<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 6, 1994
REGISTRATION NO. 33-56327
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FIRST FINANCIAL MANAGEMENT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
GEORGIA 58-1107864
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
</TABLE>
3 CORPORATE SQUARE, SUITE 700
ATLANTA, GEORGIA 30329
(404) 321-0120
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
This Registration Statement includes:
(1) A core Prospectus covering an aggregate of $1,000,000,000 of Debt
Securities, Convertible Debt Securities and Common Stock; and
(2) An initial Prospectus Supplement covering $440,000,000 of Senior
Convertible Debentures Due 1999 to be offered initially pursuant to this
Registration Statement.
<PAGE> 3
PROSPECTUS SUPPLEMENT
(To Prospectus Dated December 6, 1994)
$440,000,000
First Financial Management Corporation
5% SENIOR CONVERTIBLE DEBENTURES DUE 1999
------------------------
Interest payable December 15 and June 15
------------------------
The Debentures are convertible into Common Stock of the Company at any time
prior to maturity, unless previously redeemed, at a conversion price of
$69 per share, subject to adjustment in certain events. The last
reported sale price of the Company's Common Stock
on the New York Stock Exchange on December
5, 1994 was $56 1/2 per share.
------------------------
The Debentures are not redeemable at the option of the Company prior to December
15, 1997 and will not be subject to any sinking fund. Beginning December 15,
1997, the Debentures will be redeemable on at least 30 days' notice at
the option of the Company, in whole or in part at any time, initially
at 102% until December 15, 1998, at 101% thereafter to and including
December 14, 1999, and at 100% at maturity, together with
accrued interest. The Debentures may be redeemed at the option
of the Holder if there is a Fundamental Change (as defined
herein) at the redemption prices set forth herein,
subject to adjustment in certain events, together with
accrued interest.
------------------------
The Company has applied to list the Debentures on the New York Stock Exchange.
------------------------
THE DEBENTURES AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE DEBENTURES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
PRICE 100% AND ACCRUED INTEREST
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------ -------------- -------------
<S> <C> <C> <C>
Per Debenture............................................... 100.000% 1.000% 99.000%
Total(4).................................................... $440,000,000 $4,400,000 $ 435,600,000
</TABLE>
- ------------
(1) Plus accrued interest, if any, from December 13, 1994.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting expenses payable by the Company estimated to be $1,100,000.
(4) The Company has granted to the Underwriters an option, exercisable within 30
days of the date hereof, to purchase up to an additional $66,000,000
principal amount of Debentures at the price to public less underwriting
discounts and commissions for the purpose of covering over-allotments, if
any. If the Underwriters exercise such option in full, the total price to
public, total underwriting discounts and commissions and total proceeds to
Company will be $506,000,000, $5,060,000, and $500,940,000, respectively.
See "Underwriters."
------------------------
The Debentures are offered, subject to prior sale, when, as and if accepted
by the Underwriters, and subject to approval of certain legal matters by
Shearman & Sterling, counsel for the Underwriters. It is expected that delivery
of the Debentures will be made on or about December 13, 1994 at the offices of
Morgan Stanley & Co. Incorporated, New York, New York, against payment therefor
in New York funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
December 6, 1994
<PAGE> 4
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary.................................................................... S-3
Use of Proceeds....................................................................... S-4
Capitalization........................................................................ S-5
Description of Debentures............................................................. S-6
Underwriters.......................................................................... S-10
Legal Matters......................................................................... S-11
PROSPECTUS
Available Information................................................................. 2
Incorporation of Certain Documents by Reference....................................... 2
The Company........................................................................... 3
Recent Acquisition of Western Union Money Transfer Business........................... 3
Use of Proceeds....................................................................... 3
Price Range of Common Stock and Dividend Policy....................................... 4
Pro Forma Combined Financial Statements............................................... 5
Selected Financial Data............................................................... 11
Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 12
Business of the Company............................................................... 18
Description of Debt Securities........................................................ 26
Description of Capital Stock.......................................................... 32
Plan of Distribution.................................................................. 33
Legal Matters......................................................................... 34
Experts............................................................................... 34
</TABLE>
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE DEBENTURES
OFFERED HEREBY, THE COMMON STOCK OF THE COMPANY, OR BOTH, AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 5
PROSPECTUS SUMMARY
THE COMPANY
First Financial Management Corporation ("FFMC" or the "Company") is a
national leader in information services, offering a vertically integrated set of
data processing, storage and management services and products for the capture,
manipulation and distribution of data. FFMC operates in a single business
segment and continues to pursue further integration of its services and products
to gain competitive advantages. Similarities exist among its integrated
businesses in the methods of providing services, in the customers served, and in
the marketing activities utilized to obtain new customers. Services include
merchant and consumer payment services (involving credit cards, debit cards,
checks and nonbank immediate money transfers); debt collection and accounts
receivable management; data imaging, micrographics and electronic database
management; health care claims processing and integrated management and cost
containment services; and the development and marketing of data communications
and information processing systems, including in-store marketing programs and
systems for supermarkets. See "Business of the Company" and "Recent Acquisition
of Western Union Money Transfer Business."
THE OFFERING
Securities Offered......... $440,000,000 principal amount of 5% Senior
Convertible Debentures due 1999 (the "Debentures")
(plus an additional $66,000,000 principal amount if
the Underwriters' over-allotment option is
exercised in full). See "Description of
Debentures -- General."
Interest Payment Dates..... December 15 and June 15, commencing June 15, 1995.
Conversion................. Each Debenture will be convertible, at the option
of the Holder, prior to maturity, unless previously
redeemed, into Common Stock at $69 per share,
subject to adjustment. See "Description of
Debentures -- Conversion of Debentures."
Sinking Fund............... None.
Redemption................. The Debentures are not redeemable at the option of
the Company prior to December 15, 1997. Thereafter,
the Debentures will be redeemable, on at least 30
days' notice, at the option of the Company, in
whole or in part at any time, initially at 102%
until December 15, 1998, at 101% thereafter to and
including December 14, 1999, and at 100% at
maturity, together with accrued interest. The
Debentures may be redeemed at the option of the
Holder if there is a Fundamental Change (as defined
herein) at the redemption prices set forth herein,
subject to adjustment in certain events, together
with accrued interest. See "Description of
Debentures -- Optional Redemption by the Company"
and "-- Redemption at Option of Holders."
Use of Proceeds............ The Company intends to use the net proceeds from
the sale of the Debentures for the reduction of
bank indebtedness incurred for the Company's recent
acquisition of Western Union Financial Services,
Inc. and related assets. See "Use of Proceeds."
Listing.................... The Company has applied to list the Debentures on
the New York Stock Exchange.
S-3
<PAGE> 6
USE OF PROCEEDS
The net proceeds to be received by FFMC from the sale of the $440,000,000
aggregate principal amount of Debentures offered hereby are estimated to be
$435,600,000 ($500,940,000 if the over-allotment option is exercised in full).
FFMC intends to use the net proceeds from the sale of the Debentures for the
reduction of the bank indebtedness incurred for FFMC's recent acquisition of
Western Union Financial Services, Inc. and related assets ("Western Union") and
any excess net proceeds may be used for general corporate purposes. In
connection therewith, FFMC has borrowed $493 million and expects to borrow an
additional amount of approximately $300 million in January 1995 under its
revolving credit facility. FFMC's initial borrowing of $493 million is currently
bearing interest at an annual rate of 5.6% for a term of one month. See "Recent
Acquisition of Western Union Money Transfer Business" and "Business of the
Company -- Recently Acquired Business of Western Union" (which describes the
acquired money transfer business).
S-4
<PAGE> 7
CAPITALIZATION
The following table sets forth the capitalization of FFMC as of September
30, 1994 on (i) an historical basis, (ii) a pro forma basis giving effect to the
recent purchase of Western Union for $893 million in cash (including $300
million payable in January 1995), and (iii) a pro forma "as adjusted" basis
giving effect to the acquisition of Western Union and the sale of $440 million
of Debentures being offered pursuant to this Prospectus Supplement. See "Pro
Forma Combined Financial Statements."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
------------------------------------------
AS ADJUSTED
PRO FORMA TO REFLECT
WITH PURCHASE OF
PURCHASE OF WESTERN UNION
FFMC WESTERN AND SALE OF
(HISTORICAL) UNION DEBENTURES
------------ ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Indebtedness:
Current portion of long-term debt(1)................... $ 10,334 $ 12,641 $ 12,641
Long-term debt (less current portion)(1)............... 7,487 810,727 375,127
5% Senior Convertible Debentures due 1999.............. -- -- 440,000
------------ ----------- -------------
Total indebtedness............................. 17,821 823,368 827,768
------------ ----------- -------------
Shareholders' Equity:
Preferred Stock, $1.00 par value, 5,000,000 shares
authorized; none outstanding
Common Stock, $.10 par value, 150,000,000 shares
authorized; 62,510,411 shares outstanding(2)........ 6,251 6,251 6,251
Paid-in capital........................................ 851,552 851,552 851,552
Retained earnings...................................... 512,593 512,593 512,593
Treasury stock at cost, 20,000 shares.................. (651) (651) (651)
------------ ----------- -------------
Total shareholders' equity..................... 1,369,745 1,369,745 1,369,745
------------ ----------- -------------
Total capitalization........................... $ 1,387,566 $ 2,193,113 $ 2,197,513
========= ========= ===========
</TABLE>
- ---------------
(1) Assumes that $793 million of the purchase price for FFMC's acquisition of
Western Union (including $300 million payable in January 1995) is financed
with bank debt under FFMC's unsecured revolving credit facility, which the
Company in November 1994 increased to $1.0 billion from $450 million and
extended with a new three-year term. FFMC's initial borrowing of $493
million for the closing of the purchase of Western Union is for a term of
one month at 5.6%. As of December 1, 1994, the Company's LIBOR-based
borrowing rates under the facility (for terms ranging from one to six
months) range from 6.3% to 6.8%. It has been assumed that the net proceeds
(estimated at $435.6 million) from the $440 million of Debentures being
offered hereby will be used to reduce this bank indebtedness. The pro forma
adjustments to long-term debt (including the current portion) also reflect
the addition of Western Union's existing indebtedness.
(2) The number of shares of Common Stock outstanding does not include (a) 4.6
million shares reserved for issuance pursuant to stock options, stock
appreciation rights or restricted stock awards which have been or may be
granted under FFMC's 1982 Incentive Stock Plan, 1988 Incentive Stock Plan,
Directors' Stock Option Plan and the Directors' Restricted Stock Award Plan
and pursuant to stock options assumed by FFMC in connection with
acquisitions and (b) 1.3 million shares reserved for issuance upon exercise
of FFMC's remaining publicly held warrants. FFMC also has reserved 7.4
million shares for issuance upon conversion of the Debentures (based on the
initial conversion price and including Debentures subject to the
Underwriters' over-allotment option).
S-5
<PAGE> 8
DESCRIPTION OF DEBENTURES
The Debentures will be issued under an Indenture (the "Original Indenture")
dated as of December 5, 1994 between the Company and NationsBank of Georgia,
National Association, as Trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture (the "First Supplemental Indenture") dated as of December
5, 1994 between the Company and the Trustee (as so supplemented, the
"Indenture"). The following description of the particular Debentures offered
hereby supplements, and to the extent inconsistent therewith, replaces, the
description of the general terms and provisions of the Debt Securities set forth
in the Prospectus under the caption "Description of Debt Securities." The
Debentures will represent direct, unsecured general obligations of the Company,
convertible into Common Stock as described under "Conversion of Debentures." The
following statements are subject to the detailed provisions of the Indenture and
are qualified in their entirety by reference to the Indenture. References in
italics are to the Original Indenture and the First Supplemental Indenture, as
applicable. Wherever particular provisions of the Indenture are referred to,
such provisions are incorporated by reference as a part of the statements made,
and the statements are qualified in their entirety by such reference.
GENERAL
The Debentures will be direct, unsecured general obligations of the Company
and will rank on a parity with all other indebtedness of the Company which is
not by its terms subordinated to the Debentures. The Debentures will be limited
to $506,000,000 principal amount (including $66,000,000 subject to the
Underwriters' over-allotment option), will be issued in fully registered form
only in denominations of $1,000 or any multiple thereof, and will mature on
December 15, 1999. (Section 201 of the First Supplemental Indenture)
Interest at the annual rate set forth on the cover page of this Prospectus
Supplement is payable semiannually on June 15 and December 15, commencing June
15, 1995, to Holders of record at the close of business on the preceding June 1
and December 1, respectively, and, unless other arrangements are made, will be
paid by check mailed to such Holders. (Section 201 of the First Supplemental
Indenture)
Principal and premium, if any, will be payable, and the Debentures may be
presented for conversion, registration of transfer and exchange, without service
charge, at the Corporate Trust Office of the Trustee in Atlanta, Georgia.
(Sections 201 and 302 of the First Supplemental Indenture)
CONVERSION OF DEBENTURES
The Holders of Debentures will be entitled at any time prior to the close
of business on December 15, 1999, subject to prior redemption, to convert any
Debentures or portions thereof (in denominations of $1,000 or multiples thereof)
into Common Stock of the Company, at the conversion price set forth on the cover
page of this Prospectus Supplement, subject to adjustment as described below.
(Sections 301, 304, 305 and 306 of the First Supplemental Indenture) Except as
described below, no adjustment will be made on conversion of any Debenture for
interest accrued thereon or for dividends on any Common Stock issued upon such
conversion. (Section 302 of the First Supplemental Indenture) If any Debenture
not called for redemption is converted between a record date for the payment of
interest and the next succeeding Interest Payment Date, such Debenture must be
accompanied by funds equal to the interest payable on such succeeding Interest
Payment Date on the principal amount so converted. (Section 302 of the First
Supplemental Indenture) No such additional funds will be required for Debentures
called for redemption and converted. The Company is not required to issue
fractional shares of Common Stock upon conversion of Debentures and, in lieu
thereof, will pay a cash adjustment based upon the market price of the Common
Stock on the last Business Day prior to the date of conversion. (Section 303 of
the First Supplemental Indenture) In the case of Debentures called for
redemption, conversion rights will expire at the close of business on the
redemption date. (Sections 301 and 302 of the First Supplemental Indenture)
The initial conversion price of $69 per share of Common Stock is subject to
adjustment (under formulae set forth in the Indenture) in certain events,
including: (i) the issuance of Common Stock as a dividend or distribution on
Common Stock of the Company; (ii) subdivisions and combinations of the Common
Stock, (iii) the issuance to all holders of Common Stock of certain rights or
warrants to purchase Common Stock;
S-6
<PAGE> 9
(iv) the distribution to all holders of Common Stock of shares of capital stock
of the Company (other than Common Stock) or evidences of indebtedness of the
Company or assets (including securities, but excluding those rights, warrants,
dividends and distributions referred to above and dividends and distributions in
connection with the liquidation, dissolution or winding up of the Company or
paid in cash); (v) distributions consisting of cash, excluding any semiannual
cash dividend on the Common Stock to the extent that the aggregate cash dividend
per share of Common Stock in any semiannual period does not exceed the greater
of (x) the amount per share of Common Stock of the next preceding semiannual
cash dividend on the Common Stock to the extent that such preceding semiannual
dividend did not require an adjustment of the conversion price pursuant to this
clause (v) (as adjusted to reflect subdivisions or combinations of the Common
Stock), and (y) 7.5% of the average of the last reported sale prices of the
Common Stock for each of the ten consecutive Trading Days (as defined in the
First Supplemental Indenture) immediately prior to the date of declaration of
such dividend, and excluding any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company; and (vi) payment in
respect of a Tender Offer (as defined in the First Supplemental Indenture to
cover "traditional tender offers" as determined in good faith by the Company's
Board of Directors) or exchange offer by the Company or any subsidiary of the
Company to all holders of the Common Stock for the Common Stock to the extent
that the cash and value of any other consideration included in such payment per
share of Common Stock exceeds the Current Market Price (as defined in the First
Supplemental Indenture) per share of Common Stock on the Trading Day next
succeeding the last date on which tenders or exchanges may be made pursuant to
such tender or exchange. If any adjustment is required to be made as set forth
in clause (v) above as a result of a distribution that is a semiannual dividend,
such adjustment would be based upon the amount by which such distribution
exceeds the amount of the semiannual cash dividend permitted to be excluded
pursuant to such clause (v). If an adjustment is required to be made as set
forth in clause (v) above as a result of a distribution that is not a semiannual
dividend, such adjustment would be based upon the full amount of the
distribution. (Section 305 of the First Supplemental Indenture)
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price then in
effect; provided, that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment. The Company reserves the right to make such reductions in the
conversion price in addition to those required in the foregoing provisions as
the Company in its discretion shall determine to be advisable in order that
certain stock-related distributions hereafter made by the Company to its
shareholders shall not be taxable. (Section 305 of the First Supplemental
Indenture) Except as stated above, the conversion price will not be adjusted for
the issuance of Common Stock or any securities convertible into or exchangeable
for Common Stock, or carrying the right to purchase any of the foregoing.
In the case of (i) any reclassification or change of the Common Stock, or
(ii) a consolidation, merger, or combination involving the Company or a sale or
conveyance to another corporation of the property and assets of the Company as
an entirety or substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock, securities, or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, the Holders of the Debentures then Outstanding will be entitled
thereafter to convert such Debentures into the kind and amount of shares of
stock, other securities or other property or assets which they would have owned
or been entitled to receive upon such reclassification, change, consolidation,
merger, combination, sale or conveyance had such Debentures been converted into
Common Stock immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance assuming that a Holder of Debentures
would not have exercised any rights of election as to the stock, other
securities or other property or assets receivable in connection therewith.
(Section 306 of the First Supplemental Indenture)
In the event of a taxable distribution to holders of Common Stock which
results in an adjustment of the conversion price, the Holders of Debentures may,
in certain circumstances, be deemed to have received a distribution subject to
United States income tax as a dividend; in certain other circumstances, the
absence of such an adjustment may result in a taxable dividend to the holders of
Common Stock.
S-7
<PAGE> 10
OPTIONAL REDEMPTION BY THE COMPANY
The Debentures are not redeemable at the option of the Company prior to
December 15, 1997. At any time on or after that date, the Debentures will be
redeemable, on at least 30 but not more than 60 days' notice, at the option of
the Company, as a whole or in part, at the following prices (expressed as
percentages of the principal amount), together with accrued interest to the date
fixed for redemption (provided that if the Redemption Date is an Interest
Payment Date, interest shall be paid to the Holder of record on the Regular
Record Date with respect to such Interest Payment Date):
If redeemed during the 12-month period beginning December 15:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------------------------------ ----------
<S> <C>
1997.............................................................. 102%
1998.............................................................. 101%
</TABLE>
and 100% if redeemed at maturity. (Section 202 of the First Supplemental
Indenture)
If fewer than all the Debentures are to be redeemed, the Trustee will
select the Debentures to be redeemed by lot or, in its discretion, on a pro rata
basis. If any Debenture is to be redeemed in part only, a new Debenture or
Debentures in principal amount equal to the unredeemed principal portion thereof
will be issued. (Section 202 of the First Supplemental Indenture and Section
1107 of the Original Indenture)
REDEMPTION AT OPTION OF HOLDERS
If, at any time prior to December 15, 1999, there occurs a Fundamental
Change (as defined below), each Holder of Debentures shall have the right, at
the Holder's option, to require the Company to redeem all of such Holder's
Debentures or portions thereof (in denominations of $1,000 or multiples thereof)
on the date (the "Repurchase Date") that is 45 days after the date of the
Company's notice of such Fundamental Change referred to below (or, if not a
Business Day, on the next succeeding Business Day).
The Company shall redeem such Debentures at a price (expressed as
percentages of the principal amount) equal to (i) 105% if the Repurchase Date is
during the 12-month period beginning December 15, 1994, (ii) 104% if the
Repurchase Date is during the 12-month period beginning December 15, 1995, (iii)
103% if the Repurchase Date is during the 12-month period beginning December 15,
1996, and (iv) after December 14, 1997, the redemption price set forth under
"Optional Redemption by the Company" which would be applicable to a redemption
at the option of the Company on the Repurchase Date; provided that, with respect
to a Fundamental Change described in clause (i) in the definition of Applicable
Price below, if the Applicable Price is less than the Reference Market Price (as
defined below), the Company shall redeem such Debentures at a price equal to the
foregoing redemption price multiplied by the fraction obtained by dividing the
Applicable Price by the Reference Market Price. In each case, the Company shall
also pay accrued interest on the redeemed Debentures to the Repurchase Date
(provided that if the Repurchase Date is an Interest Payment Date, interest
shall be paid to the Holder of record on the Regular Record Date with respect to
such Interest Payment Date). (Section 203 of the First Supplemental Indenture)
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all the Company's Common
Stock shall be exchanged for, converted into, acquired for or constitute the
right to receive (whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification, recapitalization or
otherwise) consideration which is not all or substantially all common stock that
is (or, upon consummation of such transaction or event, will be) listed on a
national securities exchange or approved for quotation in the National
Association of Securities Dealers, Inc., Automated Quotation System or any
similar system of automated dissemination of quotations of securities prices.
The term "Applicable Price" means (i) in the event of a Fundamental Change
in which the holders of the Common Stock receive only cash, the amount of cash
received by the holder of one share of Common Stock and (ii) in the event of any
other Fundamental Change, the average of the last reported sale price for the
Common Stock during the ten Trading Days prior to the record date for the
determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such
S-8
<PAGE> 11
Fundamental Change, or, if no such record date, the date upon which the holders
of the Common Stock shall have the right to receive such cash, securities,
property or other assets in connection with the Fundamental Change.
The term "Reference Market Price" shall initially mean $37.667 (which is
equal to 66 2/3% of the closing price of the Common Stock set forth on the cover
page of this Prospectus Supplement) and in the event of any adjustment to the
conversion price described above pursuant to Section 305 of the First
Supplemental Indenture, the Reference Market Price shall also be adjusted so
that the ratio of the Reference Market Price to the conversion price after
giving effect to any such adjustment shall always be the same as the ratio of
$37.667 to the conversion price specified on the cover page of this Prospectus
Supplement (without regard to any adjustment thereto).
On or before the 10th day after the occurrence of a Fundamental Change, the
Company shall mail to all Holders of record of the Debentures a notice of the
occurrence of such Fundamental Change and of the redemption right arising as a
result thereof. The Company shall deliver a copy of such notice to the Trustee.
To exercise the redemption right, Holders of Debentures must deliver on or
before the 30th day after the date of such notice by the Company written notice
to the Company (or an agent designated by the Company for such purpose) and the
Trustee of the Holder's exercise of such right, together with the Debentures
with respect to which the right is being exercised, duly endorsed for transfer.
Payment for Debentures surrendered for redemption (and not withdrawn) prior to
the Repurchase Date will be made promptly following the Repurchase Date.
(Section 203 of the First Supplemental Indenture)
The Company will comply with the provisions of Rule 13e-4 and any other
tender offer rules under the Securities Exchange Act of 1934, as amended, which
may then be applicable in connection with the redemption rights of Holders of
the Debentures in the event of a Fundamental Change. The redemption rights of
the Holders of the Debentures could discourage a potential acquiror of the
Company. The Fundamental Change redemption feature, however, is not the result
of management's knowledge of any specific effort to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or part
of a plan by management to adopt a series of anti-takeover provisions.
EVENTS OF DEFAULT AND REMEDIES
An Event of Default is defined in the Indenture as being: default in
payment of the principal of or premium, if any, on any of the Debentures;
default for 30 days in payment of any installment of interest on the Debentures;
default by the Company for 60 days after notice in the observance or performance
of any other covenant in the Indenture (other than a covenant solely for the
benefit of Securities other than the Debentures); or certain events involving
bankruptcy, insolvency or reorganization of the Company. (Section 501 of the
Original Indenture) The Indenture provides that the Trustee may withhold notice
to the Holders of Debentures of any default (except in payment of principal, or
premium, if any, or interest on the Debentures) if the Trustee considers it in
the interest of the Holders of the Debentures to do so. (Section 601 of the
Original Indenture)
The Indenture provides that if any Event of Default shall have occurred and
be continuing with respect to the Debentures, the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Debentures may declare the
principal of all the Debentures to be due and payable immediately, but if the
Company shall cure all defaults (except the nonpayment of interest and premium,
if any, on and principal of any Debentures which shall have become due by
acceleration) and certain other conditions are met, such declaration may be
annulled and past defaults may be waived by the Holders of a majority in
principal amount of the Outstanding Debentures. (Section 502 of the Original
Indenture)
The Holders of a majority in principal amount of the Outstanding Debentures
shall have the right to direct the time, method and place of conducting any
proceedings for any remedy available to the Trustee with respect to the
Debentures subject to certain limitations specified in the Indenture. (Section
512 of the Original Indenture)
S-9
<PAGE> 12
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Debentures, may consolidate with or merge into, or transfer or lease its assets
substantially as an entirety to, any Person which is a corporation, partnership
or trust organized and validly existing under the laws of any domestic
jurisdiction, or may permit any such Person to consolidate with or merge into
the Company or convey, transfer or lease its properties and assets substantially
as an entirety to the Company, provided that any successor Person expressly
assumes the Company's obligations on the Debentures and under the Indenture,
that both immediately before and after giving effect to the transaction no Event
of Default shall have occurred and be continuing, and that certain other
conditions are met. (Section 801 of the Original Indenture)
UNDERWRITERS
Under the terms and subject to the conditions contained in the Underwriting
Agreement dated December 6, 1994 (the "Underwriting Agreement"), the
Underwriters named below have severally agreed to purchase, and the Company has
agreed to sell to them severally, the respective principal amount of the
Debentures set forth opposite their respective names below:
<TABLE>
<CAPTION>
NAME PRINCIPAL AMOUNT
--------------------------------------------------------------------- ----------------
<S> <C>
Morgan Stanley & Co. Incorporated.................................... $129,673,400
Bear, Stearns & Co. Inc.............................................. 129,663,300
CS First Boston Corporation.......................................... 129,663,300
J.C. Bradford & Co. ................................................. 3,000,000
Dean Witter Reynolds Inc. ........................................... 6,000,000
Hambrecht & Quist Incorporated....................................... 6,000,000
Kidder, Peabody & Co. Incorporated................................... 6,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated................... 6,000,000
Montgomery Securities................................................ 6,000,000
Piper Jaffray Inc. .................................................. 3,000,000
The Robinson-Humphrey Company, Inc. ................................. 3,000,000
Salomon Brothers Inc................................................. 6,000,000
Smith Barney Inc. ................................................... 6,000,000
----------------
Total...................................................... $440,000,000
=============
</TABLE>
The Underwriting Agreement provides that the obligation of the several
Underwriters to pay for and accept delivery of the Debentures is subject to,
among other things, approval of certain legal matters by its counsel and certain
other conditions. The Underwriters are committed to take and pay for all of the
Debentures offered hereby if any are taken.
The Company has granted to the Underwriters an option, exercisable within
30 days of the date of the Underwriting Agreement, to purchase up to an
additional $66,000,000 principal amount of Debentures solely for the purpose of
covering over-allotments, if any.
The Underwriters initially propose to offer part of the Debentures to the
public at the public offering price set forth on the cover page hereof, plus
accrued interest, if any, from December 13, 1994, and part to certain dealers at
a price that represents a concession not in excess of .60% of the principal
amount of the Debentures. Any Underwriter may allow, and such dealers may
reallow, a concession not in excess of .10% of the principal amount of the
Debentures to certain other dealers. After the initial offering of the
Debentures, the offering price and other selling terms may from time to time be
varied by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company has applied for listing of the Debentures on the New York Stock
Exchange.
S-10
<PAGE> 13
The Company has agreed that it will not, directly or indirectly, for a
period of 90 days after the date of the Underwriting Agreement, without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, offer, sell, contract to sell or otherwise dispose of any shares
of Common Stock, or any securities convertible into or exchangeable or
exercisable for shares of Common Stock, other than (i) the Debentures offered
hereby, (ii) the Common Stock issuable upon conversion of the Debentures, (iii)
securities issued by the Company in connection with acquisitions by the Company,
provided that no such securities may be issued or sold in a public distribution
during such 90-day period, (iv) shares of Common Stock, options to purchase
Common Stock, or shares of Common Stock issued upon exercise of such options,
granted or purchased (A) under the Company's existing stock option, stock
purchase and stock grant plans, or (B) under such plans that may be adopted by
the Company in the future covering up to an aggregate of 10 million additional
shares of Common Stock, and (v) shares of Common Stock issuable upon exercise of
the Company's outstanding warrants.
Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc. and CS First
Boston Corporation have engaged in transactions with and performed various
investment banking and other services for the Company in the past and may do so
from time to time in the future.
LEGAL MATTERS
The validity of the Debentures offered hereby and the Common Stock issuable
upon conversion of the Debentures will be passed upon for the Company by
Sutherland, Asbill & Brennan, Atlanta, Georgia. Certain legal matters in
connection with the offering will be passed upon for the Underwriters by
Shearman & Sterling, New York, New York. George L. Cohen, a partner in
Sutherland, Asbill & Brennan, is a director of the Company. Attorneys at
Sutherland, Asbill & Brennan participating in matters related to the offering
beneficially owned 14,528 shares of the Company's Common Stock as of December 1,
1994.
S-11
<PAGE> 14
PROSPECTUS
$1,000,000,000
FIRST FINANCIAL MANAGEMENT CORPORATION
DEBT SECURITIES
CONVERTIBLE DEBT SECURITIES
COMMON STOCK
---------------------
The Company may from time to time offer, together or separately, (a) Debt
Securities consisting of debentures, notes and/or other unsecured evidences of
indebtedness, (b) Debt Securities which are convertible into the Company's
Common Stock, $.10 par value ("Common Stock"), and (c) shares of its Common
Stock (the Debt Securities (including any that are convertible) and the Common
Stock are referred to herein together as the "Securities"). The Securities
offered pursuant to this Prospectus may be issued at an aggregate public
offering price not to exceed $1,000,000,000 (or the equivalent thereof if any of
the Debt Securities are denominated in a currency, currency unit or composite
currency ("Currency") other than the U.S. dollar), at prices and on terms to be
determined at the time of sale. The accompanying Prospectus Supplement sets
forth the terms of any Securities in respect of which this Prospectus is being
delivered (i) in the case of Debt Securities, the title, aggregate principal
amount, denominations, maturity, interest rate, if any (which may be fixed or
variable), and time of payment of any interest, any terms for redemption at the
option of the Company or the holder, any terms for sinking fund payments, any
listing on a securities exchange, the initial public offering price, the terms,
if any, for conversion of any Debt Securities into the Common Stock, and any
other terms in connection with the offering and sale of such Debt Securities,
and (ii) in the case of Common Stock, the number of shares of Common Stock and
the terms of the offering thereof.
The Company may sell Securities to or through underwriters, and also may
sell Securities directly to other purchasers or through agents. Such
underwriters may include Morgan Stanley & Co. Incorporated or may be a group of
underwriters represented by firms including such firm. Such firm may also act as
agent. The accompanying Prospectus Supplement sets forth the names of any
underwriters, dealers or agents involved in the sale of any Securities in
respect of which this Prospectus is being delivered, the principal amounts or
the number of shares, as applicable, if any, to be purchased by underwriters and
the applicable commissions or compensation, if any, of such underwriters or
agents.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
---------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER 6, 1994
<PAGE> 15
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. EXCEPT WHERE OTHERWISE INDICATED, THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT SPEAK AS OF THE RESPECTIVE DATE OF SUCH DOCUMENT. NEITHER
THE DELIVERY OF THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT NOR ANY SALE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
First Financial Management Corporation ("FFMC") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). Such reports, proxy statements and other information filed by FFMC
may be inspected and copied at the public reference facilities maintained by the
SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's Regional Offices located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials can be obtained by mail from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, such material may be inspected and copied at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005, where FFMC's Common Stock is listed, and certain other securities
offered hereby may be listed.
FFMC has filed with the SEC a registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. For further information, reference is
hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC (File No. 1-10442) pursuant to
the Exchange Act are incorporated herein by reference: (1) FFMC's Annual Report
on Form 10-K for the year ended December 31, 1993; (2) FFMC's Quarterly Reports
on Form 10-Q for the quarters ended March 31, June 30, and September 30, 1994;
(3) FFMC's Current Report on Form 8-K, dated November 4, 1994, reporting the
then proposed acquisition of Western Union Financial Services, Inc.; (4) FFMC's
Current Report on Form 8-K, dated as of November 15, 1994, reporting the
consummation of the acquisition of Western Union Financial Services, Inc. and
related assets; and (5) the description of FFMC's Common Stock contained in its
Registration Statement on Form 8-A, filed on January 16, 1990, as updated by
Item 2, Part II to FFMC's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1990 and information contained in Note I to the financial statements
included in FFMC's Annual Report on Form 10-K for the year ended December 31,
1993.
All documents filed by FFMC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement or this Prospectus to the extent that
a statement contained herein, in a Prospectus Supplement or in any other
document subsequently filed with the SEC which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
FFMC will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents which are incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
FFMC, 3 Corporate Square, Suite 700, Atlanta, Georgia 30329, Attention: Randolph
L.M. Hutto, Executive Vice President and General Counsel, telephone (404)
321-0120.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. FOR THE COMMON STOCK AND ANY OTHER SECURITIES LISTED ON THE NEW YORK
STOCK EXCHANGE, SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 16
THE COMPANY
First Financial Management Corporation ("FFMC" or the "Company") is a
national leader in information services, offering a vertically integrated set of
data processing, storage and management services and products for the capture,
manipulation and distribution of data. FFMC operates in a single business
segment and continues to pursue further integration of its services and products
to gain competitive advantages. Similarities exist among its integrated
businesses in the methods of providing services, in the customers served, and in
the marketing activities utilized to obtain new customers. Services include
merchant and consumer payment services (involving credit cards, debit cards,
checks and nonbank immediate money transfers); debt collection and accounts
receivable management; data imaging, micrographics and electronic database
management; health care claims processing and integrated management and cost
containment services; and the development and marketing of data communications
and information processing systems, including in-store marketing programs and
systems for supermarkets. The Company's principal executive office is at 3
Corporate Square, Suite 700, Atlanta, Georgia 30329 (telephone (404) 321-0120).
RECENT ACQUISITION OF WESTERN UNION MONEY TRANSFER BUSINESS
On September 19, 1994, FFMC was declared the winning bidder to acquire
Western Union Financial Services, Inc. ("Western Union") in bankruptcy
proceedings of Western Union's parent company, New Valley Corporation ("New
Valley"), in the U.S. Bankruptcy Court for the District of New Jersey. FFMC
entered into a Purchase Agreement with New Valley dated as of October 20, 1994,
as amended on November 14, 1994 (the "Purchase Agreement") to purchase all of
the stock of Western Union, as well as certain assets of New Valley relating to
the money transfer business conducted by Western Union. The Purchase Agreement
provided for a cash purchase price of $893,223,000 plus assumption by FFMC of
the Western Union Pension Plan, as to which benefit accruals were permanently
suspended in 1988. Of the cash portion of the purchase price, $593,223,000 was
paid on November 15, 1994, and $300,000,000 will be paid in January 1995. The
Purchase Agreement permitted Western Union to declare a dividend of $117,895,434
prior to the closing. The closing of the acquisition was consummated on November
15, 1994 (the "Closing Date").
The Purchase Agreement requires New Valley to indemnify FFMC for certain
losses arising (within eighteen months after the Closing Date in most instances
and longer, to the extent of the applicable statute of limitations, in other
instances) from a breach of any covenants, representations and warranties of New
Valley. Subject to certain exceptions, such liability will not apply until
losses exceed $2.5 million and will be limited to $45 million. A portion of the
cash purchase price ($45 million) has been placed in escrow for thirty months
following the Closing Date and will be available to satisfy any such
indemnification obligations of New Valley, subject to reduction of the escrow
amount by up to $20 million upon payment of any related purchase price
adjustment, and subject to further reduction of up to $18 million at the end of
the eighteenth month following the Closing Date.
Pursuant to the Purchase Agreement, on the Closing Date, FFMC, Western
Union and New Valley entered into certain related agreements providing for: a
license to New Valley to use the Western Union name and trademark in its
messaging business; the furnishing by Western Union to New Valley of certain
sales, marketing and other services related to the messaging business and other
consulting and administrative services; options granting FFMC the right to
purchase from New Valley, and New Valley the right to sell to FFMC, the
messaging business of New Valley for a purchase price of $20 million in cash
during the first quarter of 1996; and the payment by New Valley to FFMC or
Western Union of certain royalties and fees for such license and services.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for the
reduction of the bank indebtedness used for FFMC's acquisition of Western Union
and related assets and may also use a portion of the proceeds for other general
corporate purposes, including possible acquisitions. In connection with its
acquisition of Western Union and related assets, FFMC has borrowed $493 million
and expects to borrow approximately $300 million in January
3
<PAGE> 17
1995 under its revolving credit facility. See "Recent Acquisition of Western
Union Money Transfer Business" and "Business of the Company -- Recently Acquired
Business of Western Union" (which describes the acquired money transfer
business).
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "FFM." The following table sets forth high and low
prices for the Common Stock during the periods indicated as reported by the
NYSE.
<TABLE>
<CAPTION>
CALENDAR YEAR HIGH LOW
---------------------------------------------------------------- ---- ---
<S> <C> <C>
1992
First Quarter......................................... $33 1/8 $26 3/8
Second Quarter........................................ 29 7/8 24 3/4
Third Quarter......................................... 35 5/8 29 3/4
Fourth Quarter........................................ 44 5/8 31 1/2
1993
First Quarter......................................... 44 1/4 38 1/4
Second Quarter........................................ 42 3/8 36
Third Quarter......................................... 55 1/8 42 3/8
Fourth Quarter........................................ 58 1/2 50 1/2
1994
First Quarter......................................... 60 1/8 51 1/8
Second Quarter........................................ 59 1/8 52 3/8
Third Quarter......................................... 62 52
Fourth Quarter (through December 5)................... 61 1/4 53 3/4
</TABLE>
In 1989, the Company established a policy of making semiannual dividend
payments to shareholders, and the Company's Board of Directors has since
declared semiannual cash dividends of $.05 per share. The Company expects to pay
future cash dividends semiannually depending upon the Company's pattern of
growth, profitability, financial condition and other factors that the Board of
Directors may deem appropriate.
4
<PAGE> 18
FIRST FINANCIAL MANAGEMENT CORPORATION
PRO FORMA COMBINED FINANCIAL STATEMENTS
The accompanying unaudited pro forma combined financial statements conform
to the presentation format of FFMC's financial statements. The pro forma
combined balance sheet and statements of income reflect the combined financial
position and results of operations of FFMC and Western Union.
The pro forma combined balance sheet at September 30, 1994 assumes that the
acquisition of Western Union and related assets occurred on that date. The pro
forma combined statements of income assume that the acquisition was completed on
January 1, 1993.
The pro forma combined statements of income assume that the Western Union
acquisition is financed with the net proceeds of $435.6 million from the $440
million (excluding any over-allotment option) of senior convertible debentures
offered by this Prospectus and accompanying Prospectus Supplement (dated the
same date as this Prospectus) combined with borrowings under the Company's
revolving credit facility. If suitable conditions arise, FFMC may use additional
debt instruments or other securities as the ultimate source of the remaining
financing for the Western Union acquisition, which may have higher average
interest rates.
The pro forma combined financial information is not necessarily indicative
of the results which actually would have occurred had the transaction been in
effect on the dates and for the periods indicated or which may result in the
future. The pro forma combined financial statements and notes thereto should be
read in conjunction with the historical financial statements and notes thereto
of FFMC and Western Union, which are incorporated herein by reference.
5
<PAGE> 19
FIRST FINANCIAL MANAGEMENT CORPORATION
PRO FORMA COMBINED BALANCE SHEET (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
-----------------------------------------------------------
PRO FORMA
ADJUSTMENTS
FFMC WESTERN UNION INCREASE PRO FORMA
(HISTORICAL) (HISTORICAL)(1) (DECREASE) COMBINED
------------ ------------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............... $ 181,593 $ 239,045 $ (224,932)(2) $ 195,706
Accounts receivable, net................ 401,463 4,291 (2,765)(3) 402,989
Prepaid expenses and other current
assets............................... 103,612 22,296 (1,073)(3) 124,835
------------ ------------- ----------- ----------
Total Current Assets............ 686,668 265,632 (228,770) 723,530
Property and equipment, net............... 141,380 23,632 4,324(3) 169,336
Excess of cost over fair value of assets
acquired, net........................... 674,095 2,591 1,080,723(4) 1,757,409
Customer contracts, net................... 153,643 153,643
Other assets.............................. 137,539 6,768 53,879(4) 198,186
------------ ------------- ----------- ----------
$ 1,793,325 $ 298,623 $ 910,156 $3,002,104
========= =========== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses... $ 318,153 $ 180,021 $ 13,657(5) $ 505,248
(6,583)(3)
Income taxes payable.................... 16,717 16,717
Current portion of long-term debt....... 10,334 7,366 (5,059)(3) 12,641
------------ ------------- ----------- ----------
Total Current Liabilities....... 345,204 187,387 2,015 534,606
Long-term debt, less current portion...... 7,487 7,271 357,623(6) 375,127
2,746(3)
Senior Convertible Debentures............. 440,000(6) 440,000
Deferred income taxes payable............. 58,021 (58,021)(4)
Other liabilities......................... 12,868 2,535 266,000(4) 282,626
1,223(3)
------------ ------------- ----------- ----------
Total Liabilities............... 423,580 197,193 1,011,586 1,632,359
------------ ------------- ----------- ----------
Shareholders' Equity:
Common Stock............................ 6,251 6,251
Paid-in capital......................... 851,552 53,099 (53,099)(7) 851,552
Retained earnings....................... 512,593 48,331 (48,331)(7) 512,593
Treasury stock at cost.................. (651) (651)
------------ ------------- ----------- ----------
Total Shareholders' Equity...... 1,369,745 101,430 (101,430)(7) 1,369,745
------------ ------------- ----------- ----------
$ 1,793,325 $ 298,623 $ 910,156 $3,002,104
========= =========== ========= =========
</TABLE>
See notes to pro forma combined financial statements.
6
<PAGE> 20
FIRST FINANCIAL MANAGEMENT CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FFMC WESTERN UNION INCREASE PRO FORMA
(HISTORICAL) (HISTORICAL)(1) (DECREASE) RESULTS
------------ --------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues
Service revenues........................ $ 1,446,506 $ 401,365 $ (10,933) (8) $1,836,938
Product sales........................... 53,695 53,695
Other................................... 2,765 2,765
------------ --------------- ----------- ----------
1,502,966 401,365 (10,933) 1,893,398
------------ --------------- ----------- ----------
Expenses
Operating............................... 1,208,143 326,790 (9,354) (8) 1,511,735
(13,844) (9)
General and administrative.............. 20,515 20,515
Cost of products sold................... 33,482 33,482
Depreciation and amortization........... 69,194 6,717 21,063(10) 96,974
Interest, net........................... (4,616) 38,406(11) 33,790
Cost of Western Union Pension Plan...... 13,763(12) 13,763
------------ --------------- ----------- ----------
1,326,718 333,507 50,034 1,710,259
------------ --------------- ----------- ----------
Income before income taxes.............. 176,248 67,858 (60,967) 183,139
Income taxes............................ 71,990 24,238 (20,285)(13) 75,943
------------ --------------- ----------- ----------
Net income...................... $ 104,258 $ 43,620 $ (40,682) $ 107,196
========= =========== ========= =========
Earnings per common share................. $ 1.67 $ 1.71
========= =========
Average common shares outstanding......... 62,570 6,377(14) 68,947
</TABLE>
See notes to pro forma combined financial statements.
7
<PAGE> 21
FIRST FINANCIAL MANAGEMENT CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME (UNAUDITED)
YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FFMC WESTERN UNION INCREASE PRO FORMA
(HISTORICAL) (HISTORICAL)(1) (DECREASE) RESULTS
------------ --------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues
Service revenues........................ $ 1,543,004 $ 437,410 $ (17,448)(8) $1,962,966
Product sales........................... 116,798 116,798
Other................................... 9,866 9,866
------------ --------------- ----------- ----------
1,669,668 437,410 (17,448) 2,089,630
------------ --------------- ----------- ----------
Expenses
Operating............................... 1,283,839 391,521 (13,020)(8) 1,643,267
(19,073)(9)
General and administrative.............. 23,870 23,870
Cost of products sold................... 70,570 70,570
Depreciation and amortization........... 75,926 8,937 27,918(10) 112,781
Write-down of goodwill and investment... 3,250 3,250
Interest, net........................... (294) 50,447(11) 50,153
Cost of Western Union Pension Plan...... 20,788(12) 20,788
------------ --------------- ----------- ----------
1,453,911 403,708 67,060 1,924,679
------------ --------------- ----------- ----------
Income before income taxes................ 215,757 33,702 (84,508) 164,951
Income taxes.............................. 88,112 12,813 (31,540)(13) 69,385
------------ --------------- ----------- ----------
Net income...................... $ 127,645 $ 20,889 $ (52,968) $ 95,566
========= =========== ========= =========
Earnings per common share................. $ 2.10 $ 1.57
========= =========
Average common shares outstanding......... 60,845 60,845
</TABLE>
See notes to pro forma combined financial statements.
8
<PAGE> 22
FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
(1) Certain reclassifications have been made to conform the balance sheet and
statement of income presentation formats for Western Union to the formats
used by FFMC.
(2) The adjustment to cash and cash equivalents reflects: (a) a permitted
dividend of approximately $118 million paid by Western Union to New Valley
at or prior to closing, (b) approximately $6 million paid by Western Union
to New Valley as a net settlement of intercompany accounts as of September
30, 1994, (c) FFMC's use of $100 million of its cash in the acquisition of
Western Union and related assets, and (d) the assumed payment by FFMC of $1
million in cash for the estimated transaction costs (exclusive of the
underwriting discount) related to the senior convertible debentures.
(3) At closing certain transfers of assets and liabilities occurred between
Western Union and New Valley as follows:
Messaging business assets and liabilities were transferred from Western
Union to New Valley. Equipment and other capital assets and related
liabilities relating to ongoing operations were transferred from New
Valley to Western Union. New Valley assumed a $5.4 million note payable
to Datek-InstaCard, Inc. and related liabilities and assumed all
responsibilities related to current litigation between Western Union and
Datek-InstaCard, Inc.
The net effect of the transfers was to increase Western Union net
assets by $8.2 million.
(4) Adjustment for the allocation of purchase price to the fair value of assets
acquired and liabilities assumed. It is assumed that historical amounts
approximate fair value for tangible and identified intangible assets
acquired. Such allocations are based upon current estimates which will be
subsequently adjusted based upon final determination of the fair values of
assets acquired and liabilities assumed as of the closing date. The excess
of cost over fair value of net assets acquired (see Note (7) below) is as
follows (dollars in millions):
<TABLE>
<S> <C>
Cash purchase price................................................ $ 893.2
Western Union Pension Plan liability assumed....................... 266.0
Acquisition costs.................................................. 28.0
Less deferred tax asset related to Western Union Pension Plan
liability........................................................ (106.5)
--------
$1,080.7
=======
</TABLE>
The adjustment to other assets reflects: (a) a deferred tax asset related
to the Western Union Pension Plan liability of $106.5 million, less (b) the
reclassification of FFMC's deferred tax liability of $58.0 million, plus
(c) estimated transaction costs of $5.4 million related to the senior
convertible debentures.
(5) Elimination of intercompany payable to New Valley ($14.3 million) through
either payment or contribution to capital, and establishment of accrual for
estimated acquisition costs ($28 million). See Note (4) above.
(6) Long-term debt related to acquisition consisting of $440 million in senior
convertible debentures and $357.6 million in bank debt (cash purchase price
including deferred portion payable in January 1995 less FFMC cash used in
the transaction, plus $4.4 million for the underwriting discount on the
senior convertible debentures).
(7) Elimination of shareholders' equity of Western Union. The effect of all the
above adjustments, prior to applying the adjustment in Note (4) above, was
to reduce shareholder's equity of Western Union to zero.
(8) Adjustments to reflect the elimination of messaging business revenue and
related expense because such business has been retained by New Valley.
Income before income taxes related to the messaging business was $4.4
million for the year ended December 31, 1993 and $1.6 million for the nine
months ended September 30, 1994.
9
<PAGE> 23
FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
(9) Adjustments to eliminate royalty and other fees paid to New Valley which
will not continue after the acquisition.
(10) Adjustments to reflect the amortization of the excess of cost over fair
value of assets acquired, using a straight-line method over 40 years.
Adjustments have also been made to reflect depreciation on equipment and
other capital assets transferred to Western Union from New Valley.
(11) Adjustments to reflect additional interest expense (and the amortization of
estimated transaction costs of $5.4 million) related to $440 million in
senior convertible debentures and additional interest expense related to
$357.6 million in bank debt used to finance most of the cash purchase price
and interest foregone on $100 million of FFMC cash used. Interest expense
includes the senior convertible debentures at 5.0%, and bank debt under the
Company's revolving credit facility at a rate of 6.8%, the rate currently
available under such facility for a six-month term. The current rate under
the revolving credit facility is higher than the comparable average rates
in 1993 of 3.6% and the first nine months of 1994 of 4.9%. Interest
foregone on FFMC cash used is based on investment rates earned by the
Company in 1993 (3.0%) and 1994 (3.8%).
Interest rates under the revolving credit facility fluctuate. The impact of
a 1/8 percent increase in the rate on borrowings under the revolving credit
facility would be approximately $447,000 of additional interest expense for
the year ended December 31, 1993 and $335,000 for the nine months ended
September 30, 1994.
(12) Adjustments to reflect the net periodic pension cost under the Western
Union Pension Plan, as to which benefit accruals were permanently suspended
in 1988. The 1993 amount is based on actuarial assumptions and was
previously reported in New Valley's 1993 Annual Report on Form 10-K. The
1994 amount is based on similar actuarial assumptions.
(13) Tax effect of pro forma adjustments. The tax computation includes the
deductibility of the majority of goodwill amortization. New Valley has
agreed to make the necessary tax elections to allow the deductibility by
FFMC of goodwill, except for that portion associated with the assumption of
the Western Union Pension Plan which is deductible for tax purposes when
paid. Additionally, a pro forma adjustment has been made to increase
Western Union's state income tax from its historical rate to a rate which
excludes the benefit it received from using New Valley's tax loss
carryforwards in calculating its state income taxes.
(14) Shares assumed to have been issued to reflect the assumed conversion of
FFMC's $440 million senior convertible debentures (based on the conversion
price of $69.00 per share) into FFMC Common Stock solely for purposes of
computing earnings per common share for the nine months ended September 30,
1994. Interest expense (including amortization of estimated transaction
costs), net of tax effect, from the senior convertible debentures (at a
rate of 5.0%) was added to net income in calculating earnings per common
share.
The calculation of earnings per common share for the year ended December
31, 1993 does not reflect an assumed conversion of the $440 million senior
convertible debentures into FFMC Common Stock (or the corresponding
restoration of the related after tax interest expense to net income)
because the effect of those adjustments for such period would be
anti-dilutive.
10
<PAGE> 24
SELECTED FINANCIAL DATA
(IN THOUSANDS EXCEPT RATIOS AND PER SHARE DATA)
The following data should be read in conjunction with the Company's
financial statements and related notes thereto, which are included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1993 and
Quarterly Report on Form 10-Q for the nine months ended September 30, 1994, and
the Company's "Management's Discussion and Analysis of Financial Condition and
Results of Operations." FFMC has made various acquisitions (accounted for as
purchases) during the periods which affect the comparability of information
presented. In addition, in 1992 the Company disposed of one of its two business
segments and recorded a loss in another business unit that was sold. For
additional information concerning the Company's acquisitions and dispositions,
see Notes B and C, respectively, to the Company's consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1993. The selected financial data presented below as of and
for the nine months ended September 30, 1994 and 1993 are derived from the
unaudited financial statements of FFMC and, in the opinion of management,
reflect all adjustments necessary to present fairly the information contained
therein. Results for the nine months ended September 30, 1994 are not
necessarily indicative of results to be expected for the full year. The data set
forth below also should be read in conjunction with the financial statements of
Western Union included in the Company's Current Report on Form 8-K filed on
November 4, 1994 and incorporated herein by reference, and the pro forma
combined financial statements included herein with respect to the Company's
acquisition of such business.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------------------------
1994(1) 1993(1) 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues......................... $1,502,966 $1,230,735 $1,669,668 $1,425,256 $1,057,518 $ 816,268 $ 606,685
Expenses......................... 1,326,718 1,086,049 1,453,911 1,360,150(2) 952,875 737,114 537,344
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from Continuing Operations
Before Income Taxes............ 176,248 144,686 215,757 65,106 104,643 79,154 69,341
Income Taxes..................... 71,990 59,230 88,112 46,294 41,912 31,477 29,976
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from Continuing
Operations................... $ 104,258 $ 85,456 $ 127,645 $ 18,812 $ 62,731 $ 47,677 $ 39,365
========= ========= ========= ========= ========= ========= =========
PER SHARE DATA:
Income Per Common Share --
Continuing Operations
Primary........................ $ 1.67 $ 1.38 $ 2.10 $ 0.32(2) $ 1.32 $ 1.17 $ 1.06
Fully Diluted.................. 1.67 1.38 2.10 0.32(2) 1.23 1.10 1.01
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Primary.......................... 62,545 61,890 60,796 58,874 47,400 40,812 37,223
Fully Diluted.................... 62,570 61,946 60,845 59,058 53,035 48,110 44,916
Ratio of Earnings to Fixed
Charges(3)(4).................. 16.34 13.23 13.76 3.61 4.87 3.42 3.51
BALANCE SHEET DATA (AT END OF
PERIOD):
Total Assets..................... $1,793,325 $1,626,143 $1,554,661 $1,296,994 $1,105,216 $1,027,219
Long-Term Debt, including Current
Portion........................ 17,821 14,713 155,255 152,057 207,785 202,804
Convertible Subordinated
Debentures(5).................. 166,834 172,500
Total Shareholders' Equity....... 1,369,745 1,247,964 1,119,892 997,536 600,671 500,829
</TABLE>
- ---------------
(1) Nine month results include the results of GENEX Services, Inc. which was
acquired by the Company in July 1994 and was accounted for as a pooling of
interests. Financial data for other periods has not been restated because
the impact of GENEX amounts on consolidated amounts was not material.
(2) Includes loss in business unit sold of $79,567 ($1.10 after-tax loss per
share).
(3) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes
and fixed charges. Interest expense plus an estimate of the portion of rent
that represents interest constitute the fixed charges.
(4) Based upon the unaudited pro forma results reflected in the unaudited pro
forma combined statements of income included herein, the ratio of earnings
to fixed charges would have been 3.40 for the year ended December 31, 1993
and would have been 4.56 for the nine months ended September 30, 1994. The
pro forma data reflects the Company's acquisition of Western Union and
related assets. See "Recent Acquisition of Western Union Money Transfer
Business."
(5) These Convertible Subordinated Debentures were issued in July 1988 and
redeemed in October 1991.
11
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CONTINUING AND DISCONTINUED OPERATIONS AND STRATEGIC TRANSACTIONS
The continuing operations of FFMC consist of its information services
businesses together with the corporate entity. These businesses provide a
vertically integrated set of data processing, storage and management products
for the capture, manipulation and distribution of information. Similarities
exist among these businesses in the methods of providing services, in the
customers served, and in the marketing activities utilized to obtain new
customers. In addition, the Company continues to pursue further integration of
its product and service offerings to gain competitive advantages. During the
periods covered services included merchant credit card authorization, processing
and settlement; check guarantee and verification; debt collection and accounts
receivable management; data imaging, micrographics and electronic data base
management; health care claims processing and integrated management and cost
containment services; and the development and marketing of data communication
and information processing systems, including in-store marketing programs and
systems for supermarkets.
Discontinued operations consist of the Company's previous financial
services businesses, comprised of Georgia Federal Bank, FSB and its subsidiaries
("Georgia Federal"), formerly the largest thrift institution in Georgia,
together with First Family Financial Services ("First Family"), which previously
was Georgia Federal's regional consumer finance subsidiary.
FFMC consummated several significant business transactions in 1993 that
resulted from the Company's strategic reevaluation of its businesses completed
during 1992. During the fourth quarter of 1992, the Company entered into
agreements to sell First Family and Georgia Federal. These sales were
consummated on November 10, 1992 and June 12, 1993, respectively. FFMC also
agreed to sell Basis Information Technologies, Inc. ("Basis") during 1992's
fourth quarter. Basis was the unit within the Company's information service
businesses that provided data processing services to financial institutions. The
sale of Basis was consummated on February 10, 1993.
The terms of both the Georgia Federal and Basis sale agreements provided
that the results of operations of these businesses after December 31, 1992
accrued to the respective purchasers. Accordingly, the Company's financial
results do not include results for these businesses for the year ended December
31, 1993.
Prior to entering into the agreement for the sale of Basis, the Company
discontinued software development and wrote off related costs for a major
product line in connection with the settlement of litigation with a vendor, the
combination of which resulted in income of $13.8 million included in other
revenues. Concurrently, the Company decided to explore the sale of Basis. In
reviewing the potential market value of Basis, FFMC's management determined that
a write-down of the carrying value of Basis' net assets was appropriate.
Accordingly, the Company in 1992 recognized a pretax loss of $79.6 million, an
after-tax loss of $1.10 per share. Revenues attributable to Basis were $113.8
million in 1992 and its contribution to income before income taxes, aside from
the items mentioned above, was approximately $4.5 million.
In August 1993, FFMC completed its merger with International Banking
Technologies, Inc. ("IBT"). This business combination has been accounted for as
a pooling of interests and, accordingly, the following discussions include IBT
as a part of FFMC's continuing operations for all periods presented.
On July 21, 1994, FFMC issued 1,095,000 unregistered shares of its common
stock and assumed stock options for an additional 163,000 shares as
consideration for all of the outstanding shares and stock options of GENEX
Services, Inc. ("GENEX"), a company that provides workers' compensation programs
to self-insured employers, insurance companies, third party administrators, and
government agencies throughout the United States, Puerto Rico, and Canada. This
combination has been accounted for as a pooling of interests. The following
discussions concerning the Company's results of operations for the nine months
ended September 30, 1994 and 1993 include GENEX as a part of FFMC's business
operations. Other periods have not been restated because the impact of GENEX
operations on consolidated results was not material.
12
<PAGE> 26
On September 19, 1994, FFMC was declared the winning bidder to acquire
Western Union and related assets in the bankruptcy proceedings of Western
Union's parent company, New Valley. On November 1, 1994, the United States
Bankruptcy Court for the District of New Jersey approved the sale of Western
Union and related assets to FFMC pursuant to a Purchase Agreement, dated October
20, 1994, between New Valley and FFMC.
The Purchase Agreement provides for FFMC's acquisition of the stock of
Western Union and certain other assets from New Valley for a cash purchase price
of $893 million plus the assumption by FFMC of the Western Union pension plan,
as to which benefit accruals were permanently suspended in 1988. The Purchase
Agreement provides the Company with ownership of the Western Union name and
trademark, and includes Western Union's money transfer and payment services
business with an established network of over 24,000 agents in over 75 countries.
In 1993, Western Union completed over 40 million money transfers involving the
movement of over $7.8 billion. New Valley retained ownership of the Western
Union messaging business, and FFMC obtained from New Valley an option to acquire
and granted to New Valley an option to sell to FFMC this business in 1996 for
$20 million in cash.
The Company closed the acquisition of Western Union on November 15, 1994
upon payment of $593 million in cash at closing, with a deferred cash payment of
$300 million in January 1995. The business combination will be accounted for as
a purchase, and the results of Western Union will be included with the Company's
results from the effective date of the acquisition.
The impact of the debt incurred to finance the Western Union acquisition is
described under "Capital Resources and Liquidity." The Company does not believe
the acquisition will have any significant impact on the Company's liquidity.
Western Union's operations have been experiencing strong revenue and profit
growth and are not expected to require significant capital expenditures. As a
result, it is anticipated that these operations will provide substantial cash
flow, contributing to the Company's ability to service the debt incurred to
finance this acquisition.
RESULTS OF OPERATIONS
The following discussions pertain to the Company's continuing operations.
For the Nine Months Ended September 30, 1994 and 1993
For the nine months ended September 30, 1994, the Company reported net
income of $104.3 million, a 22% increase over the $85.5 million for the
comparable 1993 period. Revenues were $1,503.0 million compared with $1,230.7
million in 1993's first nine months, an increase of 22%. Earnings per share for
the nine months ended September 30, 1994 increased 21% to $1.67 per share from
the $1.38 per share reported for the first nine months of 1993.
Record new business (contracted in the latter half of 1993 and during 1994)
together with the assimilation of acquisitions contributed to the Company's
revenue growth. Internal growth was 16% for the first nine months of 1994, and
was the principal component of the overall revenue increases compared with the
first nine months of 1993. Over 40,000 new customers have been added during the
first nine months of 1994, with the majority occurring in FFMC's merchant
services area.
The Company's emphasis on the growth of service revenues is reflected in
the 27% increase during 1994's first nine months compared with the same period
in 1993. This rate of increase compares with a 25% increase in operating
expenses in the 1994 period compared with the 1993 period, as FFMC continues to
place important emphasis on expense controls. The favorable impact occurred
despite the fact that the strongest growth in service revenues occurred in
FFMC's merchant credit card processing, an area that has a margin lower than the
Company's overall margin.
Product sales declined during the first nine months of 1994 compared with
the similar 1993 period, largely as a result of the Company's decisions to
eliminate certain ancillary product sales in its imaging businesses and decrease
the significance of one-time product sales in its merchant businesses. Changes
in the
13
<PAGE> 27
composition of product sales resulted in a gross profit percentage on product
sales of 37.6% during the first nine months of 1994 compared with 39.2% for the
first nine months of 1993.
General and administrative expenses increased in the first nine months of
1994 compared with the same period in 1993, due primarily to the amortization of
stock compensation costs in 1994's second and third quarters from an executive
employment agreement (covering 1995 through 1999) entered into on March 22,
1994. Depreciation and amortization expense increased in the 1994 period
compared with 1993's first nine months due primarily to the impact of
acquisitions completed in the second half of 1993 and 1994's first six months.
The Company moved to a net interest income position during the first nine months
of 1994 from a net interest expense position in 1993's first nine months as a
result of the Company's repayment of all outstanding bank borrowings near the
end of 1993's second quarter using cash generated from the sales of businesses
during the first six months of 1993 and strong cash flow from operations. These
changes produced an increase in total expenses of 22% for the first nine months
of 1994 compared with the prior year period.
The combination of these revenue and expense changes resulted in a pre-tax
margin of 11.7% for 1994's first nine months compared with a pre-tax margin of
11.8% for the first nine months of 1993. The Company's effective tax rate for
the first nine months of 1994 was 40.8%, comparable to the 40.9% for 1993's
first nine months.
1993 Compared with 1992
FFMC's revenues increased 17% to $1.7 billion in 1993 from $1.4 billion in
the prior year. Excluding Basis' 1992 revenues, the revenue growth rate for the
year was 27%. Income from continuing operations increased to $127.6 million in
1993 from $18.8 million in 1992. Excluding the Basis asset write-down from the
prior year's results, income from continuing operations increased 53% in 1993
compared with the prior year. Income per share from continuing operations
increased to $2.10 per share in 1993, compared with $.32 in 1992. Per share
earnings increased 48% over 1992 excluding the Basis write-down.
The effect on the year-to-year revenue comparison of excluding Basis' 1992
revenues is largely offset by the incremental 1993 revenue contributions from
the 1992 acquisitions of ALTA Health Strategies, Inc., renamed as FIRST HEALTH
Strategies, in April 1992 and TeleCheck Services, Inc. and its principal
franchisee, Payment Services Company -- U.S. (collectively referred to as
"TeleCheck"), in July 1992. As a result, the 17% increase in revenues in 1993 is
all attributable to internal growth.
The internal growth in 1993 was due primarily to significant volume growth
within FFMC's existing businesses which more than offset continued pricing
pressures in several of FFMC's product areas. The Company's merchant services
areas experienced strong volume growth in its credit card services and check
verification and guarantee businesses. Record new customer volume was added from
marketing efforts, including national, regional and local merchants. In
addition, FFMC continued to cross-sell the multiple product offerings within its
merchant services area, which resulted in the signing of additional national
merchants to processing contracts. FFMC also experienced volume growth in its
health care services area, with increases in claims processing for both public
and private sectors. Health care businesses received contract awards or began
claims processing under previously awarded contracts during 1993. The Company's
imaging business experienced volume growth in 1993, which competitive pricing
pressure partially offset to produce a small increase in revenues for the year.
FFMC demonstrated the leveragibility of its businesses by translating the
revenue increases, despite the pricing pressures noted above, into higher
percentage rate increases in pretax income, thereby producing higher pretax
margins. The Company's pretax margin was 12.9% in 1993 compared with a 10.2%
pretax margin in 1992 (excluding the Basis write-down). Margins were also
favorably influenced by the Company's continued emphasis on expense controls and
the successful integration of acquisitions completed in 1992. Depreciation and
amortization expenses declined 8% in 1993 primarily due to the inclusion of
Basis in 1992. General and administrative expenses increased only 2% for the
year (and decreased as a percent of revenues) as the Company enjoyed the benefit
of the restructuring of its corporate infrastructure which occurred as a result
of the 1992 strategic reevaluation of the Company.
14
<PAGE> 28
The impact of the revenue increases and the expansion of margins in 1993
was enhanced by lower net interest expense during 1993. FFMC experienced lower
borrowing levels in 1993, as a substantial portion of its debt obligations were
repaid during the second quarter from cash received from the sale of businesses.
Proceeds from these sales, along with increased cash generated from operations,
resulted in higher levels of cash investments during the second half of 1993
which favorably impacted the Company's net interest expense for the year.
FFMC adopted Statement of Financial Accounting Standards No. 109 ("FAS
109"), "Accounting for Income Taxes," effective January 1, 1993. The Company
elected the prospective method of adoption allowable under FAS 109 instead of
restating prior period results. The cumulative effect on the Company's results
of operations of adopting FAS 109 was not material, and no adjustment was
recorded. In addition, the Omnibus Budget Reconciliation Act of 1993 (the "1993
Act") was signed into law during 1993 which contained several provisions which
affected the Company's 1993 income tax expense.
The Company's effective tax rate decreased 1.5% in 1993 to 40.8%. The
comparable prior year rate of 42.3% excludes the impact of the Basis write-down.
The decrease, which occurred despite the 1% increase in the federal corporate
tax rate, is attributable to lower levels of nondeductible goodwill, lower
effective state tax rates and other favorable impacts of the 1993 Act and the
Company's tax strategies.
1992 Compared with 1991
FFMC's revenues increased 35% to $1.4 billion in 1992 from $1.1 billion in
1991, primarily from new business acquisitions and revenue growth within
existing businesses. Both income from continuing operations and related per
share amounts decreased in 1992 compared with 1991's results. However, excluding
the Basis asset write-down of $79.6 million, the Company's 1992 income from
continuing operations increased 33% to $83.5 million from the $62.7 million
reported in 1991. Fully diluted income per share from continuing operations,
excluding the Basis write-down, increased 15% to $1.42 from $1.23 in 1991.
Revenue growth from business acquisitions in 1992 resulted primarily from
the Company's acquisition of FIRST HEALTH Strategies (April 1992) and TeleCheck
(July 1992). Existing businesses expanded revenues in 1992 from volume increases
as a result of new customers and expanded business with existing customers. The
merchant credit card processing area benefited from an increase in retail
activity during the 1992 holiday season in the fourth quarter. Health care
services experienced increased claims processing volume and received several new
long-term contracts with government agencies and became fully operational on
several other processing contracts.
Higher personnel costs within the newly acquired FIRST HEALTH Strategies
and TeleCheck businesses in 1992 caused operating expenses, as a percentage of
service revenues, to increase in 1992 over the prior year. In addition, 1992's
business acquisitions increased goodwill amortization from prior year levels.
Interest expense (net of interest income) declined in 1992 due to lower interest
rates and reduced borrowing levels due to the conversion of all of the Company's
convertible subordinated debentures into common stock in October 1991, and
repayment of borrowings under FFMC's revolving credit facility from the cash
proceeds received from the First Family sale.
FFMC's continuing operations, excluding the Basis asset write-down,
generated 1992 earnings before income taxes of $144.7 million, a pretax margin
of 10.2%. This margin is consistent with the 9.9% pre-tax margin on earnings
before income taxes of $104.6 million in 1991. The Company's 1992 effective tax
rate of 71.1% was substantially above the federal statutory rate due to the
nondeductibility of the majority of the Basis asset write-down. Excluding the
effect of the write-down, FFMC's provision for income taxes from continuing
operations increased to 42.3% in 1992 from 40.1% in 1991. This increase was due
primarily to increased state income taxes, lower IBT Subchapter S income taxed
at the shareholder level, and lower tax credits.
ECONOMIC FLUCTUATIONS
The Company's business is somewhat insulated from economic fluctuations due
to recurring revenues from long-term service contracts, and the fact that the
Company's services often result in cost savings for its
15
<PAGE> 29
customers. The slow growth, but steadily improving economic environment during
1993 benefited FFMC's results, as the Company experienced higher year-to-year
processing volumes, particularly in its merchant services area. The results of
FFMC's health care services area have not been significantly affected by recent
reform oriented developments in that industry.
The Company's business is not seasonal, except that its revenues, earnings
and margins are favorably affected in the fourth quarter, primarily by increased
merchant credit card and check volume during the holiday season.
Although FFMC cannot precisely determine the impact of inflation on its
operations, inflation affects the Company through increased costs of employee
compensation and other operating expenses. In addition, competition for
employees with data processing skills, programming expertise, and other
technical knowledge contributes to increased costs in some parts of the country.
To the extent permitted by the Company's service contracts, these increases in
costs are passed along to customers in the form of periodic price increases.
FFMC's revenues from merchant credit card processing, check verification and
guarantee services and accounts receivables collection are generally a
percentage of the dollar volume of transactions processed. The Company's
operating margins on these services are therefore relatively insulated from the
effects of inflation on merchant prices for goods and services. As a result, the
Company has not been significantly affected by inflation.
CAPITAL RESOURCES AND LIQUIDITY
The following discussions pertain to the Company's continuing operations.
FFMC's information services businesses generate strong cash flows from
operating activities, and the growth in these operating cash flows in recent
years mirrors the growth in the scale and breadth of the Company's service
offerings. Cash generated from operating activities increased 42% in 1993 to
$207 million, as compared with $146 million generated in 1992 and $121 million
in 1991. This trend of increased cash flows from operating activities has
resulted primarily from increased earnings of FFMC's businesses (before non-cash
expenses for depreciation and amortization and other non-cash charges).
The Company generated strong cash flows from operating activities totalling
$157.5 million and $177.6 million, respectively, for the first nine months of
1994 and 1993. FFMC had higher earnings, depreciation and amortization and other
non-cash charges in 1994's first nine months than in the comparable period in
1993. These increases were more than offset by unfavorable comparisons in the
working capital categories of accounts receivable and accounts payable and
accrued expenses. This negative comparison is principally due to a one-time
positive effect on cash flows as a result of the commencement of merchant
settlement payments by First Financial Bank ("FFB") in 1993.
The Company transferred the responsibility for merchant credit card
settlement to its credit card bank, FFB, in June 1993 (included in FFMC's
continuing operations) from Georgia Federal (part of the Company's discontinued
operations). The timing of these settlements impacts the computation of FFMC's
cash flows from operating activities. FFB was activated during the second
quarter of 1993 with a required initial capitalization of $70 million. The
capitalization of FFB is based upon requirements of bank card associations given
the size of the Company's credit card processing operations. The primary purpose
of FFB is to support the Company's merchant service activities, and FFB does not
conduct any significant banking activities, accept deposits from unaffiliated
parties or engage in lending activities. FFB's capitalization and activities
comply with applicable regulatory requirements and restrictions.
The significant cash flows generated from operating activities are
reinvested by the Company in existing businesses, are used to fund smaller,
tactical acquisitions, and are also used to reduce borrowings and to contribute
toward the financing of larger, strategic acquisitions.
Business reinvestments, principally for property and equipment additions,
software development and customer conversions, totalled $80 million in 1993, $78
million in 1992, and $67 million in 1991. For the first nine months of 1994
these reinvestments totalled $60 million compared with $51 million during 1993's
first
16
<PAGE> 30
nine months. The majority of the increase in reinvestments in 1994's first nine
months over the same period in 1993 is due to higher 1994 outlays for system
development activities in FFMC's health care services business.
Cash from operating activities exceeded reinvestments in existing
businesses by $128 million in 1993, $68 million in 1992, $53 million in 1991 and
$97 million in the first nine months of 1994 (as compared with $127 million in
the first nine months of 1993). This excess cash was utilized primarily to
finance the Company's business acquisitions. Cash consideration paid for
acquisitions (net of cash acquired), including amounts paid related to
acquisitions completed in prior years, totalled $92 million in 1993, $267
million in 1992, and $72 million in 1991. Such cash outlays during the first
nine months of 1994 were $97 million, including a $10 million cash deposit
related to the recent Western Union acquisition.
FFMC has potential obligations under certain acquisition arrangements to
pay future cash consideration to the former shareholders of specified acquired
businesses. Any such payments will be due only if the acquired entity's results
of operations exceed specified targeted levels that are generally set
substantially above the historical experience of the acquired entity. Thus, any
such payments will not negatively impact the Company's financial position.
The Company utilizes capital markets and borrowings under debt arrangements
to supplement excess cash generated from operations to fund its acquisition
program. In June 1993, the Company repaid all outstanding bank borrowings using
cash proceeds from the sales of businesses during the first six months of 1993
and strong cash flows from operations. FFMC received $345 million in cash in
1993 through dividends from its discontinued operation and from the sale of
businesses, after expenses. The Company also had received $150 million in cash
from Georgia Federal in 1992, comprised of a $100 million cash dividend and a
$50 million payment toward the settlement of income tax liabilities from the
sale of First Family, which were paid by FFMC during 1993. The Company utilized
these proceeds to repay $154 million on long-term debt obligations in 1993 and
$146 million in 1992.
FFMC has received approximately $20 million in cash proceeds from the
exercise of publicly held warrants issued in 1989 in connection with an offering
of Common Stock. If all remaining warrants are exercised at their exercise price
of $26.67 per share (during the final exercise period in the second quarter of
1995) the Company would issue an additional 1.3 million shares of FFMC Common
Stock and receive cash proceeds of $35 million.
In 1989, the Company's Board of Directors initiated a practice of paying
semiannual cash dividends of $.05 per share (paid in January and July), and has
maintained this per share rate despite a three-for-two stock split effective
March 31, 1992. Cash dividends were paid on January 3, 1994 and July 1, 1994. On
October 26, 1994, FFMC's Board of Directors declared a cash dividend of $.05 per
share, payable on January 3, 1995 to shareholders of record on December 1, 1994.
FFMC's cash and cash equivalents of $182 million at September 30, 1994,
except for cash and cash equivalents in its credit card bank ($82 million at
September 30, 1994), are available for acquisitions and general corporate
purposes.
The Company amended its unsecured revolving credit facility in November
1994, increasing it from $450 million to $1.0 billion and providing a new three
year term. Other terms and conditions of the amended facility are substantially
the same as the previous credit facility entered into on June 25, 1992. FFMC
used $493 million of this facility as the initial financing for the acquisition
of Western Union and related assets. The Company intends to use the Securities
offered hereby or other securities as the ultimate source of financing for a
substantial portion of the Western Union acquisition.
If suitable opportunities arise for additional acquisitions, the Company
may use cash, draw on its available credit facility, or use the Securities
offered hereby or other securities as payment of all or part of the
consideration for such acquisitions. The Company believes that its current level
of cash and future cash flows from operations are sufficient to meet the needs
of its existing businesses.
17
<PAGE> 31
BUSINESS OF THE COMPANY
STRATEGIC TRANSACTIONS
FFMC periodically conducts a strategic reevaluation of its businesses,
reviewing overall trends and developments in relation to its business
investments and industry concentrations. These strategic reviews have resulted
in numerous business acquisitions since 1986 that have broadened the Company's
service offerings and have most recently resulted in the Company's acquisition
of Western Union and related assets. In addition, in 1992, FFMC disposed of
business units no longer involved in FFMC's strategic direction.
FFMC's recent acquisition of Western Union and related assets provides FFMC
with a leadership position in the nonbank money transfer business. Adding
Western Union's worldwide network to FFMC's existing services significantly
expands the reach of FFMC's total information processing activities. See "Recent
Acquisition of Western Union Money Transfer Business."
In 1992, FFMC decided to dispose of Georgia Federal Bank, FSB and its
subsidiaries ("Georgia Federal") and Basis Information Technologies, Inc.
("Basis"). Georgia Federal had been acquired specifically to ensure that FFMC's
merchant credit card processing business had access to the payment system
through Georgia Federal's sponsorship in the Visa and the MasterCard networks.
After developing alternative measures to provide this business with continued
access to the payment system, including a plan to form a credit card bank, FFMC
entered into a definitive agreement in late 1992 to sell Georgia Federal.
Georgia Federal is presented as a discontinued operation in FFMC's consolidated
financial statements. Also in December 1992, FFMC entered into a definitive
agreement to sell Basis, FFMC's original core business unit that provided data
processing services to financial institutions. The Georgia Federal and Basis
dispositions were completed in 1993.
MERCHANT SERVICES
FFMC offers merchant services primarily through four of its operating
units: National Bancard Corporation ("NaBANCO") -- credit card authorization,
processing and settlement services; TeleCheck Services, Inc.
("TeleCheck") -- check verification and guarantee services; Nationwide Credit,
Inc. ("Nationwide") -- debt collection and accounts receivable management
services; and MicroBilt Corporation ("MicroBilt") -- the development and
marketing of data communication and information processing systems. Services are
provided to approximately 250,000 customers in all 50 states, the Caribbean and
Canada through 56 locations with 4,000 employees. Fees for merchant services are
generally based on the dollar volume of transactions processed. The percentages
of FFMC's revenues from continuing operations contributed by merchant services
were 70%, 60%, and 67%, respectively, during the years ended December 31, 1993,
1992 and 1991.
NaBANCO
NaBANCO is the largest full service provider of merchant credit card
authorization, processing, and settlement services in the United States,
providing these services for merchants with respect to transactions in which
payment is made through bank cards (primarily Visa and MasterCard) and certain
other credit cards. Over 95% of the credit card authorizations by NaBANCO are
performed electronically (generally within eight seconds), compared with
approximately 70% of all credit card transactions industry-wide. Approximately
$54 billion in merchant credit card transactions were handled in 1993, compared
with $43 billion in 1992 and $34 billion in 1991.
NaBANCO provides most of its services as agent for and in conjunction with
First Financial Bank ("FFB"). FFB is FFMC's credit card bank formed for the
primary purpose of supporting the Company's merchant services activities,
including sponsorship into the Visa and MasterCard systems, as required by their
rules. FFB replaced Georgia Federal as NaBANCO's primary sponsoring Visa and
MasterCard member bank. NaBANCO also provides services as agent for and in
conjunction with other sponsoring member banks and maintains ongoing
relationships with these and other banks to assist in marketing and delivering
NaBANCO's services to these banks' merchant customers.
18
<PAGE> 32
TeleCheck
The TeleCheck system provides check acceptance services through TeleCheck
or independent franchises to retail merchants throughout the United States,
Canada, Australia and New Zealand using large consumer data bases and
proprietary risk management systems operated under the "TeleCheck" trademark. By
the end of 1993, FFMC had a more than 95% share of the domestic TeleCheck system
volume. The TeleCheck system is one of the largest check acceptance services in
the world. Over $24 billion in checks were authorized in 1993, compared with
approximately $15 billion in checks authorized in 1992.
TeleCheck provides check guarantee services, buying the approved check at
face value from the merchant if it is subsequently dishonored up to a
pre-established warranty maximum. TeleCheck also provides check verification
service to help merchants reduce bad check write-offs and control the costs of
check acceptance by utilizing its payment data bases and activity monitoring
systems. These services allow merchants to maintain a liberal check acceptance
program to increase sales and profits.
Nationwide
Nationwide provides debt collection and accounts receivable management
services nationally to a wide variety of customers including retailers, health
care providers, financial institutions and the federal government and its
agencies through eleven collection offices located throughout the United States.
Nationwide's debt collection and accounts receivable management services are
performed with enhanced technological advancements, including on-line
skiptracing capabilities and paperless collection systems, whereby its
customers' transactions are managed through a collector's computer terminal
linked to a central mainframe computer.
MicroBilt
MicroBilt serves as FFMC's research and development arm, particularly in
the merchant services area, working to develop technological solutions to
enhance the Company's product offerings. MicroBilt develops, markets and
supports data capture, communications and distribution systems to multi-location
customers including financial institutions, retailers, health care providers,
pharmaceutical providers and restaurants. These systems are low cost, easy to
use data communication systems suited to a wide range of industries that require
data transmissions to and from numerous remote locations. MicroBilt specializes
in point of sale data communication applications through the sale of systems and
network design. MicroBilt's systems integrate proprietary software with a range
of hardware platforms which are distinguished by their application-specific
design and common product framework. MicroBilt targets application-specific
systems to selected industries. Its systems typically replace the use of mail,
voice telephone and less efficient computer systems to send and receive
information. Revenues are generated from both sales of systems and support
services.
MicroBilt provides point-of-sale equipment to merchant customers of NaBANCO
and has developed check-reading terminals targeted for TeleCheck's merchant
customers. MicroBilt also is a leader in developing in-store branch banking
programs in supermarkets. It provides a comprehensive array of services for its
financial institution customers, including design and construction and
continuing management of the in-store program between the financial institution
and the supermarket.
HEALTH CARE SERVICES
FFMC's health care services are provided by its FIRST HEALTH operating unit
("FIRST HEALTH"). Services are provided to approximately 1,500 customers through
55 locations across the United States that employ 4,500 persons. Over 330
million health care claims totalling approximately $27 billion are processed
annually on systems operated or developed and supported by FIRST HEALTH. The
percentages of FFMC's revenues from continuing operations provided by health
care services were 17%, 15%, and 6%, respectively, for the years ended December
31, 1993, 1992 and 1991.
FIRST HEALTH is one of the nation's largest processors of private sector
health care claims. Its services include claims administration, utilization
management, provider networks, insurance brokerage and data analysis and
reporting and vocational rehabilitation and other workers' compensation services
and are designed
19
<PAGE> 33
to help control employer health care costs and to monitor the quality of health
care provided. As a result of the acquisition of GENEX Services, Inc. in July
1994, FIRST HEALTH is a leading provider of workers' compensation programs,
including management of medical cases and vocational rehabilitation, outstanding
bill review, utilization management and other cost containment services. FIRST
HEALTH markets its services principally to employers with self-funded group
health benefit plans, to employers with insured plans which are seeking health
care management alternatives and to employers seeking managed care programs
relating to workers' compensation programs.
FIRST HEALTH is also one of the largest providers of transaction processing
and management services to governmental agencies and private and public third
party payors. These services include processing for Medicaid and other state
programs, pharmaceutical claims processing, drug utilization review services,
and management services for mental health, substance abuse, and preventive care
programs.
Health care reform measures have been introduced by the executive and
legislative branches of the federal government. These proposals, if enacted,
could significantly impact the delivery and payment for health care services in
the United States. It is uncertain what changes will actually be implemented and
how such changes may impact FIRST HEALTH. However, the Company believes that its
health care businesses, given their focus on the efficiency of information
processing, are favorably positioned to benefit from an emphasis on reducing the
level of administrative costs related to the delivery of health care products
and services.
DATA IMAGING SERVICES
FFMC's data imaging services are provided through First Image Management
Company ("First Image") through 74 locations across the United States. First
Image employs approximately 3,000 people in order to provide 12,000 customers
with a variety of data management services. Fees are based on the volume and
complexity of the data imaging or management services provided as well as other
factors such as required turnaround time, volume and duration of contract. The
percentages of FFMC's revenues from continuing operations provided by data
imaging services were 13% in 1993, 16% in 1992 and 19% in 1991.
First Image's data imaging services include a full spectrum of data
management services: the conversion of hard copy documents into machine readable
form and production of computer output microfilm ("COM"); the design,
installation and day-to-day management of immense data bases used by large
corporations and federal and state governments; the customization, printing and
mailing of reports and statements from large databases; and the publishing and
distribution of training manuals, product catalogs and other documents. These
services are offered by First Image under a "total solutions" approach with the
objective of improving the utility of a user's data base through ease of access
and efficient information output. In addition, First Image's services reduce the
need for its clients to devote substantial capital investments to create,
maintain and access these large databases.
First Image's COM services involve transferring data from computer tape to
microforms, generally referred to as "microfiche." Cost savings to the customer
are obtained with compact storage and efficient information retrieval. In
addition, sophisticated indexing methods are offered to aid in data retrieval.
First Image's Data Input division creates and manages large-scale
electronic data bases through the collection and conversion of paper source
documents. Large volumes of source documents are transferred to machine readable
media such as magnetic tape or diskette through key entry and high-speed Optical
Character Recognition scanning techniques. Data bases created from the converted
data are transmitted to the customer or stored for future access and retrieval
upon the customer's request. First Image's report production services are a
natural extension of its database management services.
REGULATION AND EXAMINATION
First Financial Bank ("FFB") is a special purpose bank that conducts only
those activities permitted for "credit card banks" under the Federal Bank
Holding Company Act, as amended (the "BHC Act"). Under the BHC Act, FFMC may own
a credit card bank without itself becoming subject to federal regulation as a
20
<PAGE> 34
bank holding company (or subject to related restrictions on the types of
activities FFMC and its other subsidiaries may engage in) as long as the credit
card bank: (a) engages only in credit card operations, (b) accepts no deposits
other than time deposits of $100,000 or more, (c) maintains only one office that
accepts deposits, and (d) does not engage in the business of making commercial
loans. FFB operates within these limitations. FFB is subject to examination and
regulation by the Georgia Department of Banking and Finance and applicable
federal regulatory agencies, including the Federal Deposit Insurance Corporation
("FDIC"), which in 1993 approved FFB's application for FDIC deposit insurance.
FFMC also is subject to minimal regulation by the Georgia Department of Banking
and Finance as a Georgia bank holding company. Certain activities of NaBANCO are
subject to examination and regulation. In addition, certain minimum capital
ratios must be maintained by FFB, and arrangements between FFB and its
affiliates must be on terms at least as favorable as those available from
independent third parties. FFB and NaBANCO are subject to the Visa and
MasterCard rules, including a requirement that FFB maintain adequate capital
(currently $70 million) based on the merchant credit card processing volume
settled through FFB.
Certain other services that FFMC provides directly to governmental agencies
and regulated financial institutions also may be reviewed by various federal and
state regulatory entities.
INDUSTRY TRENDS
The technological capabilities required for the rapid and efficient
creation, processing, handling, storage and retrieval of information are
becoming increasingly complex, thus requiring large capital expenditures and
resulting in an industry consolidation that is beneficial to FFMC. FFMC's
customers are handling an expanding variety and rapidly growing volumes of
transactions. This processing increasingly requires the use of sophisticated
software, hardware and communication technologies. Third-party credit card
processing and check verification services are being performed increasingly
through electronic means, which provide faster and more reliable confirmations
and quicker and more convenient transaction processing and settlement.
Sophisticated technological and communication capabilities are also essential to
permit the imaging, creation and effective management of large data bases.
Likewise, within the health care and pharmaceutical claims industry, there is an
increasing need for data to be available more rapidly in order to manage and pay
for health care services.
Significant capital commitments are becoming increasingly important in
order to develop, maintain and update the systems (including software, hardware
and communication equipment and methods) necessary to provide these
technologically advanced services at a competitive price. Economies of scale are
needed to justify these capital investments. In addition, as more on-line and
other electronic delivery systems are used, it is becoming easier to serve a
wider geographic area from centralized data processing centers. As a result of
these developments, many institutions are contracting with outside specialists
for these services, and many small information processing and handling
organizations are consolidating with large providers of these services.
FFMC believes that it can benefit from these trends by leveraging the
collective capabilities developed through its varied, but related, services and
products which lend themselves to cross-selling and to synergistic combinations.
The Company also believes that its growing array of information services and
products enhances its ability to provide a total solutions approach to many of
its customers' needs.
RECENTLY ACQUIRED BUSINESS OF WESTERN UNION
FFMC's recent acquisition of Western Union's money transfer business
completed on November 15, 1994 was accounted for as a purchase and thus is not
yet reflected in FFMC's historical financial results. Accordingly, a separate
description of this newly acquired business follows.
MARKET FOR WESTERN UNION SERVICES
The primary market for Western Union's services is composed of people who
periodically need to send or receive cash quickly to meet emergency situations
or to provide funds to families in other locations or need to use nonbank
financial services to pay bills and meet other obligations. This consumer group
includes people
21
<PAGE> 35
who relocate frequently, low-income households, itinerate workers and
individuals with dependents away from home.
STRATEGIC PLANS FOR WESTERN UNION
FFMC expects that Western Union will enhance its business activities due to
Western Union's worldwide leadership in payment services of a type where
significant barriers to entry exist. Western Union's network of over 24,000
agents in over 75 countries will expand FFMC's abilities to reach customer
markets throughout the world. In addition, Western Union's strength in nonbank
immediate money transfer represents an expansion of FFMC's product offerings.
Western Union's emphasis on the consumer market, rather than commercial
customers, reflects a further expansion of FFMC's overall customer base.
SERVICES OF WESTERN UNION
Money Transfer
Regular Domestic Money Transfer
Providing for the rapid transfer of money from one individual (the sender
with funds) to another (the recipient in need) at a distant location is the core
business of Western Union. This is the business of "wiring money" that was
invented by Western Union more than a century ago. Today, the Company believes
that Western Union has approximately 90% of the rapid consumer non-bank money
transfer market in the United States.
The Western Union Money Transfer service is provided through Western
Union's agent network and computerized funds transfer system. To send money, a
customer goes to an agent location, presents cash or a cashier's check, gives
the agent the name of the person to whom the money is being sent and is issued a
receipt. The agent, using a computer terminal in most instances, then enters the
transaction into Western Union's system. Within minutes, the money is available
to the recipient, who can pick it up at any Western Union agent location. While
there is no limit on the amount of money that can be sent, 90% of Western
Union's money transfers involve principal amounts of less than $500. The fee,
which is paid by the sender, is based on a graduated schedule and varies with
the principal amount of the money transfer.
Revenues from the regular domestic money transfer business of Western Union
have increased 5.8% from $220.6 million in 1992 to $233.4 million in 1993.
During 1993, Western Union processed over 9.7 million domestic money transfers
involving over $2.4 billion in principal.
The Western Union Money Transfer service in Canada was inaugurated in 1990
and is operated as an extension of the domestic service.
Credit Card Money Transfer
As a convenient alternative to taking cash to an agent location, MasterCard
or Visa credit card holders can transfer funds by placing a toll-free call to a
Western Union customer service center and charging the principal and fee to
their accounts.
Quick Cash(SM)
By using a specialized money transfer service called Quick Cash, commercial
customers of Western Union such as credit unions, banks and trucking firms can
send amounts up to $10,000 to traveling employees or clients for pick-up at any
Western Union agent location. Once a firm opens a Quick Cash account, it can
make money available for immediate payout by notifying Western Union to draft
the funds against the account.
International Money Transfer
In recent years, Western Union has expanded the Western Union Money
Transfer service outside of the United States, establishing agent networks in
additional countries and linking them directly with the money
22
<PAGE> 36
transfer system in the United States. This has made it possible for Western
Union's customers to transfer money to or from these countries on the same basis
(availability for pick-up within minutes) as money transferred within the United
States. It has also added a new dimension to Western Union's business, namely
the provision of money transfer service between and within foreign countries.
The "will call" service has been established in more than 75 countries outside
of the United States, and this service is expected to continue to expand. A
next-day money transfer service is available to 15 African countries. In the
past, international money transfer service was provided only through
international banks and other third-party relationships, and receipt generally
took two or more days.
Mexico currently is the largest money transfer market outside the United
States. Western Union's established Mexican Money Transfer service enables
individuals in the United States to send money to Mexico, where it is paid out a
day or two later at one of approximately 1,500 offices of the government-
operated telecommunications service with which Western Union has had a
long-standing operating agreement. Through a newly-formed Mexican subsidiary,
Western Union introduced in December 1993 a new, separate service for the rapid
transfer of funds to Mexico. The new service, called "Dinero en Minutos" ("Money
within Minutes"), makes money transfers available, at new agent locations
established in Mexico, within minutes after they are sent from the United
States.
A separate organizational unit within Western Union manages its business in
areas outside of the United States. During 1992, this business unit established
a field organization to handle business development and agent network management
overseas. Presently its international offices are located in Utrecht, the
Netherlands (Europe, Middle East and Africa Region); Miami, Florida (Latin
America and Caribbean Region); Sydney, Australia (Asia, Pacific and Australia
Region); and Moscow, Russia (Eastern Europe, Russia and the former Soviet
Republics).
In 1991, Western Union formed a joint venture with a Russian bank,
initiating the first consumer instant money transfer service between the United
States and Russia. This joint venture has recently been awarded a license as a
credit institution by the Central Bank of Russia. The service is presently
available in numerous locations in Moscow as well as several other locations in
Russia and other former Soviet Republics. It is anticipated that additional
locations will be established in the future.
Total money transfer revenues of Western Union from international
operations increased from $71.8 million in 1992 to $93.0 million in 1993.
Payment Services
Quick Collect(R)
Quick Collect is the largest of the payment services now being provided by
Western Union. Introduced in 1989, the service grew to a level of more than four
million transactions and $40 million in revenues in 1993.
Banks, collection agencies, finance companies and other financial
organizations use Quick Collect for fast collection of overdue bills. These
creditors advise their debtors to settle their accounts by bringing cash to any
Western Union agent location. The debtor pays a transaction fee, which generally
is less than overnight Express Mail or delivery service rates, to send the
money. Within minutes, a negotiable money transfer draft is produced on a check
printer that Western Union has installed in the Quick Collect customer's office
and the debtor's account is credited.
Easy Pay(SM)
Western Union's Easy Pay payment service enables utility company customers
to pay bills at Easy Pay agent locations by cash or a check. Using a countertop
terminal, the agent records the payment and prints a customer receipt. At the
end of each day, the terminal reports the payments to a central computer, all
payment activity is consolidated and the customers' accounts are updated. Within
a few business days, the utility is credited with the funds collected.
23
<PAGE> 37
Money Orders
In partnership with a subsidiary of Mid-American Bancorp, Western Union
began selling Western Union Money Orders at selected agent locations in 1992.
These negotiable drafts are purchased by consumers for a variety of uses where
rapid funds transfer is not required. Western Union Money Orders are processed
on the same personal computers that are used for money transfer transactions and
are issued from secure, automated dispensers.
Joint Ventures
Western Union is party to joint ventures to provide bill payment services
in Argentina and Venezuela.
Other Services
Secured Credit Card
Western Union introduced the Western Union MasterCard in December 1992. A
nationally available secured credit card issued by Associates National Bank
(Delaware), the Western Union MasterCard is designed for people who do not have
a banking relationship or credit history, or who have had difficulty maintaining
credit. After submitting an application and a security deposit, which is held in
an interest-bearing account and varies in amount with the credit line the
customer requests, the new cardholder is provided with the buying power and
convenience of a major credit card.
Phone Card
The Western Union Phone Card, which was introduced in May 1993, is the
first branded, pre-paid disposable telephone card to be offered nationwide.
Available in amounts of $5, $10, $20 and $50, it is being sold through more than
15,000 agents of Western Union.
The Western Union Phone Card enables consumers to place local, national or
international calls from any telephone in the United States without using coins
or a credit card. There are no bills or surcharges, and the cardholder is
informed of how much usage remains on his or her Phone Card each time a call is
completed and when there is one minute of calling time left.
OPERATING INFRASTRUCTURE OF WESTERN UNION
Approximately 1,775 full-time employees of Western Union, deployed
throughout the United States and abroad, carry on the day-to-day operations that
enabled Western Union in 1993 to process approximately 40 million money
transfers and bill payments and move approximately $7.8 billion of principal.
These transactions are processed through computers interconnected by a
nationwide high-speed packet transport network. Special software links agent
personal computers to the network.
Western Union's major operating facilities are customer service centers
located in Bridgeton, Missouri and Dallas, Texas, the latter being a
multilingual center. At these centers and through third-party out-sourcing
arrangements, approximately 1,000 customer service representatives receive
toll-free calls around the clock from the public and from Western Union's agents
in more than 75 countries.
COMPETITION FOR WESTERN UNION SERVICES
The money transfer business is highly competitive. There are numerous
methods to transfer funds, including bank wire transfer services, available
primarily to business users, and money orders which are transferred physically
or by mail. Money orders are sold by the United States Postal Service and a
number of private business firms. Western Union believes it has approximately
90% of the rapid consumer nonbank money transfer service market. Currently First
Data Corporation ("First Data") is the major competitor in the "will call" money
transfer service business. Comdata Network, Inc. also competes with Western
Union in the commercial money transfer market.
24
<PAGE> 38
The impact of the Western Union name, which is widely recognized as a
symbol of fast, dependable service, is a major competitive strength. Western
Union maintains a broad-based advertising and marketing program supporting the
Western Union brand and the public's awareness of Western Union's services.
Western Union's large and established network of agents is another major
competitive strength. Along with Western Union's television advertisements, its
network of money transfer agents (which numbers approximately 18,000 in the
United States and another 6,000 in countries throughout the world) is the most
publicly visible component of Western Union's services. Western Union's agents
are local businesses such as supermarkets, drug stores, check cashers, mailbox
stores and bus depots that are conveniently located, maintain extended hours of
operation and have available cash. These establishments operate under exclusive
contracts with Western Union to provide Western Union services in their
communities.
While the Company believes that Western Union's focused strategy makes it
somewhat less vulnerable to competition from major financial institutions,
Western Union's sales and earnings may nevertheless be affected by new entrants
in the money transfer business. The Company cannot predict the effect that
heightened competition would have on Western Union's domestic and international
money transfer service business.
Western Union has several competitors in the electronic bill payment
business, including First Data and BuyPass, a subsidiary of CoreStates Financial
Corporation, each of which has recently entered this business.
EMPLOYEE RELATIONS FOR WESTERN UNION
At October 31, 1994, Western Union had approximately 1,775 full-time
employees. Western Union has a three-year labor contract expiring August 6, 1997
with the Communications Workers of America, AFL-CIO, representing approximately
1,184 full-time and 220 part-time employees. The Company believes that relations
with Western Union's employees are satisfactory.
REGULATION OF WESTERN UNION
The money transfer operations of Western Union are regulated in most states
by banking commissions or similar authorities, which require Western Union to
obtain and maintain licenses to conduct such operations. Such licenses generally
require the maintenance of minimum levels of net worth and/or liquidity. Western
Union is subject to the jurisdiction of the Federal Communications Commission in
connection with its Phone Card service.
25
<PAGE> 39
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the debentures, notes and/or
other unsecured evidences of indebtedness offered hereby (the "Debt Securities")
sets forth certain general terms and provisions of the Debt Securities to which
any Prospectus Supplement may relate. The particular terms and provisions of the
series of Debt Securities offered by a Prospectus Supplement (the "Offered Debt
Securities"), the trustee with respect to the Offered Debt Securities, and the
extent to which the general terms and provisions described below may apply
thereto, will be described in the Prospectus Supplement relating to such Debt
Securities.
The Debt Securities will be issued under one or more indentures, the terms
of which will be substantially identical other than as described herein, with
one or more trustees. The indentures may include an Indenture in substantially
the form filed as an exhibit to the Registration Statement (the "Chase Manhattan
Indenture"), between the Company and The Chase Manhattan Bank (National
Association) ("Chase Manhattan"), as trustee, and an Indenture dated as of
December 5, 1994 (the "NationsBank Indenture"), between the Company and
NationsBank of Georgia, National Association ("NationsBank"), as trustee, copies
of which are filed as exhibits to the Registration Statement. The Chase
Manhattan Indenture and the NationsBank Indenture are referred to hereinafter
each as an "Indenture" and together as the "Indentures" and Chase Manhattan and
NationsBank are referred to hereinafter each as a "Trustee" and together as the
"Trustees." The following summaries of certain provisions of the Indentures do
not purport to be complete and are subject to, and are qualified in their
entirety by, reference to all of the provisions of the Indentures, including the
definitions therein of certain terms. Except as otherwise specified, all of the
provisions described below appear in each of the Indentures. Wherever particular
provisions or defined terms of the Indentures are referred to herein or in a
Prospectus Supplement, such provisions or defined terms are incorporated herein
or therein by reference. Section and Article references used herein are
references to the Indentures and, except as otherwise indicated, are identical
in both Indentures.
GENERAL
The Debt Securities will be direct, unsecured general obligations of the
Company that will rank on a parity with all other unsecured indebtedness of the
Company from time to time outstanding which is not by its terms subordinated to
the Debt Securities. The Debt Securities offered by this Prospectus will be
limited to $1,000,000,000 aggregate principal amount (based on the aggregate
initial public offering price of such Debt Securities), less the offering price
of any Common Stock which may be offered hereunder (other than through
conversion of Debt Securities), although the Indentures do not limit the
aggregate principal amount of Debt Securities that may be issued thereunder. The
Debt Securities may be issued thereunder from time to time in separate series up
to the aggregate amount from time to time authorized by the Company for each
series.
Unless otherwise indicated in a Prospectus Supplement relating to any
Offered Debt Securities, the covenants contained in the Indentures or the
Offered Debt Securities would not impose any limit on secured debt and would not
afford Holders of the Offered Debt Securities protection in the event of a
highly leveraged or other transaction involving the Company or its subsidiaries
that may adversely affect the Holders.
Reference is made to the applicable Prospectus Supplement for a description
of the following terms of the Offered Debt Securities in respect of which this
Prospectus is being delivered: (1) the title of the Offered Debt Securities; (2)
any limit on the aggregate principal amount of the Offered Debt Securities; (3)
the person to whom any interest on any Offered Debt Security shall be payable,
if other than the person in whose name the Offered Debt Security is registered
on the Regular Record Date; (4) the date or dates on which the Offered Debt
Securities will mature; (5) the rate or rates at which the Offered Debt
Securities will bear interest, if any, or the method by which such rate or rates
are determined, the date or dates from which any interest will accrue, the
Interest Payment Dates on which any such interest on the Offered Debt Securities
will be payable and the Regular Record Dates for interest payable on any such
Interest Payment Dates; (6) the place or places where the principal of and any
premium and interest on the Offered Debt Securities will be payable; (7) the
period or periods within which, the price or prices at which, and the terms and
conditions upon which the Offered Debt Securities may, pursuant to any optional
or mandatory provisions, be redeemed
26
<PAGE> 40
or purchased, in whole or in part, at the option of the Company; (8) the
obligation of the Company, if any, to redeem or purchase the Offered Debt
Securities pursuant to any sinking fund or analogous provisions or at the option
of the Holders, the period or periods within which, and the price or prices at
which and the terms and conditions upon which such Offered Debt Securities shall
be redeemed or purchased, in whole or in part; (9) the denominations in which
any Offered Debt Securities will be issuable; (10) any index, formula or other
method used to determine the amount of payments of principal of and any premium
and interest on the Offered Debt Securities; (11) if other than the principal
amount thereof, the portion of the principal amount of the Offered Debt
Securities which will be payable upon declaration of the acceleration of the
Maturity thereof; (12) the applicability of any covenants provided for in the
Indenture; (13) the applicability of any provisions described under "Defeasance
and Covenant Defeasance;" (14) whether any of the Offered Debt Securities are to
be issuable in permanent global form and, if so, the terms and conditions, if
any, upon which interests in such Offered Debt Securities in global form may be
exchanged, in whole or in part, for the individual Offered Debt Securities
represented thereby; (15) the terms, if any, upon which such Offered Debt
Securities may be converted into stock or other securities of the Company or any
other corporation, including the initial conversion price or conversion rate,
the conversion period and other conversion provisions; (16) any deletions from,
changes in or additions to Events of Default or covenants of the Company in the
applicable Indenture; (17) whether the Offered Debt Securities are issuable as
Registered Securities, Bearer Securities or both, and the terms upon which the
Bearer Securities can be exchanged for Registered Securities; (18) special
provisions relating to the issuance of Bearer Securities of any series; (19) the
form of the Offered Debt Securities and coupons, if any; (20) if other than U.S.
dollars, the Currency or Currencies in which payments of the principal of (or
premium, if any) or interest, if any, on the Offered Debt Securities will be
made or in which the Offered Debt Securities will be denominated; and (21) any
other terms of the Offered Debt Securities not inconsistent with the provisions
of the applicable Indenture. (See Section 301)
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will be
described in the Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security that provides for an amount less than the
principal amount thereof to be due and payable upon the declaration of
acceleration of the Maturity thereof upon the occurrence of an Event of Default
and the continuation thereof. (Section 101)
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal, premium, if any, and interest, if any, on the Debt Securities will
be payable, and the exchange of and the transfer of Debt Securities will be
registerable, at the office or agency of the Company maintained for such purpose
and at any other office or agency maintained for such purpose. (Sections 307 and
1002) Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued in denominations of $1,000 or integral multiples
thereof. (Section 302) No service charge will be made for any registration of
transfer or exchange of Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge imposed in
connection therewith. (Section 305)
All moneys paid by the Company to the Trustee or a Paying Agent for the
payment of principal, premium, if any, or interest, if any, on any Debt Security
which remain unclaimed for two years after such principal, premium, or interest
has become due and payable may to the extent permitted by law be repaid to the
Company, and thereafter the Holder of such Debt Security may look only to the
Company for payment thereof. (Section 403)
In the event of any redemption, the Company shall not be required to (i)
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before the selection of
the Debt Securities of that series to be redeemed and ending at the close of
business on the day of mailing the notice of redemption for such Debt Securities
or (ii) register the transfer of or exchange any Debt Security, or portion
thereof, called for redemption, except the unredeemed portion of any Debt
Security being redeemed in part. (Section 305)
27
<PAGE> 41
BOOK-ENTRY SYSTEM
The provisions set forth below in this section headed "Book-Entry System"
will apply to the Debt Securities of any series if the Prospectus Supplement
relating to such series so indicates.
The Debt Securities of such series will be represented by one or more
global securities (collectively, a "Global Security") registered in the name of
a depositary (the "Depositary") or a nominee of the Depositary identified in the
Prospectus Supplement relating to such series. Except as set forth below, a
Global Security may be transferred, in whole or in part, only to the Depositary
or another nominee of the Depositary.
Upon the issuance of a Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with the Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters, dealers or agents. Ownership of beneficial interests in a Global
Security will be limited to participants or persons that may hold interests
through participants. Ownership of interests in such Global Security will be
shown on, and the transfer of those ownership interests will be effected only
through, records maintained by the Depository (with respect to participants'
interests) and such participants (with respect to the owners of beneficial
interests in such Global Security). The laws of some jurisdictions may require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary, or its nominee, is the registered holder and
owner of such Global Security, the Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the related Debt Securities
for all purposes of such Debt Securities and for all purposes under the Debt
Securities Indenture. Except as set forth below or as otherwise provided in the
applicable Prospectus Supplement, owners of beneficial interests in a Global
Security will not be entitled to have the Debt Securities represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of Debt Securities in definitive form and will not be
considered to be the owners or holders of any Debt Securities under the
Indenture or such Global Security.
Accordingly, each person owning a beneficial interest in a Global Security
must rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder of Debt Securities under the
applicable Indenture or such Global Security. The Company understands that under
existing industry practice, in the event the Company requests any action of
holders of Debt Securities or an owner of a beneficial interest in a Global
Security desires to take any action that the Depositary, as the holder of such
Global Security is entitled to take, the Depositary would authorize the
participants to take such action, and that the participants would authorize
beneficial owners owning through such participants to take such action or would
otherwise act upon the instructions of beneficial owners owning through them.
Payment of principal of and premium, if any, and interest, if any, on Debt
Securities represented by a Global Security will be made to the Depositary or
its nominee, as the case may be, as the registered owner and holder of such
Global Security.
The Company expects that the Depositary, upon receipt of any payment of
principal, premium, if any, or interest, if any, in respect of a Global
Security, will credit immediately participants' accounts with payments in
amounts proportionate to the irrespective beneficial interests in the principal
amount of such Global Security as shown on the records of the Depositary. The
Company expects that payments by participants to owners of beneficial interests
in a Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants. Neither the Company nor the
applicable Trustee nor any agent of the Company or the applicable Trustee will
have any responsibility or liability for any aspect of the records relating to,
or payments made on account of, beneficial ownership interests in a Global
Security for any Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests or for any other
aspect of the relationship between
28
<PAGE> 42
the Depositary and its participants or the relationship between such
participants and the owners of beneficial interests in such Global Security
owning through such participants.
Unless and until it is exchanged in whole or in part for Debt Securities in
definitive form, a Global Security may not be transferred except as a whole by
the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary.
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities represented by a Global Security will be exchangeable for Debt
Securities in definitive form of like tenor as such Global Security in
denominations of $1,000 and in any greater amount that is an integral multiple
thereof if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such Global Security or if at any time the
Depositary ceases to be a clearing agency registered under the Exchange Act,
(ii) the Company in its discretion at any time determines not to have all of the
Debt Securities represented by a Global Security and notifies the applicable
Trustee thereof or (iii) an Event of Default has occurred and is continuing with
respect to the Debt Securities. Any Debt Security that is exchangeable pursuant
to the preceding sentence is exchangeable for Debt Securities issuable in
authorized denominations and registered in such names as the Depositary shall
direct. Subject to the foregoing, a Global Security is not exchangeable, except
for a Global Security or Global Securities of the same aggregate denominations
to be registered in the name of the Depositary or its nominee.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default under
the Indentures with respect to Debt Securities of any series (unless such event
is specifically inapplicable to a particular series as described in the
Prospectus Supplement relating thereto): (a) failure to pay any interest on any
Debt Security of that series when due, continued for 30 days; (b) failure to pay
principal of or any premium on any Debt Security of that series when due; (c)
failure to deposit any sinking fund payment, when due, in respect of any Debt
Security of that series; (d) failure to perform any other covenant of the
Company in the Indenture (other than a covenant included in the Indenture solely
for the benefit of a series of Debt Securities other than that series),
continued for 60 days after written notice as provided in the Indenture; (e)
certain events of bankruptcy, insolvency or reorganization involving the
Company; and (f) any other Event of Default provided with respect to Debt
Securities of that series. (Section 501) No Event of Default described above
with respect to a particular series of Debt Securities necessarily constitutes
an Event of Default with respect to any other series of Debt Securities.
Subject to the provisions of the Indentures relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indentures at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable security or indemnity.
(Sections 507 and 603) Subject to certain provisions, including those requiring
security and indemnification of the Trustee, the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of any series will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee. (Section 512)
The Indenture provides that the Company will deliver to the Trustee, within
120 days after the end of each fiscal year, an Officers' Certificate, stating as
to each signer thereof as to his knowledge of the Company's compliance with all
conditions and covenants under the Indenture. (Section 1005)
If an Event of Default shall occur and be continuing with respect to Debt
Securities of any series, either the Trustee or the Holders of at least 25% in
aggregate principal amount of all Outstanding Debt Securities of that series may
accelerate the maturity of all Debt Securities of that series; provided,
however, that after such acceleration, but before a judgment or decree based on
acceleration, the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration if all Events of Default, other than the
non-payment of accelerated principal, have been cured or waived as provided in
the Indenture. (Section 502) For information as to waiver of defaults, see
"Modifications and Waiver" below.
29
<PAGE> 43
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default and unless also the Holders of
at least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceeding as trustee, and the Trustee shall
not have received from the Holders of a majority in aggregate principal amount
of the Outstanding Debt Securities of that series a direction inconsistent with
such request and shall have failed to institute such proceedings within 60 days.
(Section 507). However, such limitations generally do not apply to a suit
instituted by a Holder of a Debt Security for the enforcement of payment of the
principal or interest on such Security on or after the respective due dates
expressed in such Debt Security. (Section 508)
The Trustee will, with certain exceptions, give Holders notice of all
Events of Defaults known to the Trustee within 90 days after the occurrence
thereof. (Section 601)
MODIFICATIONS AND WAIVER
Modifications and amendments of an Indenture may be made by the Company and
the relevant Trustee with the consent of the Holders of not less than a majority
in aggregate principal amount of the Outstanding Debt Securities of each series
affected by such modification or amendment; provided, however that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of
the principal of, or any installment of principal of or interest on any Debt
Security, (b) reduce the principal amount of, rate of interest on or any premium
payable upon the redemption of any Debt Security, (c) reduce the amount of
principal of an Original Issue Discount Security payable upon acceleration of
the Maturity thereof, (d) change the Place of Payment where, or the Currency in
which, principal, premium, if any, or interest on any Debt Security is payable,
(e) adversely affect any right to convert or exchange any Debt Security, (f)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Debt Security, (g) reduce the percentage in principal amount of
Outstanding Debt Securities of any series, the consent of whose Holders is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, or (h) modify any of the provisions set forth in this paragraph except
to increase any such percentage or to provide that certain other provisions of
the Indenture may not be modified or waived without the consent of the holder of
each Outstanding Debt Security affected thereby. (Section 902)
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of each series may, on behalf of the Holders of all
the Debt Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain provisions of the Indenture. (Section
1006) The Holder of not less than a majority in aggregate principal amount of
the Outstanding Debt Securities of each series may, on behalf of all Holders of
Debt Securities of that series, waive any past default under the Indenture with
respect to Debt Securities of that series, except a default (a) in the payment
of principal of, any premium on or any interest on any Debt Security of such
series or (b) in respect of a covenant or provision of the Indenture which
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security of such series affected thereby. (Section 513)
The Indentures provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or whether a quorum is present at a meeting of Holders of Debt Securities, the
principal amount of an Original Issue Discount Security that shall be deemed to
be Outstanding shall be the amount of the principal thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof. (Section 101)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Debt Securities under the Indentures, may consolidate with or merge into, or
transfer or lease its assets substantially as an entirety to, any Person which
is a corporation, partnership or trust organized and validly existing under the
laws of any
30
<PAGE> 44
domestic jurisdiction, or may permit any such Person to consolidate with or
merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, provided that any successor Person
expressly assumes the Company's obligations on the Debt Securities and under the
Indentures, that both immediately before and after giving effect to the
transaction, no Event of Default or Default shall have occurred and be
continuing, and that certain other conditions are met. (Section 801)
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide that, if such provision is made applicable to the
Debt Securities of any series pursuant to the provisions of the Indentures, the
Company may elect (i) to defease and be discharged from any and all obligations
in respect of such Debt Securities except for certain obligations to register
the transfer or exchange of such Debt Securities, to replace temporary,
destroyed, stolen, lost or mutilated Debt Securities, to maintain paying
agencies and to hold monies for payment in trust ("defeasance") or (ii) to be
released from its obligations with respect to certain covenants applicable to
the Debt Securities of any series ("covenant defeasance"), in either case upon
the deposit with the applicable Trustee (or other qualifying trustee), in trust,
of money and/or Government Obligations, which through the payment of interest
and principal in accordance with their terms will provide money in an amount
sufficient to pay the principal of and any premium and interest on the Debt
Securities of such series on the respective Stated Maturities and any mandatory
sinking fund payments or analogous payments on the days payable, in accordance
with the terms of the relevant Indenture and the Debt Securities of such series.
Upon the occurrence of a defeasance, the Company will be deemed to have paid and
discharged the entire indebtedness represented by such Debt Securities (except
for (i) the rights of Holders of such Debt Securities to receive, solely from
the trust funds deposited to defease such Debt Securities, payments in respect
of the principal of, premium, if any, and interest, if any, on such Debt
Securities when such payments are due and (ii) certain other obligations as
provided in the relevant Indenture). (Section 1402) Upon the occurrence of a
covenant defeasance, the Company will be released only from its obligations to
comply with certain covenants contained in the relevant Indenture relating to
such Debt Securities, will continue to be obligated in all other respects under
such Debt Securities and will continue to be contingently liable with respect to
the payment of principal, interest, if any, and premium, if any, with respect to
such Debt Securities. (Section 1403)
Unless otherwise specified in the applicable Prospectus Supplement, the
Company may not effect a defeasance or a covenant defeasance unless, among other
things, the Company has delivered to the applicable Trustee an Opinion of
Counsel to the effect that the Holders of the Outstanding Debt Securities of
such series will not recognize gain or loss for Federal income tax purposes as a
result of such deposit, defeasance or covenant defeasance and will be subject to
Federal income tax on the same amount, and in the same manner and at the same
times as would have been the case if such deposit, defeasance or covenant
defeasance had not occurred. Such opinion, in the case of full defeasance (in
contrast to a more limited covenant defeasance), must refer to and be based upon
a ruling of the Internal Revenue Service or a change in applicable Federal
income tax law occurring after the date of the Indenture. The Prospectus
Supplement relating to a series may further describe the provisions, if any,
permitting such defeasance or covenant defeasance with respect to the Debt
Securities of a particular series. (Section 1404)
Subject to satisfying the required opinion and other conditions, the
Company may exercise its full defeasance option with respect to any series of
Debt Securities notwithstanding its prior exercise of a more limited covenant
defeasance option. If the Company exercises its full defeasance option, payment
of such Debt Securities may not be accelerated because of a Default or an Event
of Default. If the Company exercises a more limited covenant defeasance option,
payment of such Debt Securities may not be accelerated by reason of a Default or
an Event of Default with respect to the covenants to which such covenant
defeasance is applicable. If an acceleration were to occur for other reasons,
however, and such Debt Securities were declared due and payable, the amount of
money and Government Obligations on deposit with the Trustee will be sufficient
to pay amounts due on the Debt Securities of such series at the time of their
Stated Maturity but may not be sufficient to pay amounts due on the Debt
Securities of such series at the time of the acceleration resulting from such
acceleration. In the event of such an acceleration following a covenant
defeasance, however, the Company would remain liable for any such insufficiency.
31
<PAGE> 45
NOTICES
Notices to Holders of Registered Securities will be given by mail to the
addresses of such Holders as they appear in the Security Register. (Section
106)
REPLACEMENT OF SECURITIES
Any mutilated Debt Security will be replaced by the Company at the expense
of the Holder upon surrender of such Debt Security to the applicable Trustee.
Debt Securities that are destroyed, stolen or lost will be replaced by the
Company at the expense of the Holder upon delivery to the applicable Trustee of
evidence of the destruction, loss or theft thereof satisfactory to the Company
and the applicable Trustee. In the case of a destroyed, lost or stolen Debt
Security an indemnity satisfactory to the applicable Trustee and the Company may
be required at the expense of the Holder of such Debt Security before a
replacement Debt Security will be issued. (Section 306)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York. (Section 111)
REGARDING THE TRUSTEE
Each of the Trustees is currently one of the participating lenders for the
Company's $1 billion credit facility and provides certain other banking and
financial services to the Company in the ordinary course of business and may
provide other such services in the future.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 150,000,000 shares of common stock, par
value $.10 per share (the "Common Stock"), and up to 5,000,000 shares of
preferred stock (the "Preferred Stock") which may be issued in one or more
series established by the Board of Directors of the Company from time to time.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted on by shareholders and are not entitled to cumulative voting
in the election of directors, which means that the holders of a majority of the
shares voting for the election of directors can elect all of the directors then
standing for election, if they choose to do so. The holders of shares of Common
Stock are entitled to share ratably in such dividends, if any, as may be
declared on shares of Common Stock from time to time by the Board of Directors
in its discretion from funds legally available therefor. The holders of shares
of Common Stock are entitled to share pro rata in distributions to shareholders
upon liquidation of the Company, subject to any prior rights of any holders of
Preferred Stock issued after the date of this Prospectus and then outstanding
(see "Preferred Stock" below).
The holders of shares of Common Stock have no preemptive or other
subscription or conversion rights, and there are no redemption provisions with
respect to such shares. All of the outstanding shares of Common Stock are fully
paid and non-assessable. The Company's Common Stock is listed on the New York
Stock Exchange ("NYSE"). Any Common Stock offered hereby will be listed on the
NYSE upon official notice of issuance.
PREFERRED STOCK
Pursuant to the Company's Restated Articles of Incorporation, the Board of
Directors of the Company may from time to time authorize the issuance of up to
5,000,000 shares of Preferred Stock in one or more series, having such voting
rights, dividend rates and preferences, redemption prices, sinking funds,
convertibil-
32
<PAGE> 46
ity provisions, liquidation and certain other preferences, rights and provisions
as the Board of Directors of the Company may fix in providing for the issuance
of such series.
Shares of Preferred Stock may be issued for any general corporate purposes,
including acquisitions. If and when the Board of Directors should authorize the
issuance of any shares of Preferred Stock, dividend requirements and any sinking
fund, conversion or redemption provisions of such an issue could decrease the
amount of earnings and assets available for distribution to holders of shares of
Common Stock.
ANTITAKEOVER PROVISIONS
The Company's Bylaws adopt certain "fair price" provisions of the Georgia
Business Corporation Code. These provisions impose special shareholder or
director voting requirements for certain business combinations involving a
beneficial owner of 10% or more of the Company's outstanding voting shares,
unless a "fair price" test is met. The Company's Bylaws also adopt other
provisions of the Georgia Business Corporation Code prohibiting certain business
combinations involving a beneficial owner of 10% or more of the Company's voting
shares unless either: (1) prior to the date the owner acquired 10% or more of
the Company's voting shares, the Board of Directors of the Company approved
either the proposed business combination or the acquisition of 10% or more of
the Company's voting shares; (2) in the transaction which resulted in
acquisition of 10% or more of the Company's voting shares, the shareholder
acquired beneficial ownership of at least 90% of the Company's voting shares,
excluding shares owned by directors or officers of the Company or their
affiliates or associates, any subsidiary of the Company or any employee stock
plans of the Company in which the employee participants do not have the right to
determine confidentially whether shares held subject to the plan would be
tendered in a tender or exchange offer; or (3) the beneficial owner of 10% of
the Company's voting shares increases his beneficial ownership to at least 90%
of the Company's voting shares and the business combination is approved by the
holders of a majority of FFMC voting shares excluding shares owned by the 90%
shareholder, any director or officer of FFMC, his affiliates or associates, any
subsidiary of FFMC and any employee stock plan of FFMC in which the participants
do not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer.
The authority of the Board of Directors of the Company to issue shares of
Preferred Stock and to determine the dividend, conversion, redemption, voting
and other provisions of the Preferred Stock could be exercised in a manner that
might discourage any attempt by a third party to take over the Company. Also,
the Restated Articles of Incorporation of the Company authorize the issuance of
a large number of additional shares of Common Stock. The availability of a large
number of authorized and unissued shares could be used to resist any effort to
take over the Company. For example, the Board of Directors, without shareholder
approval, could sell a large block of stock to a friendly holder or implement a
rights plan entitling all shareholders (excluding any person or entity that
might be accumulating a large, hostile position in the Company's stock) to
receive a large distribution of stock designed to dilute the interest of any
such hostile shareholder.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through one or more underwriters, and
also may sell the Debt Securities directly to one or more other purchasers or
through agents. Such underwriters may include Morgan Stanley & Co. Incorporated
or a group of underwriters represented by firms including Morgan Stanley & Co.
Incorporated. Morgan Stanley & Co. Incorporated may also act as agent.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
The Prospectus Supplement sets forth the terms of the offering of the
particular Securities to which such Prospectus Supplement relates, including (i)
the name or names of any underwriters or agents with whom the Company has
entered into arrangements with respect to the sale of such Securities, (ii) the
initial public offering or purchase price of such Securities, (iii) any
underwriting discounts, commissions and other items
33
<PAGE> 47
constituting underwriters' compensation from the Company and any other
discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to the Company and (vi) the securities exchanges, if any, on which
such Securities will be listed.
Unless otherwise set forth in the Prospectus Supplement relating to a
particular series of Debt Securities, the obligations of the underwriters to
purchase such Securities will be subject to certain conditions precedent and
each of the underwriters with respect to such Securities will be obligated to
purchase all of the Securities allocated to it if any such Securities are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
The Securities may be offered and sold by the Company directly or through
agents designated by the Company from time to time. Unless otherwise indicated
in the Prospectus Supplement, any such agent or agents will be acting on a best
efforts basis for the period of its or their appointment. Any agent
participating in the distribution of Securities may be deemed to be an
"underwriter," as that term is defined in the Securities Act, of the Securities
so offered and sold. The Securities also may be sold at the applicable price to
the public set forth in the Prospectus Supplement relating to particular
Securities to dealers who later resell such Securities to investors. Such
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement relating to particular
Securities, the Company will authorize underwriters, dealers or agents to
solicit offers by certain institutions to purchase Securities of such series
from the Company pursuant to delayed delivery contracts providing for payment
and delivery at a future date. Such contracts will be subject only to those
conditions set forth in the Prospectus Supplement and the Prospectus Supplement
will set forth the commission payable for solicitation of such contracts.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Securities offered hereby will be passed upon for the Company by
Sutherland, Asbill & Brennan, Atlanta, Georgia, and for any underwriters or
agents by Shearman & Sterling, New York, New York. George L. Cohen, a partner in
Sutherland, Asbill & Brennan, is a director of the Company. Attorneys at
Sutherland, Asbill & Brennan participating in matters related to the offering
beneficially owned 14,528 shares of the Company's Common Stock as of December 1,
1994.
EXPERTS
The financial statements and related financial statement schedules of the
Company incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports which are incorporated herein by reference,
and have been so incorporated in reliance upon the reports of such firm, given
upon their authority as experts in accounting and auditing.
The financial statements of Western Union Financial Services, Inc.
incorporated in this Prospectus by reference to the Company's Form 8-K dated
November 4, 1994 have been so incorporated in reliance upon the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in accounting and auditing.
34
<PAGE> 48
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
<TABLE>
<C> <S> <C>
1.1 -- Underwriting Agreement covering the Registrant's Senior Convertible Debentures due
1999.
1.2 -- Form of Underwriting Agreements for other Securities.*
4.1 -- Proposed Form of Indenture between the Company and The Chase Manhattan Bank (National
Association), as Trustee.**
4.2 -- Indenture, dated as of December 5, 1994, between the Company and NationsBank of
Georgia, National Association, as Trustee.***
4.3 -- First Supplemental Indenture, dated as of December 5, 1994, between the Company and
NationsBank of Georgia, National Association, as Trustee.
4.4 -- See Articles V, VI and VIII of the Registrant's Restated Articles of Incorporation
(filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994 and incorporated herein by reference), and Articles
1, 2, 5 and 9 of the Registrant's Bylaws, as amended (filed as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30,
1993 and incorporated herein by reference).
5.1 -- Opinion of Sutherland, Asbill & Brennan as to validity of securities being
registered.
12.1 -- Statement of Computation of Ratio of Earnings to Fixed Charges.***
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Price Waterhouse LLP.
23.3 -- Consent of Sutherland, Asbill & Brennan is contained within Opinion of Counsel filed
as Exhibit 5.1.
24.1 -- Power of Attorney authorizing Patrick H. Thomas and M. Tarlton Pittard to sign on
behalf of the specified directors is contained on page II-3 of this Registration
Statement as filed on November 4, 1994.
25.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of
1939 of The Chase Manhattan Bank (National Association).**
25.2 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of
1939 of NationsBank of Georgia, National Association.**
</TABLE>
- ---------------
* To be filed by Amendment to this Registration Statement or by Current Report
on Form 8-K.
** Filed on November 4, 1994.
*** Filed on December 5, 1994.
II-1
<PAGE> 49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Atlanta, State of Georgia on December 6, 1994.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ PATRICK H. THOMAS
-----------------------------------
Patrick H. Thomas
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------------------------
<C> <S> <C>
/s/ PATRICK H. THOMAS Chairman of the Board, December 6, 1994
- --------------------------------------------- President and Chief
Patrick H. Thomas Executive Officer
/s/ M. TARLTON PITTARD Senior Executive Vice December 6, 1994
- --------------------------------------------- President, Treasurer,
M. Tarlton Pittard Chief Financial Officer
and Director
/s/ RICHARD MACCHIA Executive Vice President, December 6, 1994
- --------------------------------------------- Finance and Principal
Richard Macchia Accounting Officer
George L. Cohen, Directors (The named December 6, 1994
Robert E. Coleman, individuals, together
Jack R. Kelly, Jr., with Mr. Thomas and Mr.
Henry A. Leslie, Pittard,
Charles B. Presley, and constitute all of
Virgil R. Williams the Directors)
By: /s/ PATRICK H. THOMAS
- ---------------------------------------------
Patrick H. Thomas
Attorney-in-Fact
</TABLE>
II-2
<PAGE> 50
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
PAGE
EXHIBIT NO. DESCRIPTION NUMBER
----------- --------------------------------------------------------------------- ----------
<C> <C> <S> <C>
1.1 -- Underwriting Agreement covering the Registrant's Senior Convertible
Debentures due 1999.
1.2 -- Form of Underwriting Agreements for other Securities.*
4.1 -- Proposed Form of Indenture between the Company and The Chase
Manhattan Bank (National Association), as Trustee.**
4.2 -- Indenture, dated as of December 5, 1994, between the Company and
NationsBank of Georgia, National Association, as Trustee.***
4.3 -- First Supplemental Indenture, dated as of December 5, 1994, between
the Company and NationsBank of Georgia, National Association, as
Trustee.
4.4 -- See Articles V, VI and VIII of the Registrant's Restated Articles of
Incorporation (filed as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994 and
incorporated herein by reference), and Articles 1, 2, 5 and 9 of the
Registrant's Bylaws, as amended (filed as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993 and incorporated herein by reference).
5.1 -- Opinion of Sutherland, Asbill & Brennan as to validity of securities
being registered.
12.1 -- Statement of Computation of Ratio of Earnings to Fixed Charges.***
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Price Waterhouse LLP.
23.3 -- Consent of Sutherland, Asbill & Brennan is contained within Opinion
of Counsel filed as Exhibit 5.1.
24.1 -- Power of Attorney authorizing Patrick H. Thomas and M. Tarlton
Pittard to sign on behalf of the specified directors is contained on
page II-3 of this Registration Statement as filed on November 4,
1994.
25.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank (National
Association).**
25.2 -- Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of NationsBank of Georgia, National
Association.**
</TABLE>
- ---------------
* To be filed by Amendment to this Registration Statement or by Current Report
on Form 8-K.
** Filed on November 4, 1994.
*** Filed on December 5, 1994.
<PAGE> 1
EXHIBIT 1.1
$440,000,000
First Financial Management Corporation
5% Senior Convertible Debentures due 1999
UNDERWRITING AGREEMENT
December 6, 1994
<PAGE> 2
December 6, 1994
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co., Inc.
CS First Boston Corporation
c/o Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
Dear Sirs:
First Financial Management Corporation, a Georgia corporation
(the "Company") proposes to issue and sell to the several Underwriters named in
Schedule I hereto (the "Underwriters") $440,000,000 principal amount of its 5%
Senior Convertible Debentures due 1999 (the "Initial Debt Securities"). The
Company also grants to the Underwriters, severally and not jointly, the option
described in Section 2 to purchase all or any part of the additional principal
amount of debt securities as set forth in Schedule I to cover over-allotments
(the "Option Debt Securities") on the terms and conditions stated herein. The
Option Debt Securities together with the Initial Debt Securities are herein
called the "Debt Securities". The Debt Securities will be issued pursuant to
the provisions of an Indenture dated as of December 5, 1994 (as amended or
supplemented, the "Indenture") between the Company and NationsBank of Georgia,
National Association, as Trustee (the "Trustee").
The Initial Debt Securities and the Option Debt Securities are
convertible (the "Initial Convertible Debt Securities" and the "Option
Convertible Debt Securities," respectively, and, collectively, the "Convertible
Debt Securities") into shares of common stock, par value $.10 per share, of the
Company (the "Common Stock"). The shares of Common Stock issuable upon
conversion of the Initial Convertible Debt Securities are referred to herein as
the "Initial Shares," and the shares of Common Stock issuable upon conversion
of any Option Convertible Debt Securities are referred to herein as the "Option
Shares," and together with the Initial Shares, are collectively herein called
the "Shares." The Convertible Debt Securities and the Shares are collectively
referred to as the "Offered Securities."
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, including a prospectus,
relating to the Offered Securities. The registration statement as amended at
the time it becomes effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to
Rule 430A under the Securities Act of 1933, as amended (the "Securities Act"),
is hereinafter referred to as the Registration Statement; the prospectus
together with the prospectus supplement in the form first used to confirm sales
of Offered Securities is hereinafter referred to as the Prospectus (including,
in the case of all references to the Registration Statement and the
Prospectus, documents incorporated therein by reference).
<PAGE> 3
I.
The Company represents and warrants to each of the
Underwriters that:
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document filed or to be filed pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
incorporated by reference in the Prospectus complied or will comply when so
filed in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (ii) each part of the
Registration Statement, when such part became effective, did not contain
and each such part, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iv) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph 1(b) do not apply (A) to
statements or omissions in the Registration Statement or the Prospectus
based upon information relating to any Underwriter furnished to the Company
in writing by such Underwriter through you expressly for use therein or (B)
to that part of the Registration Statement that consists of the Statements
of Eligibility and Qualification (Form T-1s) under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), of the Trustees.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the state of
Georgia, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary listed on Schedule II hereto (each
such subsidiary being referred to herein as a "Subsidiary") of the Company
has been duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and
-2-
<PAGE> 4
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms (i) except as the enforceability thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting creditors' rights generally and (ii) subject to general
principles of equity (regardless of whether enforceability is considered in
a proceeding at law or in equity).
(g) The Convertible Debt Securities have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be
entitled to the benefits of the Indenture, and will be valid and binding
obligations of the Company, enforceable in accordance with their terms (i)
except as the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting creditors'
rights generally and (ii) subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity).
(h) The Convertible Debt Securities will be convertible
into the Shares of the Company in accordance with the terms of the
Indenture; the Shares initially issuable upon conversion of the Convertible
Debt Securities have been duly authorized and reserved for issuance upon
such conversion and, when issued upon such conversion, will be validly
issued, fully paid and nonassessable, and neither the shareholders of the
Company nor any other person have any statutory preemptive rights with
respect to the Convertible Debt Securities or the Shares.
(i) The execution and delivery by the Company of this
Agreement and the Indenture, the performance by the Company of its
obligations under the Indenture and the issuance and delivery of the
Convertible Debt Securities and the Shares initially issuable upon
conversion thereof, will not contravene any provision of applicable law or
the certificate of incorporation or by-laws of the Company or any agreement
or other instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries, taken as a whole, or
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any Subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
of its obligations under this Agreement, the Indenture or the Offered
Securities, except such
-3-
<PAGE> 5
as may be required by the securities or Blue Sky laws of the various states
in connection with the offer and sale of the Offered Securities.
(j) There has not occurred any material adverse change,
or any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus.
(k) There are no legal or governmental proceedings
pending or threatened to which the Company or any of its Subsidiaries is a
party or to which any of the properties of the Company or any of its
Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) Each preliminary prospectus or prospectus supplement
filed as part of the registration statement as originally filed or as part
of any amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects with the
Securities Act and the rules and regulations of the Commission thereunder.
(m) The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended.
(n) The Company has no reason to believe that the effect
of any and all applicable federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws") on the business, operations and properties of the
Company and its Subsidiaries will impose costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which singly or
in the aggregate, would have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(o) The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida);
neither the Company nor any affiliate of the Company does business with the
government of Cuba or with any person or affiliate located in Cuba.
-4-
<PAGE> 6
II.
The Company hereby agrees to sell to the several Underwriters,
and the Underwriters, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated, agree,
severally and not jointly, to purchase from the Company the respective
principal amounts of Offered Securities set forth in Schedule I hereto opposite
their names at 99% of their principal amount -- the purchase price -- plus
accrued interest, if any, from December 13, 1994 to the date of payment and
delivery.
In addition, on the basis of the representations and
warranties herein contained, and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to $66,000,000 additional principal amount of
Option Debt Securities at the same purchase price as shall be applicable to the
Initial Debt Securities. The option hereby granted will expire 30 days after
the date hereof, and may be exercised, in whole or in part (but not more than
once), only for the purpose of covering over-allotments that may be made in
connection with the offering and distribution of the Initial Debt Securities
per notice by you to the Company setting forth the principal amount of Option
Debt Securities as to which the several Underwriters are exercising this
option, and the time and date of payment and delivery thereof. Such time and
date of delivery (each, a "Date of Delivery") shall be determined by you but
shall not be later than seven full business days after the exercise of such
option, nor in any event prior to the Closing Time. If the option is exercised
as to all or any portion of the Option Debt Securities, each of the
Underwriters, acting severally and not jointly, will purchase from the Company
that portion of the aggregate number of Option Debt Securities being purchased
which the number of Initial Debt Securities set forth opposite the name of such
Underwriter become to the total number of Initial Debt Securities.
III.
The Company is advised by you that the Underwriters propose to
make a public offering of their respective portions of the Offered Securities
as soon after the Registration Statement and this Agreement have become
effective as in your judgment is advisable. The Company is further advised by
you that the Offered Securities are to be offered to the public initially at
100% of their principal amount -- the public offering price -- plus accrued
interest, if any, and to certain dealers selected by you at a price that
represents a concession not in excess of .60% of their principal amount under
the public offering price, and that any Underwriter may allow, and such dealers
may reallow, a concession, not in excess of .10% of their principal amount, to
any Underwriter or to certain other dealers.
-5-
<PAGE> 7
IV.
Payment for the Offered Securities shall be made by certified
or official bank check or checks payable to the order of the Company in New
York Clearing House funds at the office of Shearman & Sterling, 599 Lexington
Avenue, New York, New York, at 10:00 A.M., local time, on December 13, 1994, or
at such other time on the same or such other date, not later than December 20,
1994, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the Closing Date.
Payment for the Offered Securities shall be made against
delivery to you for the respective accounts of the several Underwriters of the
Offered Securities registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
date of delivery, with any transfer taxes payable in connection with the
transfer of the Offered Securities to the Underwriters duly paid.
V.
The obligations of the Company and the several obligations of
the Underwriters hereunder are subject to the condition that the Registration
Statement shall have become effective not later than the date hereof.
The several obligations of the Underwriters hereunder are
subject to the following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date,
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g) (2) under the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations, of the Company and its subsidiaries,
taken as a whole, from that set forth in the Registration
Statement, that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable to market the
Offered Securities on the terms and in the manner contemplated
in the Prospectus.
-6-
<PAGE> 8
(b) The Underwriters shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in clause (a)(i) above and
to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date and
that the Company has complied with all of the agreements and satisfied all
of the conditions on its part to be performed or satisfied on or before the
Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his knowledge after due inquiry.
(c) You shall have received on the Closing Date an
opinion of Sutherland, Asbill & Brennan, counsel for the Company, dated
the Closing Date, to the effect that
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation and has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus; provided,
however, that such counsel may state that to the extent their
opinion regarding corporate power and authority might also
imply an opinion regarding due organization, such counsel is
relying solely on a presumption of regularity and continuity
without having examined any organizational minutes or other
organization procedures with respect to the Company or the
applicable corporate law in existence at the time of the
Company's organization;
(ii) each of the Subsidiaries of the Company has
been duly incorporated, is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus; provided, however, that such counsel may state
that to the extent their opinion regarding corporate power and
authority might also imply an opinion regarding due
organization, such counsel is relying solely on a presumption
of regularity and continuity without having examined any
organizational minutes or other organization procedures with
respect to any Subsidiary or the applicable corporate law in
existence at the time of any Subsidiary's organization;
(iii) this Agreement has been duly authorized,
executed and delivered by the Company;
(iv) the Indenture has been duly qualified under
the Trust Indenture Act and has been duly authorized, executed
and delivered by the Company and is a valid and binding
agreement of the Company, enforceable in accordance with its
terms (a) except as the enforceability thereof may be limited
by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization,
moratorium or similar laws
-7-
<PAGE> 9
affecting creditors' rights generally and (b) subject to
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity);
(v) the Convertible Debt Securities have been
duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the
Company, enforceable in accordance with their terms (a) except
as the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or
similar laws affecting creditors' rights generally and (b)
subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity);
(vi) the Convertible Debt Securities will be
convertible into the Shares of the Company in accordance with
the terms of the Indenture; the Shares initially issuable upon
conversion of the Convertible Debt Securities have been duly
authorized and reserved for issuance upon such conversion and,
when issued upon such conversion, will be validly issued,
fully paid and nonassessable, and neither the shareholders of
the Company nor any other person have any statutory preemptive
rights with respect to the Convertible Debt Securities or the
Shares;
(vii) the execution and delivery by the Company of
this Agreement and the Indenture, the performance by the
Company of its obligations under the Indenture, and the
issuance and delivery of the Convertible Debt Securities and
the shares initially issuable upon conversion thereof will not
contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or, to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any subsidiary, and to the best of such
counsel's knowledge, no consent, approval, authorization or
order of or qualification with any governmental body or agency
is required for the performance by the Company of its
obligations under this Agreement and the Indenture, except
such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of
the Offered Securities;
(viii) the statements (1) in the Prospectus under
the captions "Description of Debt Securities," "Description of
Capital Stock" and "Description of Debentures" and (2) in the
Registration Statement under Item 15, in each case insofar as
such statements constitute summaries of the legal matters,
documents and proceedings referred to therein, fairly present
the
-8-
<PAGE> 10
information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein;
(ix) the Company is not an "investment company" or
an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act of 1940, as
amended;
(x) such counsel is of the opinion that the
Registration Statement and Prospectus (except for financial
statements and schedules included therein and except for that
part of the Registration Statement that consists of the Form
T-1s heretofore referred to, as to which such counsel need not
express any opinion) comply as to form in all material
respects with the Securities Act and the rules and regulations
of the Commission thereunder.
In addition, such counsel shall state that nothing has come to
such counsel's attention which causes such counsel to: (1) believe that
(except for financial statements and schedules as to which such counsel need
not express any belief and except for that part of the Registration Statement
that constitutes the Form T-1s heretofore referred to) the Registration
Statement and the prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (2) believe that (except for
financial statements and schedules and except for that portion of the
Registration Statement that constitutes the Form T-1s hereinafter referred to,
as to which such counsel need not express any belief) the Prospectus as of the
Closing Date contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(d) You shall have received on the Closing Date an
opinion of Randolph L.M. Hutto, Executive Vice President and General Counsel,
dated the Closing Date, to the effect that (i) to the best of such counsel's
knowledge, the execution and delivery by the Company of this Agreement and the
Indenture, the performance by the Company of its obligations under the
Indenture, and the issuance and delivery of the Convertible Debt Securities and
the Shares initially issuable upon conversion thereof will not contravene any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as a
whole; (ii) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its Subsidiaries is a party or to which any of the properties of the Company or
any of its Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required; and (iii) each document filed pursuant to the Exchange Act and
incorporated by reference in the Registration Statement and the Prospectus
(except for financial statements and schedules as to which counsel need not
-9-
<PAGE> 11
express any opinion) complied when so filed as to form in all material respects
with the Exchange Act and the applicable rules and regulations of the
Commission thereunder.
(e) You shall have received on the Closing Date an
opinion of Shearman & Sterling, counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (iii), (iv), (v),
(viii) (but only as to the statements in the Prospectus under "Description of
Debentures" and "Underwriters"), and subparagraph (x) of paragraph (c) above
and the paragraph immediately thereafter.
With respect to subparagraph (x) of paragraph (c) above and
the paragraph immediately thereafter, Sutherland, Asbill & Brennan and Shearman
& Sterling each may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto (other than the documents
incorporated therein by reference) and review and discussion of the contents
thereof, but are without independent check or verification except as specified.
Shearman & Sterling may rely on the opinion of Sutherland, Asbill & Brennan with
respect to matters of Georgia law.
The opinion of Sutherland, Asbill & Brennan described in
paragraph (c) above shall be rendered to you at the request of the Company and
shall so state therein.
(f) You shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date, as
the case may be, in form and substance reasonably satisfactory to you, from
Deloitte & Touche LLP and Price Waterhouse LLP, independent public accountants
for the Company and Western Union Financial Services, Inc., respectively,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into the Registration Statement and the Prospectus.
VI.
In further consideration of the agreements of the Underwriters
herein contained, the Company covenants as follows:
(a) To furnish to you, without charge, one signed copy of
the Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto but including documents incorporated by
reference, excluding the exhibits thereto) and, during the period mentioned
in paragraph (c) below, as many copies of the Prospectus, any documents
incorporated therein by reference (excluding the exhibits thereto) and any
supplements and amendments to the Prospectus or to the Registration
Statement as you may reasonably request. The terms "supplement" and
"amendment" or "amend" as used
-10-
<PAGE> 12
in this Agreement shall include all documents subsequently filed by the
Company with the Commission pursuant to the Securities Exchange Act of
1934, as amended, that are deemed to be incorporated by reference in the
Prospectus.
(b) Before amending or supplementing the Registration
Statement or the Prospectus during the period from the date hereof through
the Closing Date, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object. For a period of two years after the date
hereof, the Company will furnish to you a copy of each amendment or
supplement to the Registration Statement.
(c) If, during such period after the first date of the
public offering of the Offered Securities as in the opinion of your counsel
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of your counsel, it is necessary to amend or supplement the
Prospectus to comply with law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to
which Offered Securities may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Offered Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions
as you shall reasonably request and to pay all expenses (including fees and
disbursements of counsel) in connection with such qualification and in
connection with (i) the determination of the eligibility of the Offered
Securities for investment under the laws of such jurisdictions as you may
designate and (ii) any review of the offering of the Offered Securities by
the National Association of Securities Dealers, Inc.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering the
twelve-month period ending December 31, 1995 that satisfies the provisions
of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) During the period ending 90 days after the date of
the Prospectus, it will not offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock,
-11-
<PAGE> 13
other than (i) the Debentures offered hereby, (ii) the Common Stock
issuable upon conversion of the Debentures, (iii) securities issued by the
Company in connection with acquisitions by the Company, provided that no
such securities may be issued or sold in a public distribution during such
90-day period, (iv) shares of Common Stock, options to purchase Common
Stock, or shares of Common Stock issued upon exercise of such options,
granted or purchased (A) under the Company's existing stock option, stock
purchase and stock grant plans, or (B) under such plans that may be adopted
by the Company in the future covering up to an aggregate of 10 million
additional shares of Common Stock, and (v) shares of Common Stock issuable
upon exercise of the Company's outstanding warrants.
(g) To pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the preparation and
filing of the Registration Statement and the Prospectus and all amendments
and supplements thereto, (ii) the preparation, issuance and delivery of the
Offered Securities, including any transfer taxes payable in connection with
the transfer of the Offered Securities to the Underwriters, (iii) the fees
and disbursements of the Company's counsel and accountants, (iv) the
qualification of the Offered Securities under state securities or Blue Sky
laws in accordance with the provisions of VI(d), including filing fees and
the fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky or Legal
Investment Memoranda, copies of which shall be delivered to the Company,
(v) the printing and delivery to the Underwriters, in quantities as
hereinabove stated, copies of the Registration Statement and all amendments
thereto and of each preliminary prospectus and the Prospectus and any
amendments or supplements thereto, (vi) the printing and delivery to the
Underwriters of copies of any Blue Sky or Legal Investment Memoranda, (vii)
the filing fees and expenses, if any, incurred with respect to any filing
with the National Association of Securities Dealers, Inc., made in
connection with the offering of the Offered Securities, (viii) any expenses
incurred by the Company in connection with a "road show" presentation to
potential investors and (ix) the listing of the Convertible Debt Securities
and the Common Stock on the New York Stock Exchange Inc.
VII.
The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Underwriter or any such controlling person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements
-12-
<PAGE> 14
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Offered Securities, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if required
by law so to have been delivered, at or prior to the written confirmation of
the sale of the Offered Securities to such person, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities.
Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either of the two preceding paragraphs,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley
& Co. Incorporated, in the case of parties
-13-
<PAGE> 15
indemnified pursuant to the second preceding paragraph, and by the Company, in
the case of parties indemnified pursuant to the first preceding paragraph. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in the first or second
paragraph of this Article VII is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Offered Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other hand in connection with the offering of the Offered Securities
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Offered Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate public offering price of the
Offered Securities. The relative fault of the Company on the one hand and of
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations
to contribute pursuant to this Article VII are several in proportion to the
respective principal amounts of Offered Securities they have purchased
hereunder, and not joint.
The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Article VII were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified
-14-
<PAGE> 16
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Article VII, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Article VII are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
The indemnity and contribution provisions contained in this
Article VII and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Offered Securities.
VIII.
This Agreement shall be subject to termination by notice given
by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Offered Securities on the terms and in the manner contemplated in
the Prospectus.
-15-
<PAGE> 17
IX.
This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement by the
Commission.
If, on the Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase Debt Securities that it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of Debt
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Debt Securities to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the principal
amount of Debt Securities set forth opposite their respective names in Schedule
I bears to the principal amount of Debt Securities set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as you
may specify, to purchase the Debt Securities which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Debt Securities that any
Underwriter has agreed to purchase pursuant to Article II be increased pursuant
to this Article IX by an amount in excess of one-ninth of such principal amount
of Debt Securities without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Debt Securities and the aggregate principal amount of Debt Securities with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Debt Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such Debt
Securities are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company. In any such case either you or the Company shall have the
right to postpone the Closing Date but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and
in the Prospectus or in any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
-16-
<PAGE> 18
This Agreement may be signed in two or more counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
Very truly yours,
FIRST FINANCIAL MANAGEMENT
CORPORATION
By /s/ M. Tarlton Pittard
-------------------------------
M. Tarlton Pittard
Senior Executive Vice President
Accepted, December 6, 1994
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
CS First Boston Corporation
Acting severally on behalf of
themselves and the several
Underwriters named herein.
By Morgan Stanley & Co. Incorporated
By /s/ Scott R. Brakebill
----------------------
Scott R. Brakebill
Managing Director
-17-
<PAGE> 19
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of Debt Securities
Underwriter To Be Purchased
- ----------- ------------------
<S> <C>
Morgan Stanley & Co. Incorporated $129,673,400
Bear, Stearns & Co. Inc. 129,663,300
CS First Boston Corporation 129,663,300
J.C. Bradford & Co. 3,000,000
Dean Witter Reynolds Inc. 6,000,000
Hambrecht & Quist Incorporated 6,000,000
Kidder, Peabody & Co. Incorporated 6,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 6,000,000
Montgomery Securities 6,000,000
Piper Jaffray Inc. 3,000,000
The Robinson-Humphrey Company, Inc. 3,000,000
Salomon Brothers Inc 6,000,000
Smith Barney Inc. 6,000,000
------------
Total . . . . . . . . . . . . . $440,000,000
============
</TABLE>
<PAGE> 20
SCHEDULE II
For purposes of this Underwriting Agreement, the term "Subsidiary"
when capitalized shall include only the following principal subsidiaries of
First Financial Management Corporation:
<TABLE>
<CAPTION>
Subsidiary State of Incorporation
------------------------------------------------------------------------
<S> <C>
Appalachian Computer Services, Inc. Kentucky
FIRST HEALTH Services Corporation Virginia
FIRST HEALTH Strategies, Inc. Delaware
GENEX Services, Inc. Pennsylvania
International Banking Technologies, Inc. Georgia
MicroBilt Corporation Georgia
National Bancard Corporation Florida
TeleCheck International, Inc. Georgia
TeleCheck Services, Inc. Delaware
First Financial Bank Georgia
Nationwide Credit, Inc. Georgia
Western Union Financial Services, Inc. Delaware
</TABLE>
<PAGE> 1
EXHIBIT 4.3
- --------------------------------------------------------------------------------
FIRST FINANCIAL MANAGEMENT CORPORATION
TO
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION
Trustee
----------------------------
First Supplemental Indenture
Dated as of December 5, 1994
to
Indenture
Dated as of December 5, 1994
----------------------------
Providing for the Issuance
of
5% Senior Convertible Debentures Due 1999
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE (this "First Supplemental
Indenture"), dated as of December 5, 1994, between FIRST FINANCIAL MANAGEMENT
CORPORATION, a Georgia corporation, and NATIONSBANK OF GEORGIA, NATIONAL
ASSOCIATION, a national banking association organized under the laws of the
United States, Trustee under that certain Indenture dated as of December 5,
1994 (the "Indenture").
WHEREAS, Section 901(7) of the Indenture permits supplements
thereto without the consent of Holders of Securities to establish the form or
terms of Securities of any series as permitted by Sections 201 and 301 of the
Indenture; and
WHEREAS, the Board of Directors of the Company has established
a new series of Securities to be designated as "5% Senior Convertible
Debentures Due 1999," and the Board of Directors of the Company has authorized
an issue of Five Hundred Six Million and No/100 Dollars ($506,000,000.00)
principal amount thereof; and
WHEREAS, the Company desires to execute and deliver this First
Supplemental Indenture, in accordance with the provisions of the Indenture, for
the purposes, among others, of providing for the creation of a new series of
Securities, designating the series to be created and specifying the terms and
provisions of the Securities of such series;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
ARTICLE ONE
DEFINITIONS
SECTION 101. DEFINITIONS. For purposes of this First
Supplemental Indenture, all terms used herein, unless otherwise defined herein,
shall have the meaning assigned to them in the Indenture.
ARTICLE TWO
THE DEBENTURES
SECTION 201. TITLE, AMOUNT AND CERTAIN OTHER TERMS. There
shall be hereby established a first series of Securities titled "5% Senior
Convertible Debentures Due 1999" (hereinafter called the "First Series
Debentures"). The aggregate principal amount of the First Series Debentures
that shall be authenticated and delivered under the Indenture and this First
Supplemental Indenture shall be limited to $506,000,000.00 (except for First
Series Debentures authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other First Series Debentures pursuant to
Sections 304, 305, 306, 906, 1107 and 1305 of the Indenture). The First Series
Debentures may be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver the
First Series Debentures upon the written direction of the Company without any
further action by the Company.
<PAGE> 3
The principal of the First Series Debentures shall be due and
payable on December 15, 1999. The First Series Debentures shall bear interest
from December 13, 1994 at 5% per annum, which interest shall be payable on
December 15 and June 15, commencing on June 15, 1995. The Regular Record Date
for interest payable on the First Series Debentures shall be December 1 and
June 1 (whether or not a Business Day), as the case may be, next preceding the
relevant Interest Payment Date. Interest shall be computed on the basis of a
360-day year of twelve 30-day months. The principal of (and premium, if any)
and interest on the First Series Debentures shall be paid, First Series
Debentures may be surrendered for registration of transfer, First Series
Debentures may be surrendered for conversion, and notices or demands to or upon
the Company in respect of the First Series Debentures and the Indenture may be
served, at the Corporate Trust Office. Interest may, at the option of the
Company, be paid by mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to Sections 307 and 309
of the Indenture, to the address of such Person as it appears on the Security
Register for the First Series Debentures.
First Series Debentures shall be issued as Registered
Securities, without coupons, in denominations of $1,000 and in any integral
multiple thereof.
The form of the First Series Debentures shall be substantially
as set forth in the form established by or pursuant to a Board Resolution or
Officers' Certificate delivered to the Trustee, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture or this First Supplemental Indenture, and with such
letters, numbers or other marks of identification or designation and such
legends or endorsements placed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of the Indenture or this First
Supplemental Indenture, or as may be required to comply with any law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the First Series Debentures may be listed, or to
conform to usage.
SECTION 202. REDEMPTION. The First Series Debentures are not
redeemable at the option of the Company prior to December 15, 1997. On and
after December 15, 1997, the Company may, at its option, redeem all or from
time to time any part of the First Series Debentures on any date on or prior to
the close of business on December 15, 1999, upon notice as set forth in Section
1102 of the Indenture, and at the Redemption Prices set forth below (expressed
as percentages of the principal amount) during the twelve-month periods
commencing on the dates set forth below:
If Redemption occurs Redemption
on or after December 15 Price
----------------------- ----------
1997 102%
1998 101%
and 100% if redeemed on December 15, 1999, together in each case with accrued
interest to the date fixed for redemption; provided that if the date fixed for
redemption is an Interest Payment
-2-
<PAGE> 4
Date, then the interest payable on such date shall be paid to the Holder of
record on the Regular Record Date with respect to such Interest Payment Date.
If fewer than all of the First Series Debentures are to be redeemed,
the Trustee will select the First Series Debentures to be redeemed by lot or,
in its discretion, on a pro rata basis.
The First Series Debentures shall not be subject to a sinking fund or
analogous redemption.
SECTION 203. REDEMPTION AT OPTION OF HOLDERS.
(a) If, at any time prior to the close of business on
December 15, 1999, there shall occur a Fundamental Change, then each Holder of
a First Series Debenture shall have the right, at such Holder's option, to
require the Company to redeem all of such Holder's First Series Debentures, or
any portion thereof that is an integral multiple of $1,000 principal amount, on
the date (the "Repurchase Date") that is 45 days after the date of the Company
Notice of such Fundamental Change (or if not a Business Day, the next
succeeding Business Day). The Company shall redeem such First Series
Debentures at a Redemption Price equal to (i) 105% if the Repurchase Date is
during the twelve-month period beginning December 15, 1994, (ii) 104% if the
Repurchase Date is during the twelve-month period beginning December 15, 1995,
(iii) 103% if the Repurchase Date is during the twelve-month period beginning
December 15, 1996, and (iv) after December 14, 1997, the Redemption Price which
would be applicable on the Repurchase Date to a redemption at the option of the
Company pursuant to Section 202 of this First Supplemental Indenture; provided
that with respect to a Fundamental Change in which the holders of the Company's
Common Stock receive only cash, if the Applicable Price with respect to such
Fundamental Change is less than the Reference Market Price, the Company shall
redeem such First Series Debentures at a price equal to the foregoing
redemption price multiplied by the fraction obtained by dividing the Applicable
Price by the Reference Market Price. In each case, the Company shall also pay
to such Holders accrued interest to the Repurchase Date on the redeemed First
Series Debentures; provided that if the Repurchase Date is an Interest Payment
Date, then the interest payable on such date shall be paid to the Holder of
record on the Regular Record Date with respect to such Interest Payment Date.
Upon presentation of any First Series Debenture redeemed in
part only, the Company shall execute and the Trustee shall authenticate and
deliver to the holder thereof, at the expense of the Company, a new First
Series Debenture or First Series Debentures, of authorized denominations, in
principal amount equal to the unredeemed portion of the First Series Debentures
so presented.
(b) On or before the tenth day after the occurrence of a
Fundamental Change, the Company or, at its request, the Trustee in the name of
and at the expense of the Company, shall mail or cause to be mailed to all
Holders of record on the date of the Fundamental Change a notice (the "Company
Notice") of the occurrence of such Fundamental Change and of the redemption
right at the option of the Holders arising as a result thereof. Such notice
shall be
-3-
<PAGE> 5
mailed in the manner and with the effect set forth in Section 1104 of the
Indenture. The Company shall also deliver a copy of the Company Notice to the
Trustee.
Each Company Notice shall specify the circumstances
constituting the Fundamental Change, the Repurchase Date, the price at which
the Company shall be obligated to redeem First Series Debentures, the date and
time by which the Holder must exercise the redemption right (the "Fundamental
Change Expiration Date"), that the Holder shall have the right to withdraw any
First Series Debentures surrendered prior to the Fundamental Change Expiration
Date, a description of the procedure which a Holder must follow to exercise
such redemption right, the place or places that payment will be made upon
presentation and surrender of such Holder's First Series Debentures, and the
amount of interest accrued on each First Series Debenture to the Repurchase
Date.
No failure of the Company to give the foregoing notices and no
defect therein shall limit the Holder's redemption rights or affect the
validity of the proceedings for the redemption of the First Series Debentures
pursuant to this Section 203.
(c) To exercise a redemption right a Holder shall deliver
to the Company (or an agent designed by the Company in the Company Notice) and
to the Trustee on or before the thirtieth day after the date of the Company
Notice: (i) an irrevocable written notice of the Holder's exercise of such
right, which notice shall set forth the name of the Holder, the principal
amount of First Series Debentures to be redeemed and a statement that the
election to exercise a redemption right is being made thereby; and (ii) the
First Series Debentures with respect to which such redemption right is being
exercised, duly endorsed for transfer to the Company. Such written notice
shall be irrevocable following the Fundamental Change Expiration Date and shall
terminate all conversion rights of the Holder under Article Three of this First
Supplemental Indenture with respect to the First Series Debentures to be
redeemed under this Section 203; provided, however, that if the Company shall
arrange for the purchase and conversion of any such First Series Debentures
pursuant to Section 204 of this First Supplemental Indenture, the purchasers
pursuant to such Section shall have the right to convert such First Series
Debentures as set forth therein. All questions as to the validity, eligibility
(including time of receipt) and acceptance of any First Series Debenture for
repayment shall be determined by the Company, whose determination shall be
final and binding absent manifest error.
(d) On or prior to the Repurchase Date, the Company will
deposit with the Trustee or with one or more Paying Agents (or, if the Company
is acting as its own Paying Agent, set aside, segregate and hold in trust as
provided in Section 1003 of the Indenture) an amount of money sufficient to
repay on the Repurchase Date all the First Series Debentures to be repaid on
such date at the appropriate redemption price, together with accrued interest
to the Repurchase Date. Payment for First Series Debentures surrendered for
redemption (and not withdrawn) prior to the Fundamental Change Expiration Date
will be made promptly (but in no event more than three Business Days) following
the Repurchase Date by mailing checks for the amount payable to the Holders of
such First Series Debentures entitled thereto as they shall appear on the
Security Register for such First Series Debentures.
-4-
<PAGE> 6
(e) The term "Applicable Price" means (i) in the event of
a Fundamental Change in which the holders of the Company's Common Stock receive
only cash, the amount of cash received by the holder of one share of Common
Stock and (ii) in the event of any other Fundamental Change, the average of the
last reported sales price for the Company's Common Stock (determined as set
forth in 305(f) of this First Supplemental Indenture) during the ten Trading
Days prior to the record date for the determination of the holders of Common
Stock entitled to receive cash, securities, property or other assets in
connection with such Fundamental Change, or, if no such record date, the date
upon which the holders of the Common Stock shall have the right to receive such
cash, securities, property or other assets in connection with such Fundamental
Change.
(f) The term "Fundamental Change" means the occurrence of
any transaction or event in connection with which all or substantially all the
Company's Common Stock shall be exchanged for, converted into, acquired for or
constitute the right to receive (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise) consideration which is not all
or substantially all common stock which is (or, upon consummation of such
transaction or event, will be) listed on a national securities exchange or
approved for quotation in the National Association of Securities Dealers, Inc.
Automated Quotation System or any similar system of automated dissemination of
quotations of securities prices.
(g) The term "Reference Market Price" shall initially
mean $37.667, and in the event of any adjustment to the conversion price
pursuant to Section 305 of this First Supplemental Indenture, the Reference
Market Price shall also be adjusted so that the ratio of the Reference Market
Price to the conversion price after giving effect to any such adjustment shall
always be the same as the ratio of $37.667 to the conversion price specified in
Section 304 of this First Supplemental Indenture (without regard to any
adjustment thereto).
SECTION 204. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of First Series Debentures, the Company may
arrange for the purchase and conversion of any First Series Debentures called
for redemption by an agreement with one or more investment bankers or other
purchasers to purchase such First Series Debentures by paying to the Trustee in
trust for the Holders of the First Series Debentures to be redeemed, on or
before the close of business on the Redemption Date (including, without
limitation, Redemption Dates arising pursuant to redemption under Section 203
of this First Supplemental Indenture), an amount not less than the applicable
Redemption Price of such First Series Debentures, together with interest
accrued to the date fixed for redemption as provided in Sections 202 and 203 of
this First Supplemental Indenture. Notwithstanding anything to the contrary
contained in this Article Two, the obligation of the Company to pay the
Redemption Price of such First Series Debentures, together with interest
accrued to the date fixed for redemption as provided in Sections 202 and 203 of
this First Supplemental Indenture, shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, a copy of which will be filed with the Trustee prior
to the Redemption Date, any First Series Debentures called for redemption and
not duly surrendered for conversion by the Holders thereof may, at the option
of the Company, be deemed, to the
-5-
<PAGE> 7
fullest extent permitted by law, acquired by such purchasers from such Holders
and (notwithstanding anything to the contrary contained in Article Three of
this First Supplemental Indenture) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the date
fixed for redemption, subject to payment of the above amount as aforesaid. At
the direction of the Company, the Trustee shall hold and dispose of any such
amount paid to it in the same manner as it would monies deposited with it by
the Company for the redemption of any First Series Debentures. Without the
Trustee's prior written consent, no arrangement between the Company and such
purchasers for the purchase and conversion of any First Series Debentures shall
increase or otherwise affect any of the powers, duties, responsibilities or
obligations of the Trustee as set forth in the Indenture, and the Company
agrees to indemnify the Trustee from, and hold it harmless against, any loss,
liability or expense arising out of or in connection with any such arrangement
for the purchase and conversion of any First Series Debentures between the
Company and such purchasers, including the costs and expenses incurred by the
Trustee in the defense of any claim or liability arising out of or in
connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under the Indenture.
ARTICLE THREE
CONVERSION OF FIRST SERIES DEBENTURES
SECTION 301. RIGHT TO CONVERT. Subject to and upon
compliance with the provisions of the Indenture and this First Supplemental
Indenture, the Holder of any First Series Debenture shall have the right, at
the option of such Holder, at any time prior to the close of business on
December 15, 1999 (except that, with respect to any First Series Debenture or
portion of a First Series Debenture which shall be called for redemption, such
right shall terminate, except as provided in the third paragraph of Section 302
of this First Supplemental Indenture, at the close of business on the
Redemption Date of such First Series Debenture or portion of a First Series
Debenture unless the Company shall default in payment due upon redemption
thereof) to convert the principal amount of any such First Series Debenture, or
any portion of such principal amount which is $1,000 or an integral multiple
thereof, into that number of fully paid and nonassessable shares of Common
Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the First Series Debenture or portion thereof surrendered
for conversion by the conversion price in effect at such time, by surrender of
the First Series Debenture so to be converted in whole or in part in the manner
provided in Section 302 of this First Supplemental Indenture. A Holder of
First Series Debentures is not entitled to any rights of a holder of Common
Stock until such Holder has converted such Holder's First Series Debentures,
and only to the extent such First Series Debentures are deemed to have been
converted to Common Stock under this Article Three.
The term "Common Stock" shall mean any stock of any class of
the Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company and which is not subject to redemption by the
Company. Subject to the provisions of Section 306 of this First
-6-
<PAGE> 8
Supplemental Indenture, however, shares issuable on conversion of First Series
Debentures shall include only shares of the class designated as Common Stock of
the Company at the date of the First Supplemental Indenture or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company and which are not subject to redemption by the
Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares
of all such classes resulting from all such reclassifications.
SECTION 302. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF
COMMON STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order
to exercise the conversion privilege, the Holder of any First Series Debenture
to be converted in whole or in part shall surrender such First Series
Debenture, duly endorsed, at an office or agency maintained by the Company
pursuant to Section 1002 of the Indenture, accompanied by the funds, if any,
required by the last paragraph of this Section 302, and shall give written
notice of conversion in the form provided on the First Series Debentures (or
such other notice which is acceptable to the Company) to the Company at such
office or agency that the Holder elects to convert such First Series Debenture
or the portion thereof specified in said notice. Such notice shall also state
the name or names (with address) in which the certificate or certificates for
shares of Common Stock which shall be issuable on such conversion shall be
issued, and shall be accompanied by transfer taxes, if required pursuant to
Section 307 of this First Supplemental Indenture. Each First Series Debenture
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the same name as the registration of such First Series
Debenture, be duly endorsed by, or be accompanied by instruments of transfer in
form satisfactory to the Company duly executed by, the Holder or the Holder's
duly authorized attorney.
As promptly as practicable after the surrender of such First
Series Debenture and the receipt of such notice and funds, if any, as
aforesaid, the Company shall issue and deliver at such office or agency to such
Holder, or on such Holder's written order, a certificate or certificates for
the number of full shares of Common Stock issuable upon the conversion of such
First Series Debenture or portion thereof in accordance with the provisions of
this Article Three and a check or cash in respect of any fractional interest in
respect to a share of Common Stock arising upon such conversion, as provided in
Section 303 of this First Supplemental Indenture. In case any First Series
Debenture of a denomination greater than $1,000 shall be surrendered for
partial conversion, and subject to Sections 302 and 305 of the Indenture, the
Company shall execute and the Trustee shall authenticate and deliver to or upon
the written order of the Holder of the First Series Debenture so surrendered,
without charge to such Holder, a new First Series Debenture or First Series
Debentures in authorized denominations in an aggregate principal amount equal
to the unconverted portion of the surrendered First Series Debenture.
Each conversion shall be deemed to have been effected on the
date on which such First Series Debenture (or portion thereof) shall have been
surrendered (accompanied by the funds, if any, required by the last paragraph
of this Section 302) and such notice shall have been
-7-
<PAGE> 9
received by the Company, each as aforesaid, and the Person in whose name any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become on said date the holder of
record of the shares represented thereby; provided, however, that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall constitute the Person in whose name the certificates are to be
issued as the record holder thereof for all purposes on the next succeeding day
on which such stock transfer books are open, but such conversion shall be at
the conversion price in effect on the date upon which such First Series
Debenture shall have been surrendered.
Any First Series Debenture (or portion thereof) surrendered
for conversion during the period from the close of business on the Regular
Record Date for any Interest Payment Date to the opening of business on such
Interest Payment Date shall (unless such First Series Debenture (or portion
thereof) being converted shall have been called for redemption) be accompanied
by payment, in funds acceptable to the Company, of an amount equal to the
interest otherwise payable on such Interest Payment Date on the principal
amount being converted; provided, however, that no such payment need be made if
there shall exist at the time of conversion a default in the payment of
interest on the First Series Debentures. An amount equal to such payment shall
be paid by the Company on such Interest Payment Date to the Holder of such
First Series Debenture at the close of business on such Regular Record Date;
provided, however, that if the Company shall default in the payment of interest
on such Interest Payment Date, such amount shall be paid to the Person who made
such required payment. Except as provided above in this Section 302, no
adjustment shall be made for interest accrued on any First Series Debenture
converted or for dividends on any shares issued upon the conversion of such
First Series Debenture as provided in this Article Three.
SECTION 303. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of First Series Debentures. If more than one First
Series Debenture shall be surrendered for conversion at one time by the same
Holder, the number of full shares which shall be issuable upon conversion shall
be computed on the basis of the aggregate principal amount of the First Series
Debentures (or specified portions thereof to the extent permitted hereby) so
surrendered. If any fractional share of stock would be issuable upon the
conversion of any First Series Debenture or First Series Debentures, the
Company shall make an adjustment therefor in cash at the current market value
thereof. The current market value of a share of Common Stock shall be the last
reported sale price on the first day (which is a Business Day) immediately
preceding the day on which the First Series Debentures (or specified portions
thereof) are deemed to have been converted and such last reported sale price
shall be determined as provided in Section 305(f) of this First Supplemental
Indenture.
SECTION 304. CONVERSION PRICE. The conversion price shall be
$69.00, subject to adjustment as provided in this Article Three.
SECTION 305. ADJUSTMENT OF CONVERSION PRICE. The conversion
price shall be adjusted from time to time by the Company as follows:
-8-
<PAGE> 10
(a) In case the Company shall (i) pay a dividend,
or make a distribution, in shares of its Common Stock, on its Common
Stock, (ii) subdivide its outstanding Common Stock into a greater
number of shares, or (iii) combine its outstanding Common Stock into a
smaller number of shares, the conversion price in effect immediately
prior thereto shall be adjusted so that the Holder of any First Series
Debenture thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock of the Company which such
Holder would have owned or have been entitled to receive after the
happening of any of the events described above had such First Series
Debenture been converted immediately prior to the happening of such
event. An adjustment made pursuant to this Section 305(a) shall
become effective immediately after the record date in the case of a
dividend and shall become effective immediately after the effective
date in the case of subdivision or combination.
(b) In case the Company shall issue rights or
warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below)
to subscribe for or purchase Common Stock at a price per share less
than the Current Market Price per share of Common Stock (as defined in
Section 305(f) of this First Supplemental Indenture) at the date fixed
for the determination of stockholders entitled to receive such rights
or warrants, except as provided in Section 305(f) of this First
Supplemental Indenture, the conversion price in effect immediately
prior thereto shall be adjusted so that the same shall equal the price
determined by multiplying the conversion price in effect immediately
prior to the date of issuance of such rights or warrants by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus
the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at such Current Market
Price, and of which the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or
warrants plus the total number of additional shares of Common Stock
offered for subscription or purchase. Such adjustment shall be made
successively whenever any such rights or warrants are issued, and
shall become effective immediately after such record date, except as
provided in Section 305(f) of this First Supplemental Indenture. In
determining whether any rights or warrants entitle the holders to
subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the
value of such consideration, if other than cash, to be determined by
the Board of Directors. To the extent that any shares of Common Stock
issuable upon exercise of such rights or warrants are not delivered
due to non-exercise of such rights or warrants, the conversion price
shall be readjusted to the conversion price which would then be in
effect had the adjustments made upon the issuance of such rights or
warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered.
(c) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock any shares of
capital stock of the Company (other than
-9-
<PAGE> 11
Common Stock) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in
Section 305(b) of this First Supplemental Indenture, and excluding any
dividend or distribution (x) in connection with the liquidation,
dissolution or winding up of the Company, whether voluntary or
involuntary, (y) paid exclusively in cash or (z) referred to in
Section 305(a) of this First Supplemental Indenture), any of the
foregoing distributions (except such excluded distributions)
hereinafter in this Section 305(c) called the "Distribution
Securities," then, in each case, unless the Company elects to reserve
such Distribution Securities for distribution to the Holders of First
Series Debentures upon the conversion of the First Series Debentures
so that any such Holder converting First Series Debentures will
receive upon such conversion, in addition to the shares of Common
Stock to which such Holder is entitled, the amount and kind of such
Distribution Securities which such Holder would have received if such
Holder had, immediately prior to the Distribution Record Date (as
defined below) for such distribution of the Distribution Securities,
converted its First Series Debentures into Common Stock, the
conversion price shall be reduced so that the same shall be equal to
the price determined by multiplying the conversion price in effect on
the Distribution Record Date by a fraction of which the numerator
shall be the Current Market Price per share of the Common Stock on the
Distribution Record Date less the fair market value (as determined by
the Board of Directors or, to the extent permitted by applicable law,
a duly authorized committee thereof, whose determination shall be
conclusive, and described in a resolution of the Board of Directors or
such duly authorized committee, as the case may be) on the
Distribution Record Date of the portion of the Distribution Securities
so distributed applicable to one share of Common Stock and the
denominator shall be the Current Market Price per share of the Common
Stock, such reduction to become effective immediately prior to the
opening of business on the day following such Distribution Record
Date; provided, however, that in the event the then fair market value
(as so determined) of the portion of the Distribution Securities so
distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price of the Common Stock on the
Distribution Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder of First Series
Debentures shall have the right to receive upon conversion the amount
of Distribution Securities such Holder would have received had such
Holder converted each First Series Debenture on the Distribution
Record Date. In the event that such dividend or distribution is not
so paid or made, the conversion price shall again be adjusted to be
the conversion price which would then be in effect if such dividend or
distribution had not been declared. If the Board of Directors (or, to
the extent permitted by applicable law, a duly authorized committee
thereof) determines the fair market value of any distribution for
purposes of this Section 305(c) by reference to the actual or when
issued trading market for any securities, it must in doing so consider
the prices in such market over the same period used in computing the
Current Market Price of the Common Stock.
For purposes of this Section 305(c) and Sections
305(a) and (b) of this First Supplemental Indenture, any dividend or
distribution to which this Section 305(c) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock (or both), shall be deemed
instead
-10-
<PAGE> 12
to be (1) a dividend or distribution of the evidences of indebtedness,
assets or shares of capital stock other than such shares of Common
Stock or rights or warrants (and any conversion price reduction
required by this Section 305(c) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights
or warrants (and any further conversion price reduction required by
Sections 305(a) and (b) of this First Supplemental Indenture with
respect to such dividend or distribution shall then be made, except
the Distribution Record Date of such dividend or distribution shall be
substituted as "the record date in case of a dividend" and "the date
of issuance of such rights or warrants" within the meaning of Sections
305(a) and (b) of this First Supplemental Indenture).
(d) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock cash
(excluding (x) any quarterly or semi-annual cash dividend on the
Common Stock to the extent the aggregate cash dividend per share of
Common Stock in any fiscal quarter or, in the case of a semi-annual
dividend, semi-annual period does not exceed the greater of (A) the
amount per share of Common Stock of the next preceding quarterly or,
in the case of a semi-annual dividend, semi-annual cash dividend on
the Common Stock to the extent not requiring any adjustment of the
conversion price pursuant to this Section 305(d) (as adjusted to
reflect subdivisions or combinations of the Common Stock), and (B) in
the case of a quarterly dividend, 3.75% of the Current Market Price
or, in the case of a semi-annual dividend, 7.50% of the Current Market
Price of the Common Stock, in each case on the Trading Day (as defined
in Section 305(f) of this First Supplemental Indenture) next preceding
the date of declaration of such dividend and (y) any dividend or
distribution in connection with the liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary), then, in
such case, unless the Company elects to reserve such cash for
distribution to the Holders of the First Series Debentures upon the
conversion of the First Series Debentures so that any such Holder
converting First Series Debentures will receive upon such conversion,
in addition to the shares of Common Stock to which such Holder is
entitled, the amount of cash which such Holder would have received if
such Holder had, immediately prior to the Distribution Record Date for
such distribution of cash, converted its First Series Debentures into
Common Stock, the conversion price shall be reduced so that the same
shall equal the price determined by multiplying the conversion price
in effect immediately prior to the Distribution Record Date by a
fraction of which the numerator shall be the Current Market Price of
the Common Stock on the Distribution Record Date less the amount of
cash so distributed (and not excluded as provided above) applicable to
one share of Common Stock and the denominator shall be such Current
Market Price of the Common Stock, such reduction to be effective
immediately prior to the opening of business on the day following the
Distribution Record Date; provided, however , that in the event the
portion of the cash so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price of the
Common Stock on the Distribution Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder of
First Series Debentures shall have the right to receive upon
conversion the amount of cash such Holder would have received had such
Holder converted each First Series Debenture on
-11-
<PAGE> 13
the Distribution Record Date. In the event that such dividend or
distribution is not so paid or made, the conversion price shall again
be adjusted to be the conversion price which would then be in effect
if such dividend or distribution had not been declared.
(e) In case a Tender Offer (as defined below) or
exchange offer made by the Company or any Subsidiary of the Company to
all holders of its Common Stock for all or any portion of the Common
Stock shall expire and such Tender Offer or exchange offer shall
involve the payment by the Company or such Subsidiary of consideration
per share of Common Stock having a fair market value (as determined by
the Board of Directors or, to the extent permitted by applicable law,
a duly authorized committee thereof, whose determination shall be
conclusive, and described in a resolution of the Board of Directors or
such duly authorized committee thereof, as the case may be) at the
last time (the "Expiration Time") tenders or exchanges may be made
pursuant to such Tender Offer or exchange offer (as it shall have been
amended) that exceeds the Current Market Price of the Common Stock on
the Trading Day next succeeding the Expiration Time, the conversion
price shall be reduced so that the same shall equal the price
determined by multiplying the conversion price in effect immediately
prior to the Expiration Time by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Expiration Time multiplied by
the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders based on the acceptance (up to
any maximum specified in the terms of the Tender Offer or exchange
offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any
such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any
Purchased Shares) on the Expiration Time and the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration
Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time. In the
event that the Company is obligated to purchase shares pursuant to any
such Tender Offer or exchange offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the conversion price shall again be
adjusted to be the conversion price which would then be in effect if
such Tender Offer or exchange offer had not been made.
(f) For the purpose of any computation under
Sections 305(b), (c), (d) and (e) of this First Supplemental
Indenture, the "Current Market Price" per share of Common Stock at any
date shall be deemed to be the average of the last reported sale
prices for the ten consecutive Trading Days (as defined below)
preceding the day before the record date with respect to any
distribution, issuance or other event requiring such computation;
provided (1) if the "ex" date (as hereinafter defined) for any event
(other than the issuance or distribution or Fundamental Change
requiring such computation) that requires an adjustment to the
conversion price pursuant to Section 305(a), (b), (c), (d) or (e) of
this First Supplemental Indenture occurs during such ten consecutive
Trading
-12-
<PAGE> 14
Days, the last reported sale price for each Trading Day prior to the
"ex" date for such other event shall be adjusted by multiplying such
last reported sale price for each Trading Day on and after the "ex"
date for such other event by the same fraction by which the conversion
price is so required to be adjusted as a result of such other event,
(2) if the "ex" date for any event (other than the issuance,
distribution or Fundamental Change requiring such computation) that
requires an adjustment to the conversion price pursuant to Section
305(a), (b), (c), (d) or (e) of this First Supplemental Indenture
occurs on or after the "ex" date for the issuance or distribution
requiring such computation and prior to the day in question, the last
reported sale price for each Trading Day on and after the "ex" date
for such other event shall be adjusted by multiplying such last
reported sale price by the reciprocal of the fraction by which the
conversion price is so required to be adjusted as a result of such
other event, and (3) if the "ex" date for the issuance, distribution
or Fundamental Change requiring such computation is prior to the day
in question, after taking into account any adjustment required
pursuant to clause (1) or (2) of this proviso, the last reported sale
price for each Trading Day on or after such "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for purposes of
Section 305(c) or (e) of this First Supplemental Indenture, whose
determination shall be conclusive and described in a resolution of the
Board of Directors or such duly authorized committee thereof, as the
case may be) of the evidences of indebtedness, shares of capital stock
or assets being distributed applicable to one share of Common Stock as
of the close of business on the day before such "ex" date.
For purposes of this Section 305(f), the term "ex"
date, (I) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on
the relevant exchange or in the relevant market from which the last
reported sale price was obtained without the right to receive such
issuance or distribution, (II) when used with respect to any
subdivision or combination of shares of Common Stock, means the first
date on which the Common Stock trades regular way on such exchange or
in such market after the time at which such subdivision or combination
becomes effective, and (III) when used with respect to any Tender
Offer or exchange offer means the first date on which the Common Stock
trades regular way on such exchange or in such market after the
Expiration Time of such offer.
The last reported sale price for each day shall be
(i) the last sale price, or the closing bid price if no sale occurred,
of such class of stock on the New York Stock Exchange (or, if not
listed on such exchange, then on the principal securities exchange, if
any, on which such class of stock is listed), or (ii) the last
reported sale price of Common Stock on the National Market System of
the National Association of Securities Dealers, Inc. Automated
Quotation System, or any similar system of automated dissemination of
quotations of securities prices then in common use, if so quoted, or
(iii) if not quoted as described in clause (ii), the mean between the
high bid and low asked quotations for Common Stock as reported by the
National Quotation Bureau Incorporated
-13-
<PAGE> 15
if at least two securities dealers have inserted both bid and asked
quotations for such class of stock on at least 5 of the 10 preceding
days. If the Common Stock is quoted on a national securities or
central market system, in lieu of a market or quotation system
described above, the last reported sale price shall be determined in
the manner set forth in clause (iii) of the preceding sentence if bid
and asked quotations are reported but actual transactions are not, and
in the manner set forth in clause (i) of the preceding sentence if
actual transactions are reported. If none of the conditions set forth
above is met, the last reported sale price of Common Stock on any day
or the average of such last reported sale prices for any period shall
be the fair market value of such class of stock as determined by a
member firm of the New York Stock Exchange, Inc. selected by the
Company.
As used herein the term "Trading Days" with respect
to Common Stock means (I) if the Common Stock is listed or admitted
for trading on any national securities exchange, days on which such
national securities exchange is open for business or (II) if the
Common Stock is quoted on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation System or
any similar system of automated dissemination of quotations of
securities prices, days on which trades may be made on such system.
In addition, for purpose of any computation under
this Section 305: (x) the market value or exercise price of any
rights or warrants shall be determined without giving effect to any
potential adjustment that is contingent upon the occurrence of any
event other than the passage of time; and (y) to the extent that any
right or warrant is subject to any condition (other than the passage
of time), the date of issuance or distribution of such right or
warrant and the record date for the determination of stockholders
entitled to receive such rights or warrants shall be deemed to be the
date of occurrence of such condition.
(g) "Distribution Record Date" shall mean, with
respect to any dividend, distribution or other transaction or event in
which the holders of Common Stock have the right to receive any cash,
securities or other property or in which the Common Stock (or other
applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board
of Directors or by statute, contract or otherwise).
(h) "Tender Offer" means a written offer by the
Company or any Subsidiary of the Company (and widely publicized by the
Company or such Subsidiary as a tender offer) to purchase all or any
portion of the Common Stock of the Company, which offer is determined
by the Board of Directors (or, to the extent permitted by applicable
law, a duly authorized committee thereof) in good faith to constitute
a traditional tender offer based on the type of transaction
traditionally characterized by investors, market professionals and
other participants in the securities industry as a tender offer.
Without in any way limiting the foregoing, such term is not intended
to include
-14-
<PAGE> 16
the broader array of transactions that are sometimes characterized as
tender offers by the Securities and Exchange Commission or the courts,
but are not determined by the Board of Directors (or, to the extent
permitted by applicable law, a duly authorized committee thereof) in
good faith to constitute a traditional tender offer.
(i) No adjustment in the conversion price shall
be required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that any
adjustments which by reason of this subsection (i) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article Three
shall be made by the Company and shall be made to the nearest cent or
to the nearest one hundredth of a share, as the case may be. Anything
in this Section 305 to the contrary notwithstanding, the Company shall
be entitled to make such reductions in the conversion price, in
addition to those required by this Section 305, as it in its
discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, distribution of rights to purchase
stock or securities, or a distribution of securities convertible into
or exchangeable for stock hereafter made by the Company to its
stockholders shall not be taxable.
(j) Whenever the conversion price is adjusted as
herein provided, the Company shall promptly file with the Trustee and
any conversion agent other than the Trustee an Officers' Certificate
setting forth the conversion price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
Promptly after delivery of such certificate, the Company shall prepare
a notice of such adjustment of the conversion price setting forth the
adjusted conversion price and the date on which such adjustment
becomes effective and shall mail such notice of such adjustment of the
conversion price to the Holder of each First Series Debenture at such
Holder's last address appearing on the Security Register for the First
Series Debentures.
(k) In any case in which this Section 305
provides that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence
of such event (i) issuing to the Holder of any First Series Debenture
converted after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such
conversion by reason of the adjustment required by such event over and
above the number of shares of Common Stock issuable upon such
conversion before giving effect to such adjustment and (ii) paying to
such Holder any amount in cash in lieu of any fraction pursuant to
Section 303 of this First Supplemental Indenture.
SECTION 306. EFFECT OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE. If any of the following events occur, namely (i) any
reclassification or change of outstanding shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), (ii) any
consolidation, merger or combination of the Company with another corporation as
a result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock, or (iii) any
-15-
<PAGE> 17
sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock shall occur, then the Company or the successor or purchasing
corporation, as the case may be, shall execute with the Trustee a supplemental
indenture (which shall conform to the Trust Indenture Act as in force at the
date of execution of such supplemental indenture) providing that each First
Series Debenture shall be convertible into the kind and amount of shares of
stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
conversion of such First Series Debentures (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to convert all
such First Series Debentures) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise such holder's rights of election, if
any, as to the kind or amount of securities, cash or other property receivable
upon such reclassification, consolidation, change, merger, statutory exchange,
sale or conveyance (provided that, if the kind or amount of securities, cash or
other property receivable upon such consolidation, merger, exchange, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purposes of this Section 306 the kind and amount of securities,
cash or other property receivable upon such consolidation, merger, statutory
exchange, sale or conveyance for each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the non-electing
shares). Such supplemental indenture shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Article Three.
The Company shall promptly cause notice of the execution of
such supplemental indenture to be mailed to each Holder of First Series
Debentures, at such Holder's address appearing on the Security Register for the
First Series Debentures.
The above provisions of this Section 306 shall similarly apply
to successive reclassifications, changes, consolidations, mergers,
combinations, sales and conveyances.
SECTION 307. TAXES ON SHARES ISSUED. The issue of stock
certificates on conversions of First Series Debentures shall be made without
charge to the converting Holder for any tax in respect of the issue thereof.
The Company shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of stock in any
name other than that of the Holder of any First Series Debenture converted, and
the Company shall not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting the issue thereof
shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
SECTION 308. RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK. The
Company shall provide,
-16-
<PAGE> 18
free from preemptive rights, out of its authorized but unissued shares or
shares held in treasury, sufficient shares to provide for the conversion of the
First Series Debentures, from time to time as such First Series Debentures are
presented for conversion.
Before taking any action which would cause an adjustment
reducing the conversion price below the then par value, if any, of the shares
of Common Stock issuable upon conversion of the First Series Debentures, the
Company will take all corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
shares of such Common Stock at such adjusted conversion price.
The Company covenants that all shares of Common Stock which
may be issued upon conversion of First Series Debentures will upon issue be
fully paid and nonassessable by the Company and free from all taxes, liens and
charges with respect to the issue thereof.
The Company covenants that if any shares of Common Stock to be
provided for the purpose of conversion of First Series Debentures hereunder
require registration with or approval of any governmental authority under any
Federal or State law before such shares may be validly issued upon conversion,
the Company will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be.
The Company further covenants that if at any time the Common
Stock shall be listed on the New York Stock Exchange or any other national
securities exchange the Company will, if permitted by the rules of such
exchange, list and keep listed so long as the Common Stock shall be so listed
on such exchange, all Common Stock issuable upon conversion of the First Series
Debentures.
SECTION 309. RESPONSIBILITY OF TRUSTEE. The Trustee and any
other conversion agent shall not at any time be under any duty or
responsibility to any Holder of First Series Debentures to determine whether
any facts exist which may require any adjustment of the conversion price, or
with respect to the nature or extent or calculation of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. The Trustee and any
other conversion agent shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any First Series Debenture; and the Trustee and any other
conversion agent make no representations with respect thereto. Neither the
Trustee nor any conversion agent shall be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property or cash upon the surrender of any
First Series Debenture for the purpose of conversion or to comply with any of
the duties, responsibilities or covenants of the Company contained in this
Article Three. Without limiting the generality of the foregoing, neither the
Trustee nor any conversion agent shall be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
entered into pursuant to Section 306 of this First Supplemental Indenture
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders of First Series Debentures upon
the conversion of their First Series
-17-
<PAGE> 19
Debentures after any event referred to in Section 306 of this First
Supplemental Indenture or to any adjustment to be made with respect thereto,
but, subject to the provisions of Section 602 of the Indenture may accept as
conclusive evidence of the correctness of any such provisions, and shall be
protected in relying upon, the Officers' Certificate and Opinion of Counsel
(which the Company shall be obligated to file with the Trustee prior to the
execution of any such supplemental indenture) with respect thereto.
SECTION 310. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In
case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock, which dividend or distribution,
under Section 305 of this First Supplemental Indenture, would require
an adjustment to the conversion price for the First Series Debentures;
or
(b) the Company shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or
purchase any share of any class or any other rights or warrants, which
grant, under Section 305 of this First Supplemental Indenture, would
require an adjustment to the conversion price for the First Series
Debentures; or
(c) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding
Common Stock, or a change in par value, or from par value to no par
value, or from no par value to par value), or of any consolidation or
merger to which the Company is a party, to which the Company is not
the surviving corporation and for which approval of any shareholders
of the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
Holder of First Series Debentures, at such Holder's address appearing on the
Security Register, as promptly as possible but in any event at least 15 days
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective or occur, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
-18-
<PAGE> 20
ARTICLE FOUR
MISCELLANEOUS
SECTION 401. GOVERNING LAW, ETC. This First Supplemental
Indenture shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the laws of
the State of New York (without regard to principles of conflicts of laws). The
terms and conditions of this First Supplemental Indenture shall be, and be
deemed to be, part of the terms and conditions of the Indenture for any and all
purposes applicable to the First Series Debentures, in accordance with the
terms and provisions of Section 901 of the Indenture. Other than as amended
and supplemented by this First Supplemental Indenture, the Indenture is in all
respects ratified and confirmed.
SECTION 402. ACCEPTANCE BY TRUSTEE. The Trustee hereby
accepts this First Supplemental Indenture and agrees to perform the same upon
the terms and conditions set forth in the Indenture.
SECTION 403. THE INDENTURE AS SUPPLEMENTED. From and after
the date of this First Supplemental Indenture, for purposes of all Securities,
all references in the Indenture to this "Indenture" shall refer to the
Indenture as supplemented hereby.
[Signatures on following page]
-19-
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed all as of the day and year first
above written.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Randolph L. M. Hutto
-------------------------------------------
Name: Randolph L. M. Hutto
Title: Executive Vice President
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Sandra Carreker
------------------------------------------
Name: Sandra Carreker
Title: Vice President
-20-
<PAGE> 1
EXHIBIT 5.1
Sutherland, Asbill & Brennan
ATLANTA
TEL: (404) 853-8000 999 PEACHTREE STREET, N.E. AUSTIN
FAX: (404) 853-8806 ATLANTA, GEORGIA 30309-3996 NEW YORK
WASHINGTON
December 6, 1994
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Ladies and Gentlemen:
We are acting as counsel to First Financial Management Corporation, a
Georgia corporation ("FFMC") in connection with the preparation of the
Registration Statement No. 33-56327 on Form S-3, filed by FFMC on November 4,
1994 (the "Registration Statement") with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "1933
Act") relating to the initial offering of the convertible debentures described
below and the delayed offering, from time to time pursuant to Rule 415 under
the 1933 Act (the "Delayed Offering"), as set forth in the prospectus contained
in the Registration Statement (the "Prospectus") and as set forth or to be set
forth in one or more supplements to the Prospectus (each such supplement, a
"Prospectus Supplement"), of the Company's (i) debt securities (the "Debt
Securities"), (ii) convertible debt securities (the "Convertible Debt
Securities") and (iii) common stock, par value $.10 per share (the "Common
Stock"), with an aggregate offering price of up to $1 billion. The Debt
Securities, Convertible Debt Securities and Common Stock are collectively
referred to herein as the "Securities." Any Convertible Debt Securities may be
convertible into Common Stock.
The Debt Securities and the Convertible Debt Securities will be issued
in one or more series and will be issued pursuant to either an Indenture dated
December 5, 1994 (the "NationsBank Indenture") between FFMC and NationsBank of
Georgia, National Association, trustee ("NationsBank") or an indenture in the
form filed as an exhibit to the Registration Statement (the "Chase Indenture")
between the Company and The Chase Manhattan Bank (National Association),
trustee ("Chase"). NationsBank and Chase are each also referred to as a
"Trustee," and the NationsBank Indenture and the Chase Indenture are each also
referred to as an "Indenture."
Post-Effective Amendment No. 1 to the Registration Statement contains
a Prospectus Supplement (the "Debenture Prospectus Supplement") covering the
public offering of $506 million (including $66 million to cover
over-allotments) of Senior Convertible Debentures due 1999 (the "Debentures")
pursuant to an underwriting agreement, which is being filed with Post-Effective
Amendment No. 1 as an exhibit to the
<PAGE> 2
First Financial Management Corporation
December 6, 1994
Page 2
Registration Statement (the "Underwriting Agreement"). Post-Effective
Amendment No. 1 and the Debenture Prospectus Supplement contain definitive
information regarding the offering price and terms of the Debentures. The
Debentures will be issued pursuant to the NationsBank Indenture and a related
First Supplemental Indenture (the "Debenture Indenture Supplement") executed
and delivered thereunder.
Based on our review of the relevant documents and materials used in
preparing the Registration Statement, the Prospectus and the Debenture
Prospectus Supplement and the corporate proceedings of FFMC to date with
respect to the proposed issuance and sale of the Securities, including
resolutions of the Board of Directors of FFMC and committees thereof (the
"Resolutions") authorizing the NationsBank Indenture and the issuance, offering
and sale of the Securities and such corporate records of FFMC and such other
documents and certificates as we have deemed necessary, and having regard for
such legal considerations as we have deemed relevant, we are of the opinion
that:
1. The NationsBank Indenture has been duly authorized, executed
and delivered by FFMC and, assuming due authorization, execution and delivery
thereof by NationsBank, constitutes a valid and legally binding instrument of
FFMC enforceable against FFMC in accordance with its terms.
2. The Debentures have been duly authorized, and when (a) the
Debentures shall have been sold upon the terms and conditions set forth in the
Prospectus, the Debenture Prospectus Supplement and the Underwriting Agreement,
and (b) the Debentures have been duly executed by FFMC and authenticated by
NationsBank in accordance with the NationsBank Indenture and the Debenture
Indenture Supplement and delivered and paid for by the purchasers thereof, then
the Debentures will constitute valid and legally binding obligations of FFMC
entitled to the benefits of the NationsBank Indenture.
3. The Common Stock initially issuable upon conversion of the
Debentures has been duly authorized and, when issued and delivered upon
conversion of the Debentures, will be validly issued, fully paid and
nonassessable.
4. The Chase Indenture, when duly approved by a duly authorized
committee of the Board of Directors, executed and delivered by FFMC pursuant to
the authority granted in the resolutions, and assuming due authorization,
execution and delivery thereof by Chase, will have been duly authorized and
will constitute a valid and legally binding instrument of FFMC enforceable
against FFMC in accordance with its terms.
<PAGE> 3
First Financial Management Corporation
December 6, 1994
Page 3
5. The Debt Securities, when the final terms thereof have been
duly established and approved and when duly executed by FFMC, in each case
pursuant to the authority granted in the Resolutions, and authenticated by the
applicable Trustee in accordance with the applicable Indenture and delivered to
and paid for by the purchasers thereof, will have been duly authorized and will
constitute valid and legally binding obligations of FFMC entitled to the
benefits of such Indenture.
6. The Convertible Debt Securities to be issued in the Delayed
Offering, when the final terms thereof have been duly established and approved
and when duly executed by FFMC, in each case pursuant to the authority granted
in the Resolutions, and authenticated by the applicable Trustee in accordance
with the applicable Indenture and delivered to and paid for by the purchasers
thereof, will constitute valid and legally binding obligations of FFMC entitled
to the benefits of such Indenture.
7. The Common Stock issuable on conversion of any issue of
Convertible Debt Securities issued in the Delayed Offering, when duly
authorized pursuant to the authority granted in the Resolutions and when issued
and delivered upon conversion of such Convertible Debt Securities, will be
validly issued, fully paid and non-assessable.
8. The Common Stock issued in the Delayed Offering other than
upon conversion of any Convertible Debt Securities, when duly authorized,
issued and delivered pursuant to the authority granted in the Resolutions and
against payment therefor, will be validly issued, fully paid and
non-assessable.
The opinions set forth above are subject to the qualification that the
enforceability of the Indentures and the Securities may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws
relating to or affecting the enforcement of creditors' rights generally and are
subject to general equitable principles (regardless of whether enforcement is
considered in a proceeding in equity or at law).
The opinions set forth above are limited to the laws of the States of
New York and Georgia and the federal laws of the United States, and we express
no opinion herein concerning the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption
"Legal Matters" in the Prospectus and in the Debenture Prospectus Supplement.
Yours very truly,
SUTHERLAND, ASBILL & BRENNAN
By: /s/ F. Louise Adams
------------------------
F. Louise Adams, Partner
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 1 to Registration Statement No. 33-56327 of First Financial Management
Corporation on Form S-3 of the reports of Deloitte & Touche dated January 28,
1994 included in the Annual Report on Form 10-K of First Financial Management
Corporation for the year ended December 31, 1993. We also consent to the
reference to Deloitte & Touche LLP under the heading "Experts" in such
Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Atlanta, Georgia
December 6, 1994
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-56327) of
First Financial Management Corporation ("FFMC") of our report dated February
22, 1994 relating to the consolidated financial statements of Western Union
Financial Services, Inc. (a wholly owned subsidiary of New Valley Corporation)
and its subsidiaries, which appears in the Current Report by FFMC on Form 8-K
dated November 4, 1994. We also consent to the references to us under the
heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Morristown, New Jersey
December 5, 1994
