (including governmental pension
plans) for employees who are not United States citizens, or (h) any liability
in respect of post-retirement benefits to any former employees of Seller or FSI
who retired prior to the Closing Date, other than (1) post-retirement benefits
provided under the Western Union Pension Plan expressly assumed pursuant to
Section 2.2(a) or (2) post retirement benefits for individuals who retire after
the Closing Date pursuant to any plans maintained by or applicable to Purchaser
or FSI on and after the Closing Date. Seller shall indemnify and hold
Purchaser, FSI and the FSI Subsidiaries harmless from and against any loss,
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liability, damage or deficiency (including, without limitation, costs,
interest, penalties and reasonable attorneys' fees) resulting from the Excluded
Liabilities.
2.4. CERTAIN OTHER ARRANGEMENTS. After the Closing Date,
Purchaser agrees that it will not, and will cause FSI not to, take any action
which would have the effect of increasing the amount of liability of Seller for
any post-retirement benefits payable to any former employees of Seller or FSI
under the Collective Bargaining Agreements.
2.5. PENSION ASSETS. (a) Seller shall indemnify and hold
Purchaser, FSI and the FSI Subsidiaries harmless from and against any decline
in the fair market value of the assets in the Western Union Pension Plan (the
"Plan Assets") from December 31, 1993 to the Closing Date (other than as a
result of the payment of plan benefits and expenses from and after December 31,
1993 and prior to the Closing Date and without giving effect to any minimum
funding contribution made by Seller during such period) as follows: Within
forty-five (45) days following the Closing Date, Seller shall provide Purchaser
with a statement of the fair market value of the Plan Assets as of the Closing
Date. Purchaser shall have ten (10) days to review such statement and to give
Seller notice of any objection it may have to the value of any asset included
therein. In the event that such an objection is made and Seller and Purchaser
cannot resolve the dispute within ten (10) days thereafter, the dispute shall
be referred to a nationally recognized organization expert in pricing
securities (an "Evaluation Firm") satisfactory to Seller and Purchaser whose
opinion as to the fair market value of the disputed item(s) shall be delivered
within thirty days and shall be binding on Seller and Purchaser and whose fees
and expenses shall be borne equally by the parties. The opinion of the
Evaluation Firm shall not be subject to judicial review. In the event that the
fair market value of the Plan Assets as of the Closing Date is less than the
fair market value of the Plan Assets as of December 31, 1993 (other than as a
result of the payment of plan benefits and expenses from and after December 31,
1993 and prior to the Closing Date and without giving effect to any minimum
funding contribution made by Seller during such period), then Seller shall pay
the difference to Purchaser within three (3) days after the fair market value
of the Plan Assets as of the Closing Date is determined.
(b) For purposes of Section 2.5(a) the parties agree
that the fair market value of the Plan Assets at December 31, 1993 shall be
$288,349,000. Seller and Purchaser agree to compute and to instruct any
Evaluation Firm selected pursuant to Section 2.5(a) to compute the value of the
Plan Assets as of the Closing Date on a basis consistent with the December 31,
1993 valuation set forth above.
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2.6. CLOSING. The Closing shall take place at the offices of
Mudge Rose Guthrie Alexander & Ferdon, 180 Maiden Lane, New York, New York
10038 at 11:00 a.m. New York City Time on the last business day of the calendar
month in which the conditions set forth in Article IX have been satisfied, or
at such other time or place as the parties may agree and as may be approved by
the Bankruptcy Court.
2.7. DEFERRED CLOSING ELECTION. (a) Notwithstanding anything
herein to the contrary, Purchaser may elect, on 15 days' notice to Seller prior
to the Closing, to close the purchase of all interests owned by Seller and its
subsidiaries and affiliates in those Marks and associated goodwill constituting
the Western Union Name and Trademark not held by FSI or the FSI Subsidiaries
("Seller's Marks") separately from and subsequent to the Closing of the
purchase of the Shares and the other Related Assets, provided that the date
elected by Purchaser for such subsequent closing (the "Second Closing") shall
be on or before January 15, 1995. If Purchaser so elects, (i) the Purchase
Price payable at the Closing shall be reduced by $250,000,000, (ii) at the
Closing, Purchaser and Seller shall execute and deliver a Trademark License
Agreement in the form of Exhibit C-3; and (iii) at the Second Closing:
Purchaser shall pay to Seller $250,000,000 plus a license or royalty fee on
such amount computed at the rate per annum announced from time to time by
Citibank, N.A. as its base rate from the date of the Closing to the Second
Closing; Seller shall execute and deliver to Purchaser a Bill of Sale in the
form of Exhibit F-3 and such other instruments of transfer, conveyance and
assignment as are reasonably necessary to vest in Purchaser, free and clear of
all Liens except Permitted Liens, all right, title and interest of Seller and
its subsidiaries and affiliates as of the date of this Agreement and through
the Second Closing in and to Seller's Marks; and Seller shall cause to be
delivered to Purchaser written opinions of Seller's General Counsel and Mudge
Rose Guthrie Alexander & Ferdon, counsel to Seller, addressed to Purchaser,
substantially in the forms attached hereto as Exhibits H and I, respectively,
as specified therein with respect to the Second Closing. It is understood and
agreed among the parties that if the Closing occurs each party shall be
absolutely and unconditionally obligated to complete the Second Closing and
this obligation shall be a separate independent covenant and agreement and
shall not be affected by any circumstance whatsoever, including (1) any
set-off, claim, counterclaim, defense or other right which Purchaser may have
against Seller or Seller may have against Purchaser, any failure on the part of
any party to comply with this Agreement or any Related Agreement or any
validity or unenforceability thereof, (2) any defect in title, condition,
operation, merchantability or fitness for use of the Shares or any Related
Assets, (3) any insolvency, bankruptcy, reorganization or similar proceedings
by or against any party or any other person, or (4) any other circumstance or
event whatsoever, whether or not similar to any of the foregoing.
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(b) Each party acknowledges that the rights of the other
party to consummate the transactions contemplated by this Section 2.7 are
special, unique and of extraordinary character, and in the event that a party
violates or fails or refuses to perform any covenant or agreement made by it in
this Section 2.7 then the other party may be without adequate remedy at law.
Each party agrees, therefore, that nothing in this Agreement, including the
provisions of Section 11.11, shall be deemed to limit the right of a party, in
the event that the other party violates, fails or refuses to perform any
covenant or agreement by it in this Section 2.7, to institute or prosecute an
action in any court of competent jurisdiction to enforce specific performance
of such covenant or agreement or seek any other equitable relief. The seeking
of specific performance or injunctive relief from a court shall not constitute
a waiver of the right of any party, including the claimant in any such action,
to arbitrate any other controversy or claim arising out of or relating to this
Agreement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents, covenants and warrants to Purchaser as
follows:
3.1. CORPORATE ORGANIZATION; ETC. Each of Seller and FSI is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to carry on its business as it is now being conducted and to own the
properties and assets it now owns; is duly qualified or licensed to do business
as a foreign corporation in good standing in every jurisdiction in which
ownership of property or the conduct of its business requires such
qualification, except jurisdictions in which its failure to qualify to do
business would not have a material adverse effect on the business, prospects,
operations, properties, assets or condition (financial or otherwise) of FSI and
the FSI Subsidiaries (as hereinafter defined) or the Business taken as a whole
(a "Material Adverse Effect"). The copies of the Certificate of Incorporation
and By-Laws of each of Seller and FSI heretofore made available to Purchaser
are complete and correct copies of such instruments as are presently in effect.
3.2. CAPITALIZATION OF FSI. The authorized capital stock of FSI
consists of 20,000 shares of Common Stock, $.01 par value per share, of which
1,000 shares are issued and outstanding and no shares are held in the treasury
of FSI. The Shares constitute all of the issued and outstanding shares of
capital stock of FSI and are owned beneficially and of record solely by Seller.
All issued and outstanding shares of capital stock of FSI are validly issued,
fully paid and nonassessable. There are no outstanding (a) securities
convertible into or exchangeable for capital stock of FSI; (b) options,
warrants or other rights to purchase or subscribe
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to capital stock of FSI or securities convertible into or exchangeable for
capital stock of FSI; or (c) contracts, commitments, agreements, understandings
or arrangements of any kind relating to the issuance or voting of any capital
stock of FSI, any such convertible or exchangeable securities or any such
options, warrants or rights.
3.3. SUBSIDIARIES AND AFFILIATES. Schedule 3.3 sets forth the
name and jurisdiction of incorporation of each subsidiary of FSI (the "FSI
Subsidiaries"). Seller does not own, directly or indirectly, any capital stock
or other equity interest in any corporation or other entity which has any
interest in the Business or any Related Assets not listed in Schedule 3.3.
Except as and to the extent set forth in Schedule 3.3, all the outstanding
capital stock of each FSI Subsidiary (i) is owned directly or indirectly by FSI
and at the Closing Date will be held free and clear of all Liens, and (ii) is
validly issued, fully paid and nonassessable. There are no outstanding
options, rights or agreements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of any FSI Subsidiary.
Each FSI Subsidiary (1) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; (2) has
full corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns; and (3) except as
provided in Schedule 3.3, is duly qualified or licensed to do business as a
foreign corporation in good standing in every jurisdiction in which ownership
of property or the conduct of its business requires such qualification, except
jurisdictions in which the failure to qualify to do business would have no
Material Adverse Effect. Seller has heretofore made available to Purchaser
complete and correct copies of the certificate of incorporation and by-laws of
each FSI Subsidiary, as presently in effect.
3.4. AUTHORIZATION, ETC. Seller has full corporate power and
authority to enter into this Agreement and the Related Agreements and to carry
out the transactions contemplated hereby. This Agreement and the Related
Agreements have been duly approved by an order of the Bankruptcy Court
determining that the Purchase Price and the other consideration to be paid by
Purchaser is the highest and best offer for the Business and authorizing Seller
to perform the transactions contemplated by this Agreement and the Related
Agreements in accordance with the terms of such order and subject to
confirmation of the Amended Plan. The Board of Directors of Seller has taken
all action required by law and the Bankruptcy Court to be taken by them to
authorize the execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby, and this Agreement is and upon execution the Related Agreements will
be legal, valid and binding agreements of Seller enforceable in accordance with
their terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization,
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moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought,
and (iii) enforceability of the indemnification provisions of this Agreement
and the Related Agreements may be subject to limitations of public policy under
Federal or State laws.
3.5. FINANCIAL STATEMENTS. The consolidated balance sheets of
Seller and its subsidiaries and of FSI and its subsidiaries as of December 31,
1993 and December 31, 1992, and the related consolidated statements of
operations, operations and retained earnings, changes in capital and cash flows
for each of the three years in the period ended December 31, 1993, audited by
Price Waterhouse, independent certified public accountants, and included in
Exhibit E, and the consolidated unaudited balance sheets of Seller and its
subsidiaries and of FSI and its subsidiaries as of June 30, 1994 and the
related consolidated statements of operations and retained earnings and cash
flows for the six months then ended included in Exhibit E (i) have been
prepared in accordance with the books of account and other financial records of
Seller, (ii) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise stated therein), (iii) fairly present the
consolidated financial position of Seller and its subsidiaries and of FSI and
its subsidiaries at such dates and their results of operations, changes in
capital or retained earnings and cash flows for such periods, and (iv) with
respect to the June 30, 1994 financial statements, include all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation of the consolidated financial position of Seller and its
subsidiaries and of FSI and its subsidiaries and the results of their
operations and their cash flows. The Pro Forma Balance Sheet attached as
Exhibit A has been properly compiled on the basis of the assumptions set forth
therein, none of which are inconsistent with any provisions of this Agreement
and in the notes thereto, and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of the Pro Forma Balance
Sheet in each case in compliance with Section 2.1.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on the Schedules hereto, since June 30, 1994 the Business has been conducted
only in the ordinary course consistent with past practices and there has not
been:
(i) any material adverse change in the financial
position or results of operations of the Business or of FSI and its
subsidiaries considered as a whole from that reflected in the
financial statements as of June 30, 1994, attached hereto as Exhibit
E, or any material adverse change in the
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Business, or the assets or prospects of FSI and the FSI Subsidiaries
considered as a whole;
(ii) any material damage, destruction or other casualty
loss with respect to any Related Assets or any property owned or
leased by Seller, FSI or any FSI Subsidiaries and used in the Business
that is not adequately covered by insurance;
(iii) any event or events that could, individually or in
the aggregate, be reasonably expected to have a Material Adverse
Effect; or
(iv) except for the Permitted Dividend, any dividend or
other distribution on or with respect to any capital stock of FSI or
any FSI Subsidiary.
3.7. SERVICE MARKS, TRADEMARKS, TRADE NAMES, ETC. (a) Schedule
3.7(a) contains an accurate and complete description of all Marks, all material
registered copyrights and all material computer software used by Seller, FSI or
any FSI Subsidiary in or necessary for the Business, all Marks used by Seller,
FSI or any FSI Subsidiary in or necessary for the Business constituting the
Western Union Name and Trademark, all applications for any of the foregoing,
and a list of all licenses, sublicenses and other agreements relating thereto
("Intellectual Property Agreements"). Schedule 3.7(b) contains an accurate and
complete description of all Marks which Seller and its subsidiaries (including
without limitation FSI and the FSI Subsidiaries) own, license or otherwise have
the right to use, relating to the Business or otherwise, which are not
otherwise disclosed in Schedule 3.7(a).
(b) (i) Upon the Closing (or, if applicable, the
Second Closing) and after giving effect to the transactions
contemplated hereby, Purchaser, FSI and the FSI Subsidiaries (A) shall
collectively own or will be licensed or otherwise have the right to
use, free and clear of all Liens (other than Permitted Liens and Liens
created by this Agreement, the Related Agreements or by or through
Purchaser, including the restrictions contained in the Intellectual
Property Agreements), all right, title and interest in and to the
Western Union Name and Trademark and all other Marks used in or
necessary for the conduct of the Business (and, in the case of the
Western Union Name and Trademark, the Messaging Services Business), as
presently conducted, and the goodwill relating thereto, (B) shall
collectively receive or own all right, title and interest of Seller,
FSI and the FSI Subsidiaries in and to, or other non- proprietary
rights to the use of, all other Intellectual Property (as defined
below) used in or necessary for the conduct of the Business, as
presently conducted, and the goodwill relating thereto, and (C) as a
result of the foregoing, shall collectively receive or own or will be
licensed or otherwise have the right to use,
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all Intellectual Property used in or necessary for the conduct of the
Business (and, in the case of the Western Union Name and Trademark,
the Messaging Services Business), as presently conducted;
(ii) except as set forth in Schedule 3.7(c), to
the knowledge of Seller, the use by Seller and its subsidiaries of the
Western Union Name and Trademark and all other Intellectual Property
used in or necessary for the conduct of the Business (and, in the case
of the Western Union Name and Trademark, the Messaging Services
Business), as presently conducted, does not infringe upon the rights
of any third party anywhere in the world, nor are there any infringing
or diluting uses of the Western Union Name and Trademark or any other
Marks used in or necessary for the conduct of the Business (and, in
the case of the Western Union Name and Trademark, the Messaging
Services Business), as presently conducted, by any third party
anywhere in the world;
(iii) except for the Intellectual Property
Agreements and other than Permitted Liens and Liens created by this
Agreement, the Related Agreements or by or through Purchaser, and
subject to applicable Legal Requirements and the restrictions
contained in the Sale Order, as of the Closing (and, if applicable, as
to Seller's Marks, the Second Closing), Seller and its subsidiaries
shall have the right to assign rights, including rights of usage, in
the Western Union Name and Trademark and all other Intellectual
Property used in or necessary for the conduct of the Business (and, in
the case of the Western Union Name and Trademark, the Messaging
Services Business), as presently conducted, anywhere in the world
without seeking the approval or consent of any third party and without
payment to any third party, and shall not have granted any license or
other right to use the Western Union Name and Trademark, any other
Marks or any other Intellectual Property used in or necessary for the
conduct of the Business (and, in the case of the Western Union Name
and Trademark, the Messaging Services Business), as presently
conducted, to any other person anywhere in the world, other than
limited rights granted to third parties to use Intellectual Property
other than Marks or the Western Union Name and Trademark solely in
connection with performing services for Seller, FSI or the FSI
Subsidiaries;
(iv) Schedule 3.7(c) contains an accurate and
complete description of all material adverse claims, disputes,
demands, proceedings, or litigation that have been asserted or, to the
knowledge of Seller, threatened, by any person anywhere in the world
to the use, ownership or validity of the Western Union Name and
Trademark or any other Marks used in or necessary for the conduct of
the Business (and, in the case of the Western Union Name and
Trademark, the Messaging Services
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Business), as presently conducted, and Seller does not know of any
other valid basis for any such claims, disputes, demands, proceedings,
or litigation;
(v) except for the Intellectual Property
Agreements or as set forth in Schedule 3.7(c), there is no outstanding
order, decree, stipulation, written restriction, undertaking,
administrative or judicial decision or judgment, or any other kind of
agreement, limiting or restricting the use or licensing of the Western
Union Name and Trademark or any other Marks used in or necessary for
the conduct of the Business (and, in the case of the Western Union
Name and Trademark, the Messaging Services Business), as presently
conducted, or declaring any abandonment thereof anywhere in the world;
(vi) Seller has made available to Purchaser all
reports or written advice, including without limitation, appraisals
and trademark search reports, received by Seller relating in whole or
in part to the ownership, availability, enforceability, or possible
infringement of the Western Union Name and Trademark and all other
Marks used in or necessary for the conduct of the Business (and, in
the case of the Western Union Name and Trademark, the Messaging
Services Business), as presently conducted, anywhere in the world;
(vii) except as set forth in Schedule 3.7(c), all
registrations for and applications to register the Western Union Name
and Trademark and all other Marks used in or necessary for the conduct
of the Business (and, in the case of the Western Union Name and
Trademark, the Messaging Services Business), as presently conducted,
anywhere in the world, including but not limited to such registrations
and applications listed in Schedule 3.7(a), are in full force and
effect and uncontested, not abandoned, fully assignable to Purchaser
and are not subject to cancellation for non-use, and will not be
subject to cancellation for non-use within three months after the
Closing Date (and, if applicable, as to Seller's Marks, the Second
Closing); and
(viii) neither Seller, FSI nor any FSI Subsidiary
owns or licenses any patents (other than in connection with existing
leases or ownership of computer equipment used in the ordinary course
of the Business).
(c) As to the Intellectual Property Agreements listed
in Schedule 3.7(a), except as noted therein (i) all such agreements are in full
force and effect and, to the extent such agreements are Related Assets, are
fully assignable to Purchaser; (ii) neither the Seller nor any other parties to
such agreements are in default in any material respect under any such
agreement, except for those defaults under money transfer agent agreements and
network agent
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agreements which, individually or in the aggregate, would not have a Material
Adverse Effect; (iii) none of Seller, FSI or any of the FSI Subsidiaries is or
will become obligated to make any additional royalty or similar payments under
any such agreements as a result of the transactions contemplated by this
Agreement; and (iv) the exercise by the Seller, FSI or any of the FSI
Subsidiaries of their rights under any such agreement does not infringe upon
the claimed rights of others. True and complete copies of all Intellectual
Property Agreements have been made available to Purchaser.
(d) "Intellectual Property" means (a) inventions,
whether or not patentable, whether or not reduced to practice, and whether or
not yet made the subject of a pending patent application or applications, (b)
ideas and conceptions of potentially patentable subject matter, including,
without limitation, any patent disclosures, whether or not reduced to practice
and whether or not yet made the subject of a pending patent application or
applications, (c) national (including the United States) and multinational
statutory invention registrations, patents, patent registrations and patent
applications (including all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations) and all rights therein
provided by international treaties or conventions and all improvements to the
inventions disclosed in each such registration, patent or application, (d)
trademarks, service marks, trade dress, logos, trade names and corporate names,
whether or not registered, including all common law rights, and registrations
and applications for registration thereof, including, but not limited to, all
marks registered in the United States Patent and Trademark Office, the
Trademark Offices of the States and Territories of the United States of
America, and the Trademark Offices of other nations throughout the world, and
all rights therein provided by international treaties or conventions
(collectively, "Marks"), (e) copyrights (registered or otherwise) and
registrations and applications for registration thereof, and all rights therein
provided by international treaties or conventions, (f) moral rights (including,
without limitation, rights of paternity and integrity), and waivers of such
rights by others, (g) computer software (other than software for personal
computers generally available in the retail market), including, without
limitation, source code, operating systems and specifications, data, data
bases, files, documentation and other materials related thereto, (h) trade
secrets and confidential, technical and business information (including ideas,
formulas, compositions, inventions, and conceptions of inventions whether
patentable or unpatentable and whether or not reduced to practice), (i) whether
or not confidential, technology (including know-how and show-how),
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and supplier lists
and information, (j) copies and tangible embodiments of all
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the foregoing, in whatever form or medium, (k) all rights to obtain and rights
to apply for patents, and to register trademarks and copyrights, and (l) all
rights to sue or recover and retain damages and costs and attorneys' fees for
present and past infringement of any of the foregoing.
3.8. LEASES AND REAL PROPERTY. Schedule 3.8 contains a list of
all leases pursuant to which Seller, FSI or any FSI Subsidiary leases real
property used in connection with the Business or the Related Assets. Except as
set forth in Schedule 3.8, (a) all such leases are in full force and effect and
constitute the valid and binding obligations of Seller or its subsidiaries and,
to Seller's knowledge, the other parties thereto; and (b) at the Closing Date
there will be no default under any such lease by Seller or any of its
subsidiaries or, to their knowledge, any other party thereto. With the
exception of defaults resulting from the filing of the Case, no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default under any such
lease entitling any party to terminate such lease, and the continuation,
validity and effectiveness of all such leases under the current terms thereof
will in no way be affected, altered or impaired by the consummation of the
Acquisition. True and complete copies of all such leases, including all
amendments thereto, have been made available to Purchaser. None of FSI or any
of the FSI Subsidiaries currently owns or at any time in the past has owned any
real property.
3.9. TAXES. As used in this Agreement, "taxes" or "tax
liability" means all taxes (including but not limited to income taxes, excise
taxes, sales taxes, gross receipts or any other taxes), including applicable
interest, additions to tax and penalties.
(a) Except as set forth in Schedule 3.9, each of FSI
and its subsidiaries has filed all required tax returns, and has paid all taxes
shown thereon as owing. Such returns are correct and complete in all material
respects.
(b) Except as set forth in Schedule 3.9, each of FSI
and its subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) Except as set forth in Schedule 3.9, (i) neither
Seller nor any director, officer, or employee responsible for tax matters of
Seller or FSI is aware of any proposed tax assessment by any tax authority for
additional taxes for any period for which tax returns have been filed; and (ii)
there is no currently pending dispute or claim concerning any tax liability of
Seller's affiliated group, FSI, or any of its subsidiaries of which such
persons have knowledge.
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(d) Neither FSI nor any of its subsidiaries has been a
member of an affiliated group filing a consolidated federal income tax return,
or any consolidated or combined or unitary group filing a state tax return,
other than a group the common parent of which is Seller.
(e) Except as set forth in Schedule 3.9, Seller has on
behalf of its affiliated group including FSI filed all required tax returns
required for any period during which FSI or any of its subsidiaries has been a
member of the group, and has paid all taxes shown thereon as owing. Such
returns are correct and complete in all material respects.
(f) Except as set forth in Schedule 3.9, none of FSI
and its subsidiaries has any liability for taxes (i) as a transferee or
successor, or (ii) imposed by contract.
3.10. INSURANCE. Schedule 3.10 contains a description of all
material policies of fire, liability, workmen's compensation and other forms of
insurance owned or held by Seller, FSI and each FSI Subsidiary relating to the
Business. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of this
Agreement have been paid, and as of the Closing will have been paid, and no
notice of cancellation or termination has been received with respect to any
such policy. True and complete copies of all policies listed in Schedule 3.10
have been made available to Purchaser. All such policies are of a scope and,
in the opinion of management, in an amount to insure all material assets of FSI
relating to the Business as is usual and customary for businesses engaged in
the Business and are sufficient for compliance in all material respects with
all requirements of law and all agreements relating to the Business to which
FSI or any of its subsidiaries is a party. All material notices relating to
the Business required to have been given by Seller, FSI or any of their
subsidiaries to any insurance company have been timely and duly given, and no
insurance company has asserted (or reserved its right to assert) that any
unsatisfied judgment or any pending or asserted action, suit or other claim
relating to the Business is not covered by the applicable policy relating
thereto.
3.11. BENEFIT PLANS. (a) Schedule 3.11 contains a true and
complete list of Seller's and FSI's "employee benefit plans" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and all stock option, deferred compensation, incentive and
similar plans (the "Benefit Plans"). Each Benefit Plan is in writing, and
Seller has previously made available to Purchaser a true and correct copy of
each Benefit Plan together with a true and complete copy of the relevant trust
instruments, the most recently filed Internal Revenue Service Form 5500, the
most recently received IRS determination letter, and the most recently prepared
actuarial
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report and financial statement. Except as disclosed in Schedule 3.11, no
Benefit Plan subject to Title IV of ERISA has been terminated and no proceeding
has been initiated to terminate any Benefit Plan with respect to which
Purchaser would be expected to incur any liability, direct or indirect,
contingent or otherwise, under Title IV of ERISA. Neither the Shares nor the
Related Assets are the subject of any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Code and neither Seller nor FSI is the subject
of any lien arising under Section 302(f) of ERISA or Section 412(n) of the Code
or has been required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code with respect to any Benefit Plan. Except as disclosed
in Schedule 3.11, to the best knowledge of Seller, no action or claims (other
than routine claims for benefits made in the ordinary course of administration
of the Benefit Plans) are pending, threatened or imminent against or with
respect to any Benefit Plan, or any sponsor or fiduciary (as defined in Section
3(21) of ERISA) of any Benefit Plan. Neither Seller nor FSI has engaged in a
transaction described in Section 4069 of ERISA. Neither Seller, FSI nor any
Benefit Plan has engaged in any prohibited transactions (as defined in Section
406 or 407 of ERISA or Section 4975 of the Code) for which a statutory
exemption is not available. Except as otherwise provided in Articles II and
VI, Purchaser and Seller agree that Purchaser expressly does not assume any
liability, including contingent liabilities, under any Benefit Plan. No
Benefit Plan under which Seller or FSI has any liability or other obligation is
or was a "multiple employer plan" within the meaning of Section 413(c) of the
Code, or a "multiemployer plan" as defined in Section 3(37) of ERISA. All
continuation health care coverage and notice requirements under Section 4980B
of the Code and Sections 601 and 608 of ERISA have been satisfied with respect
to all Covered Employees or prior employees of Seller and FSI and any
"qualified beneficiary" (within the meaning of Section 4980B(g) of the Code) of
such employees.
(b) Each Benefit Plan which is intended to qualify
under Section 401(a) of the Code has been determined to be so qualified by the
Internal Revenue Service and nothing has occurred since the date of the last
such determination which has resulted or is likely to result in the revocation
of such determination. Each Benefit Plan has been operated and administered in
all material respects in accordance with its respective terms and applicable
law.
3.12. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except
for (i) requirements of the Bankruptcy Code, (ii) requirements of state and
foreign banking, currency or other regulatory authorities (all of which
requirements are set forth in Schedule 3.12), and (iii) filing and recording
appropriate documents as provided by the laws of the State of New Jersey
relating to conveyances of interests in real estate, no consent, approval or
authorization of, or declaration, filing or
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registration with, any governmental or regulatory authority is required in
connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby or to enable
Purchaser, FSI and the FSI Subsidiaries to conduct the Business after the
Closing as and where it is currently being conducted.
3.13. NO VIOLATION. Except as set forth in Schedule 3.13,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will violate any provision of the
certificate of incorporation or by-laws of Seller, FSI or any FSI Subsidiary,
or violate, or be in conflict with, or constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation or imposition of any
security interest, Lien, encumbrance, claim or adverse interest of any kind or
nature whatsoever on any of the Related Assets or the assets or property of FSI
or any subsidiary pursuant to, any agreement or commitment to which Seller, FSI
or any FSI Subsidiary is a party or by which Seller, FSI or any FSI Subsidiary
is bound or any of their properties is subject, or violate any statute or law
or any judgment, decree, order, regulation or rule of any court or governmental
authority, except for such violations, defaults or other events as would not
individually or in the aggregate have a Material Adverse Effect.
3.14. GOOD TITLE CONVEYED, ETC. Upon approval by the Bankruptcy
Court of an order confirming the Amended Plan (the "Confirmation Order") and an
order approving this Agreement and authorizing the sale of the Shares and the
Related Assets under Section 363 of the Bankruptcy Code substantially in the
form of Exhibit L (the "Sale Order") and expiration of the period for stay of
the Sale Order without a stay of the Sale Order having been granted and not
lifted, Seller will have complete and unrestricted power and the unqualified
right to sell, assign, transfer and deliver to Purchaser, and, at the Closing
Date (and, if applicable, as to Seller's Marks, the Second Closing), Seller and
its affiliates will transfer good, valid and marketable title, free and clear
of all Liens, to the Shares and, except for Permitted Liens, the Related
Assets. The Bill of Sale in the form attached as Exhibit F-1 and the deeds,
endorsements, assignments and other instruments to be executed and delivered to
Purchaser by Seller at the Closing (and, if applicable, the Second Closing)
will be legal, valid and binding obligations of Seller enforceable in
accordance with their terms, subject as to enforcement to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles and will
effectively vest in Purchaser good, valid and marketable title to all the
Related Assets, subject to Permitted Liens.
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3.15. GOVERNMENT LICENSES, PERMITS AND RELATED APPROVALS.
Schedule 3.15 sets forth all licenses, permits, consents, approvals,
authorizations, qualifications and orders of any Governmental Agency (as
hereinafter defined) necessary to enable Seller, FSI and the FSI Subsidiaries
to conduct their respective businesses as presently conducted, except where the
failure to have any such license, permit, consent, approval, authorization,
qualification or order, would not, individually or in the aggregate, have a
Material Adverse Effect. All such licenses, permits, consents, approvals,
authorizations, qualifications and orders are valid and in full force and
effect, except as set forth in Schedule 3.15.
3.16. CONDUCT OF BUSINESS IN COMPLIANCE WITH REGULATORY
REQUIREMENTS. Except as set forth in Schedule 3.16, the Business and the
Related Assets are operated and maintained in compliance with each applicable
law, regulation, ordinance and code promulgated by any Governmental Agency,
except for those circumstances of noncompliance which would not, individually
or in the aggregate, have a Material Adverse Effect.
3.17. LITIGATION. Except as set forth in Schedule 3.17 hereto,
no action, suit, proceeding or investigation is pending or, to the knowledge of
Seller, threatened, against Seller or FSI or any FSI Subsidiary relating to or
affecting the Business or any of the Related Assets, except for any actions,
suits, proceedings or investigations that if adversely determined, individually
or in the aggregate with all other actions, suits, proceedings or
investigations, would not have a Material Adverse Effect.
3.18. ENVIRONMENTAL MATTERS. Except as set forth in Schedule
3.18 hereto:
(a) The Business and all other properties owned,
leased, used or operated by FSI or any FSI Subsidiary have been operated in
compliance in all material respects with all applicable environmental laws.
(b) FSI and the FSI Subsidiaries have obtained,
maintained, and complied with all permits, licenses, approvals and other
authorizations which are required for the operation of the Business pursuant to
applicable environmental laws, except for such permits, licenses or approvals
the failure to obtain, maintain or comply with which would not, individually or
in the aggregate, have a Material Adverse Effect, and have maintained all
material records and made all material filings required by applicable
environmental laws.
(c) Neither Seller, FSI nor any FSI Subsidiary has
received any written notice of any pending or threatened investigation,
proceeding or claim to the effect that it is or may be liable to any person, or
responsible or potentially responsible
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for the costs of any remedial or removal action or other cleanup costs, as a
result of noncompliance with any applicable environmental laws or arising out
of the presence, generation, storage, treatment or disposal of hazardous
substances, solid or hazardous wastes, petroleum or toxic materials, including
liability under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, or any state superfund law; and there is no past or
present action, activity, condition or circumstance that could be expected to
give rise to any liability on the part of FSI or any FSI Subsidiary to any
person, or for any such cleanup costs.
(d) The transactions contemplated hereby do not
require compliance with, and/or are exempt from the requirements of, the New
Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. ("ISRA") or any
other similar state superfund or other environmental law relating to the
transfer of real property or leasehold interests, or disclosure of actual or
potential environmental liabilities; none of the assets of FSI or of any of the
FSI Subsidiaries includes an "industrial establishment" within the meaning of
ISRA; and the transactions contemplated hereby do not constitute "closing
operations", "transferring ownership or operations" or a "change of ownership",
within the meaning of ISRA, with respect to any such industrial establishment.
3.19. NO UNDISCLOSED LIABILITIES. Except (a) as set forth in
Schedule 3.19, (b) for Intercompany Accounts which will be paid or settled
pursuant to Section 1.5 hereof, (c) for liabilities set forth or reserved
against or disclosed in the Pro Forma Balance Sheet, (d) for liabilities
disclosed in this Agreement or the schedules hereto, and (e) for liabilities
incurred in the ordinary and usual course of the Business since June 30, 1994,
neither FSI nor any of the FSI Subsidiaries has any liabilities (whether
accrued, absolute, contingent or otherwise) which would, individually or in the
aggregate, have a Material Adverse Effect.
3.20. CONTRACTS. Schedule 3.20 lists all ongoing (a) broker,
distributor, dealer, franchise or agency agreements, (b) management agreements,
(c) agreements with governmental authorities, (d) noncompete or other
agreements that limit the Business, (e) intercompany agreements and (f) any
other agreements with revenues or expenses exceeding or anticipated to exceed
$1,0000,000 annually, relating to the Business to which Seller or any of its
subsidiaries is a party (each a "Material Agreement"). Each Material Agreement
is legally valid and binding except to the extent that the invalidity or
nonbinding nature of any Material Agreement would not have a Material Adverse
Effect, and neither Seller nor any of its subsidiaries, nor, to their
knowledge, any other party thereto, is in default in the performance of any of
its obligations under any Material Agreement, except for defaults which would
not, individually or in the aggregate, have a Material Adverse Effect. Except
as set forth in Schedule 3.20, no event has occurred which (whether with or
without notice, lapse of time or
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the happening or occurrence of any other event) would constitute a default
under any such Material Agreement entitling any party to terminate any such
Material Agreement, and the continuation, validity and effectiveness of all
such Material Agreements under the current terms thereof will in no way be
affected, altered or impaired by the consummation of the Acquisition or any
other transaction contemplated hereby.
3.21. CONDUCT OF BUSINESS BY PURCHASER. Except as listed in
Schedule 3.21, upon consummation of the Acquisition on the Closing Date (and,
if applicable, the Second Closing), Seller shall have transferred to Purchaser
all of Seller's assets and properties used in or necessary for the operation of
the Business in the manner presently conducted by Seller except for any
licenses, permits or approvals which cannot be transferred to Purchaser or
which Purchaser is required to obtain. The Related Assets together with the
assets of FSI and the FSI Subsidiaries and the benefits to Purchaser under the
Related Agreements constitute all of the assets used in the Business.
3.22. BROKERS AND FINDERS. None of Seller, FSI, any of their
subsidiaries or any of their officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated by this
Agreement.
3.23. PENSION PLAN CONTRIBUTION. Seller made a contribution to
the Western Union Pension Plan on September 14, 1994 in respect of the 1993
Plan Year in the amount of $20,269,753.
3.24. LABOR RELATIONS. Except as described in Schedule 3.24, (a)
Seller, FSI and each FSI Subsidiary is in compliance in all material respects
with all applicable law respecting employment and employment practices, terms
and conditions of employment and wages and hours; (b) there are no charges,
investigations, administrative proceedings or formal complaints of
discrimination (including discrimination based upon sex, age, marital status,
race, national origin, religion, sexual preference, disability, veteran status,
color or citizenship status) pending or, to Seller's knowledge, threatened
before the Equal Employment Opportunity Commission or any other Governmental
Agency against Seller, FSI or any FSI Subsidiary; (c) there have been no
governmental audits of Seller's, FSI's or any FSI Subsidiary's, equal
employment opportunity practices of the Business; (d) there is no unfair labor
practice, complaint, charge or other matter against or involving Seller, FSI or
any FSI Subsidiary pending, or to Seller's knowledge, threatened, before the
National Labor Relations Board or any other Governmental Agency; (e) there is
no (and since December 31, 1990 has not been any) labor strike, dispute,
organizing effort, slow down, stoppage or other labor difficulty pending,
involving or threatened against or affecting Seller, FSI or any FSI Subsidiary,
and (f) no representation question exists (or has existed since
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December 31, 1990) respecting Seller's, FSI's or any FSI subsidiary's
employees. Schedule 3.24 lists all reports and filings made by Seller, FSI and
all FSI Subsidiaries pursuant to Executive Order 11246 (Equal Employment
Opportunity) and similar applicable laws since December 31, 1990. Schedule
3.24 lists all collective bargaining agreements of Seller, true and correct
copies of which have been delivered by Seller to Purchaser.
3.25. FULL DISCLOSURE. (a) Seller is not aware of any facts
pertaining to FSI or any of its subsidiaries or the Business which could,
individually or in the aggregate, have a Material Adverse Effect, or that could
be expected to impair the ability of Seller to perform this Agreement and the
transactions contemplated hereby, or the ability of Purchaser, FSI and the FSI
Subsidiaries to conduct the Business after the Closing (and, if applicable, the
Second Closing) as presently conducted, and which have not been disclosed in
this Agreement, the schedules hereto or the financial statements included in
Exhibit E hereto or otherwise disclosed to Purchaser by Seller in writing.
(b) No representation or warranty of Seller in this
Agreement, nor any financial or other written statement (considered together
with all other financial or other written statements) or certificate furnished
or to be furnished to Purchaser pursuant to this Agreement, or in connection
with the transactions contemplated by this Agreement, contains or as of the
Closing (and, as to representations and warranties pertaining to Seller's
Marks, as of the Second Closing) will contain any untrue statement of a
material fact, or omits or as of the Closing (and, if applicable, the Second
Closing) will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller as follows:
4.1. CORPORATE ORGANIZATION; ETC. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia.
4.2. AUTHORIZATION, ETC. Purchaser has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of Purchaser has taken all action
required by law, its Certificate of Incorporation and by-laws or otherwise to
authorize the execution and delivery of this Agreement and the transactions
contemplated hereby, and this Agreement is a legal, valid and binding agreement
of Purchaser enforceable in accordance with its terms except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, (ii) the remedy of
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specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought, and (iii) enforceability of the
indemnification provisions of this Agreement may be subject to limitations of
public policy under Federal and State securities laws.
4.3. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provisions of the certificate of incorporation or by-laws of
Purchaser, or violate, or be in conflict with, or constitute a default under,
or cause the acceleration of the maturity of any debt or obligation pursuant
to, any agreement or commitment to which Purchaser is a party or by which
Purchaser is bound, or violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority, except for
such violations, conflicts or defaults as would not have a material adverse
effect on the ability of Purchaser to consummate the transactions contemplated
by this Agreement.
4.4. COMMITMENTS FOR THE FINANCING. Purchaser has in hand or
under existing fully committed lines of credit or other fully committed
facilities or has heretofore received written binding and enforceable
commitments from responsible financial institutions in either case sufficient
to provide all financing necessary to complete the Acquisition.
4.5. LICENSES. Purchaser does not know of any reason why it
would be unable to obtain any and all licenses and licensing approvals required
by State regulatory agencies or bodies in the United States in connection with
the Acquisition.
4.6. SECURITIES LAWS. Purchaser is purchasing the Shares for
its own account for investment and not with a view to any distribution thereof.
Purchaser acknowledges that the Shares have not been registered under the
Securities Act of 1933.
ARTICLE V. COVENANTS AND AGREEMENTS OF THE PARTIES.
5.1. BEST EFFORTS. Upon the terms and subject to the conditions
of this Agreement, each of Purchaser and Seller shall (and Seller shall cause
its affiliates including FSI to) use its reasonable best efforts to take, or
cause to be taken, and to assist and cooperate with the other in doing all
things reasonably necessary, proper or advisable under any applicable law,
statute or ordinance of any Governmental Agency or any order, rule, regulation
or requirement of any Governmental Agency (collectively, "Legal Requirements")
to consummate and make effective in the most expeditious manner practicable,
the Acquisition, including, without limitation, using such reasonable best
efforts to:
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(a) obtain from the Bankruptcy Court such Bankruptcy
Court orders as may be necessary or appropriate to effect the
Acquisition, including, without limitation, the Confirmation Order and
the Sale Order;
(b) obtain all necessary or appropriate
authorizations, permits, consents, exemptions, orders, waivers,
licenses or other approvals, including all money transfer licensing
approvals required by State regulatory agencies or bodies in the
United States (collectively, the "Authorizations"), from applicable
federal, state and local United States and foreign governmental
agencies and authorities ("Governmental Agencies"), including, without
limitation, the Authorization of any Governmental Agency necessary or
desirable in order for Purchaser (through FSI) to conduct the Business
after the Closing (and, if applicable, the Second Closing);
(c) obtain all necessary Authorizations from third
parties; and
(d) discharge all Liens from the Related Assets
(including, without limitation, the Western Union Name and Trademark)
and the Shares so that at Closing (and, if applicable, the Second
Closing) (i) the Shares and the Related Assets will be delivered to
Purchaser, in each case, free and clear of all Liens other than, in
the case of the Related Assets, the Permitted Liens; and (ii)
Purchaser will receive good, valid and marketable title to the Shares,
and, except for Permitted Liens, the Related Assets;
provided, however, that nothing in this Section 5.1 shall require Purchaser to
agree to any divestiture by Purchaser or FSI or any of their subsidiaries of
any business, properties or assets or of any shares of capital stock of any
subsidiaries of Purchaser or FSI, or to the imposition of any material
limitation on the ability of Purchaser to conduct such business or to own or
exercise control of such stock, business, properties or assets.
5.2. CONDUCT OF BUSINESS. Except as otherwise permitted or
expressly contemplated by this Agreement or with the prior written consent of
Purchaser or as ordered or permitted by the Bankruptcy Court, prior to the
Closing Date, Seller shall (and, as appropriate, shall cause its affiliates
including FSI to):
(a) conduct the Business in the ordinary and usual
course and in accordance with the business plans, budgets and
projections previously provided to Purchaser and use its reasonable
best efforts to preserve the business organization of the Business
intact, to keep available the services of employees, independent
contractors, domestic and international agents and consultants
currently employed in or by the
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Business, to maintain the current suppliers and agents under the agent
contracts of the Business, and to preserve the goodwill of the
Business;
(b) use its reasonable best efforts to maintain in
good standing and keep in full force and effect all Authorizations
with any Governmental Agency or any third party applicable to the
Business and comply in all material respects with all Legal
Requirements applicable thereto;
(c) maintain in force all insurance policies, maintain
all of the tangible assets used in the Business in good operating
condition (save for reasonable wear and tear), maintain all
inventories, and take all reasonable steps consistent with past
practices to maintain all Intellectual Property and other intangible
assets;
(d) not (i) sell, assign, dispose of, transfer to
another location, lease, mortgage, encumber or otherwise grant any
interest in (or permit or allow to become subject to any Lien) any of
the assets or properties used in the Business which constitute
tangible or intangible property (other than in the ordinary and usual
course of the Business and consistent with past practice) or (ii)
dispose of or fail to use reasonable best efforts to renew any
material Authorization;
(e) not enter into, modify, terminate, amend, renew,
renegotiate or expand in any respect, or waive any of its rights
under, any material agent contract, Material Agreement, or any other
material contract, agreement, lease, license of the Western Union Name
and Trademark or otherwise, commitment, undertaking or other
arrangement with respect to any material asset used in the Business
other than in the ordinary and usual course of the Business and, with
respect to licenses of the Western Union Name and Trademark, non-
exclusive licenses to agents;
(f) not enter into any transaction or contract, or
amend or terminate any transaction or contract, including any agent
contract or any collective bargaining agreement, that could reasonably
be expected at the time such transaction is entered into, individually
or in the aggregate, to have a Material Adverse Effect;
(g) cause FSI and the FSI Subsidiaries not to incur or
compromise any debt, liability or obligation, direct or indirect,
whether accrued, absolute, contingent or otherwise, other than current
liabilities incurred in the ordinary and usual course of the Business,
or pay any debt, liability or obligation of any kind other than such
current liabilities and current maturities of existing long-term debt
(including
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interest when due) in each case only in accordance with the terms of
the document creating and evidencing such debt, or fail to pay any
debt when due or take or fail to take any action, the taking of which,
or the failure to take of which, would permit any debt to be
accelerated;
(h) cause FSI and the FSI Subsidiaries not to assume,
guarantee, endorse or otherwise become responsible for the obligations
of any other individual, firm or corporation, or make any loans or
advances other than in the ordinary and usual course of the Business
to any individual, firm or corporation, which loans or advances shall
in no event exceed $500,000 in the aggregate;
(i) cause FSI and the FSI Subsidiaries not to declare,
set aside or pay any dividend (whether in cash, capital stock or
property) with respect to its capital stock, or declare or make any
distribution on, redeem, or purchase or otherwise acquire any Shares,
or split, combine or otherwise similarly change the outstanding
Shares, or authorize the creation or issuance of or issue or sell any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for, or giving any person any right
to acquire from it, any shares of its capital stock, or agree to take
any such action;
(j) cause FSI and the FSI Subsidiaries not to make any
investment of a capital nature either by purchase of stock or
securities, contributions to capital, property transfers or otherwise,
or by the purchase of any property or assets of any other individual,
firm or corporation, except in the ordinary and usual course of the
Business but in no event greater than $500,000 in the aggregate;
(k) perform in all material respects all of their
obligations under Material Agreements (except those being contested in
good faith) and not enter into, assume or amend any contract or
commitment that would be a Material Agreement other than contracts to
provide services entered into in the ordinary and usual course of the
Business;
(l) except as required by Collective Bargaining
Agreements and except for regularly scheduled increases in accordance,
both as to timing and amount, with normal prior practice, cause FSI
and the FSI Subsidiaries not to increase in any manner the
compensation or fringe benefits of any of its officers or employees or
pay or agree to pay any pension or retirement allowance not required
by any existing plan or agreement to any such officers or employees,
or commit itself to or enter into or amend any employment agreement or
any incentive compensation, deferred compensation, profit sharing,
stock option, stock purchase, savings, consulting, retirement,
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pension or other "fringe benefit" plan or arrangement with or for the
benefit of any officer, employee or other person;
(m) cause each of FSI and the FSI Subsidiaries not to
amend its Certificate of Incorporation or Bylaws;
(n) cause FSI and the FSI Subsidiaries not to enter
into any union, collective bargaining or similar agreement;
(o) not institute any new methods of purchase, sale,
lease, management, bookkeeping, accounting or operation with respect
to the Business except for those changes intended to improve the
Business which are agreed to in writing by Purchaser prior to
implementation, and provided, that no reserves, liabilities or similar
items reflected on the Pro Forma Balance Sheet or created thereafter
shall be reversed (except to reflect payment or legal extinguishment
of a liability or collection of cash in respect of a reserve prior to
the Closing Date) or reallocated to cover any other reserves,
liabilities or similar items on the Audited Pro Forma Balance Sheet;
and
(p) not enter into an agreement to do any of the
things described in clauses (a) through (o).
5.3. ACCESS TO ASSETS. (a) As provided in the Procedures
Order and the Solicitation Procedures and as expressly limited thereby, Seller
has established a data room and has afforded Purchaser, its counsel, financial
advisers, accountants and other authorized representatives full access thereto
and to Seller's personnel.
(b) Seller agrees to permit Purchaser and its
authorized representatives to have or cause them to be permitted to have, after
the date hereof and until the Closing, full access to the premises, books and
records of Seller and its subsidiaries at reasonable hours, and the officers of
Seller and its subsidiaries will furnish Purchaser with such financial and
operating data and other information with respect to the Business and the
Related Assets as Purchaser shall from time to time reasonably request. Seller
will request its auditing firm to permit Purchaser and its representatives,
including its auditing firm, to review the work papers of the auditing firm of
Seller relating to their examination of the consolidated audited financial
statements of Seller and its subsidiaries, subject to appropriate
indemnification arrangements for the benefit of the auditing firm of Seller.
No investigation by Purchaser heretofore or hereafter made shall affect the
representations and warranties of Seller and each such representation and
warranty shall survive any such investigation, subject to Article VIII.
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5.4. CONFIDENTIALITY. Each party hereto will hold all
confidential information in accordance with the terms of the letter agreement
dated June 30, 1994 between Seller and Purchaser which agreement shall remain
in full force and effect.
5.5. INSTRUMENTS OF CONVEYANCE. To effectuate the transactions
contemplated by this Agreement, and subject to Section 2.7, Seller shall
execute and deliver to Purchaser at or prior to the Closing (and, if
applicable, the Second Closing), the Bill of Sale attached as Exhibit F-1 (and,
if applicable, the Bill of Sale attached as Exhibit F-3) and all deeds,
documents or instruments of sale, assignment, transfer or conveyance, and
following the Closing shall execute such other documents and do such other
things, as Purchaser shall reasonably deem necessary or appropriate to vest in
Purchaser good, valid and marketable title to the Shares and, subject to
Permitted Liens, the Related Assets, including all interests owned by Seller
and its subsidiaries and affiliates in the Western Union Name and Trademark.
Seller shall use its reasonable best efforts to obtain the consent or waiver of
any person whose consent or waiver may be necessary to effectuate the sale of
the Related Assets. Purchaser agrees to cooperate with Seller and supply
relevant information to governmental agencies and third parties in order to
assist Seller in obtaining any such consents or waivers or causing such
assignment or transfer to become effective, provided that the costs, if any, of
assuming and assigning such contracts, including the costs of curing any breach
in respect of such contracts, shall be borne by Seller. If and so long as any
such consent or waiver shall not have been obtained, Seller shall use its
reasonable best efforts, to the extent permissible under law and the terms of
the pertinent asset, to keep such asset in full force and effect and to provide
to Purchaser the benefit of the asset to the same extent as if such asset had
been transferred to Purchaser. If Seller provides Purchaser with such
benefits, then Purchaser shall perform Seller's obligations and shall pay all
amounts Seller is obligated to pay under the terms of such asset (excluding any
amounts payable with respect to, or resulting from, the use of such asset prior
to the Closing Date). In addition, at Purchaser's request, Seller shall provide
Purchaser with (a) such releases as may be reasonably requested by Purchaser in
order to carry out the terms of this Agreement and (b) appropriate
documentation to demonstrate Seller's right, title and interest in the Shares
and the Related Assets and Purchaser's right, title and interest in and to any
of the assets and properties reflected on the Audited Pro Forma Balance Sheet.
5.6. NONCOMPETITION. (a) For a period of five (5) years after
the Closing (the "Restricted Period"), Seller and its affiliates shall not
engage, directly or indirectly, in the Business anywhere in the world or,
directly or indirectly, own an interest in, manage, operate, join, control,
lend money or render financial or other assistance to or participate in or be
connected with, as a partner, stockholder, consultant or otherwise, any
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natural person or entity that competes with FSI, any FSI Subsidiary or the
Business; provided, however, that, for the purposes of this Section 5.6,
ownership of securities having no more than five percent of the outstanding
voting power of any competitor which are listed on any national securities
exchange or traded actively in the national over-the-counter market shall not
be deemed to be in violation of this Section 5.6 so long as Seller has no other
material relationship with such competitor.
(b) As separate and independent covenants, Seller
agrees with Purchaser that: (i) for a period of five (5) years following the
Closing, Seller and its affiliates will not in any way, directly or indirectly,
for the purpose of conducting or engaging in the Business, call upon, solicit,
advise or otherwise do, or attempt to do, business with any customers of the
Business with whom Seller or any subsidiary thereof had any dealings prior to
the Closing Date, or take away or interfere or attempt to interfere with any
custom, trade, business or patronage of the Business, FSI or any FSI
Subsidiary; and (ii) for a period of three (3) years following the Closing,
Seller will not in any way, directly or indirectly, interfere with or attempt
to interfere with any officers, employees, representatives or agents of the
Business, FSI or any FSI Subsidiary or induce or attempt to induce any of them
to leave the employ of FSI or any FSI Subsidiary or violate the terms of their
contracts, or any employment arrangements, with FSI or any FSI Subsidiary.
(c) The Restricted Period shall be extended by the
length of any period during which Seller is in breach of the terms of this
Section 5.6.
(d) Seller acknowledges that the covenants of Seller
set forth in this Section 5.6 are an essential element of this Agreement and
that, but for the agreement of Seller to comply with these covenants, Purchaser
would not have entered into this Agreement. Seller acknowledges that this
Section 5.6 constitutes an independent covenant and shall not be affected by
performance or nonperformance of any other provision of this Agreement by
Purchaser.
5.7. COMPLIANCE WITH WARN ACT. Prior to the Closing, Seller
shall cause FSI to take all actions necessary to comply with its obligations
under the Worker Adjustment and Retraining Notification Act (29 U.S.C. Section
2101 et seq.) and any regulations adopted thereunder with respect to any plant
closing or mass layoff before the Closing Date or the contemplated closing of
FSI's customer service center in Reno, Nevada, including discharging all
obligations to the employees of Seller, FSI or any of their subsidiaries under
such Act, resulting from the termination of employment of employees of Seller,
FSI or any of their subsidiaries in connection with the closing of FSI's
customer service center in Reno, Nevada subsequent to the Closing, and Seller
shall be
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responsible for, and shall indemnify and hold Purchaser harmless against any
liability or damages whatsoever relating to, any failure to take any such
action.
ARTICLE VI. EMPLOYEE MATTERS.
6.1. COVERED EMPLOYEES; PRIOR SERVICE. (a) Purchaser or an
affiliate shall offer employment to, or shall cause FSI to continue to employ,
commencing on the Closing Date, all those individuals who are employees of FSI
or an FSI Subsidiary on the Closing Date, except those identified by Purchaser
as "Excluded Employees" in Schedule 6.1, which shall be delivered by Purchaser
to Seller at the Closing. Those employees not actively at work with FSI due to
illness or injury in benefit payment status on the Closing Date shall not be
offered employment at the Closing and shall continue to draw payments related
to such disability from Seller or Seller's Benefit Plans. Upon rehabilitation,
such employees shall be offered employment with Purchaser, FSI or an affiliate;
provided, however, that unless all interests of Seller and its subsidiaries in
any reserves or cash collected under any insurance policy for the purpose of
paying any claim made with respect to such disability for treatment or other
disability payments after such employee's return to work are transferred to
Purchaser or FSI, Seller shall remain liable for any payments related to such
disability after such employee's return to work. Within 15 days from the date
hereof, Seller shall provide to Purchaser a preliminary list of all employees
of FSI or an FSI Subsidiary, with a final list to be provided at least two
weeks prior to the Closing. Such employees so hired or continued in employment
by Purchaser, FSI or an affiliate are collectively referred to as "Covered
Employees". Seller agrees to employ all Excluded Employees following the
Closing Date or to pay any amounts of severance pay or amounts under the
Benefit Plans (other than the Western Union Pension Plan) to which they are
entitled.
(b) If Purchaser elects to include Covered Employees
in any employee benefit plan of Purchaser or an affiliate, Purchaser shall
recognize service with Seller, FSI or any FSI Subsidiary for the purposes of
eligibility, vesting and qualification for benefit payments in such employee
benefit plans.
(c) Schedule 6.1 lists all employment, severance or
similar agreements or arrangements to which Seller or any subsidiary is a party
or by which any of them are bound. If any Covered Employee is a party to an
employment, severance or similar agreement or arrangement with FSI or Seller,
Purchaser will, or will cause FSI to, assume such agreement or arrangement and
relieve Seller of any further obligation thereunder.
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6.2. BENEFITS, COMPENSATION AND WORKING CONDITIONS. As of the
Closing Date, all Covered Employees eligible to participate in Seller's
employee benefit plans shall be immediately eligible to participate in all of
Purchaser's employee benefit plans, which are generally applicable to
comparable Purchaser employees, or, at Purchaser's option, shall be eligible to
participate in plans the benefits of which are comparable to the benefits of
current FSI Benefit Plans.
6.3. VACATION. Purchaser shall allow the exercise of any
accumulated but unused vacation by Covered Employees for the 1994 calendar
year. Covered Employees will be eligible for Purchaser's vacation schedule
beginning January 1, 1995, or at Purchaser's option will continue in the
current FSI vacation plan. As soon as practicable after the Closing Date,
Seller shall provide Purchaser with a listing of vacation eligibility for all
Covered Employees.
6.4. INCENTIVE COMPENSATION PLANS. (a) Seller shall be liable
for unpaid or vested incentive compensation for Covered Employees or other
employees of FSI and the FSI Subsidiaries which is earned through June 30, 1994
and Purchaser shall be liable for incentive compensation earned thereafter.
Seller agrees to pay all incentive compensation awards earned by Covered
Employees or other employees of FSI and the FSI Subsidiaries according to the
terms and conditions of the various FSI incentive plans up through June 30,
1994. Incentive compensation will include all awards for employees covered
under the Senior Management Incentive Plan, the Management Incentive Plan, Long
Term Incentive Plan I and the various Sales and Marketing Incentive Plans
effective for the 1994 calendar year.
(b) Seller and Purchaser agree that, to the extent any
liability for incentive compensation is reflected on the Audited Pro Forma
Balance Sheet, Seller shall be deemed to have fulfilled its obligation
hereunder to make such payment, and Purchaser will, or will cause FSI to,
actually make the payment to the employee in accordance with the terms of the
relevant incentive plan. It is the intention of the parties that incentive
obligations to Covered Employees as of June 30, 1994 will be so reflected on
the Audited Pro Forma Balance Sheet and that incentive obligations to all other
employees of Seller or FSI or any of the FSI Subsidiaries will be removed from
said Audited Pro Forma Balance Sheet and actually paid by Seller.
6.5. SEVERANCE BENEFITS. (a) Purchaser agrees that the
continued employment by Purchaser, FSI, or an affiliate thereof, of the Covered
Employees shall not be considered a severance of employment by Seller, and
Seller agrees that transfer from FSI to Seller and continued employment by
Seller of persons who are not Covered Employees shall not be considered a
severance of employment by Purchaser or FSI, for purposes of any severance,
salary continuation or similar policy, plan, program or arrangement of
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Seller.
(b) Effective as of the Closing Date, Purchaser shall
provide a severance benefit plan for Covered Employees that is comparable to
the plan for similarly situated Purchaser employees, or at Purchaser's option
Covered Employees may remain in the current FSI severance plan.
6.6. BENEFIT PLANS. (a) As of the Closing Date, in respect of
all Covered Employees who are participants in any Benefit Plan that is an
"individual account plan" within the meaning of Section 3(34) of ERISA (a
"Seller Individual Account Plan"), Seller and Purchaser shall take such actions
as shall be necessary to cause the accounts of Covered Employees in all Seller
Individual Account Plans to be transferred into Purchaser's individual account
plan ("Purchaser's Savings Plus Plan"), maintaining the accounts of
participants in such plans as a separate subpart or subparts of such
Purchaser's Savings Plus Plan. Such separate subpart or subparts of
Purchaser's Savings Plus Plan shall have the same trustee, contribution,
eligibility, vesting and loan provisions and investment choices as applied to
each such participant in the Seller Individual Account Plan from which such
accounts were transferred, each such subpart being referred to as a "mirror
subpart." Purchaser agrees to maintain each mirror subpart that is similar to a
Seller Individual Account Plan referred to in a Collective Bargaining Agreement
during the current term of such agreement. Purchaser agrees to maintain each
other mirror subpart for a reasonable transition period, provided, however,
that maintenance of such subpart shall not endanger, in Purchaser's judgment,
the qualification of Purchaser's Savings Plus Plan. In lieu of transferring
accounts to become a subpart of Purchaser's Savings Plus Plan, Purchaser may
establish a separate individual account plan having the same trustee,
contribution, eligibility, vesting and loan provisions and investment choices
as one of Seller's Individual Account Plans. If Purchaser establishes such a
separate plan, Purchaser agrees to continue such separate plan during the
transition period described in Section 410(b)(6)(C)(ii) of the Code.
(b) As of the Closing Date, in respect of all Covered
Employees who are participants in any Benefit Plan that is a "defined benefit
plan" (within the meaning of Section 3(35) of ERISA) and that is maintained by
Purchaser, FSI or an affiliate after the Closing, including the Western Union
Pension Plan, Purchaser shall take such actions as shall be necessary to cause
such Benefit Plan (i) to provide that Covered Employees may not commence
receiving any benefits for which they are eligible under the terms of such
Benefit Plan unless employment with Purchaser, FSI and their affiliates is
terminated, and (ii) to recognize service with Purchaser, FSI and their
affiliates on and after the Closing Date under any such Benefit Plan, to the
extent and under the terms and conditions recognized under such Benefit Plan,
solely
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for purposes of vesting and eligibility for retirement benefits. Seller agrees
that prior to the Closing Date it shall take such actions as shall be necessary
to cause such Benefit Plan to provide that any transfer of employment from
Seller, FSI or an FSI Subsidiary to Purchaser, FSI or an affiliate of Purchaser
shall not be deemed a termination of employment for purposes of such Benefit
Plan with respect to any individual who after the Closing continues to perform
essentially the same services with Purchaser, FSI or an affiliate of Purchaser
as he or she performed prior to the Closing.
(c) As of the Closing Date, with respect to those
employees of FSI on the Closing Date who are participants in the Western Union
Pension Plan and who continue as employees of Seller or its affiliates on or
after the Closing Date, Purchaser will cause such Pension Plan to be amended to
provide that (i) such employees may not commence receiving any benefits for
which they are eligible under the terms of such Benefit Plan unless employment
with Seller and its affiliates is terminated, and (ii) employment with Seller
and its affiliates on and after the Closing Date shall be recognized under such
Pension Plan for purposes of vesting and eligibility for retirement benefits.
(d) As of the Closing Date, Covered Employees shall
cease to participate in any Benefit Plan that is a "welfare plan" (within the
meaning of Section 3(1) of ERISA), and Seller shall be responsible for all
claims of such employees relating to any treatment which was performed prior to
the Closing Date and which are payable under the terms and conditions of any
such Benefit Plan. As of the Closing Date, Seller shall take such actions as
shall be necessary to transfer the accounts of Covered Employees who are
participants in Benefit Plans funded under the Western Union Corporation
Preservation Trust for Employee Welfare Benefits and the Western Union
Corporation Conservation Trust for Employee Related Programs to trusts
maintained by Purchaser, FSI or an affiliate pursuant to comparable welfare
plans of Purchaser, FSI or an affiliate. With respect to Covered Employees,
Purchaser shall cause each applicable "welfare plan" of Purchaser, FSI or their
affiliates to waive any pre-existing conditions exclusions, physical
examination requirements and actively-at-work requirements, except that claims
of any such Covered Employee who is hospitalized on the Closing Date will
remain the responsibility of Seller until the hospitalization is ended, and to
provide that any expenses incurred on or before the Closing Date shall be taken
into account under such plans for purposes of satisfying applicable deductible,
co-insurance and maximum out-of-pocket provisions with respect to calendar year
1994 and for purposes of applying any annual, lifetime or other benefit
limitation. Claims of Covered Employees who are receiving ongoing out patient
services for alcohol/substance abuse or psychiatric reasons shall remain the
responsibility of Seller until the earlier of recovery or rehabilitation or the
exhaustion of benefits for that cause and time period.
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(e) Seller shall remain responsible for all
liabilities and obligations in connection with claims for post-employment
medical and dental benefits that may be required under Section 4980B of the
Code made by or in respect of any employee of Seller or any of its subsidiaries
whose employment terminated prior to the Closing Date and any "qualified
beneficiary" (within the meaning of Section 4980B of the Code) of any such
employee who is receiving post-employment medical and dental benefits, or is
eligible to elect such benefits as of the Closing Date. Seller shall also be
responsible for medical or other benefits under the Benefit Plans for any
employees of Seller or any of its subsidiaries who retire prior to or as of the
Closing Date. On and after the Closing Date, active Covered Employees shall
accrue no further benefits under any of Seller's Benefit Plans, and Seller
shall cease to have any further liability or obligation for medical or other
benefits with respect to Covered Employees under any Benefit Plan, except as
set forth in Section 6.1 and 6.6(d).
(f) As to any governmental pension plan to which
Seller makes contributions for employees who are not U.S. citizens, Seller
shall prepare a schedule listing all such employees who are Covered Employees,
the name of the governmental pension plan or plans to which contributions are
made for such Covered Employees, the current amount of the contribution made by
Seller and the employee, if any, and the formula or method used to determine
the amount of the contribution made by Seller and the employee to such plans.
Such schedule shall be delivered to Purchaser prior to the Closing Date.
Seller shall make any contributions required to be made by Seller to such plans
through the Closing Date. Purchaser agrees to comply, or to cause FSI to
comply, with all applicable legal requirements regarding the maintenance,
modification or termination of such arrangements on and after the Closing Date.
Seller further agrees that it shall take such actions as shall be necessary and
permissible under applicable law to cause any transfer of employment from
Seller, FSI or an FSI Subsidiary to Purchaser, FSI or an affiliate of Purchaser
incident to the Closing to be deemed not a termination of employment for
purposes of any such governmental plan or arrangement with respect to any
individual who after the Closing continues to perform essentially the same
services with Purchaser, FSI or an affiliate of Purchaser as he or she
performed prior to the Closing.
(g) On or before December 1, 1994, Seller, upon
request by Purchaser, will file appropriate notice with the Internal Revenue
Service on Form 5310 as to the division effective December 31, 1994 of the
assets and liabilities of the Western Union Pension Plan into two plans, one
benefitting the retired and vested terminated former employee participants and
one benefitting the active employee participants of such plans and the division
shall be effective on December 31, 1994 if the Closing shall occur on or before
such date. If the Closing Date is postponed beyond December 31, 1994, Seller
will use its reasonable best efforts to
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take all actions necessary or appropriate to permit the above described
division of the Western Union Pension Plan to be effected as of the Closing
Date.
6.7. PURCHASER'S PLANS. To the extent that Purchaser elects to
have Covered Employees participate in Purchaser's benefit plans, no Covered
Employee shall be entitled to any pension or welfare benefit from Purchaser
except to the extent such benefits accrue after his or her employment with
Purchaser or an affiliate commences. However, for purposes of eligibility for
benefits under Purchaser's pension or retirement plans, Purchaser shall
recognize Covered Employees' service with Seller and its affiliates for those
Covered Employees deemed by Purchaser to be participants in Purchaser's non
union pension plan(s). Purchaser shall recognize and give credit to Covered
Employees in respect of Covered Employees' service with Seller and its
affiliates for purposes of vacation accrual, medical, dental, disability and
life insurance benefits and eligibility under any qualified individual account
plan to the extent such service is recognized under any Benefit Plan, program
or arrangement in effect as of the Closing Date.
6.8. PLANS SUBJECT TO COLLECTIVE BARGAINING AGREEMENTS. (a)
Seller shall pay any contributions in respect of any Benefit Plan that covers
any employee of Seller and its affiliates and is required pursuant to the terms
of collective bargaining agreements listed in Schedule 3.24 with respect to
periods ended on or before the Closing Date and those portions of contributions
due and payable with respect to periods ended after the Closing Date as are
allocable to the portions of such periods from the first day thereof to the
Closing Date. On and after the Closing Date, Seller shall cease to have any
liability or obligation for benefits in respect of Covered Employees under any
such Benefit Plan. Any arrearages in such Benefit Plans up to the Closing Date
are the responsibility of Seller.
(b) As of the Closing Date, in respect of all Covered
Employees covered by a collective bargaining agreement who are participants in
any Benefit Plan that is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA), and that is maintained by Purchaser, FSI or an
affiliate after the Closing, Purchaser shall take such actions as shall be
necessary to cause such Benefit Plan to recognize service of such Employees
with Purchaser, FSI and their affiliates on and after the Closing Date under
any such Benefit Plan, to the extent and under terms and conditions recognized
under such Benefit Plan, solely for purposes of vesting and eligibility for
retirement benefits and subject to applicable current collective bargaining
agreements.
(c) Nothing contained in this Agreement shall require
Seller or any of its subsidiaries to breach any collective bargaining agreement
listed in Schedule 3.24.
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6.9. OBLIGATIONS OF PURCHASER AND SELLER. Purchaser and Seller
shall cooperate and Purchaser shall make appropriate arrangements for the
payment of benefits in respect of Covered Employees that become due and payable
under the terms and conditions of any Benefit Plans on or after the Closing
Date. Seller shall deliver to Purchaser, as soon as practicable following the
Closing Date, pertinent information from personnel and other employment records
in respect of Covered Employees that is required in order to carry out
Purchaser's obligations.
6.10. ACKNOWLEDGMENTS. Except as provided in Section 6.6(a),
Purchaser and Seller acknowledge that, other than as required by any collective
bargaining agreement listed in Schedule 3.24, nothing in this Article VI shall
be construed as (i) requiring Purchaser or FSI or any of the FSI Subsidiaries
to continue the employment of any Covered Employee or prohibiting the
termination of or change in terms of employment of any Covered Employee, (ii)
vesting in any Covered Employee any right to continued employment, (iii)
requiring Purchaser or FSI or any of the FSI Subsidiaries to continue any
particular employee benefit plan, program, policy or practice for any
particular period of time after the Closing or (iv) prohibiting or in any way
limiting Purchaser or FSI or any of the FSI Subsidiaries from amending or
terminating any such plan, program, policy or practice after the Closing.
ARTICLE VII. BANKRUPTCY MATTERS.
7.1. CONFIRMATION AND SALE ORDERS. Seller shall use its
reasonable best efforts to obtain the entry by the Bankruptcy Court of the
Confirmation Order and the Sale Order as soon as practicable following the
hearing on confirmation of the Amended Plan, both in form and substance
reasonably satisfactory to Purchaser and to have included in the Confirmation
Order provisions which: (a) permanently enjoin the assertion against Purchaser
or FSI or any of the FSI Subsidiaries of any claims that are subject to
discharge under Section 1141 of the Bankruptcy Code; and (b) provide that if
the Closing does not occur on or prior to December 31, 1994, the Internal
Revenue Service and all state or local tax authorities shall be required to
assert any claims for unpaid taxes due with respect to any taxable year which
includes any period through the Closing Date, as a claim against Seller, or be
forever barred from assertion of such claim against any other person; provided,
however, that if Seller is unsuccessful in its efforts to obtain inclusion of
these provisions in the Confirmation Order, such failure shall not be deemed a
breach of this Agreement.
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7.2. CERTAIN BANKRUPTCY UNDERTAKINGS BY SELLER.
(a) Seller shall use its reasonable best efforts to
(and shall cause its affiliates including FSI to use their reasonable best
efforts to) effect the transactions contemplated by this Agreement and to
consummate the Amended Plan expeditiously in accordance with the Confirmation
Order, the Sale Order and the Procedures Order.
(b) From and after the date hereof, Seller shall not
(and shall cause its affiliates including FSI not to) take any action, or fail
to take any action, which action or failure to act might (i) prevent, impede,
or result in the revocation of the confirmation of, the Amended Plan, (ii)
prevent or impede the consummation of the Acquisition in accordance with the
Amended Plan or (iii) result in the reversal, avoidance or modification (in any
manner that could, in the reasonable judgment of Purchaser, materially and
adversely affect Purchaser's rights hereunder) of the Confirmation Order or the
Sale Order.
(c) Seller shall provide actual notice of any hearing
on the Confirmation Order or any other matter before the Bankruptcy Court that
may materially affect the consummation of the Acquisition, in each case in form
and substance and to such parties as requested in good faith by Purchaser.
Seller shall promptly provide to Purchaser such copies of motions, orders,
briefs, hearing transcripts, reports and other pleadings filed in the
Bankruptcy Court or in related court proceedings as Purchaser may reasonably
request.
(d) Seller shall comply in all material respects with
the Bankruptcy Code and all other laws, rules, regulations, decrees and orders
promulgated thereunder.
(e) If the Closing shall not have occurred on or prior
to December 31, 1994, Seller shall, simultaneously with the filing of any tax
return for any taxable year which includes the Closing Date, request a
determination of any unpaid liability for any tax incurred with respect to such
taxable year in accordance with Section 505 of the Bankruptcy Code.
7.3. CERTAIN BANKRUPTCY UNDERTAKINGS BY PURCHASER. Purchaser
agrees to use its reasonable best efforts to cooperate with Seller to
effectuate the Acquisition as promptly as practicable in accordance with the
Solicitation Procedures, the Procedures Order, the Confirmation Order and the
Sale Order, including providing Seller with such information relating to
Purchaser as may be necessary or appropriate in connection with the preparation
of any amended disclosure statement and attending hearings before the
Bankruptcy Court related to the Acquisition.
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ARTICLE VIII. TERMINATION.
8.1. TERMINATION. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing:
(a) by mutual written consent of Seller and Purchaser,
subject to any necessary approval of the Bankruptcy Court;
(b) by the party not in breach in the event of a
material breach of this Agreement by the other party which is not
cured within ten (10) days after written notice thereof;
(c) by Purchaser (i) unless, prior to November 15,
1994, the Confirmation Order and the Sale Order have been entered by
the Bankruptcy Court and the time for appeal of the Sale Order has
expired without a stay of the Sale Order having been granted and not
lifted; (ii) if after entry of the Confirmation Order and the Sale
Order, the Confirmation Order or the Sale Order shall have been
reversed, revoked, voided, modified (in any manner that could in the
reasonable judgment of Purchaser materially and adversely affect
Purchaser's rights hereunder), or stayed by an order of a court of
competent jurisdiction in any manner not satisfactory to Purchaser;
(iii) if an order by the Bankruptcy Court is entered confirming any
plan of reorganization of Seller which plan does not incorporate the
Acquisition in accordance with the terms hereof; (iv) if the plan of
reorganization of Seller confirmed by the Bankruptcy Court is modified
in such a manner as to be materially inconsistent with the terms of
this Agreement; or (v) if Seller proposes confirmation of a plan of
reorganization of Seller or amendment to Seller's currently proposed
plan of reorganization of Seller which is materially inconsistent with
the terms of this Agreement;
(d) by Purchaser or Seller in the event that the
Bankruptcy Court enters an order confirming any plan of reorganization
of Seller based upon, or an order authorizing or resulting in, a sale
of all or substantially all of the assets of Seller or FSI or a sale
of all or substantially all of the capital stock of FSI to a person
other than Purchaser which plan would result in a distribution under
such plan to creditors and interestholders having a value in the
aggregate in excess of the value of the distribution proposed to be
made under the Amended Plan; or
(e) by Purchaser if the Closing has not occurred on or
before December 31, 1994, or by Seller if the Closing Date has not
occurred by the sixtieth day following the date on which the Sale
Order is entered.
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8.2. EFFECT OF TERMINATION. If this Agreement is terminated and
the transactions contemplated hereby are not consummated as provided above,
this Agreement shall become void and be of no further force or effect and no
party shall have any further liability to the other party hereunder as a result
of such termination, except for (i) damages for breach in the event of
termination pursuant to Section 8.1(b), (ii) expenses pursuant to Section 11.6,
and (iii) in the case of a termination pursuant to Section 8.1(d), Liquidated
Damages pursuant to Section 10.5.
ARTICLE IX. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES.
9.1. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement and the Related Agreements is subject to the satisfaction, at or
before the Closing Date, of all of the following conditions (subject to the
right of Purchaser to waive any such condition in writing).
(a) The representations and warranties of Seller
contained in this Agreement and in any statement, certificate, exhibit,
schedule or other document delivered by Seller pursuant to this Agreement or
the Related Agreements or in connection with the transactions contemplated
hereby or thereby shall have been true and correct in all material respects as
of the date of this Agreement and shall be true and correct in all material
respects at and as of the Closing Date as if made on and as of the Closing
Date; Seller shall have performed all of its obligations under this Agreement,
any Related Agreement and any Bankruptcy Court order relating to this Agreement
or the Related Agreements to be performed at or prior to the Closing Date; and
Purchaser shall have received at the time of the Closing a certificate from
Seller reasonably satisfactory in form and substance to Purchaser certifying to
the satisfaction of all of the conditions set forth in this Section 9.1(a).
(b) No temporary restraining order, injunction or
other order shall have been issued by the Bankruptcy Court or any other court
or Governmental Agency with jurisdiction restraining, prohibiting or staying,
and no other Legal Requirement shall have come into effect making illegal,
performance of this Agreement or the Related Agreements or the consummation of
any of the transactions contemplated hereby or thereby.
(c) The Authorizations of all Governmental Agencies
and third parties which are necessary or required to (i) consummate the
transactions contemplated hereby or by the Related Agreements, and (ii) permit
Purchaser or FSI to operate the Business substantially as operated on the date
hereof (free of any restrictions or limitations arising out of Seller's status
as a debtor in possession under the Bankruptcy Code) shall have been
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obtained, and such Authorizations shall not contain any conditions, which,
individually or in the aggregate, could be reasonably expected to have a
Material Adverse Effect, and all waiting periods specified under all Legal
Requirements applicable to the Acquisition, and all extensions thereof, the
passing of which is required for such consummation, shall have passed.
(d) The Bankruptcy Court shall have entered the Sale
Order, and, as of the Closing Date, the Sale Order shall be in full force and
effect and shall not have been stayed pending appeal.
(e) No motion to convert the Case to a proceeding
under Chapter 7 of the Bankruptcy Code or to appoint a Chapter 11 trustee shall
have been granted.
(f) Since June 30, 1994, there shall not have occurred
any change in the condition (financial or other), business, assets,
liabilities, properties, cash flows, prospects or results of operations of the
Business which has had or is reasonably likely to have a Material Adverse
Effect and no event shall have occurred that in the reasonable judgment of
Purchaser would be likely to have a Material Adverse Effect other than as
disclosed in the Schedules hereto.
(g) Except as provided in Section 2.7, Seller and its
subsidiaries shall have duly executed and delivered to Purchaser (i) such
instruments of transfer, conveyance and assignment as are reasonably necessary
to vest in Purchaser good and marketable title to the Shares and, subject to
Permitted Liens, the Related Assets, and (ii) all Related Agreements to which
Seller and its subsidiaries are parties.
(h) Purchaser shall have received written opinions of
John C. Walters, Senior Vice President and General Counsel of Seller, and Mudge
Rose Guthrie Alexander & Ferdon, Seller's counsel, addressed to Purchaser,
substantially in the forms attached hereto as Exhibits H and I, respectively.
9.2. CONDITIONS TO THE OBLIGATION OF SELLER. The obligation of
Seller to consummate the transactions contemplated by this Agreement and the
Related Agreements is subject to the satisfaction, at or before the Closing
Date, of the following conditions (subject to the right of Seller to waive any
such condition in writing):
(a) The representations and warranties of Purchaser
contained herein and in the Related Agreements and in any statement,
certificate, exhibit, schedule or other document delivered by Purchaser
pursuant to this Agreement or the Related Agreements or in connection with the
transactions contemplated hereby or thereby shall have been true and correct in
all material respects as of the date of this Agreement and shall be true and
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correct in all material respects at and as of the Closing Date as if made on
and as of the Closing Date; Purchaser shall have performed all of its
obligations under this Agreement and the Related Agreements to be performed at
or prior to the Closing Date; and Seller shall have received at the time of the
Closing a certificate from Purchaser reasonably satisfactory in form and
substance to Seller certifying to the satisfaction of all of the conditions set
forth in this Section 9.2(a).
(b) No temporary restraining order, injunction or
other order shall have been issued by the Bankruptcy Court or any other court
or Governmental Agency with jurisdiction restraining, prohibiting or staying,
and no other Legal Requirement shall have come into effect making illegal,
performance of this Agreement or the Related Agreements or the consummation of
any of the transactions contemplated hereby or thereby.
(c) The Authorizations of all Governmental Agencies
and third parties which are necessary or required to consummate the
transactions contemplated hereby or by the Related Agreements shall have been
obtained, and all waiting periods specified under all Legal Requirements
applicable to the Acquisition and all extensions thereof, the passing of which
is required for such consummation, shall have passed.
(d) The Bankruptcy Court shall have entered the
Confirmation Order and the Sale Order pursuant to this Agreement, which orders
as of the Closing Date shall be in full force and effect and the Sale Order
shall not have been stayed pending appeal.
(e) No motion to convert the Case to a proceeding
under Chapter 7 of the Bankruptcy Code or to appoint a Chapter 11 trustee shall
have been granted.
(f) Purchaser and its affiliates shall have duly
executed and delivered to Seller (i) such instruments of assumption as are
reasonably necessary to assume the Assumed Liabilities, and (ii) all Related
Agreements to which they are parties.
(g) Seller shall have received an opinion from
Purchaser's counsel, addressed to Seller substantially in the form attached
hereto as Exhibit J.
(h) Purchaser shall have delivered to Seller the funds
set forth in Section 2.1 and all Related Agreements to which it or FSI is a
party, in each case duly executed by Purchaser and FSI.
(i) Seller shall have received the Escrow Agreement,
duly executed and delivered by Purchaser and the Escrow Agent.
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ARTICLE X. SURVIVAL; INDEMNIFICATION; LIQUIDATED DAMAGES.
10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Sections 3.1, 3.2, 3.4, 3.7, 3.14,
3.18 and 3.22 and all representations and warranties of Seller regarding tax
liabilities shall survive until the applicable statute of limitations has
expired; all other representations and warranties of Seller and Purchaser
contained in this Agreement shall survive for a period of 18 months following
the Closing Date.
10.2. INDEMNIFICATION. Purchaser on the one hand and Seller on
the other hand each agree to indemnify and hold harmless the other and
their respective affiliates, directors, officers, employees and agents from and
against any loss, liability, damage or deficiency (including, without
limitation, costs, interest, penalties and reasonable attorneys' fees) arising
out of or due to any breach of any covenant or any surviving representation or
warranty made by such party in this Agreement. There shall be no limitation
whatsoever on indemnification for any breaches by Seller of any provisions of
Article I, Article II or Section 3.7 hereof or for any breaches of
representations, warranties or covenants of Seller under this Agreement
regarding tax liabilities, but the total amount due for all breaches of other
representations, warranties and covenants of Seller under this Agreement shall
in no event exceed $45 million. In addition, no claim for indemnification shall
be made by the Purchaser under this Section 10.2 for the failure to list a Lien
in Schedule 1.1 to the extent such Lien would be discharged by the
satisfaction by Purchaser or FSI of (i) an Assumed Liability or (ii) a
liability of FSI if the existence of such liability would not be a breach of
Section 3.19. Promptly after the receipt by any party hereto of notice of any
claim or the commencement of any action or proceeding, such party will, if a
claim with respect thereto is to be made against any party obligated to provide
indemnification hereunder (the "Indemnifying Party"), give such Indemnifying
Party written notice of such claim or the commencement of such action or
proceeding, but any failure to timely notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder except to the
extent it was prejudiced thereby. Such Indemnifying Party shall have the right,
at its option to compromise or defend, at its own expense and with its own
counsel, any such claim, action or proceeding involving the asserted liability
of the party seeking such indemnification (the "Indemnified Party"). If any
Indemnifying Party undertakes to compromise, settle or defend any such asserted
liability, it shall promptly notify the Indemnified Party of its intention to
do so, and the Indemnified Party agrees to cooperate fully with the
Indemnifying Party and its counsel in the compromise of, or defense against,
any such asserted liability. The Indemnified Party may appoint, at its own
expense, associate counsel to participate in the joint defense of any such
matter. No Indemnified Party shall settle, compromise or consent to the entry
of any judgment in any pending or threatened claim, action or
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proceeding except with the consent of the Indemnifying Party (which
consent shall not be unreasonably withheld). All indemnification by the Seller
under this Article X, other than indemnification for any breaches by Seller of
any provisions of Article I, Article II or Section 3.7 hereof or for any
breaches of representations, warranties or covenants of Seller under this
Agreement regarding tax liabilities, shall be made first from the Escrowed
Funds in accordance with the terms of the Escrow Agreement.
10.3. LIMITATIONS. (a) Purchaser shall not be entitled to make
any claim against Seller under Section 10.2 unless and until the aggregate
amount of losses, liabilities, damages and deficiencies (including costs,
interest, penalties and reasonable attorneys' fees) with respect to all such
claims exceeds $2.5 million, in which event, Purchaser may assert its right to
indemnification to the extent such claims exceed $2.5 million.
(b) Notwithstanding the other provisions of this
Article, the limitations on amounts contained in Section 10.2 and in paragraph
(a) of this Section 10.3 shall not apply to the breach of any provisions of
Article I, Article II or Section 3.7 hereof or for any breaches of
representations, warranties or covenants of Seller under this Agreement
regarding tax liabilities.
10.4. TREATMENT OF CLAIMS FOR INDEMNITY. An Indemnified Party's
claim for indemnification hereunder shall be treated as an allowed
administrative expense under Section 503(b) of the Bankruptcy Code entitled to
priority under Section 507(a)(1) of the Bankruptcy Code.
10.5. LIQUIDATED DAMAGES. (a) Whether or not the Acquisition is
consummated, Seller acknowledges and agrees that Purchaser has made a
substantial investment of management time and incurred substantial
out-of-pocket expenses in connection with the negotiation and execution of this
Agreement and the effort to consummate the Acquisition. If the Acquisition is
not consummated and a "Liquidated Damages Event" (as defined below) shall have
occurred, Seller shall pay to Purchaser an amount equal to the sum of (i)
$25,000,000 plus (ii) the aggregate amount of expense reimbursement payable by
Seller to Purchaser under Section 11.6 ("Liquidated Damages"). As used herein,
a "Liquidated Damages Event" shall be a termination of this Agreement by Seller
or Purchaser pursuant to Section 8.1(d), provided Purchaser is not in default
hereunder at the time of such termination.
(b) Upon the occurrence of a Liquidated Damages Event,
Purchaser shall provide written notice to Seller of Purchaser's entitlement to
Liquidated Damages and Seller shall be liable for the payment of Liquidated
Damages and shall pay to Purchaser within 10 business days thereafter the
Liquidated Damages by wire transfer of immediately available funds to an
account or accounts designated by Purchaser. Until Seller's obligation to pay
Liquidated Damages
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is fully and indefeasibly discharged, Purchaser's claim for Liquidated Damages
shall be treated as an allowed administrative claim pursuant to section 503(b)
of the Bankruptcy Code entitled to priority under section 507(a)(1) of the
Bankruptcy Code.
ARTICLE XI. MISCELLANEOUS.
11.1. PUBLIC ANNOUNCEMENTS; NOTICES. (a) From the date hereof
until the Closing Date, no party hereto (nor any of their respective
affiliates) shall make any public announcement or other public disclosure
regarding the Acquisition or the terms of this Agreement without the consent of
the other (which consent shall not be unreasonably withheld) except to the
extent that such disclosure is required by applicable law. Notwithstanding the
foregoing, the parties may communicate with their respective employees,
customers, suppliers, creditors, shareholders, relevant Governmental Agencies
and the other parties in interest in the Case as may be necessary and
appropriate in connection with the implementation and consummation of the terms
of this Agreement. In addition, the parties shall cooperate and coordinate
with one another on the form and substance of an initial press release
announcing the execution and delivery of this Agreement.
(b) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally
(including by courier), sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, or if sent by facsimile transmission, when
transmitted, or, if mailed, four days after the date of deposit in the United
States mail, as follows:
(i) if to Purchaser, to:
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Attention: Randolph L.M. Hutto, Esq.
with a copy to:
Sutherland, Asbill & Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: George L. Cohen, Esq.
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(ii) if to Seller to:
New Valley Corporation
One Mack Centre Drive
Paramus, NJ 07652
Attention: General Counsel
with a copy to:
Mudge Rose Guthrie
Alexander & Ferdon
180 Maiden Lane
New York, New York 10038
Attention: Arnold H. Tracy, Esq.
Any party may, by notice given in accordance with this Section 11.1 to the
other party, designate another address or person for receipt of notices
hereunder.
11.2. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties with respect to the Acquisition
and supersedes all prior discussions, agreements and undertakings, written or
oral, of any and every nature with respect thereto.
11.3. GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED IN
ALL RESPECTS, INCLUDING VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT, BY
THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW).
(b) Each of the parties hereto agrees to submit to the
exclusive jurisdiction of the Bankruptcy Court and, in the event the Bankruptcy
Court no longer retains jurisdiction over the Case, the Federal District Court
for the Southern District of New York.
11.4. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY BENEFICIARY.
Subject to the entry of an appropriate order of the Bankruptcy Court approving
the execution and delivery of this Agreement, this Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns. This Agreement shall survive entry of the Confirmation
Order and the occurrence of the Effective Date of the Amended Plan. This
Agreement is not assignable without the prior written consent of each of the
parties hereto; provided, however, that Purchaser may assign its rights under
this Agreement to a wholly-owned subsidiary without such prior written consent,
but no such assignment shall relieve Purchaser of any of its obligations
hereunder. This Agreement does not create any rights, claims or benefits
inuring to any person that is not a party hereto or create or establish any
third party beneficiary hereto.
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11.5. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts which together shall constitute one and
the same instrument.
11.6. EXPENSES. Except as otherwise provided in Article II or
Section 10.5, and whether or not the Closing occurs, Seller shall reimburse
Purchaser for all of Purchaser's out-of-pocket costs and expenses incurred in
connection with its due diligence investigation of the Business, the
negotiation and preparation of this Agreement, the carrying out of the
provisions hereof and the consummation of the transactions contemplated hereby,
to the extent approved by the Bankruptcy Court; provided, however, that
Purchaser shall not be entitled to any reimbursement for, and shall indemnify
and hold Seller and its subsidiaries harmless from and against any loss
liability, damage or deficiency (including, without limitation, costs,
interest, penalties and reasonable attorneys' fees) resulting from, any
brokerage fees, commissions or finders' fees incurred by Purchaser in
connection with the transactions contemplated by this Agreement, other than
fees to Morgan Stanley & Co. Incorporated in connection with the Acquisition.
11.7. CONSTRUCTION AND REPRESENTATION BY COUNSEL. The parties
hereto represent that in the negotiation and drafting of this Agreement they
have been represented by and relied upon the advice of counsel of their choice.
The parties affirm that their counsel have had a substantial role in the
drafting and negotiation of this Agreement and, therefore, the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any exhibit or schedule attached hereto.
11.8. TAXES. (a) Seller shall join with Purchaser in making an
election under Sections 338(g) and 338(h)(10) of the Code and any corresponding
elections under state, local, or foreign tax law (collectively, a "Section
338(h)(10) Election") with respect to the purchase and sale of the Shares.
Seller shall pay any Federal, state, local and foreign income taxes (including
any interest or penalties that may become payable in respect thereof) imposed
on FSI and attributable to the making of the Section 338(h)(10) Election
(including any state, local or foreign income taxes imposed on FSI and
attributable to the making of an election under Section 338(g) of the Code, or
any comparable election under state, local or foreign tax law, in a situation
where an election under Section 338(h)(10) of the Code, or a comparable
election under state, local or foreign tax law, is not available with respect
to the purchase and sale of the Shares) and shall indemnify Purchaser and FSI
against any such taxes.
(b) Seller and Purchaser agree to allocate the
purchase price between the Shares and the Related Assets, and to allocate the
purchase price for the Shares (which shall exclude any contingent termination
liability to the PBGC with respect to the
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Western Union Pension Plan and Purchaser's obligation to satisfy the minimum
funding requirements imposed under Section 412 of the Code with respect to such
Pension Plan, and which shall be determined in accordance with Section 338(b)
of the Code) among the FSI assets deemed purchased for tax purposes in any
reasonable manner determined by Purchaser in accordance with Legal Requirements
and consented to by Seller, which consent may not be unreasonably withheld by
Seller, and to file all tax returns in a manner consistent with such
allocation. The parties agree to make such allocations as soon as possible
after the Closing and in all events no later than 60 days prior to the last
date (determined with regard to extensions) on which a Section 388(h)(10)
election may be filed with any applicable Federal, State, local or foreign
governmental authority. If Purchaser makes the deferred closing election of
Section 2.7, the parties agree to file all income tax returns treating the sale
of the Western Union Name and Trademark as having occurred at the Second
Closing.
(c) Seller shall bear and pay all transfer, stamp or
other similar taxes (if they are not exempted under section 1146 of the
Bankruptcy Code) imposed in connection with the Acquisition.
(d) Seller will indemnify and hold Purchaser and FSI
harmless against (1) any and all liability for Federal, state, local or foreign
taxes (including any interest, penalties or additions to tax that may become
payable in respect thereof) assessed against or payable by FSI with respect to
any period ending on or before the Closing Date or any period ending on or
before the last day of the taxable year of Seller's consolidated group in which
the Closing occurs, to the extent apportioned under Section 11.9(b); and (2)
any liability for Federal, state, local or foreign taxes (including any
interest, penalties or additions to tax that may become payable in respect
thereof) assessed against FSI pursuant to Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law) with respect to any
period ending on or before the last day of the taxable year of Seller's
consolidated group in which the Closing occurs provided, however, that
Purchaser shall not be indemnified for tax liabilities properly accrued and
reflected on the Audited Pro Forma Balance Sheet; and provided, further, that
to the extent any payment which, but for the provisions of this Section
11.8(d), would be payable to Seller by FSI also constitutes an undisclosed
liability which is taken into account in determining the amount payable to
Purchaser pursuant to Section 2.1(b), Seller shall be absolved of any such
liability to Purchaser under this Section 11.8(d).
(e) Purchaser shall pay to Seller, as a post-closing
Purchase Price adjustment, an amount equal to FSI's separate tax liability for
the period July 1, 1994 through the day preceding the Closing Date, determined
in accordance with the Agreement respecting Consolidating Federal Income Tax
Return Allocation of
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Taxes and Payment for Tax Benefits Utilized dated March 23, 1976 between Seller
and its subsidiaries (the "Tax Sharing Agreement"), less the total amount of
payments made for such period pursuant to Section 11.9, and Seller shall pay to
Purchaser as a post-closing Purchase Price adjustment any amount by which the
payments by FSI to Seller pursuant to Section 11.9 for the period July 1, 1994
through the Closing Date exceeded the amounts payable with respect thereto
pursuant to the Tax Sharing Agreement.
11.9. TAX PROCEDURES.
(a) Tax Sharing Agreements. Any tax sharing
agreement, including the Tax Sharing Agreement, between Seller and any of FSI
and its subsidiaries shall be terminated as to FSI and its subsidiaries as of
the Closing Date and shall have no further effect for any taxable year. FSI
and its subsidiaries may make payments pursuant to the Tax Sharing Agreement
with respect to the period from July 1, 1994 through the Closing Date, but from
and after July 1, 1994 through the Closing Date FSI and its subsidiaries have
not made and shall not make any other payments to Seller under any such
agreements, including any such other payments with respect to any taxable year
within which the Closing Date occurs.
(b) Tax Returns and Payment. Seller shall include the
income of FSI and its subsidiaries in Seller's consolidated federal and
consolidated, combined, or unitary state tax returns for all periods through
the Closing Date and pay any federal, state or local income taxes attributable
to such income. Income and tax liability of FSI and its subsidiaries shall be
apportioned to the period through the Closing Date by closing the books of FSI
and its subsidiaries as of the end of the Closing Date. Seller shall allow FSI
an opportunity to review and comment on any tax returns to be filed for any
period which includes the Closing Date.
(c) Audits. Seller shall allow FSI and its
representatives to participate in any audits and any tax contests of Seller's
consolidated, combined, or unitary tax returns to the extent such returns
related to FSI and its subsidiaries. Seller shall not settle any such audit in
a manner which would adversely affect FSI or its subsidiaries after the Closing
Date without the prior written consent of Purchaser, which consent shall not
unreasonably be withheld. To the extent reasonably required by Seller,
Purchaser will, and will cause FSI and its representatives to, cooperate with
and assist Seller in connection with any such audits or tax contests covering
any period prior to the Closing or any period during which FSI and the FSI
Subsidiaries were members of the consolidated group of which Seller was the
parent.
11.10. WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES;
PRESERVATION OF REMEDIES. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may
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be waived, only by a written instrument signed by authorized representatives of
each of the parties or, in the case of a waiver, by an authorized
representative of the party waiving compliance. No such written instrument
shall be effective unless it expressly recites that it is intended to amend,
supersede, cancel, renew or extend this Agreement or to waive compliance with
one or more of the terms hereof, as the case may be. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, or any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of
any other such right, power or privilege.
11.11. ARBITRATION. Any dispute, controversy or claim arising out
of or relating to this Agreement shall be settled by arbitration in accordance
with the then-prevailing Commercial Arbitration Rules of the American
Arbitration Association. Such arbitration shall be held before a panel of
three (3) arbitrators, one selected by Purchaser, one selected by Seller and
the third selected by mutual agreement of the first two arbitrators. Each
arbitrator shall be independent and impartial. Judgment upon any award
rendered by the arbitrators may be entered into by any court of competent
jurisdiction. The determination of which party (or combination of them) bears
the costs and expenses, including reasonable attorneys' fees, incurred in
connection with any such arbitration proceeding shall be made by the
arbitrators.
ARTICLE XII. DEFINITIONS.
12.1. DEFINED TERMS. Capitalized terms used herein shall have
the meanings set forth in the Sections referred to below:
Defined Terms Section Reference
- - ------------- -----------------
Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Amended Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Amended Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Audited Pro Forma Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(3)
Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(b)
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Bankruptcy Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Collective Bargaining Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
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Confirmation Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
Covered Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
CWA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
Datek Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Escrowed Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Evaluation Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(a)
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Excluded Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
FSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
FSI Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
Governmental Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(b)
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(d)
Intellectual Property Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(a)
Intercompany Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
ISRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18(d)
Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5(a)
Liquidated Damages Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5(a)
Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(d)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Material Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(1)
Messaging Services Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Permitted Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Permitted Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(a)
Plan Proponents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Pro Forma Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Procedures Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Purchaser's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(2)
Purchaser's Savings Plus Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6(a)
Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Related Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Restricted Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
Sale Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
Second Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
Section 338(h)(10) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8(a)
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Seller's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(2)
Seller Individual Account Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6(a)
Seller's Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
Shared Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Solicitation Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
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taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
Tax Sharing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8(e)
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(1)
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(1)
Western Union Name and Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
IN WITNESS WHEREOF, each of the parties hereto has caused its duly authorized
representative to execute this Agreement as of the date first set forth above.
NEW VALLEY CORPORATION FIRST FINANCIAL MANAGEMENT CORPORATION
By /s/ Robert J. Amman By /s/ Randolph L. M. Hutto
------------------------------- -------------------------------
Name: Robert J. Amman Name: Randolph L. M. Hutto
Title: Title:
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