<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10442
-----------------
Date of Report (Date of earliest event reported) NOVEMBER 4, 1994
--------------------------
FIRST FINANCIAL MANAGEMENT CORPORATION
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-1107864
------------------------------------ ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 CORPORATE SQUARE, SUITE 700, ATLANTA, GEORGIA 30329
- - ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (404) 321-0120
NOT APPLICABLE
(Former name, former address and formal fiscal year, if changed since last
report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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 has
entered into a Purchase Agreement with New Valley dated as of October 20, 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 New Valley and Western Union. The Purchase Agreement provides for
a cash purchase price of $893,223,000 plus the assumption by FFMC of the
Western Union Pension Plan, as to which benefit accruals have been permanently
suspended. The Purchase Agreement permits Western Union to declare a dividend
of $117,895,435 prior to the closing.
The Bankruptcy Court on November 1, 1994 entered a Confirmation Order
confirming a plan of reorganization of New Valley incorporating the Purchase
Agreement and a Sale Order authorizing the sale to FFMC of all of the stock of
Western Union and related assets pursuant to the Purchase Agreement. The plan
of reorganization was approved by all classes of creditors and holders of
equity of New Valley, so no efforts to appeal or stay the Confirmation Order
are anticipated. Consummation of the Western Union acquisition is expected to
occur during November 1994 (the "Closing Date"), subject to a number of
conditions, including the obtaining of all necessary governmental approvals.
The cash portion of the purchase price will be paid (i) $643,223,000 at the
Closing Date, and (ii) $250,000,000 in January 1995.
The Purchase Agreement requires New Valley to indemnify FFMC for certain
losses arising (within eighteen months after the Closing Date in most instances
and subject to the applicable statute of limitations in other instances) from a
breach of any of the 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. Of the Purchase Price,
$45 million will be placed in escrow for thirty months following closing 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
completion of the audited pro forma balance sheet and 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 Western Union and New
Valley will enter 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.
Western Union, headquartered in Paramus, New Jersey, is the worldwide leader
in the nonbank immediate money transfer 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. The
company has an estimated 90% of the rapid consumer, nonbank money transfer
market in the U.S. Through the use of a central computer system, information
about each transfer is readily available on-line to Western Union agents.
Transfers may be picked up, usually within minutes, at any agent location on a
"will call" basis. Western Union also provides nationwide electronic-based
bill payment services which enables customers to pay utility bills and other
obligations electronically at agent offices.
2
<PAGE> 3
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.
3
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Information of Acquired Business (Western Union Financial
Services, Inc.)
Report of Independent Accountants.
Statements of Operations and Retained Earnings for the years ended
December 31, 1993,1992 and 1991.
Balance Sheets at December 31, 1993 and 1992.
Statements of Cash Flows for the years ended December 31, 1993, 1992
and 1991.
Notes to Financial Statements.
Unaudited Statements of Operations and Retained Earnings for the nine
months ended September 30, 1994 and 1993.
Unaudited Balance Sheet at September 30, 1994.
Unaudited Statements of Cash Flows for the nine months ended September
30, 1994 and 1993.
Notes to Unaudited Financial Statements.
(b) Pro Forma Combined Financial Statements of First Financial Management
Corporation and Business Acquired (unaudited):
Pro Forma Combined Balance Sheet at September 30, 1994.
Pro Forma Combined Statement of Income for the nine months ended
September 30, 1994.
Pro Forma Combined Statement of Income for the year ended December 31,
1993.
Notes to Pro Forma Combined Financial Statements.
(c) Exhibits
2.0 Stock Purchase Agreement, dated October 20, 1994, by and between
New Valley Corporation and First Financial Management Corporation.
The Exhibits and Schedules to the Stock Purchase Agreement are
identified on a list of Exhibits and Schedules contained in the
Table of Contents to the Stock Purchase Agreement, which list is
incorporated herein by reference. Such Exhibits and Schedules
have been omitted for purposes of this filing, but will be
furnished supplementally to the Commission upon request.
4
<PAGE> 5
10.1 Form of Amended and Restated Credit Agreement, a draft
version, dated as of June 25, 1992, amended and restated as of
November 2, 1994 between First Financial Management
Corporation, First Financial Bank, and The Chase Manhattan
Bank (National Association), as agent, for the banks that are
signatories to the Agreement. The Exhibits and Schedules to
the Amended and Restated Credit Agreement are identified on a
list of Exhibits and Schedules contained in the Table of
Contents to the Amended and Restated Credit Agreement, which
list is incorporated herein by reference. Such Exhibits and
Schedules have been omitted for purposes of this filing, but
will be furnished supplementally to the Commission upon
request.
23.1 Consent of Independent Accountants.
5
<PAGE> 6
REPORT OF INDEPENDENT ACCOUNTANTS
February 22, 1994
To the Board of Directors and Stockholder of
Western Union Financial Services, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Western
Union Financial Services, Inc., (a wholly owned subsidiary of New Valley
Corporation) and its subsidiaries at December 31, 1993 and 1992 and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As explained in the Notes to the Consolidated Financial Statements, Western
Union Financial Services, Inc. is a wholly owned subsidiary of New Valley
Corporation, with which it has significant intercompany transactions. As
discussed in Note H, on March 31, 1993 New Valley Corporation consented to an
order for relief under Chapter 11 of the United States Bankruptcy Code and is
operating as a debtor-in-possession.
/s/ Price Waterhouse LLP
6
<PAGE> 7
WESTERN UNION FINANCIAL SERVICES, INC.
(A Wholly Owned Subsidiary of New Valley Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1993 1992 1991
---- ---- ----
(Thousands)
<S> <C> <C> <C>
Revenues $437,410 $400,850 $374,528
-------- -------- --------
Costs and Expenses:
Cost of services 271,561 254,197 245,516
Marketing, general and administrative 116,530 105,965 97,244
Depreciation 8,937 9,941 8,204
Interest expense 716 1,876 586
Write-down of goodwill and investment
(Notes A and E) 3,250 2,611 6,623
Other, net 2,714 (1,818) (2,570)
-------- -------- --------
Total costs and expenses 403,708 372,772 355,603
-------- -------- --------
Income before income taxes 33,702 28,078 18,925
Provision for state income taxes (600) (1,140) (858)
Provision for Federal income tax (12,213) (10,947) (9,017)
-------- -------- --------
Net income 20,889 15,991 9,050
Retained earnings at January 1 19,822 3,831 3,781
Dividends paid to Parent Company (16,000) -- (9,000)
-------- -------- --------
Retained earnings at December 31 $ 24,711 $ 19,822 $ 3,831
======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
7
<PAGE> 8
WESTERN UNION FINANCIAL SERVICES, INC.
(A Wholly Owned Subsidiary of New Valley Corporation)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
-------------------------------
1993 1992
------ ------
(Thousands, except par value)
<S> <C> <C>
Assets
------
Current assets:
Cash in banks $ 25,022 $ 24,792
Cash in transit 35,933 41,331
Temporary cash investments 85,121 59,134
Receivables, less allowance for doubtful accounts
($8,601 and $8,901) 4,939 7,920
Restricted funds 17,091 17,162
Other current assets 7,248 10,115
Receivable from Parent Company 2,655 --
-------- --------
Total current assets 178,009 160,454
-------- --------
Property and equipment 45,369 48,505
Accumulated depreciation (19,369) (20,012)
-------- --------
Net property and equipment 26,000 28,493
-------- --------
Goodwill and other assets 7,909 7,095
-------- --------
Total assets $211,918 $196,042
======== ========
Liabilities and Shareholder's Equity
------------------------------------
Current liabilities:
Current portion of long-term debt $ 7,144 $ 6,229
Accounts payable and accrued liabilities 92,034 76,904
Payable to utilities 10,301 17,778
Money Transfer payable 16,958 16,025
Payable to Parent Company -- 2,128
-------- --------
Total current liabilities 126,437 119,064
-------- --------
Long-term debt and other obligations 7,479 2,832
-------- --------
Deferred credits 192 1,225
-------- --------
Shareholder's equity:
Common stock, $.01 par value: 20,000 shares
authorized, 1,000 shares issued and outstanding -- --
Capital surplus 53,099 53,099
Retained earnings 24,711 19,822
-------- --------
Total shareholder's equity 77,810 72,921
-------- --------
Contingencies and commitments (Notes C and F)
Total liabilities and shareholder's equity $211,918 $196,042
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
8
<PAGE> 9
WESTERN UNION FINANCIAL SERVICES, INC.
(A Wholly Owned Subsidiary of New Valley Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1993 1992 1991
---- ---- ----
(Thousands)
<S> <C> <C> <C>
Cash provided from (used for) operating activities:
Net income $ 20,889 $ 15,991 $ 9,050
Adjustments to reconcile net income to net cash
provided from (used for) operating activities:
Depreciation 8,937 9,941 8,204
Write-down of goodwill and investment 3,250 2,611 6,623
Decrease in receivables 2,896 2,375 7,512
Decrease (increase) in other assets 1,063 (12,052) (1,165)
Decrease (increase) in restricted funds 71 (947) 1,624
Decrease in payable to utilities (7,477) (17,817) (6,297)
Increase (decrease) in money transfer payable 933 6,190 (5,851)
Increase in other liabilities 14,410 8,199 24,290
-------- -------- --------
Net cash provided from operating activities 44,972 14,491 43,990
-------- -------- --------
Cash used for investing activities:
Additions to property and equipment (3,701) (6,981) (5,311)
-------- -------- --------
Cash provided from (used for) financing activities:
Dividends paid to Parent Company (16,000) -- (9,000)
Settlement of accounts with Parent Company (net) (4,278) 3,615 5,823
Repayment of other obligations (174) (1,916) (474)
-------- -------- --------
Net cash provided from (used for) financing activities (20,452) 1,699 (3,651)
-------- -------- --------
Net increase in cash and cash equivalents 20,819 9,209 35,028
Cash and cash equivalents, beginning of year 125,257 116,048 81,020
-------- -------- --------
Cash and cash equivalents, end of year $ 146,076 $125,257 $116,048
======== ======== ========
Supplemental cash flow information:
Cash paid, including payments to Parent Company
(Note H), for:
Interest $ 236 $ 1,388 $ 107
Income taxes 13,047 11,950 10,580
Non-cash investing and financing activities:
Capital leases 4,982 2,212 2,981
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
9
<PAGE> 10
WESTERN UNION FINANCIAL SERVICES, INC.
(A Wholly Owned Subsidiary of New Valley Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
include the accounts of Western Union Financial Services, Inc. ("FSI"), a
wholly owned subsidiary of New Valley Corporation (the "Parent Company"), and
its subsidiaries (collectively the "Company"). All significant intercompany
transactions with FSI's subsidiaries have been eliminated.
Certain amounts in the 1991 and 1992 financial statements have been
reclassified to conform to the 1993 presentation.
STATEMENT OF CASH FLOWS. The Company defines "cash and cash
equivalents" in the Consolidated Statement of Cash Flows as cash in banks, cash
in transit and temporary cash investments in highly liquid marketable
securities. Temporary cash investments consist primarily of commercial paper
with maturities of three months or less and money market funds.
MONEY TRANSFER. The money transfer operations of FSI require FSI to
maintain licenses in most states. Such licenses generally require the
maintenance of minimum levels of net worth and/or liquidity; these requirements
are met by FSI.
Cash received by FSI and its agents generally becomes available to FSI
within one to three days after initial receipt. The money transfer payable
represents amounts to be paid to transferees when they call for their funds,
generally within minutes of receipt by FSI of the transferor's funds.
PAYABLE TO UTILITIES. Cash and checks received by agents for
payment to utilities generally become available from one to several days after
initial receipt by the agents, depending on the number of days required to
clear checks through the banking system. The foregoing does not apply to cash
and checks received by agents and deposited directly into accounts held for the
utilities. These deposits are immediately applied to reduce the principal due
to the utilities. The amount reported as payable to utilities represents other
principal amounts due to the utilities.
RESTRICTED FUNDS. The restricted funds consist of deposits
held by insurance companies or the banking authorities of various states in
connection with the operation of the money transfer business.
10
<PAGE> 11
PROPERTY AND EQUIPMENT. Net property and equipment, which
consists mainly of computers, office equipment and furniture, is stated at cost
less accumulated depreciation.
DEPRECIATION. Depreciation on property and equipment is
computed using the straight-line method over estimated useful lives (5 - 10
years). A major portion of depreciation expense is related to assets held
under capital leases. As property and equipment is retired, its cost and the
related accumulated depreciation are eliminated.
GOODWILL. In 1989, Western Union National Payments Network,
Inc. ("WUNPN"), now a wholly-owned subsidiary of FSI, acquired all the
businesses of National Payments Network ("NPN"). This acquisition was
accounted for as a purchase and the excess of the purchase price over the
estimated fair value of the net assets acquired, $13 million, was recorded as
goodwill and amortized over forty years. In 1991 and 1992, WUNPN wrote down
$6.6 million and $2.6 million of goodwill resulting from the loss of certain
NPN customers. The remaining goodwill is now being amortized over eleven years
using the straight-line method.
INCOME TAXES. In January 1993, FSI prospectively adopted
Statement of Financial Accounting Standards No. 109 (FAS 109), Accounting for
Income Taxes which changes FSI's method of accounting for income taxes from the
deferred method (APB 11) to an asset and liability approach. The asset and
liability approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of other assets and liabilities.
Such adoption did not have a material effect on the Company's financial
statements.
The Company's Federal income tax provision is paid to the
Parent Company, which files a consolidated Federal income tax return. The
state income tax provision represents applicable taxes payable to the various
states in which FSI operations are taxable.
Federal income taxes are calculated at the statutory rate on
pretax income, excluding certain expenses which are not deductible for tax
purposes. There are no significant timing differences.
NOTE B - RETIREMENT PLAN
The Company's eligible full-time employees are covered under
the Parent Company's defined contribution retirement and savings plan, under
which the Company contributes 4% of eligible employee compensation, plus
matching contributions up to 1.2% and 4.2% of such compensation for unionized
and non-union employees, respectively, who make voluntary contributions to the
plan. Expense under this plan was $2.4, $2.3 and $2.2 million in 1993, 1992
and 1991, respectively.
Based on the current union contract and corporate policy
towards non-union employees, FSI was not required to record any liability upon
adoption of SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions", and does not expect to be required to record any
liability in the future.
11
<PAGE> 12
NOTE C - LEASES AND OTHER COMMITMENTS
CAPITAL LEASES AND INSTALLMENT PURCHASES. Assets and
liabilities recorded for capital leases and installment purchases are as
follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------
1993 1992
---- ----
(Thousands)
<S> <C> <C>
Property and equipment . . . . . . . . . . . . . . . . . . . . $ 8,848 $ 5,450
======== ========
Liabilities:
Current . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,745 $ 829
Long-term . . . . . . . . . . . . . . . . . . . . . . . . 5,866 1,975
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . $ 7,611 $ 2,804
======== ========
</TABLE>
The future minimum lease and installment payments and the
present value of such payments as of December 31, 1993 are as follows:
<TABLE>
<CAPTION>
(Thousands)
<S> <C>
1994 $ 1,460
1995 1,997
1996 1,911
1997 1,738
1998 1,476
Later years 400
-------
Total minimum lease payments 8,982
Amount representing interest (1,371)
-------
Present value of net minimum payments $ 7,611
=======
</TABLE>
OPERATING LEASES. FSI leases its headquarters facility in
Paramus, New Jersey under an operating lease which expires in 2000. FSI also
leases certain real properties, principally from the Parent Company, for use as
customer service centers and sales offices. The Company leases certain data
communications terminals, computers, office equipment and motor vehicles.
Annual rent and lease expense was $1.7 million for 1993 and 1992, and $1.8
million in 1991.
The future minimum rental payments required under operating
leases with initial terms in excess of one year as of December 31, 1993 are as
follows:
<TABLE>
<CAPTION>
(Thousands)
<S> <C>
1994 $3,192
1995 3,069
1996 3,000
1997 2,593
1998 2,616
1999 and beyond 4,982
</TABLE>
12
<PAGE> 13
Effective January 1, 1990, the Parent Company leased certain
computer equipment to FSI under a capital lease with the result that FSI
recorded the assets, with a net book value of approximately $22 million, at the
Parent Company's historical cost basis. Subsequent thereto, the Parent Company
made an additional cash capital contribution to FSI, the proceeds of which were
used to repay the capital lease obligation.
COMMITMENTS. Data processing services are provided by
Electronic Data Systems Corporation to FSI and the Parent Company pursuant to a
contract which continues through the year 2000. FSI's expenses were $11.4
million, $10.5 million and $8.5 million in 1993, 1992 and 1991, respectively.
Contracted minimum payments for 1994 are $10.6 million.
NOTE D - DEBT AND OTHER OBLIGATIONS
Debt and other obligations are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1993 1992
---- ----
(Thousands)
<S> <C> <C>
9% Note due July 14, 1992 (Note F) . . . . . . . . . . . . . . $ 5,400 $ 5,400
Other, mainly installment purchases,
due 1994 to 1998:
Current portion . . . . . . . . . . . . . . . . . . 1,744 829
Long-term portion . . . . . . . . . . . . . . . . . 7,479 2,832
</TABLE>
The fair market value of the 9% Note is not determinable due
to the fact that it is currently the subject of litigation (Note F).
13
<PAGE> 14
NOTE E - JOINT VENTURES
In 1991, FSI 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.
In 1991, FSI entered into a joint venture to develop and
operate a check-cashing services business. At December 31, 1993, FSI had
invested $5.1 million in the joint venture's operations and capital
expenditures. FSI has determined to end its commitment to fund this joint
venture and accordingly wrote off its remaining investment of $3.3 million.
In October 1992, FSI entered into a joint venture to provide
bill payment services in Argentina. The joint venture corporation is owned 25%
by FSI. The joint venture will begin operations in 1994.
NOTE F - CONTINGENCIES
In May 1990 the Parent Company filed a complaint against
Datek-InstaCard Corp. and Goldome, which has been subsequently placed under the
control of the Federal Deposit Insurance Corporation, in the United States
District Court for the District of New Jersey. The complaint, which seeks
substantial damages, alleges material misrepresentations and breaches of
warranties, covenants and agreements in connection with the purchase of NPN.
In connection with the litigation, WUNPN has suspended payments on the $5.4
million note issued to Goldome as part of the purchase price. The Parent
Company and the defendants are also in dispute with respect to the settlement
and apportionment of funds, certain expenses and other items in connection with
the sale. In the litigation, the defendants seek damages in excess of $17
million. FSI has been added as a defendant with respect to counterclaims
asserted by Datek.
An unfavorable decision in this proceeding, in the absence of
full or partial recovery of the Company's claims against the defendants, could
have an adverse impact on cash flow.
While it is not possible to predict the outcome of this
matter, management believes, after consultation with counsel, that it has
meritorious positions with respect to the claims described above, and it
intends to defend those positions vigorously. In any event, management
believes that the outcome of this matter will not have a material adverse
effect on the Company's financial position.
14
<PAGE> 15
NOTE G - SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
The composition of accounts payable and accrued liabilities is
as follows:
<TABLE>
<CAPTION>
December 31,
---------------------
1993 1992
---- ----
(Thousands)
<S> <C> <C>
Accounts payable and accruals, principally trade $44,946 $33,857
Payable to banks (funded with cash in transit) 39,988 36,492
Payable to international agents 5,310 5,393
Other, miscellaneous 1,790 1,162
------- -------
Total $92,034 $76,904
======= =======
</TABLE>
The composition of "Other, net" as shown on the Consolidated
Statement of Operations includes the following items:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
(Millions)
<S> <C> <C> <C>
Customer service center closure accrual $ 3.8 $ -- $ --
Interest income (2.4) (2.4) (2.8)
Other miscellaneous 1.3 .6 .2
----- ----- -----
Other, net $ 2.7 $(1.8) $(2.6)
===== ===== =====
</TABLE>
NOTE H - RELATED PARTY TRANSACTIONS
The Parent Company has granted FSI a royalty-bearing,
non-exclusive, perpetual license to utilize certain trademarks and service
marks including the name "Western Union".
The Parent Company provided FSI with certain administrative
services including legal, regulatory affairs, human resources, data processing,
accounting, treasury, tax management, insurance, purchasing, real estate
management and corporate communications. The related agreement provided that
the Parent Company may earn a profit on certain of those services comparable to
that earned by unaffiliated service providers. The Company is included in the
consolidated Federal income tax return of the Parent Company and is charged
with an amount equivalent to its Federal income tax computed at the statutory
rate on a separate-return basis less any applicable tax losses. The agreement
allows the Company and the Parent Company to offer certain services to each
other at market rates. FSI is reimbursed by the Parent Company and earns a
reasonable profit for providing such services.
15
<PAGE> 16
Transactions with the Parent Company are summarized below:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1993 1992 1991
---- ---- ----
(Thousands)
<S> <C> <C> <C>
Revenues to Financial Services:
Provide messaging services as agent $17,448 $22,045 $30,805
Provide operational support 418 625 915
------- ------- -------
Total revenues from Parent
Company $17,866 $22,670 $31,720
======= ======= =======
Expenses incurred by Financial
Services:
Payment for corporate staff support $36,420 $34,392 $29,507
Trademark royalty fee 14,482 13,096 11,999
Federal income taxes 12,213 10,947 9,017
Expenses for message processing 2,865 3,580 4,976
Interest expense (income) on
intercompany balances 204 1,350 (701)
------- ------- -------
Total expenses from Parent
Company $66,184 $63,365 $54,798
======= ======= =======
</TABLE>
As of December 1993, all employees of the Parent Company were
transferred to FSI and FSI has agreed to act as agent for the Parent Company in
the marketing and delivery of its commercial messaging services. FSI will also
provide any required administrative services to the Parent Company. FSI will
charge the Parent Company fees for services provided and may make a profit
while acting as an agent.
See Note C for information regarding the lease of computer
equipment to FSI by the Parent Company.
FSI paid dividends on its common stock in the amount of $16
million in 1993 and $9 million in 1991 to the Parent Company.
Certain FSI employees are covered under the Parent Company's
suspended defined benefit pension plan. In the event of a termination of this
plan by the Pension Benefit Guaranty Corporation, FSI would have joint and
several liability with the Parent Company with respect to any underfunded
obligations. FSI is also jointly and severally liable for the funding of the
Parent Company's pension plan. However, if called upon to do so, any amounts
paid may be offset against charges for services provided to it by the Parent
Company. In 1993, FSI paid the required minimum funding contributions with
respect to the pension plan and was reimbursed by the Parent Company through
offsets to billings for services provided.
The stock of WUNPN is pledged as collateral to secure the
Parent Company's 19 1/4% Senior Secured Notes which were due December 15, 1992.
16
<PAGE> 17
On March 31, 1993, the Parent Company consented to an order
for relief under Chapter 11 of the United States Bankruptcy Code and is now
operating as a debtor-in-possession. FSI and other wholly-owned subsidiaries
of the Parent Company were not included in the bankruptcy proceedings and
continue to operate in the normal manner.
On February 16, 1994 the Parent Company filed an Amended Plan
of Reorganization with the Bankruptcy Court. In connection with the Plan, the
Parent Company has developed a proposal to refinance its capital structure and
improve its operating and financial flexibility. There are three other
proposed plans of reorganization being considered by the Court. No plan has
yet been approved or confirmed by the Court.
17
<PAGE> 18
WESTERN UNION FINANCIAL SERVICES, INC.
(A Wholly Owned Subsidiary of New Valley Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1994 1993
----- -----
(Thousands)
<S> <C> <C>
Revenues $ 401,365 $ 333,289
---------- ----------
Costs and Expenses:
Cost of services 243,264 211,101
Marketing, general and administrative 85,539 87,946
Depreciation 6,717 6,406
Interest expense 701 651
Other, net (2,714) (1,526)
---------- ----------
Total costs and expenses 333,507 304,578
---------- ----------
Income before income taxes 67,858 28,711
Provision for state income taxes (750) (600)
Provision for Federal income tax (23,488) (10,106)
---------- ----------
Net income 43,620 18,005
Retained earnings at January 1 24,711 19,822
Dividends paid to Parent Company (20,000) (16,000)
---------- ----------
Retained earnings at September 30 $ 48,331 $ 21,827
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
18
<PAGE> 19
WESTERN UNION FINANCIAL SERVICES, INC.
(A Wholly Owned Subsidiary of New Valley Corporation)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
----------- ----------------
Assets (Thousands, except per value)
------
<S> <C> <C>
Current assets:
Cash in banks $ 15,334 $ 25,022
Cash in transit 71,478 35,933
Temporary cash investments 152,233 85,121
Receivables, less allowance for doubtful accounts
($8,059 and $8,601) 4,291 4,939
Restricted funds 18,539 17,091
Other current assets 3,757 7,248
Receivable from Parent Company --- 2,655
-------- --------
Total current assets 265,632 178,009
-------- --------
Property and equipment 42,979 45,369
Accumulated depreciation (19,347) (19,369)
-------- --------
Net property and equipment 23,632 26,000
-------- --------
Goodwill and other assets 6,359 7,909
Restricted funds 3,000 ---
-------- --------
Total assets $298,623 $211,918
======== ========
Liabilities and Shareholder's Equity
------------------------------------
Current liabilities:
Current portion of long-term debt $ 7,366 $ 7,144
Accounts payable and accrued liabilities 126,044 92,034
Payable to utilities 12,765 10,301
Money Transfer payable 26,869 16,958
Payable to Parent Company 14,343 ---
-------- --------
Total current liabilities 187,387 126,437
-------- --------
Long-term debt and other obligations 9,234 7,479
-------- --------
Deferred credits 572 192
-------- --------
Shareholder's equity:
Common stock, $.01 par value; 20,000 shares
authorized, 1,000 shares issued and outstanding --- ---
Capital surplus 53,099 53,099
Retained earnings 48,331 24,711
-------- --------
Total shareholder's equity 101,430 77,810
-------- --------
Contingencies (Note C)
Total liabilities and shareholder's $298,623 $211,918
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
19
<PAGE> 20
WESTERN UNION FINANCIAL SERVICES, INC.
(A Wholly Owned Subsidiary of New Valley Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1994 1993
----------- ----------
(Thousands)
<S> <C> <C>
Cash provided from (used for) operating activities:
Net income $ 43,620 $ 18,005
Adjustments to reconcile net income to net cash
provided from (used for) operating activities:
Depreciation 6,717 6,406
Gain on sale of asset (2,653) --
Decrease in receivables 648 2,412
Decrease in other assets 4,511 3,767
Increase in restricted funds (1,448) (204)
Increase (decrease) in payable to utilities 2,464 (4,536)
Increase (decrease) in money transfer payable 9,911 (955)
Increase in other liabilities 34,874 14,080
-------- --------
Net cash provided from operating activities 98,644 38,975
-------- --------
Cash provided from (used for) investing activities:
Proceeds from sale of asset 3,000 --
Increase in noncurrent restricted funds (3,000) --
Additions to property and equipment (2,023) (4,196)
-------- --------
Net cash used for investing activities (2,023) (4,196)
-------- --------
Cash provided from (used for) financing activities:
Dividends paid to Parent Company (20,000) (16,000)
Settlement of accounts with Parent Company (net) 16,998 (13,119)
Repayment of other obligations (650) --
-------- --------
Net cash used for financing activities (3,652) (29,119)
-------- --------
Net increase in cash and cash equivalents 92,969 5,660
Cash and cash equivalents, beginning of period 146,076 125,257
-------- --------
Cash and cash equivalents, end of period $239,045 $130,917
======== ========
Supplemental cash flow information:
Cash paid, including payments to Parent Company, for:
Interest $ 342 $ 292
Income taxes 24,734 10,892
Non-cash investing and financing activities:
Capital leases 2,143 3,327
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
20
<PAGE> 21
WESTERN UNION FINANCIAL SERVICES, INC.
(A Wholly Owned Subsidiary of New Valley Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial
statements include the accounts of Western Union Financial Services, Inc.
("FSI"), a wholly owned subsidiary of New Valley Corporation (the "Parent
Company"), and its subsidiaries collectively (the "Company"). All significant
intercompany transactions with FSI's subsidiaries have been eliminated.
The consolidated financial statements as of September 30,
1994 presented herein have been prepared by FSI without an audit. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position as of September
30, 1994 and the results of operations and cash flows for all periods presented
have been made. Results for interim periods are not necessarily indicative of
the results for an entire year. Certain amounts in the 1993 financial
statements have been reclassified to conform to the 1994 presentation.
These financial statements should be read in conjunction with
the Consolidated Financial Statements in FSI's 1993 Annual Report.
NOTE B - DEBT AND OTHER OBLIGATIONS
Debt and other obligations are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
---------------- ---------------
(Thousands)
<S> <C> <C>
9% Note due July 14, 1992 (Note C) $ 5,400 $ 5,400
Other, mainly installment purchases,
due 1994 to 1999:
Current portion . . . . . 1,966 1,744
Long-term portion . . . 9,234 7,479
</TABLE>
The fair market value of the 9% Note is not determinable due
to the fact that it is currently the subject of litigation (Note C).
21
<PAGE> 22
NOTE C - CONTINGENCIES
In May 1990 the Parent Company filed a complaint against
Datek-InstaCard Corp. and Goldome, which has been subsequently placed under the
control of the Federal Deposit Insurance Corporation, in the United States
District Court for the District of New Jersey. The complaint, which seeks
substantial damages, alleges material misrepresentations and breaches of
warranties, covenants and agreements in connection with the purchase of NPN.
In connection with the litigation, WUNPN has suspended payments on the $5.4
million note issued to Goldome as part of the purchase price. The Parent
Company and the defendants are also in dispute with respect to the settlement
and apportionment of funds, certain expenses and other items in connection with
the sale. In the litigation, the defendants seek damages in excess of $17
million. FSI has been added as a defendant with respect to counterclaims
asserted by Datek.
An unfavorable decision in this proceeding, in the absence of
full or partial recovery of the Company's claims against the defendants, could
have an adverse impact on cash flow. While it is not possible to predict the
outcome of this matter, management believes after consultation with counsel,
that it has meritorious positions with respect to the claims described above,
and it intends to defend those positions vigorously. In any event, management
believes that the outcome of this matter will not have a material adverse
effect on the Company's financial position.
NOTE D - SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
The composition of accounts payable and accrued liabilities is
as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
---------------- ---------------
(Thousands)
<S> <C> <C>
Accounts payable and accruals,
principally trade $ 53,450 $ 44,946
Payable to banks (funded with cash
in transit) 62,267 39,988
Payable to international agents 8,141 5,310
Other, miscellaneous 2,186 1,790
------- -------
Total $126,044 $ 92,034
======= =======
</TABLE>
NOTE E - RELATED PARTY TRANSACTIONS
The Parent Company has granted FSI a royalty-bearing,
non-exclusive, perpetual license to utilize certain trademarks and service
marks including the name "Western Union".
The Company is included in the consolidated Federal income tax
return of the Parent Company and is charged with an amount equivalent to its
Federal income tax computed at the statutory rate on a separate-return basis
less any applicable tax losses. The agreement allows the Company and the
Parent Company to offer certain services to each other at market rates. FSI is
reimbursed by the Parent Company and earns a reasonable profit for providing
such services. In 1993, the Parent Company provided FSI with certain
administrative services. The related agreement provided that the Parent
Company may earn a profit on certain of those services comparable to that
earned by unaffiliated service providers.
22
<PAGE> 23
As of December 1993, all employees of the Parent Company were
transferred to FSI and FSI has agreed to act as agent for the Parent Company in
the marketing and delivery of its commercial messaging services. FSI will also
provide any required administrative services to the Parent Company. FSI will
charge the Parent Company fees for services provided and may make a profit
while acting as an agent.
Transactions with the Parent Company are summarized below:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------
1994 1993
-------- --------
(Thousands)
<S> <C> <C>
Revenues to Financial Services:
Provide consumer messaging services
as agent $10,933 $13,466
Provide operational support --- 341
Provide commercial messaging services
as agent 23,300 ---
Provide corporate staff support 1,800 ---
------ ------
Total revenues from Parent Company $36,033 $13,807
====== ======
Expenses incurred by Financial Services:
Payment for corporate staff support $ --- $27,020
Trademark royalty fee 13,798 10,760
Federal income taxes 23,488 10,106
Expenses for message processing --- 2,262
Interest expense on intercompany balances 77 282
------ ------
Total expenses from Parent Company $37,363 $50,430
====== ======
</TABLE>
FSI paid dividends on its common stock in the amount of $20
million in the second quarter of 1994 and $16 million in 1993 to the Parent
Company.
Certain FSI employees are covered under the Parent Company's
suspended defined benefit pension plan. In the event of a termination of this
plan by the Pension Benefit Guaranty Corporation, FSI would have joint and
several liability with the Parent Company with respect to any underfunded
obligations. FSI is also jointly and severally liable for the funding of the
Parent Company's pension plan. However, if called upon to do so, any amounts
paid may be offset against charges for services provided to it by the Parent
Company. In 1993 FSI paid the required minimum funding contributions with
respect to the pension plan and was reimbursed by the Parent Company through
offsets to billings for services provided.
The stock of WUNPN is pledged as collateral to secure the
Parent Company's 19 1/4% Senior Secured Notes which were due December 15, 1992.
23
<PAGE> 24
On March 31, 1993, the Parent Company consented to an order
for relief under Chapter 11 of the United States Bankruptcy Code and is now
operating as a debtor-in-possession. FSI and other wholly-owned subsidiaries
of the Parent Company were not included in the bankruptcy proceedings and
continue to operate in the normal manner.
On October 20, 1994 the Parent Company along with the Official
Committee of Secured Noteholders and the Statutory Unsecured Committee of
Unsecured Creditors of New Valley Corporation filed an Amended Joint Plan of
Reorganization with the Bankruptcy Court.
In conjunction with such plan, the Bankruptcy Court authorized
the sale of FSI to First Financial Management Corporation along with the
assumption of the Western Union Pension Plan by First Financial Management
Corporation. As a part of this plan, New Valley is assuming the $5.4 million
note payable to Datek-InstaCard and assumed all responsibilities for the
litigation described in Note C. The sale of FSI was approved in a confirmation
hearing in Bankruptcy Court on November 1, 1994.
24
<PAGE> 25
FIRST FINANCIAL MANAGEMENT CORPORATION
PRO FORMA COMBINED FINANCIAL STATEMENTS
The accompanying pro forma combined financial statements conform to the current
presentation format of FFMC's financial statements. The unaudited pro forma
balance sheet and statements of income reflect the combined financial position
and results of operations of FFMC and Western Union.
The pro forma balance sheet at September 30, 1994 assumes that the acquisition
of Western Union occurred on that date. The pro forma statements of income
assume that the acquisition was completed on January 1, 1993.
The pro forma statements of income assume the use of the Company's revolving
bank credit facility to provide the financing for this transaction. If
suitable conditions arise, FFMC intends to use longer term debt instruments or
other securities as the ultimate source of financing, which may have higher
average interest rates. The Company is contemporaneously filing a shelf
registration statement covering such securities.
The pro forma 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.
25
<PAGE> 26
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 $ (223,932)(2) $ 196,706
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 (227,770) 724,530
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 48,479 (4) 192,786
---------- ---------- ---------- -----------
$1,793,325 $ 298,623 $ 905,756 $ 2,997,704
========== ========== ========== ===========
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 7,271 793,223 (6) 810,727
2,746 (3)
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 1,007,186 1,627,959
---------- ---------- ---------- -----------
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 $ 905,756 $ 2,997,704
========== ========== ========== ===========
</TABLE>
See notes to pro forma combined financial statements.
26
<PAGE> 27
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) 39,742 (11) 35,126
Cost of Western Union
pension plan 13,763 (12) 13,763
--------- -------- -------- ----------
1,326,718 333,507 51,370 1,711,595
--------- -------- -------- ----------
Income before income taxes 176,248 67,858 (62,303) 181,803
Income taxes 71,990 24,238 (20,820)(13) 75,408
--------- -------- -------- ----------
Net income $ 104,258 $ 43,620 ($41,483) $ 106,395
========= ======== ======== ==========
Earnings per common share $1.67 $1.70
========= ==========
Average common shares
outstanding 62,570 62,570
</TABLE>
See notes to pro forma combined financial statements.
27
<PAGE> 28
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) 52,229 (11) 51,935
Cost of Western Union
pension plan 20,788 (12) 20,788
------------ -------------- ---------- ------------
1,453,911 403,708 68,842 1,926,461
------------ -------------- ---------- ------------
Income before income taxes 215,757 33,702 (86,290) 163,169
Income taxes 88,112 12,813 (32,253)(13) 68,672
------------ -------------- ---------- ------------
$ 127,645 $ 20,889 $ ($54,037) $ 94,497
============ =============== ========== =============
Earnings per common share $ 2.10 $ 1.55
============ =============
Average common shares
outstanding 60,845 60,845
</TABLE>
See notes to pro forma combined financial statements.
28
<PAGE> 29
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) Under the Purchase Agreement certain net cash payments totalling $124
million will be paid by Western Union to New Valley at closing, including
a permitted dividend of $118 million. In addition FFMC will use $100
million of its cash in the acquisition of Western Union.
(3) At closing certain transfers of assets and liabilities will occur between
Western Union and New Valley as follows:
Messaging service business assets and liabilities will be
transferred from Western Union to New Valley. Equipment and
other capital assets and related liabilities relating to
ongoing operations will be transferred from New Valley to
Western Union. New Valley will assume a $5.4 million note
payable to Datek-InstaCard, Inc. and related liabilities and
assume all responsibilities related to current litigation
between Western Union and Datek-InstaCard.
The net effect of the transfers will be to increase Western Union net
assets by $8.2 million.
(4) Adjustment for the allocation of purchase price to the fair value of
assets acquired and liabilities assumed. It is assumed that historical
amounts approximate fair value for tangible and identified intangible
assets acquired. Such allocations are based upon current estimates which
will be subsequently adjusted based upon final determination of the fair
values of assets acquired and liabilities assumed as of the closing date.
The excess of cost over fair value of net assets acquired (see note 7) is
as follows ($millions):
<TABLE>
<S> <C>
Cash purchase price $ 893.2
Pension Plan liability assumed 266.0
Acquisition costs 28.0
Less deferred tax asset related to Pension
Plan liability (106.5)
-------
$1,080.7
=======
</TABLE>
Deferred tax liability of $58 million has been netted against the deferred
tax asset established above.
(5) Elimination of intercompany payable to New Valley ($14.3 million), and
establishment of accrual for estimated acquisition costs ($28 million).
See Note (4) above.
(6) Long-term debt related to acquisition (cash purchase price including
deferred portion payable in January 1995, net of FFMC cash used).
(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.
29
<PAGE> 30
(8) Adjustments to reflect the elimination of messaging service business
revenue and related expense because such business is to be retained by New
Valley. Income before tax related to the messaging service 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) 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 the
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 related to $793.2
million in bank debt used to finance a portion of the cash purchase price
and interest foregone on $100 million of FFMC cash used. Interest expense
reflects borrowings under a new debt agreement entered into in connection
with the acquisition at the current rate available under such agreement of
6.2%. The current rate 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 debt agreement fluctuate. The impact of a 1/8
percent increase in the rate would be approximately $1 million of
additional interest expense for the year ended December 31, 1993 and
$750,000 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. The 1993 amount is based on actuarial assumptions and was
previously reported in New Valley's 1993 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.
30
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST FINANCIAL MANAGEMENT CORPORATION
--------------------------------------
(Registrant)
Date: November 4, 1994 By /s/ M. Tarlton Pittard
------------------------- ----------------------------------------
M. Tarlton Pittard
Senior Executive Vice President, Chief
Financial Officer and Treasurer
Date: November 4, 1994 By /s/ Richard Macchia
------------------------- ----------------------------------------
Richard Macchia
Executive Vice President
and Principal Accounting Officer
31
<PAGE> 1
EXHIBIT 2.0
EXECUTION COPY
PURCHASE AGREEMENT
BETWEEN
NEW VALLEY CORPORATION
and
FIRST FINANCIAL MANAGEMENT CORPORATION
DATED AS OF
OCTOBER 20, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. PURCHASE AND SALE OF SHARES AND RELATED ASSETS; TREATMENT OF EXCLUDED ASSETS AND SHARED ASSETS
----------------------------------------------------------------------------------------------
1.1. Related Assets; Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3. Shared Assets and Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4. Permitted Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5. Intercompany Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II. PURCHASE PRICE AND ASSUMPTION OF LIABILITIES
--------------------------------------------
2.1. Purchase Price and Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2. Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3. Liabilities Not Assumed by Purchaser or FSI . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4. Certain Other Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5. Pension Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7. Deferred Closing Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
3.1. Corporate Organization; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2. Capitalization of FSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3. Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4. Authorization, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.6. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7. Service Marks, Trademarks, Trade Names, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.8. Leases and Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.10. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11. Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.12. Consents and Approvals of Governmental Authorities . . . . . . . . . . . . . . . . . . . . . . . . 21
3.13. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.14. Good Title Conveyed, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.15. Government Licenses, Permits and Related Approvals . . . . . . . . . . . . . . . . . . . . . . . . 23
3.16. Conduct of Business in Compliance with Regulatory Requirements . . . . . . . . . . . . . . . . . . 23
3.17. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.19. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.20. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.21. Conduct of Business by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.22. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.23. Pension Plan Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.24. Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.25. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
4.1. Corporate Organization; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2. Authorization, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.4. Commitments for the Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.5. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.6. Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V. COVENANTS AND AGREEMENTS OF THE PARTIES
---------------------------------------
5.1. Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3. Access to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.5. Instruments of Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.6. Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.7. Compliance with WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VI. EMPLOYEE MATTERS
----------------
6.1. Covered Employees; Prior Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2. Benefits, Compensation and Working Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.3. Vacation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.4. Incentive Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.5. Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.6. Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.7. Purchaser's Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.8. Plans Subject to Collective Bargaining Agreements . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9. Obligations of Purchaser and Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.10. Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII. BANKRUPTCY MATTERS
------------------
7.1. Confirmation and Sale Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2. Certain Bankruptcy Undertakings by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3. Certain Bankruptcy Undertakings by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII. TERMINATION
-----------
8.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
--------------------------------------------
9.1. Conditions to the Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2. Conditions to the Obligation of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE X. SURVIVAL; INDEMNIFICATION; LIQUIDATED DAMAGES
---------------------------------------------
10.1. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.3. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.4. Treatment of Claims for Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.5. Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XI. MISCELLANEOUS
-------------
11.1. Public Announcements; Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
11.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.4. Binding Effect; No Assignment; No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . 49
11.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.7. Construction and Representation by Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.9. Tax Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.10. Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies . . . . . . . . . . . . 52
11.11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XII. DEFINITIONS
-----------
12.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Pro Forma Balance Sheet
Exhibit B-1 Services Agreement
Exhibit B-2 Consulting Services Agreement
Exhibit B-3 Pension and Retiree Benefits Administration Services Agreement
Exhibit C-1 Trademark License Agreement
Exhibit C-2 Service Mark License Agreement
Exhibit C-3 Trademark License Agreement
Exhibit D Sales and Marketing Agreement
Exhibit E Financial Statements
(a) Audited Seller Financial Statements
(b) Audited FSI Financial Statements
(c) Unaudited Seller June 30, 1994 Financial Statements
(d) Unaudited FSI June 30, 1994 Financial Statements
Exhibit F-1 Bill of Sale -- Closing
Exhibit F-2 Bill of Sale -- Prior to Closing
Exhibit F-3 Bill of Sale -- Second Closing
Exhibit G Instrument of Assumption
Exhibit H Opinion of John C. Walters
Exhibit I Opinion of Mudge Rose Guthrie Alexander & Ferdon
Exhibit J Opinion of Purchaser's Counsel
Exhibit K Escrow Agreement
Exhibit L Form of Sale Order
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS (Continued)
SCHEDULES
<TABLE>
<S> <C>
1.0 Related Assets
1.1 Permitted Liens
1.2 Excluded Assets
1.3 Shared Assets
1.5 Intercompany Claims
2.2 Liabilities Assumed
3.3 FSI Subsidiaries
3.7 Intellectual Property
3.8 Leases
3.9 Taxes
3.10 Insurance
3.11 Benefit Plans
3.12 Consents and Approvals of Governmental Authorities
3.13 Violations
3.15 Licenses
3.16 Compliance with Law
3.17 Litigation
3.18 Environmental Matters
3.19 Undisclosed Liabilities
3.20 Contracts
3.21 Conduct of Business by Purchaser
3.24 Labor Relations
6.1 Excluded Employees; Employment Contracts
</TABLE>
iv
<PAGE> 6
PURCHASE AGREEMENT (the "Agreement") dated as of October 20,
1994 by and between NEW VALLEY CORPORATION, a New York corporation ("Seller"),
and FIRST FINANCIAL MANAGEMENT CORPORATION, a Georgia corporation
("Purchaser").
RECITALS:
WHEREAS, Seller is a debtor and debtor in possession in a case
(the "Case") filed in the United States Bankruptcy Court for the District of
New Jersey (the "Bankruptcy Court") entitled "In re New Valley Corporation,
Debtor," Case No. 91-27704 NW, under Chapter 11, Title 11 of the United States
Bankruptcy Code (the "Bankruptcy Code");
WHEREAS, Seller operates its business and manages its
properties as a debtor in possession in accordance with sections 1107(a) and
1108 of the Bankruptcy Code;
WHEREAS, Seller owns all of the issued and outstanding shares
of common stock (the "Shares"), par value $.01 per share, of Western Union
Financial Services, Inc., a Delaware corporation ("FSI");
WHEREAS, Seller and FSI own all of the assets related to and
are engaged in the business of providing (i) domestic and international money
transfer services, bill payment services, telephone cards, money orders and
bank card services (the "Business") and (ii) messaging services to individuals
and high volume commercial users including, without limitation, Mailgram,
Telegram, Cablegram, Priority Letter, Action Hotline, Automated Voice Telegram,
Commercial Telegram, Custom Letter, and Opiniongram (the "Messaging Services
Business");
WHEREAS, Seller desires to sell and transfer, and Purchaser
desires to purchase and acquire, all of the Shares and all of Seller's and its
affiliates' (other than FSI and its subsidiaries') right, title and interest in
and to all of the assets and properties of Seller and such affiliates which, as
of the Closing Date, relate in any way to the Business, including without
limitation the assets listed in Schedule 1.0 (collectively, the "Related
Assets"), and Purchaser is willing to assume certain liabilities associated
with the Shares and the Related Assets, all on the terms and subject to the
conditions set forth in this Agreement (the acquisition of the Shares and the
Related Assets by Purchaser on such terms and conditions being hereinafter
referred to as the "Acquisition");
<PAGE> 7
WHEREAS, by order dated July 7, 1994 (the "Procedures Order")
the Bankruptcy Court has set forth certain procedures (the "Solicitation
Procedures") for the public auction and sale of the Business, the Shares and
the Related Assets pursuant to the Procedures Order;
WHEREAS, Seller and other parties in interest (the "Plan
Proponents") have filed on or prior to the date of the Procedures Order plans
of reorganization and disclosure statements with the Bankruptcy Court;
WHEREAS, pursuant to the Procedures Order and the Solicitation
Procedures Purchaser has previously deposited $10 million in cash with Seller
to be applied toward the Purchase Price payable pursuant to Section 2.1; and
WHEREAS, consistent with the Procedures Order, Seller wishes
to carry out the transactions contemplated by this Agreement pursuant to an
amended plan of reorganization (the "Amended Plan") filed by a Plan Proponent
and, to the extent required, an amended disclosure statement (the "Amended
Disclosure Statement"), in each case based on and incorporating the
transactions contemplated by this Agreement, and to consummate the transactions
contemplated hereby as promptly as practicable.
NOW, THEREFORE, in consideration of the respective premises,
mutual covenants and agreements of the parties hereto, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I. PURCHASE AND SALE OF SHARES AND RELATED ASSETS; TREATMENT
OF EXCLUDED ASSETS AND SHARED ASSETS.
1.1. RELATED ASSETS; PURCHASE OF SHARES. Upon the terms and
subject to the conditions of this Agreement, on the closing date of the
purchase by Purchaser of the Shares pursuant to the Acquisition (the "Closing
Date"), Seller shall sell and transfer to Purchaser, or its designated
affiliates (any references herein to Purchaser being deemed to include such
designated affiliates unless the context indicates otherwise), and Purchaser,
subject to the provisions of Section 2.7, shall purchase and acquire from
Seller, the Shares and the Related Assets owned by it or any of its
subsidiaries (other than FSI or any FSI Subsidiary, as defined below),
including, without limitation, all interests owned by Seller and any of its
subsidiaries or affiliates (other than FSI or any FSI Subsidiary) in the
Western Union Name and Trademark (as defined below) and Seller shall cause each
of its affiliates (other than FSI and its subsidiaries) which owns any of the
Related Assets to transfer, sell and assign such Related Assets to Purchaser,
in each case free and clear of all liens, encumbrances, claims (as
2
<PAGE> 8
"claim" is defined in Section 101(5) of the Bankruptcy Code), security
interests of whatever kind or nature, mortgages, pledges, charges, licenses,
options, rights-of-recovery, judgments, orders and decrees of any court or
foreign or domestic governmental entity, interest, tax (including foreign,
state and local taxes), in each case, of any kind or nature, whether secured or
unsecured, choate or inchoate, filed or unfiled, scheduled or unscheduled,
noticed or unnoticed, recorded or unrecorded, contingent or non-contingent,
material or non-material, known or unknown and including all claims based on
any theory that Purchaser is a successor, transferee or continuation of Seller
or the business of Seller (collectively, "Liens" and each a "Lien") whether
arising prior to or subsequent to the date of the filing of the Chapter 11
petition of Seller, other than, in the case of the Related Assets only, the
Liens set forth in Schedule 1.1 ("Permitted Liens") (the consummation of such
transactions other than the transfers at the Second Closing referred to in
Section 2.7, if applicable, being hereinafter referred to as the "Closing").
It is the intention of the parties that, after giving effect to the sale of the
Shares and the Related Assets and the transfer of the Excluded Assets (as
defined below), Purchaser shall own, either directly or through ownership of
FSI and the FSI Subsidiaries, all interests owned by Seller and its
subsidiaries and affiliates as of the date of this Agreement and through the
Closing (and, if applicable, the Second Closing) in and to all Marks (as
defined below) incorporating the words "Western Union," regardless of when such
Marks were created, whether alone or in conjunction with other words, and
associated goodwill, as used in connection with the Business or otherwise (all
such Marks being hereafter referred to as the "Western Union Name and
Trademark"), subject to the licenses and other agreements set forth in Schedule
3.7(a), and shall own or have an interest in all of the assets and properties
reflected on the June 30, 1994 Pro Forma Combined Balance Sheet (the "Pro Forma
Balance Sheet") attached hereto as Exhibit A (other than for changes in such
assets and properties pursuant to this Agreement or as may occur after the date
of such Pro Forma Balance Sheet in the ordinary course of the Business and
consistent with the terms of this Agreement).
1.2. EXCLUDED ASSETS. Upon the terms and subject to the
conditions of this Agreement, prior to the Closing Date, Seller shall cause FSI
to transfer and assign to Seller or an affiliate all of the assets and
properties owned by it which are used exclusively in the conduct of the
Messaging Services Business (the "Excluded Assets") (all of which assets are
listed in Schedule 1.2), pursuant to the Bill of Sale attached as Exhibit F-2,
free and clear of all Liens in favor of, or arising through, FSI or an FSI
Subsidiary and Seller shall assume and be responsible for all liabilities and
obligations (whether fixed, contingent, matured or unmatured, known or unknown,
liquidated or unliquidated) related to the Excluded Assets. The parties hereto
understand and agree that if any Excluded Assets cannot be transferred to
Seller at or prior to the Closing Date by reason of any required consent or
approval
3
<PAGE> 9
not being obtained, FSI and Purchaser will use reasonable efforts to transfer
to Seller the benefits and burdens of such Excluded Assets so that Seller may
enjoy the use of such Excluded Assets.
1.3. SHARED ASSETS AND RELATED AGREEMENTS. The assets and
properties of FSI or Seller (including the Related Assets) which following the
Closing Date (and, if applicable, the Second Closing) shall be used in the
conduct of both the Business and the Messaging Services Business and listed in
Schedule 1.3 are hereinafter referred to as the "Shared Assets". The Shared
Assets shall be subject to (i) a Services Agreement in the form of Exhibit B-1
and (ii) a Trademark License Agreement in the form of Exhibit C-1, both of
which shall be executed at the Closing. In addition, at the Closing (or, if
applicable, the Second Closing), the parties shall execute (1) a Consulting
Services Agreement in the form of Exhibit B-2, (2) a Pension and Retiree
Benefits Administration Services Agreement in the form of Exhibit B-3, (3) a
Sales and Marketing Agreement in the form of Exhibit D, (4) a Service Mark
License Agreement in the form of Exhibit C-2, and (5) if Purchaser elects to
acquire Seller's Marks (as defined below) in a Second Closing pursuant to
Section 2.7, a Trademark License Agreement in the form of Exhibit C-3. The
foregoing agreements, with such changes therein as Purchaser and Seller may
agree to as of the Closing Date (and, if applicable, the Second Closing), are
hereinafter referred to as the "Related Agreements". Seller agrees to comply
with all of its obligations under the Related Agreements.
1.4. PERMITTED DIVIDEND. On or prior to the Closing Date,
Seller may cause FSI to declare and pay to Seller a dividend, or otherwise to
distribute to Seller, an amount in cash equal to $117,895,434 (the "Permitted
Dividend"). Seller hereby agrees that Purchaser shall be entitled to deduct
from the portion of the Purchase Price to be paid to Seller at the Closing (or,
if not determined until after the Closing, shall receive a refund from Seller
of a portion of the Purchase Price equal to) the amount, if any, by which the
aggregate amount of dividends or other distributions or payments paid or made
by FSI or any of its subsidiaries to Seller or any of its affiliates after June
30, 1994 in respect of its capital stock or otherwise (other than pursuant to
Section 1.2 and the last sentence of Section 1.5) exceeds the amount of the
Permitted Dividend.
1.5. INTERCOMPANY ACCOUNTS. The balance of all intercompany
accounts between Seller and its affiliates other than FSI and the FSI
Subsidiaries, on the one hand, and FSI and the FSI Subsidiaries, on the other
hand (the "Intercompany Accounts"), as of June 30, 1994 on a pro forma basis
and on an actual basis will not be settled but will be contributed to capital
of FSI at or prior to the Closing. Except as set forth in Schedule 1.5, from
and after July 1, 1994, FSI and the FSI Subsidiaries have not made and, after
the date of this Agreement, shall not make any payments or transfers, or incur
any liabilities to Seller or any of its
4
<PAGE> 10
subsidiaries (other than FSI or the FSI Subsidiaries) except as permitted by
Sections 1.2, 1.4 or 11.9 or as reimbursement for expenses incurred in the
ordinary course of business and recorded in the Intercompany Accounts;
provided, however, that expenses incurred by FSI in the amount of not less than
$200,000 per month for each month after June 1994 shall be allocated to Seller
as "Corporate Overhead", consistent with Seller's practice for the six months
ended June 30, 1994 and royalties or other charges in respect of the use by FSI
and the FSI Subsidiaries of any Related Assets, interest on Intercompany
Accounts, revenue sharing payments and processing fees shall each be consistent
with such charges made during the six months ended June 30, 1994. The balance
of the Intercompany Accounts as so determined shall be paid in full on the
Closing Date, or as soon as practicable thereafter, and Seller shall pay to FSI
at or prior to the Closing the amount of any transfers set forth in Schedule
1.5.
ARTICLE II. PURCHASE PRICE AND ASSUMPTION OF LIABILITIES.
2.1. PURCHASE PRICE AND ADJUSTMENTS. (a) At the Closing, in
consideration for the sale to Purchaser of the Shares and the Related Assets,
and subject to Section 2.7, (i) Purchaser shall pay to Seller $1,193,223,000
(the "Purchase Price"), of which $893,223,000 less the sum of (x) the amount of
the $10 million good faith deposit previously deposited with Seller, (y) any
interest actually earned thereon, and (z) the amount of $45 million (the
"Escrowed Funds") which shall be paid by Purchaser to the Escrow Agent (as
named in the Escrow Agreement, as defined below) shall be paid in cash and
$300,000,000 shall be paid by the assumption by Purchaser of the Western Union
Pension Plan; and (ii) FSI and/or Purchaser, as applicable, shall assume the
Assumed Liabilities (including the Western Union Pension Plan) as described in
Section 2.2. The cash portion of the Purchase Price to be paid at Closing
shall be paid by wire transfer of immediately available funds, to such account
or accounts of Seller as may be designated by Seller. The Escrowed Funds shall
be held and paid pursuant to the provisions of an escrow agreement,
substantially in the form attached as Exhibit K hereto (the "Escrow
Agreement").
(b) The Purchase Price shall be subject to adjustment
as follows:
(1) Seller has prepared (or caused to be prepared) the
Pro Forma Balance Sheet which is a consolidated balance sheet of FSI
and its subsidiaries as of June 30, 1994, which: (A) is adjusted to
give effect to an assumed contribution by Seller of the Related Assets
to FSI, to an assumed assumption by FSI of the Assumed Liabilities
(other than the Pension Plan liability described in Section 2.2(a)),
to the payment of an assumed dividend in the amount of $87,895,434 as
of June 30, 1994 (rather than a payment of the Permitted Dividend) and
to
5
<PAGE> 11
the other transactions contemplated by this Agreement, including the
contribution to capital of FSI of all Intercompany Accounts as of June
30, 1994, the transfer of the Excluded Assets by FSI to Seller, and
the assumption by Seller of the Excluded Liabilities; (B) reflects
consolidated Total Assets (as defined below) and consolidated Total
Liabilities (as defined below); (C) has been prepared using accounting
practices consistent with those followed on an annual basis at each
December 31, without regard to those followed on an interim basis; (D)
otherwise has been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the balance
sheets of FSI and its subsidiaries as of December 31, 1993 and June
30, 1994 included in Exhibit E; and (E) fairly presents the
consolidated financial position of FSI and its subsidiaries at June
30, 1994, after making the foregoing adjustments and all other
adjustments that are necessary for a fair presentation of the
consolidated financial position of FSI and its subsidiaries at that
date. The Pro Forma Balance Sheet does not reflect any liability
which may result under the Shareholders Agreement between FSI and
Elektra, S.A. de C.V. if such Shareholders Agreement is not affirmed
by FSI after the execution of this Agreement (which liability
Purchaser acknowledges is not an obligation of Seller). For the
purposes hereof, Total Liabilities" and "Total Assets" are defined in
accordance with generally accepted accounting principles; provided,
however, that Total Liabilities do not include any liability in
respect of the Western Union Pension Plan or the Excluded Liabilities
(as defined below); and provided, furthe, that Total Assets do not
include the Excluded Assets and do not include any assets reflected in
the Pro Forma Balance Sheet at values in excess of their historical
cost less amortization; andprovided, further, that: (x) the amount of
any reserve, liability or similar item on the Pro Forma Balance Sheet
determined by any estimation methodology (the Methodology") has been
determined by use of the same Methodology used in determining the
amount included in the balance sheet of FSI and its subsidiaries as of
December 31, 1993 included in Exhibit E; (y) Total Assets do not
include any capitalized transaction costs incurred in connection with
the Acquisition, all of which, if any, incurred by FSI prior to June
30, 1994 have been expensed by FSI prior to June 30, 1994; and (z) the
Pro Forma Balance Sheet reflects full and adequate reserves against
(1) all unpaid Federal, state, local or foreign taxes (including any
interest, penalties or additions to tax that may become payable in
respect thereof) assessed against or payable by FSI with respect to
any period ending on or before June 30, 1994 and (2) unpaid or vested
sales or other incentive compensation for Covered Employees which is
earned through June 30, 1994.
6
<PAGE> 12
(2) Seller shall cause its independent certified
public accountants, Price Waterhouse ("Seller's Accountants"), to
audit the Pro Forma Balance Sheet and Seller shall deliver to
Purchaser within sixty (60) days after the date of this Agreement
Seller's Accountants' draft audit report with respect thereto
(together with the Pro Forma Balance Sheet), which report shall state
that the Pro Forma Balance Sheet has been audited in accordance with
generally accepted auditing standards and that the Pro Forma Balance
Sheet has been prepared in accordance with the basis of accounting
described in the notes thereto and the provisions of Section
2.1(b)(1). Purchaser's representatives, including its independent
accountants, (which shall be a "Big Six" accounting firm or other
accounting firm acceptable to Seller) ("Purchaser's Accountants"),
shall be entitled to review all workpapers of Seller's Accountants and
supporting evidence relating to such audit subject to appropriate
indemnification arrangements for the benefit of Seller's Accountants.
(3) Within forty-five (45) days after its receipt of
the Pro Forma Balance Sheet and the draft audit report of Seller's
Accountants or, if later, thirty (30) days after the Closing Date,
Purchaser shall notify Seller whether it accepts or disputes the
accuracy of the Pro Forma Balance Sheet. If Purchaser accepts the Pro
Forma Balance Sheet, Seller's Accountants shall be requested to issue
their final audit report thereon and the Pro Forma Balance Sheet shall
be deemed to be the audited pro forma balance sheet of FSI as of June
30, 1994 (the "Audited Pro Forma Balance Sheet"). If Purchaser
disputes the accuracy of the Pro Forma Balance Sheet, it shall in such
notice set forth in reasonable detail those items that Purchaser
believes are not fairly presented and the reasons for its opinion.
The parties shall then meet and in good faith use their best efforts
to try to resolve their disagreements over the disputed items on the
Pro Forma Balance Sheet. If the parties resolve their disagreements
in accordance with the foregoing sentence, the Pro Forma Balance Sheet
with those modifications to which the parties shall have agreed shall
be deemed to be the Audited Pro Forma Balance Sheet. If the parties
have not resolved their disagreements over the disputed items on the
Pro Forma Balance Sheet within thirty (30) days after Purchaser's
notice of dispute, the parties shall forthwith jointly select an
independent "Big Six" firm (or other firm acceptable to both parties)
of certified public accountants and such firm shall make a binding
determination of those disputed items in accordance with this
Agreement within ninety (90) days of its selection, and the Pro Forma
Balance Sheet with those modifications determined by such third
accounting firm shall be deemed to be the Audited Pro Forma Balance
Sheet. The determination of such third accounting firm shall not be
subject to judicial review. The fees and expenses of Purchaser's
Accountants
7
<PAGE> 13
shall be paid by Purchaser, the fees and expenses of Seller's
Accountants (including audit fees) shall be paid by Seller and the
fees and expenses of any third accounting firm shall be shared equally
by both parties.
(4) If FSI's consolidated Total Assets reflected in
the Audited Pro Forma Balance Sheet do not exceed FSI's consolidated
Total Liabilities reflected therein by at least $15.0 million, the
amount by which the sum of FSI's consolidated Total Liabilities plus
$15.0 million exceeds FSI's consolidated Total Assets shall be
deducted from the Purchase Price and paid by Seller to Purchaser
within two (2) business days after the Audited Pro Forma Balance Sheet
has been determined by wire transfer of immediately available funds to
such account or accounts as may be designated by Purchaser.
(5) If FSI's consolidated Total Assets reflected in the
Audited Pro Forma Balance Sheet exceed FSI's consolidated Total
Liabilities reflected therein by more than $15.0 million, the amount
of such excess shall be added to the Purchase Price and paid by
Purchaser to Seller within two (2) business days after the Audited
Closing Date Balance Sheet has been determined by wire transfer of
immediately available funds to such account or accounts as may be
designated by Seller.
(6) All amounts payable by Seller to Purchaser or by
Purchaser to Seller pursuant to this Section 2.1(b) shall bear
interest for the period from the Closing Date to the date of payment
of such amounts at the rate announced from time to time by Citibank,
N.A. as its base rate.
2.2. ASSUMPTION OF LIABILITIES. At and effective as of the
Closing, FSI and/or Purchaser, as applicable, shall assume or continue to be
responsible for, as the case may be, the following obligations and liabilities
(the "Assumed Liabilities") of Seller pursuant to the Instrument of Assumption
attached as Exhibit G:
(a) PENSION PLAN. Purchaser or a wholly-owned
subsidiary of Purchaser will adopt and become the plan sponsor of the Western
Union Pension Plan (as defined in the Amended Plan) and the trust thereunder,
including any plans and trusts resulting from the division of the Western Union
Pension Plan pursuant to Section 6.6(g), except that Seller shall remain liable
for and shall indemnify and hold Purchaser and FSI and its subsidiaries
harmless against any excise tax under Chapter 43 of the Internal Revenue Code,
as amended (the "Code") asserted with respect to contributions made by Seller,
FSI or Purchaser or omitted to be made to any plan of Seller or its affiliates
and any prohibited transactions during or for any plan year prior to January 1,
1995, except any excise tax imposed for failure to make the minimum
8
<PAGE> 14
contribution with respect to the 1994 plan year. Purchaser and FSI shall be
liable for and shall indemnify and hold Seller and its subsidiaries harmless
against any such excise tax asserted with respect to contributions made to the
Western Union Pension Plan and any prohibited transactions during or for any
plan year commencing on or after January 1, 1995, and for any excise tax
imposed for failure to make the minimum contribution with respect to the 1994
plan year.
(b) CERTAIN LIABILITIES. Purchaser or FSI or another
affiliate of Purchaser will assume the liabilities listed in Schedule 2.2
associated with the Related Assets.
(c) COLLECTIVE BARGAINING AGREEMENTS. FSI shall
assume all of Seller's obligations in respect of active employees of the
Business under Seller's collective bargaining agreements (the "Collective
Bargaining Agreements") with the Communications Workers of America (the "CWA").
2.3. LIABILITIES NOT ASSUMED BY PURCHASER OR FSI. Except as
expressly assumed hereunder, neither Purchaser, FSI, nor any subsidiary of
either of them, shall assume or have any responsibility for or otherwise become
liable for any liabilities (whether fixed, contingent, matured or unmatured,
known or unknown, liquidated or unliquidated) of Seller (the "Excluded
Liabilities"), including without limitation, (a) the Reno, Nevada Customer
Service Center lease, (b) any liability of Seller to any of its creditors or
shareholders, (c) any liability to the extent associated with the conduct of
the Messaging Services Business (including without limitation, any liability to
its employees under the Collective Bargaining Agreements or otherwise), (d) any
liability associated with the Datek litigation referred to in Note G to
Seller's financial statements for the quarter ended June 30, 1994 (the "Datek
Litigation"), (e) any federal, state, local or foreign tax liabilities
(including interest and penalties) attributable to the income of FSI and its
subsidiaries included in Seller's consolidated federal and consolidated,
combined or unitary state tax returns for all periods through the Closing Date,
(f) any liability related to the Excluded Assets, (g) any liability resulting
from the failure by Seller or FSI prior to, or with respect to periods ending
on or prior to, the Closing Date properly to fund, maintain or make payments
pursuant to any benefit plans or arrangements (including governmental pension
plans) for employees who are not United States citizens, or (h) any liability
in respect of post-retirement benefits to any former employees of Seller or FSI
who retired prior to the Closing Date, other than (1) post-retirement benefits
provided under the Western Union Pension Plan expressly assumed pursuant to
Section 2.2(a) or (2) post retirement benefits for individuals who retire after
the Closing Date pursuant to any plans maintained by or applicable to Purchaser
or FSI on and after the Closing Date. Seller shall indemnify and hold
Purchaser, FSI and the FSI Subsidiaries harmless from and against any loss,
9
<PAGE> 15
liability, damage or deficiency (including, without limitation, costs,
interest, penalties and reasonable attorneys' fees) resulting from the Excluded
Liabilities.
2.4. CERTAIN OTHER ARRANGEMENTS. After the Closing Date,
Purchaser agrees that it will not, and will cause FSI not to, take any action
which would have the effect of increasing the amount of liability of Seller for
any post-retirement benefits payable to any former employees of Seller or FSI
under the Collective Bargaining Agreements.
2.5. PENSION ASSETS. (a) Seller shall indemnify and hold
Purchaser, FSI and the FSI Subsidiaries harmless from and against any decline
in the fair market value of the assets in the Western Union Pension Plan (the
"Plan Assets") from December 31, 1993 to the Closing Date (other than as a
result of the payment of plan benefits and expenses from and after December 31,
1993 and prior to the Closing Date and without giving effect to any minimum
funding contribution made by Seller during such period) as follows: Within
forty-five (45) days following the Closing Date, Seller shall provide Purchaser
with a statement of the fair market value of the Plan Assets as of the Closing
Date. Purchaser shall have ten (10) days to review such statement and to give
Seller notice of any objection it may have to the value of any asset included
therein. In the event that such an objection is made and Seller and Purchaser
cannot resolve the dispute within ten (10) days thereafter, the dispute shall
be referred to a nationally recognized organization expert in pricing
securities (an "Evaluation Firm") satisfactory to Seller and Purchaser whose
opinion as to the fair market value of the disputed item(s) shall be delivered
within thirty days and shall be binding on Seller and Purchaser and whose fees
and expenses shall be borne equally by the parties. The opinion of the
Evaluation Firm shall not be subject to judicial review. In the event that the
fair market value of the Plan Assets as of the Closing Date is less than the
fair market value of the Plan Assets as of December 31, 1993 (other than as a
result of the payment of plan benefits and expenses from and after December 31,
1993 and prior to the Closing Date and without giving effect to any minimum
funding contribution made by Seller during such period), then Seller shall pay
the difference to Purchaser within three (3) days after the fair market value
of the Plan Assets as of the Closing Date is determined.
(b) For purposes of Section 2.5(a) the parties agree
that the fair market value of the Plan Assets at December 31, 1993 shall be
$288,349,000. Seller and Purchaser agree to compute and to instruct any
Evaluation Firm selected pursuant to Section 2.5(a) to compute the value of the
Plan Assets as of the Closing Date on a basis consistent with the December 31,
1993 valuation set forth above.
10
<PAGE> 16
2.6. CLOSING. The Closing shall take place at the offices of
Mudge Rose Guthrie Alexander & Ferdon, 180 Maiden Lane, New York, New York
10038 at 11:00 a.m. New York City Time on the last business day of the calendar
month in which the conditions set forth in Article IX have been satisfied, or
at such other time or place as the parties may agree and as may be approved by
the Bankruptcy Court.
2.7. DEFERRED CLOSING ELECTION. (a) Notwithstanding anything
herein to the contrary, Purchaser may elect, on 15 days' notice to Seller prior
to the Closing, to close the purchase of all interests owned by Seller and its
subsidiaries and affiliates in those Marks and associated goodwill constituting
the Western Union Name and Trademark not held by FSI or the FSI Subsidiaries
("Seller's Marks") separately from and subsequent to the Closing of the
purchase of the Shares and the other Related Assets, provided that the date
elected by Purchaser for such subsequent closing (the "Second Closing") shall
be on or before January 15, 1995. If Purchaser so elects, (i) the Purchase
Price payable at the Closing shall be reduced by $250,000,000, (ii) at the
Closing, Purchaser and Seller shall execute and deliver a Trademark License
Agreement in the form of Exhibit C-3; and (iii) at the Second Closing:
Purchaser shall pay to Seller $250,000,000 plus a license or royalty fee on
such amount computed at the rate per annum announced from time to time by
Citibank, N.A. as its base rate from the date of the Closing to the Second
Closing; Seller shall execute and deliver to Purchaser a Bill of Sale in the
form of Exhibit F-3 and such other instruments of transfer, conveyance and
assignment as are reasonably necessary to vest in Purchaser, free and clear of
all Liens except Permitted Liens, all right, title and interest of Seller and
its subsidiaries and affiliates as of the date of this Agreement and through
the Second Closing in and to Seller's Marks; and Seller shall cause to be
delivered to Purchaser written opinions of Seller's General Counsel and Mudge
Rose Guthrie Alexander & Ferdon, counsel to Seller, addressed to Purchaser,
substantially in the forms attached hereto as Exhibits H and I, respectively,
as specified therein with respect to the Second Closing. It is understood and
agreed among the parties that if the Closing occurs each party shall be
absolutely and unconditionally obligated to complete the Second Closing and
this obligation shall be a separate independent covenant and agreement and
shall not be affected by any circumstance whatsoever, including (1) any
set-off, claim, counterclaim, defense or other right which Purchaser may have
against Seller or Seller may have against Purchaser, any failure on the part of
any party to comply with this Agreement or any Related Agreement or any
validity or unenforceability thereof, (2) any defect in title, condition,
operation, merchantability or fitness for use of the Shares or any Related
Assets, (3) any insolvency, bankruptcy, reorganization or similar proceedings
by or against any party or any other person, or (4) any other circumstance or
event whatsoever, whether or not similar to any of the foregoing.
11
<PAGE> 17
(b) Each party acknowledges that the rights of the other
party to consummate the transactions contemplated by this Section 2.7 are
special, unique and of extraordinary character, and in the event that a party
violates or fails or refuses to perform any covenant or agreement made by it in
this Section 2.7 then the other party may be without adequate remedy at law.
Each party agrees, therefore, that nothing in this Agreement, including the
provisions of Section 11.11, shall be deemed to limit the right of a party, in
the event that the other party violates, fails or refuses to perform any
covenant or agreement by it in this Section 2.7, to institute or prosecute an
action in any court of competent jurisdiction to enforce specific performance
of such covenant or agreement or seek any other equitable relief. The seeking
of specific performance or injunctive relief from a court shall not constitute
a waiver of the right of any party, including the claimant in any such action,
to arbitrate any other controversy or claim arising out of or relating to this
Agreement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents, covenants and warrants to Purchaser as
follows:
3.1. CORPORATE ORGANIZATION; ETC. Each of Seller and FSI is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to carry on its business as it is now being conducted and to own the
properties and assets it now owns; is duly qualified or licensed to do business
as a foreign corporation in good standing in every jurisdiction in which
ownership of property or the conduct of its business requires such
qualification, except jurisdictions in which its failure to qualify to do
business would not have a material adverse effect on the business, prospects,
operations, properties, assets or condition (financial or otherwise) of FSI and
the FSI Subsidiaries (as hereinafter defined) or the Business taken as a whole
(a "Material Adverse Effect"). The copies of the Certificate of Incorporation
and By-Laws of each of Seller and FSI heretofore made available to Purchaser
are complete and correct copies of such instruments as are presently in effect.
3.2. CAPITALIZATION OF FSI. The authorized capital stock of FSI
consists of 20,000 shares of Common Stock, $.01 par value per share, of which
1,000 shares are issued and outstanding and no shares are held in the treasury
of FSI. The Shares constitute all of the issued and outstanding shares of
capital stock of FSI and are owned beneficially and of record solely by Seller.
All issued and outstanding shares of capital stock of FSI are validly issued,
fully paid and nonassessable. There are no outstanding (a) securities
convertible into or exchangeable for capital stock of FSI; (b) options,
warrants or other rights to purchase or subscribe
12
<PAGE> 18
to capital stock of FSI or securities convertible into or exchangeable for
capital stock of FSI; or (c) contracts, commitments, agreements, understandings
or arrangements of any kind relating to the issuance or voting of any capital
stock of FSI, any such convertible or exchangeable securities or any such
options, warrants or rights.
3.3. SUBSIDIARIES AND AFFILIATES. Schedule 3.3 sets forth the
name and jurisdiction of incorporation of each subsidiary of FSI (the "FSI
Subsidiaries"). Seller does not own, directly or indirectly, any capital stock
or other equity interest in any corporation or other entity which has any
interest in the Business or any Related Assets not listed in Schedule 3.3.
Except as and to the extent set forth in Schedule 3.3, all the outstanding
capital stock of each FSI Subsidiary (i) is owned directly or indirectly by FSI
and at the Closing Date will be held free and clear of all Liens, and (ii) is
validly issued, fully paid and nonassessable. There are no outstanding
options, rights or agreements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of any FSI Subsidiary.
Each FSI Subsidiary (1) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; (2) has
full corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns; and (3) except as
provided in Schedule 3.3, is duly qualified or licensed to do business as a
foreign corporation in good standing in every jurisdiction in which ownership
of property or the conduct of its business requires such qualification, except
jurisdictions in which the failure to qualify to do business would have no
Material Adverse Effect. Seller has heretofore made available to Purchaser
complete and correct copies of the certificate of incorporation and by-laws of
each FSI Subsidiary, as presently in effect.
3.4. AUTHORIZATION, ETC. Seller has full corporate power and
authority to enter into this Agreement and the Related Agreements and to carry
out the transactions contemplated hereby. This Agreement and the Related
Agreements have been duly approved by an order of the Bankruptcy Court
determining that the Purchase Price and the other consideration to be paid by
Purchaser is the highest and best offer for the Business and authorizing Seller
to perform the transactions contemplated by this Agreement and the Related
Agreements in accordance with the terms of such order and subject to
confirmation of the Amended Plan. The Board of Directors of Seller has taken
all action required by law and the Bankruptcy Court to be taken by them to
authorize the execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby, and this Agreement is and upon execution the Related Agreements will
be legal, valid and binding agreements of Seller enforceable in accordance with
their terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization,
13
<PAGE> 19
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought,
and (iii) enforceability of the indemnification provisions of this Agreement
and the Related Agreements may be subject to limitations of public policy under
Federal or State laws.
3.5. FINANCIAL STATEMENTS. The consolidated balance sheets of
Seller and its subsidiaries and of FSI and its subsidiaries as of December 31,
1993 and December 31, 1992, and the related consolidated statements of
operations, operations and retained earnings, changes in capital and cash flows
for each of the three years in the period ended December 31, 1993, audited by
Price Waterhouse, independent certified public accountants, and included in
Exhibit E, and the consolidated unaudited balance sheets of Seller and its
subsidiaries and of FSI and its subsidiaries as of June 30, 1994 and the
related consolidated statements of operations and retained earnings and cash
flows for the six months then ended included in Exhibit E (i) have been
prepared in accordance with the books of account and other financial records of
Seller, (ii) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise stated therein), (iii) fairly present the
consolidated financial position of Seller and its subsidiaries and of FSI and
its subsidiaries at such dates and their results of operations, changes in
capital or retained earnings and cash flows for such periods, and (iv) with
respect to the June 30, 1994 financial statements, include all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation of the consolidated financial position of Seller and its
subsidiaries and of FSI and its subsidiaries and the results of their
operations and their cash flows. The Pro Forma Balance Sheet attached as
Exhibit A has been properly compiled on the basis of the assumptions set forth
therein, none of which are inconsistent with any provisions of this Agreement
and in the notes thereto, and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of the Pro Forma Balance
Sheet in each case in compliance with Section 2.1.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on the Schedules hereto, since June 30, 1994 the Business has been conducted
only in the ordinary course consistent with past practices and there has not
been:
(i) any material adverse change in the financial
position or results of operations of the Business or of FSI and its
subsidiaries considered as a whole from that reflected in the
financial statements as of June 30, 1994, attached hereto as Exhibit
E, or any material adverse change in the
14
<PAGE> 20
Business, or the assets or prospects of FSI and the FSI Subsidiaries
considered as a whole;
(ii) any material damage, destruction or other casualty
loss with respect to any Related Assets or any property owned or
leased by Seller, FSI or any FSI Subsidiaries and used in the Business
that is not adequately covered by insurance;
(iii) any event or events that could, individually or in
the aggregate, be reasonably expected to have a Material Adverse
Effect; or
(iv) except for the Permitted Dividend, any dividend or
other distribution on or with respect to any capital stock of FSI or
any FSI Subsidiary.
3.7. SERVICE MARKS, TRADEMARKS, TRADE NAMES, ETC. (a) Schedule
3.7(a) contains an accurate and complete description of all Marks, all material
registered copyrights and all material computer software used by Seller, FSI or
any FSI Subsidiary in or necessary for the Business, all Marks used by Seller,
FSI or any FSI Subsidiary in or necessary for the Business constituting the
Western Union Name and Trademark, all applications for any of the foregoing,
and a list of all licenses, sublicenses and other agreements relating thereto
("Intellectual Property Agreements"). Schedule 3.7(b) contains an accurate and
complete description of all Marks which Seller and its subsidiaries (including
without limitation FSI and the FSI Subsidiaries) own, license or otherwise have
the right to use, relating to the Business or otherwise, which are not
otherwise disclosed in Schedule 3.7(a).
(b) (i) Upon the Closing (or, if applicable, the
Second Closing) and after giving effect to the transactions
contemplated hereby, Purchaser, FSI and the FSI Subsidiaries (A) shall
collectively own or will be licensed or otherwise have the right to
use, free and clear of all Liens (other than Permitted Liens and Liens
created by this Agreement, the Related Agreements or by or through
Purchaser, including the restrictions contained in the Intellectual
Property Agreements), all right, title and interest in and to the
Western Union Name and Trademark and all other Marks used in or
necessary for the conduct of the Business (and, in the case of the
Western Union Name and Trademark, the Messaging Services Business), as
presently conducted, and the goodwill relating thereto, (B) shall
collectively receive or own all right, title and interest of Seller,
FSI and the FSI Subsidiaries in and to, or other non- proprietary
rights to the use of, all other Intellectual Property (as defined
below) used in or necessary for the conduct of the Business, as
presently conducted, and the goodwill relating thereto, and (C) as a
result of the foregoing, shall collectively receive or own or will be
licensed or otherwise have the right to use,
15
<PAGE> 21
all Intellectual Property used in or necessary for the conduct of the
Business (and, in the case of the Western Union Name and Trademark,
the Messaging Services Business), as presently conducted;
(ii) except as set forth in Schedule 3.7(c), to
the knowledge of Seller, the use by Seller and its subsidiaries of the
Western Union Name and Trademark and all other Intellectual Property
used in or necessary for the conduct of the Business (and, in the case
of the Western Union Name and Trademark, the Messaging Services
Business), as presently conducted, does not infringe upon the rights
of any third party anywhere in the world, nor are there any infringing
or diluting uses of the Western Union Name and Trademark or any other
Marks used in or necessary for the conduct of the Business (and, in
the case of the Western Union Name and Trademark, the Messaging
Services Business), as presently conducted, by any third party
anywhere in the world;
(iii) except for the Intellectual Property
Agreements and other than Permitted Liens and Liens created by this
Agreement, the Related Agreements or by or through Purchaser, and
subject to applicable Legal Requirements and the restrictions
contained in the Sale Order, as of the Closing (and, if applicable, as
to Seller's Marks, the Second Closing), Seller and its subsidiaries
shall have the right to assign rights, including rights of usage, in
the Western Union Name and Trademark and all other Intellectual
Property used in or necessary for the conduct of the Business (and, in
the case of the Western Union Name and Trademark, the Messaging
Services Business), as presently conducted, anywhere in the world
without seeking the approval or consent of any third party and without
payment to any third party, and shall not have granted any license or
other right to use the Western Union Name and Trademark, any other
Marks or any other Intellectual Property used in or necessary for the
conduct of the Business (and, in the case of the Western Union Name
and Trademark, the Messaging Services Business), as presently
conducted, to any other person anywhere in the world, other than
limited rights granted to third parties to use Intellectual Property
other than Marks or the Western Union Name and Trademark solely in
connection with performing services for Seller, FSI or the FSI
Subsidiaries;
(iv) Schedule 3.7(c) contains an accurate and
complete description of all material adverse claims, disputes,
demands, proceedings, or litigation that have been asserted or, to the
knowledge of Seller, threatened, by any person anywhere in the world
to the use, ownership or validity of the Western Union Name and
Trademark or any other Marks used in or necessary for the conduct of
the Business (and, in the case of the Western Union Name and
Trademark, the Messaging Services
16
<PAGE> 22
Business), as presently conducted, and Seller does not know of any
other valid basis for any such claims, disputes, demands, proceedings,
or litigation;
(v) except for the Intellectual Property
Agreements or as set forth in Schedule 3.7(c), there is no outstanding
order, decree, stipulation, written restriction, undertaking,
administrative or judicial decision or judgment, or any other kind of
agreement, limiting or restricting the use or licensing of the Western
Union Name and Trademark or any other Marks used in or necessary for
the conduct of the Business (and, in the case of the Western Union
Name and Trademark, the Messaging Services Business), as presently
conducted, or declaring any abandonment thereof anywhere in the world;
(vi) Seller has made available to Purchaser all
reports or written advice, including without limitation, appraisals
and trademark search reports, received by Seller relating in whole or
in part to the ownership, availability, enforceability, or possible
infringement of the Western Union Name and Trademark and all other
Marks used in or necessary for the conduct of the Business (and, in
the case of the Western Union Name and Trademark, the Messaging
Services Business), as presently conducted, anywhere in the world;
(vii) except as set forth in Schedule 3.7(c), all
registrations for and applications to register the Western Union Name
and Trademark and all other Marks used in or necessary for the conduct
of the Business (and, in the case of the Western Union Name and
Trademark, the Messaging Services Business), as presently conducted,
anywhere in the world, including but not limited to such registrations
and applications listed in Schedule 3.7(a), are in full force and
effect and uncontested, not abandoned, fully assignable to Purchaser
and are not subject to cancellation for non-use, and will not be
subject to cancellation for non-use within three months after the
Closing Date (and, if applicable, as to Seller's Marks, the Second
Closing); and
(viii) neither Seller, FSI nor any FSI Subsidiary
owns or licenses any patents (other than in connection with existing
leases or ownership of computer equipment used in the ordinary course
of the Business).
(c) As to the Intellectual Property Agreements listed
in Schedule 3.7(a), except as noted therein (i) all such agreements are in full
force and effect and, to the extent such agreements are Related Assets, are
fully assignable to Purchaser; (ii) neither the Seller nor any other parties to
such agreements are in default in any material respect under any such
agreement, except for those defaults under money transfer agent agreements and
network agent
17
<PAGE> 23
agreements which, individually or in the aggregate, would not have a Material
Adverse Effect; (iii) none of Seller, FSI or any of the FSI Subsidiaries is or
will become obligated to make any additional royalty or similar payments under
any such agreements as a result of the transactions contemplated by this
Agreement; and (iv) the exercise by the Seller, FSI or any of the FSI
Subsidiaries of their rights under any such agreement does not infringe upon
the claimed rights of others. True and complete copies of all Intellectual
Property Agreements have been made available to Purchaser.
(d) "Intellectual Property" means (a) inventions,
whether or not patentable, whether or not reduced to practice, and whether or
not yet made the subject of a pending patent application or applications, (b)
ideas and conceptions of potentially patentable subject matter, including,
without limitation, any patent disclosures, whether or not reduced to practice
and whether or not yet made the subject of a pending patent application or
applications, (c) national (including the United States) and multinational
statutory invention registrations, patents, patent registrations and patent
applications (including all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations) and all rights therein
provided by international treaties or conventions and all improvements to the
inventions disclosed in each such registration, patent or application, (d)
trademarks, service marks, trade dress, logos, trade names and corporate names,
whether or not registered, including all common law rights, and registrations
and applications for registration thereof, including, but not limited to, all
marks registered in the United States Patent and Trademark Office, the
Trademark Offices of the States and Territories of the United States of
America, and the Trademark Offices of other nations throughout the world, and
all rights therein provided by international treaties or conventions
(collectively, "Marks"), (e) copyrights (registered or otherwise) and
registrations and applications for registration thereof, and all rights therein
provided by international treaties or conventions, (f) moral rights (including,
without limitation, rights of paternity and integrity), and waivers of such
rights by others, (g) computer software (other than software for personal
computers generally available in the retail market), including, without
limitation, source code, operating systems and specifications, data, data
bases, files, documentation and other materials related thereto, (h) trade
secrets and confidential, technical and business information (including ideas,
formulas, compositions, inventions, and conceptions of inventions whether
patentable or unpatentable and whether or not reduced to practice), (i) whether
or not confidential, technology (including know-how and show-how),
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and supplier lists
and information, (j) copies and tangible embodiments of all
18
<PAGE> 24
the foregoing, in whatever form or medium, (k) all rights to obtain and rights
to apply for patents, and to register trademarks and copyrights, and (l) all
rights to sue or recover and retain damages and costs and attorneys' fees for
present and past infringement of any of the foregoing.
3.8. LEASES AND REAL PROPERTY. Schedule 3.8 contains a list of
all leases pursuant to which Seller, FSI or any FSI Subsidiary leases real
property used in connection with the Business or the Related Assets. Except as
set forth in Schedule 3.8, (a) all such leases are in full force and effect and
constitute the valid and binding obligations of Seller or its subsidiaries and,
to Seller's knowledge, the other parties thereto; and (b) at the Closing Date
there will be no default under any such lease by Seller or any of its
subsidiaries or, to their knowledge, any other party thereto. With the
exception of defaults resulting from the filing of the Case, no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default under any such
lease entitling any party to terminate such lease, and the continuation,
validity and effectiveness of all such leases under the current terms thereof
will in no way be affected, altered or impaired by the consummation of the
Acquisition. True and complete copies of all such leases, including all
amendments thereto, have been made available to Purchaser. None of FSI or any
of the FSI Subsidiaries currently owns or at any time in the past has owned any
real property.
3.9. TAXES. As used in this Agreement, "taxes" or "tax
liability" means all taxes (including but not limited to income taxes, excise
taxes, sales taxes, gross receipts or any other taxes), including applicable
interest, additions to tax and penalties.
(a) Except as set forth in Schedule 3.9, each of FSI
and its subsidiaries has filed all required tax returns, and has paid all taxes
shown thereon as owing. Such returns are correct and complete in all material
respects.
(b) Except as set forth in Schedule 3.9, each of FSI
and its subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) Except as set forth in Schedule 3.9, (i) neither
Seller nor any director, officer, or employee responsible for tax matters of
Seller or FSI is aware of any proposed tax assessment by any tax authority for
additional taxes for any period for which tax returns have been filed; and (ii)
there is no currently pending dispute or claim concerning any tax liability of
Seller's affiliated group, FSI, or any of its subsidiaries of which such
persons have knowledge.
19
<PAGE> 25
(d) Neither FSI nor any of its subsidiaries has been a
member of an affiliated group filing a consolidated federal income tax return,
or any consolidated or combined or unitary group filing a state tax return,
other than a group the common parent of which is Seller.
(e) Except as set forth in Schedule 3.9, Seller has on
behalf of its affiliated group including FSI filed all required tax returns
required for any period during which FSI or any of its subsidiaries has been a
member of the group, and has paid all taxes shown thereon as owing. Such
returns are correct and complete in all material respects.
(f) Except as set forth in Schedule 3.9, none of FSI
and its subsidiaries has any liability for taxes (i) as a transferee or
successor, or (ii) imposed by contract.
3.10. INSURANCE. Schedule 3.10 contains a description of all
material policies of fire, liability, workmen's compensation and other forms of
insurance owned or held by Seller, FSI and each FSI Subsidiary relating to the
Business. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of this
Agreement have been paid, and as of the Closing will have been paid, and no
notice of cancellation or termination has been received with respect to any
such policy. True and complete copies of all policies listed in Schedule 3.10
have been made available to Purchaser. All such policies are of a scope and,
in the opinion of management, in an amount to insure all material assets of FSI
relating to the Business as is usual and customary for businesses engaged in
the Business and are sufficient for compliance in all material respects with
all requirements of law and all agreements relating to the Business to which
FSI or any of its subsidiaries is a party. All material notices relating to
the Business required to have been given by Seller, FSI or any of their
subsidiaries to any insurance company have been timely and duly given, and no
insurance company has asserted (or reserved its right to assert) that any
unsatisfied judgment or any pending or asserted action, suit or other claim
relating to the Business is not covered by the applicable policy relating
thereto.
3.11. BENEFIT PLANS. (a) Schedule 3.11 contains a true and
complete list of Seller's and FSI's "employee benefit plans" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and all stock option, deferred compensation, incentive and
similar plans (the "Benefit Plans"). Each Benefit Plan is in writing, and
Seller has previously made available to Purchaser a true and correct copy of
each Benefit Plan together with a true and complete copy of the relevant trust
instruments, the most recently filed Internal Revenue Service Form 5500, the
most recently received IRS determination letter, and the most recently prepared
actuarial
20
<PAGE> 26
report and financial statement. Except as disclosed in Schedule 3.11, no
Benefit Plan subject to Title IV of ERISA has been terminated and no proceeding
has been initiated to terminate any Benefit Plan with respect to which
Purchaser would be expected to incur any liability, direct or indirect,
contingent or otherwise, under Title IV of ERISA. Neither the Shares nor the
Related Assets are the subject of any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Code and neither Seller nor FSI is the subject
of any lien arising under Section 302(f) of ERISA or Section 412(n) of the Code
or has been required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code with respect to any Benefit Plan. Except as disclosed
in Schedule 3.11, to the best knowledge of Seller, no action or claims (other
than routine claims for benefits made in the ordinary course of administration
of the Benefit Plans) are pending, threatened or imminent against or with
respect to any Benefit Plan, or any sponsor or fiduciary (as defined in Section
3(21) of ERISA) of any Benefit Plan. Neither Seller nor FSI has engaged in a
transaction described in Section 4069 of ERISA. Neither Seller, FSI nor any
Benefit Plan has engaged in any prohibited transactions (as defined in Section
406 or 407 of ERISA or Section 4975 of the Code) for which a statutory
exemption is not available. Except as otherwise provided in Articles II and
VI, Purchaser and Seller agree that Purchaser expressly does not assume any
liability, including contingent liabilities, under any Benefit Plan. No
Benefit Plan under which Seller or FSI has any liability or other obligation is
or was a "multiple employer plan" within the meaning of Section 413(c) of the
Code, or a "multiemployer plan" as defined in Section 3(37) of ERISA. All
continuation health care coverage and notice requirements under Section 4980B
of the Code and Sections 601 and 608 of ERISA have been satisfied with respect
to all Covered Employees or prior employees of Seller and FSI and any
"qualified beneficiary" (within the meaning of Section 4980B(g) of the Code) of
such employees.
(b) Each Benefit Plan which is intended to qualify
under Section 401(a) of the Code has been determined to be so qualified by the
Internal Revenue Service and nothing has occurred since the date of the last
such determination which has resulted or is likely to result in the revocation
of such determination. Each Benefit Plan has been operated and administered in
all material respects in accordance with its respective terms and applicable
law.
3.12. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except
for (i) requirements of the Bankruptcy Code, (ii) requirements of state and
foreign banking, currency or other regulatory authorities (all of which
requirements are set forth in Schedule 3.12), and (iii) filing and recording
appropriate documents as provided by the laws of the State of New Jersey
relating to conveyances of interests in real estate, no consent, approval or
authorization of, or declaration, filing or
21
<PAGE> 27
registration with, any governmental or regulatory authority is required in
connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby or to enable
Purchaser, FSI and the FSI Subsidiaries to conduct the Business after the
Closing as and where it is currently being conducted.
3.13. NO VIOLATION. Except as set forth in Schedule 3.13,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will violate any provision of the
certificate of incorporation or by-laws of Seller, FSI or any FSI Subsidiary,
or violate, or be in conflict with, or constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation or imposition of any
security interest, Lien, encumbrance, claim or adverse interest of any kind or
nature whatsoever on any of the Related Assets or the assets or property of FSI
or any subsidiary pursuant to, any agreement or commitment to which Seller, FSI
or any FSI Subsidiary is a party or by which Seller, FSI or any FSI Subsidiary
is bound or any of their properties is subject, or violate any statute or law
or any judgment, decree, order, regulation or rule of any court or governmental
authority, except for such violations, defaults or other events as would not
individually or in the aggregate have a Material Adverse Effect.
3.14. GOOD TITLE CONVEYED, ETC. Upon approval by the Bankruptcy
Court of an order confirming the Amended Plan (the "Confirmation Order") and an
order approving this Agreement and authorizing the sale of the Shares and the
Related Assets under Section 363 of the Bankruptcy Code substantially in the
form of Exhibit L (the "Sale Order") and expiration of the period for stay of
the Sale Order without a stay of the Sale Order having been granted and not
lifted, Seller will have complete and unrestricted power and the unqualified
right to sell, assign, transfer and deliver to Purchaser, and, at the Closing
Date (and, if applicable, as to Seller's Marks, the Second Closing), Seller and
its affiliates will transfer good, valid and marketable title, free and clear
of all Liens, to the Shares and, except for Permitted Liens, the Related
Assets. The Bill of Sale in the form attached as Exhibit F-1 and the deeds,
endorsements, assignments and other instruments to be executed and delivered to
Purchaser by Seller at the Closing (and, if applicable, the Second Closing)
will be legal, valid and binding obligations of Seller enforceable in
accordance with their terms, subject as to enforcement to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles and will
effectively vest in Purchaser good, valid and marketable title to all the
Related Assets, subject to Permitted Liens.
22
<PAGE> 28
3.15. GOVERNMENT LICENSES, PERMITS AND RELATED APPROVALS.
Schedule 3.15 sets forth all licenses, permits, consents, approvals,
authorizations, qualifications and orders of any Governmental Agency (as
hereinafter defined) necessary to enable Seller, FSI and the FSI Subsidiaries
to conduct their respective businesses as presently conducted, except where the
failure to have any such license, permit, consent, approval, authorization,
qualification or order, would not, individually or in the aggregate, have a
Material Adverse Effect. All such licenses, permits, consents, approvals,
authorizations, qualifications and orders are valid and in full force and
effect, except as set forth in Schedule 3.15.
3.16. CONDUCT OF BUSINESS IN COMPLIANCE WITH REGULATORY
REQUIREMENTS. Except as set forth in Schedule 3.16, the Business and the
Related Assets are operated and maintained in compliance with each applicable
law, regulation, ordinance and code promulgated by any Governmental Agency,
except for those circumstances of noncompliance which would not, individually
or in the aggregate, have a Material Adverse Effect.
3.17. LITIGATION. Except as set forth in Schedule 3.17 hereto,
no action, suit, proceeding or investigation is pending or, to the knowledge of
Seller, threatened, against Seller or FSI or any FSI Subsidiary relating to or
affecting the Business or any of the Related Assets, except for any actions,
suits, proceedings or investigations that if adversely determined, individually
or in the aggregate with all other actions, suits, proceedings or
investigations, would not have a Material Adverse Effect.
3.18. ENVIRONMENTAL MATTERS. Except as set forth in Schedule
3.18 hereto:
(a) The Business and all other properties owned,
leased, used or operated by FSI or any FSI Subsidiary have been operated in
compliance in all material respects with all applicable environmental laws.
(b) FSI and the FSI Subsidiaries have obtained,
maintained, and complied with all permits, licenses, approvals and other
authorizations which are required for the operation of the Business pursuant to
applicable environmental laws, except for such permits, licenses or approvals
the failure to obtain, maintain or comply with which would not, individually or
in the aggregate, have a Material Adverse Effect, and have maintained all
material records and made all material filings required by applicable
environmental laws.
(c) Neither Seller, FSI nor any FSI Subsidiary has
received any written notice of any pending or threatened investigation,
proceeding or claim to the effect that it is or may be liable to any person, or
responsible or potentially responsible
23
<PAGE> 29
for the costs of any remedial or removal action or other cleanup costs, as a
result of noncompliance with any applicable environmental laws or arising out
of the presence, generation, storage, treatment or disposal of hazardous
substances, solid or hazardous wastes, petroleum or toxic materials, including
liability under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, or any state superfund law; and there is no past or
present action, activity, condition or circumstance that could be expected to
give rise to any liability on the part of FSI or any FSI Subsidiary to any
person, or for any such cleanup costs.
(d) The transactions contemplated hereby do not
require compliance with, and/or are exempt from the requirements of, the New
Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. ("ISRA") or any
other similar state superfund or other environmental law relating to the
transfer of real property or leasehold interests, or disclosure of actual or
potential environmental liabilities; none of the assets of FSI or of any of the
FSI Subsidiaries includes an "industrial establishment" within the meaning of
ISRA; and the transactions contemplated hereby do not constitute "closing
operations", "transferring ownership or operations" or a "change of ownership",
within the meaning of ISRA, with respect to any such industrial establishment.
3.19. NO UNDISCLOSED LIABILITIES. Except (a) as set forth in
Schedule 3.19, (b) for Intercompany Accounts which will be paid or settled
pursuant to Section 1.5 hereof, (c) for liabilities set forth or reserved
against or disclosed in the Pro Forma Balance Sheet, (d) for liabilities
disclosed in this Agreement or the schedules hereto, and (e) for liabilities
incurred in the ordinary and usual course of the Business since June 30, 1994,
neither FSI nor any of the FSI Subsidiaries has any liabilities (whether
accrued, absolute, contingent or otherwise) which would, individually or in the
aggregate, have a Material Adverse Effect.
3.20. CONTRACTS. Schedule 3.20 lists all ongoing (a) broker,
distributor, dealer, franchise or agency agreements, (b) management agreements,
(c) agreements with governmental authorities, (d) noncompete or other
agreements that limit the Business, (e) intercompany agreements and (f) any
other agreements with revenues or expenses exceeding or anticipated to exceed
$1,0000,000 annually, relating to the Business to which Seller or any of its
subsidiaries is a party (each a "Material Agreement"). Each Material Agreement
is legally valid and binding except to the extent that the invalidity or
nonbinding nature of any Material Agreement would not have a Material Adverse
Effect, and neither Seller nor any of its subsidiaries, nor, to their
knowledge, any other party thereto, is in default in the performance of any of
its obligations under any Material Agreement, except for defaults which would
not, individually or in the aggregate, have a Material Adverse Effect. Except
as set forth in Schedule 3.20, no event has occurred which (whether with or
without notice, lapse of time or
24
<PAGE> 30
the happening or occurrence of any other event) would constitute a default
under any such Material Agreement entitling any party to terminate any such
Material Agreement, and the continuation, validity and effectiveness of all
such Material Agreements under the current terms thereof will in no way be
affected, altered or impaired by the consummation of the Acquisition or any
other transaction contemplated hereby.
3.21. CONDUCT OF BUSINESS BY PURCHASER. Except as listed in
Schedule 3.21, upon consummation of the Acquisition on the Closing Date (and,
if applicable, the Second Closing), Seller shall have transferred to Purchaser
all of Seller's assets and properties used in or necessary for the operation of
the Business in the manner presently conducted by Seller except for any
licenses, permits or approvals which cannot be transferred to Purchaser or
which Purchaser is required to obtain. The Related Assets together with the
assets of FSI and the FSI Subsidiaries and the benefits to Purchaser under the
Related Agreements constitute all of the assets used in the Business.
3.22. BROKERS AND FINDERS. None of Seller, FSI, any of their
subsidiaries or any of their officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated by this
Agreement.
3.23. PENSION PLAN CONTRIBUTION. Seller made a contribution to
the Western Union Pension Plan on September 14, 1994 in respect of the 1993
Plan Year in the amount of $20,269,753.
3.24. LABOR RELATIONS. Except as described in Schedule 3.24, (a)
Seller, FSI and each FSI Subsidiary is in compliance in all material respects
with all applicable law respecting employment and employment practices, terms
and conditions of employment and wages and hours; (b) there are no charges,
investigations, administrative proceedings or formal complaints of
discrimination (including discrimination based upon sex, age, marital status,
race, national origin, religion, sexual preference, disability, veteran status,
color or citizenship status) pending or, to Seller's knowledge, threatened
before the Equal Employment Opportunity Commission or any other Governmental
Agency against Seller, FSI or any FSI Subsidiary; (c) there have been no
governmental audits of Seller's, FSI's or any FSI Subsidiary's, equal
employment opportunity practices of the Business; (d) there is no unfair labor
practice, complaint, charge or other matter against or involving Seller, FSI or
any FSI Subsidiary pending, or to Seller's knowledge, threatened, before the
National Labor Relations Board or any other Governmental Agency; (e) there is
no (and since December 31, 1990 has not been any) labor strike, dispute,
organizing effort, slow down, stoppage or other labor difficulty pending,
involving or threatened against or affecting Seller, FSI or any FSI Subsidiary,
and (f) no representation question exists (or has existed since
25
<PAGE> 31
December 31, 1990) respecting Seller's, FSI's or any FSI subsidiary's
employees. Schedule 3.24 lists all reports and filings made by Seller, FSI and
all FSI Subsidiaries pursuant to Executive Order 11246 (Equal Employment
Opportunity) and similar applicable laws since December 31, 1990. Schedule
3.24 lists all collective bargaining agreements of Seller, true and correct
copies of which have been delivered by Seller to Purchaser.
3.25. FULL DISCLOSURE. (a) Seller is not aware of any facts
pertaining to FSI or any of its subsidiaries or the Business which could,
individually or in the aggregate, have a Material Adverse Effect, or that could
be expected to impair the ability of Seller to perform this Agreement and the
transactions contemplated hereby, or the ability of Purchaser, FSI and the FSI
Subsidiaries to conduct the Business after the Closing (and, if applicable, the
Second Closing) as presently conducted, and which have not been disclosed in
this Agreement, the schedules hereto or the financial statements included in
Exhibit E hereto or otherwise disclosed to Purchaser by Seller in writing.
(b) No representation or warranty of Seller in this
Agreement, nor any financial or other written statement (considered together
with all other financial or other written statements) or certificate furnished
or to be furnished to Purchaser pursuant to this Agreement, or in connection
with the transactions contemplated by this Agreement, contains or as of the
Closing (and, as to representations and warranties pertaining to Seller's
Marks, as of the Second Closing) will contain any untrue statement of a
material fact, or omits or as of the Closing (and, if applicable, the Second
Closing) will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller as follows:
4.1. CORPORATE ORGANIZATION; ETC. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia.
4.2. AUTHORIZATION, ETC. Purchaser has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of Purchaser has taken all action
required by law, its Certificate of Incorporation and by-laws or otherwise to
authorize the execution and delivery of this Agreement and the transactions
contemplated hereby, and this Agreement is a legal, valid and binding agreement
of Purchaser enforceable in accordance with its terms except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, (ii) the remedy of
26
<PAGE> 32
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought, and (iii) enforceability of the
indemnification provisions of this Agreement may be subject to limitations of
public policy under Federal and State securities laws.
4.3. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provisions of the certificate of incorporation or by-laws of
Purchaser, or violate, or be in conflict with, or constitute a default under,
or cause the acceleration of the maturity of any debt or obligation pursuant
to, any agreement or commitment to which Purchaser is a party or by which
Purchaser is bound, or violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority, except for
such violations, conflicts or defaults as would not have a material adverse
effect on the ability of Purchaser to consummate the transactions contemplated
by this Agreement.
4.4. COMMITMENTS FOR THE FINANCING. Purchaser has in hand or
under existing fully committed lines of credit or other fully committed
facilities or has heretofore received written binding and enforceable
commitments from responsible financial institutions in either case sufficient
to provide all financing necessary to complete the Acquisition.
4.5. LICENSES. Purchaser does not know of any reason why it
would be unable to obtain any and all licenses and licensing approvals required
by State regulatory agencies or bodies in the United States in connection with
the Acquisition.
4.6. SECURITIES LAWS. Purchaser is purchasing the Shares for
its own account for investment and not with a view to any distribution thereof.
Purchaser acknowledges that the Shares have not been registered under the
Securities Act of 1933.
ARTICLE V. COVENANTS AND AGREEMENTS OF THE PARTIES.
5.1. BEST EFFORTS. Upon the terms and subject to the conditions
of this Agreement, each of Purchaser and Seller shall (and Seller shall cause
its affiliates including FSI to) use its reasonable best efforts to take, or
cause to be taken, and to assist and cooperate with the other in doing all
things reasonably necessary, proper or advisable under any applicable law,
statute or ordinance of any Governmental Agency or any order, rule, regulation
or requirement of any Governmental Agency (collectively, "Legal Requirements")
to consummate and make effective in the most expeditious manner practicable,
the Acquisition, including, without limitation, using such reasonable best
efforts to:
27
<PAGE> 33
(a) obtain from the Bankruptcy Court such Bankruptcy
Court orders as may be necessary or appropriate to effect the
Acquisition, including, without limitation, the Confirmation Order and
the Sale Order;
(b) obtain all necessary or appropriate
authorizations, permits, consents, exemptions, orders, waivers,
licenses or other approvals, including all money transfer licensing
approvals required by State regulatory agencies or bodies in the
United States (collectively, the "Authorizations"), from applicable
federal, state and local United States and foreign governmental
agencies and authorities ("Governmental Agencies"), including, without
limitation, the Authorization of any Governmental Agency necessary or
desirable in order for Purchaser (through FSI) to conduct the Business
after the Closing (and, if applicable, the Second Closing);
(c) obtain all necessary Authorizations from third
parties; and
(d) discharge all Liens from the Related Assets
(including, without limitation, the Western Union Name and Trademark)
and the Shares so that at Closing (and, if applicable, the Second
Closing) (i) the Shares and the Related Assets will be delivered to
Purchaser, in each case, free and clear of all Liens other than, in
the case of the Related Assets, the Permitted Liens; and (ii)
Purchaser will receive good, valid and marketable title to the Shares,
and, except for Permitted Liens, the Related Assets;
provided, however, that nothing in this Section 5.1 shall require Purchaser to
agree to any divestiture by Purchaser or FSI or any of their subsidiaries of
any business, properties or assets or of any shares of capital stock of any
subsidiaries of Purchaser or FSI, or to the imposition of any material
limitation on the ability of Purchaser to conduct such business or to own or
exercise control of such stock, business, properties or assets.
5.2. CONDUCT OF BUSINESS. Except as otherwise permitted or
expressly contemplated by this Agreement or with the prior written consent of
Purchaser or as ordered or permitted by the Bankruptcy Court, prior to the
Closing Date, Seller shall (and, as appropriate, shall cause its affiliates
including FSI to):
(a) conduct the Business in the ordinary and usual
course and in accordance with the business plans, budgets and
projections previously provided to Purchaser and use its reasonable
best efforts to preserve the business organization of the Business
intact, to keep available the services of employees, independent
contractors, domestic and international agents and consultants
currently employed in or by the
28
<PAGE> 34
Business, to maintain the current suppliers and agents under the agent
contracts of the Business, and to preserve the goodwill of the
Business;
(b) use its reasonable best efforts to maintain in
good standing and keep in full force and effect all Authorizations
with any Governmental Agency or any third party applicable to the
Business and comply in all material respects with all Legal
Requirements applicable thereto;
(c) maintain in force all insurance policies, maintain
all of the tangible assets used in the Business in good operating
condition (save for reasonable wear and tear), maintain all
inventories, and take all reasonable steps consistent with past
practices to maintain all Intellectual Property and other intangible
assets;
(d) not (i) sell, assign, dispose of, transfer to
another location, lease, mortgage, encumber or otherwise grant any
interest in (or permit or allow to become subject to any Lien) any of
the assets or properties used in the Business which constitute
tangible or intangible property (other than in the ordinary and usual
course of the Business and consistent with past practice) or (ii)
dispose of or fail to use reasonable best efforts to renew any
material Authorization;
(e) not enter into, modify, terminate, amend, renew,
renegotiate or expand in any respect, or waive any of its rights
under, any material agent contract, Material Agreement, or any other
material contract, agreement, lease, license of the Western Union Name
and Trademark or otherwise, commitment, undertaking or other
arrangement with respect to any material asset used in the Business
other than in the ordinary and usual course of the Business and, with
respect to licenses of the Western Union Name and Trademark, non-
exclusive licenses to agents;
(f) not enter into any transaction or contract, or
amend or terminate any transaction or contract, including any agent
contract or any collective bargaining agreement, that could reasonably
be expected at the time such transaction is entered into, individually
or in the aggregate, to have a Material Adverse Effect;
(g) cause FSI and the FSI Subsidiaries not to incur or
compromise any debt, liability or obligation, direct or indirect,
whether accrued, absolute, contingent or otherwise, other than current
liabilities incurred in the ordinary and usual course of the Business,
or pay any debt, liability or obligation of any kind other than such
current liabilities and current maturities of existing long-term debt
(including
29
<PAGE> 35
interest when due) in each case only in accordance with the terms of
the document creating and evidencing such debt, or fail to pay any
debt when due or take or fail to take any action, the taking of which,
or the failure to take of which, would permit any debt to be
accelerated;
(h) cause FSI and the FSI Subsidiaries not to assume,
guarantee, endorse or otherwise become responsible for the obligations
of any other individual, firm or corporation, or make any loans or
advances other than in the ordinary and usual course of the Business
to any individual, firm or corporation, which loans or advances shall
in no event exceed $500,000 in the aggregate;
(i) cause FSI and the FSI Subsidiaries not to declare,
set aside or pay any dividend (whether in cash, capital stock or
property) with respect to its capital stock, or declare or make any
distribution on, redeem, or purchase or otherwise acquire any Shares,
or split, combine or otherwise similarly change the outstanding
Shares, or authorize the creation or issuance of or issue or sell any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for, or giving any person any right
to acquire from it, any shares of its capital stock, or agree to take
any such action;
(j) cause FSI and the FSI Subsidiaries not to make any
investment of a capital nature either by purchase of stock or
securities, contributions to capital, property transfers or otherwise,
or by the purchase of any property or assets of any other individual,
firm or corporation, except in the ordinary and usual course of the
Business but in no event greater than $500,000 in the aggregate;
(k) perform in all material respects all of their
obligations under Material Agreements (except those being contested in
good faith) and not enter into, assume or amend any contract or
commitment that would be a Material Agreement other than contracts to
provide services entered into in the ordinary and usual course of the
Business;
(l) except as required by Collective Bargaining
Agreements and except for regularly scheduled increases in accordance,
both as to timing and amount, with normal prior practice, cause FSI
and the FSI Subsidiaries not to increase in any manner the
compensation or fringe benefits of any of its officers or employees or
pay or agree to pay any pension or retirement allowance not required
by any existing plan or agreement to any such officers or employees,
or commit itself to or enter into or amend any employment agreement or
any incentive compensation, deferred compensation, profit sharing,
stock option, stock purchase, savings, consulting, retirement,
30
<PAGE> 36
pension or other "fringe benefit" plan or arrangement with or for the
benefit of any officer, employee or other person;
(m) cause each of FSI and the FSI Subsidiaries not to
amend its Certificate of Incorporation or Bylaws;
(n) cause FSI and the FSI Subsidiaries not to enter
into any union, collective bargaining or similar agreement;
(o) not institute any new methods of purchase, sale,
lease, management, bookkeeping, accounting or operation with respect
to the Business except for those changes intended to improve the
Business which are agreed to in writing by Purchaser prior to
implementation, and provided, that no reserves, liabilities or similar
items reflected on the Pro Forma Balance Sheet or created thereafter
shall be reversed (except to reflect payment or legal extinguishment
of a liability or collection of cash in respect of a reserve prior to
the Closing Date) or reallocated to cover any other reserves,
liabilities or similar items on the Audited Pro Forma Balance Sheet;
and
(p) not enter into an agreement to do any of the
things described in clauses (a) through (o).
5.3. ACCESS TO ASSETS. (a) As provided in the Procedures
Order and the Solicitation Procedures and as expressly limited thereby, Seller
has established a data room and has afforded Purchaser, its counsel, financial
advisers, accountants and other authorized representatives full access thereto
and to Seller's personnel.
(b) Seller agrees to permit Purchaser and its
authorized representatives to have or cause them to be permitted to have, after
the date hereof and until the Closing, full access to the premises, books and
records of Seller and its subsidiaries at reasonable hours, and the officers of
Seller and its subsidiaries will furnish Purchaser with such financial and
operating data and other information with respect to the Business and the
Related Assets as Purchaser shall from time to time reasonably request. Seller
will request its auditing firm to permit Purchaser and its representatives,
including its auditing firm, to review the work papers of the auditing firm of
Seller relating to their examination of the consolidated audited financial
statements of Seller and its subsidiaries, subject to appropriate
indemnification arrangements for the benefit of the auditing firm of Seller.
No investigation by Purchaser heretofore or hereafter made shall affect the
representations and warranties of Seller and each such representation and
warranty shall survive any such investigation, subject to Article VIII.
31
<PAGE> 37
5.4. CONFIDENTIALITY. Each party hereto will hold all
confidential information in accordance with the terms of the letter agreement
dated June 30, 1994 between Seller and Purchaser which agreement shall remain
in full force and effect.
5.5. INSTRUMENTS OF CONVEYANCE. To effectuate the transactions
contemplated by this Agreement, and subject to Section 2.7, Seller shall
execute and deliver to Purchaser at or prior to the Closing (and, if
applicable, the Second Closing), the Bill of Sale attached as Exhibit F-1 (and,
if applicable, the Bill of Sale attached as Exhibit F-3) and all deeds,
documents or instruments of sale, assignment, transfer or conveyance, and
following the Closing shall execute such other documents and do such other
things, as Purchaser shall reasonably deem necessary or appropriate to vest in
Purchaser good, valid and marketable title to the Shares and, subject to
Permitted Liens, the Related Assets, including all interests owned by Seller
and its subsidiaries and affiliates in the Western Union Name and Trademark.
Seller shall use its reasonable best efforts to obtain the consent or waiver of
any person whose consent or waiver may be necessary to effectuate the sale of
the Related Assets. Purchaser agrees to cooperate with Seller and supply
relevant information to governmental agencies and third parties in order to
assist Seller in obtaining any such consents or waivers or causing such
assignment or transfer to become effective, provided that the costs, if any, of
assuming and assigning such contracts, including the costs of curing any breach
in respect of such contracts, shall be borne by Seller. If and so long as any
such consent or waiver shall not have been obtained, Seller shall use its
reasonable best efforts, to the extent permissible under law and the terms of
the pertinent asset, to keep such asset in full force and effect and to provide
to Purchaser the benefit of the asset to the same extent as if such asset had
been transferred to Purchaser. If Seller provides Purchaser with such
benefits, then Purchaser shall perform Seller's obligations and shall pay all
amounts Seller is obligated to pay under the terms of such asset (excluding any
amounts payable with respect to, or resulting from, the use of such asset prior
to the Closing Date). In addition, at Purchaser's request, Seller shall provide
Purchaser with (a) such releases as may be reasonably requested by Purchaser in
order to carry out the terms of this Agreement and (b) appropriate
documentation to demonstrate Seller's right, title and interest in the Shares
and the Related Assets and Purchaser's right, title and interest in and to any
of the assets and properties reflected on the Audited Pro Forma Balance Sheet.
5.6. NONCOMPETITION. (a) For a period of five (5) years after
the Closing (the "Restricted Period"), Seller and its affiliates shall not
engage, directly or indirectly, in the Business anywhere in the world or,
directly or indirectly, own an interest in, manage, operate, join, control,
lend money or render financial or other assistance to or participate in or be
connected with, as a partner, stockholder, consultant or otherwise, any
32
<PAGE> 38
natural person or entity that competes with FSI, any FSI Subsidiary or the
Business; provided, however, that, for the purposes of this Section 5.6,
ownership of securities having no more than five percent of the outstanding
voting power of any competitor which are listed on any national securities
exchange or traded actively in the national over-the-counter market shall not
be deemed to be in violation of this Section 5.6 so long as Seller has no other
material relationship with such competitor.
(b) As separate and independent covenants, Seller
agrees with Purchaser that: (i) for a period of five (5) years following the
Closing, Seller and its affiliates will not in any way, directly or indirectly,
for the purpose of conducting or engaging in the Business, call upon, solicit,
advise or otherwise do, or attempt to do, business with any customers of the
Business with whom Seller or any subsidiary thereof had any dealings prior to
the Closing Date, or take away or interfere or attempt to interfere with any
custom, trade, business or patronage of the Business, FSI or any FSI
Subsidiary; and (ii) for a period of three (3) years following the Closing,
Seller will not in any way, directly or indirectly, interfere with or attempt
to interfere with any officers, employees, representatives or agents of the
Business, FSI or any FSI Subsidiary or induce or attempt to induce any of them
to leave the employ of FSI or any FSI Subsidiary or violate the terms of their
contracts, or any employment arrangements, with FSI or any FSI Subsidiary.
(c) The Restricted Period shall be extended by the
length of any period during which Seller is in breach of the terms of this
Section 5.6.
(d) Seller acknowledges that the covenants of Seller
set forth in this Section 5.6 are an essential element of this Agreement and
that, but for the agreement of Seller to comply with these covenants, Purchaser
would not have entered into this Agreement. Seller acknowledges that this
Section 5.6 constitutes an independent covenant and shall not be affected by
performance or nonperformance of any other provision of this Agreement by
Purchaser.
5.7. COMPLIANCE WITH WARN ACT. Prior to the Closing, Seller
shall cause FSI to take all actions necessary to comply with its obligations
under the Worker Adjustment and Retraining Notification Act (29 U.S.C. Section
2101 et seq.) and any regulations adopted thereunder with respect to any plant
closing or mass layoff before the Closing Date or the contemplated closing of
FSI's customer service center in Reno, Nevada, including discharging all
obligations to the employees of Seller, FSI or any of their subsidiaries under
such Act, resulting from the termination of employment of employees of Seller,
FSI or any of their subsidiaries in connection with the closing of FSI's
customer service center in Reno, Nevada subsequent to the Closing, and Seller
shall be
33
<PAGE> 39
responsible for, and shall indemnify and hold Purchaser harmless against any
liability or damages whatsoever relating to, any failure to take any such
action.
ARTICLE VI. EMPLOYEE MATTERS.
6.1. COVERED EMPLOYEES; PRIOR SERVICE. (a) Purchaser or an
affiliate shall offer employment to, or shall cause FSI to continue to employ,
commencing on the Closing Date, all those individuals who are employees of FSI
or an FSI Subsidiary on the Closing Date, except those identified by Purchaser
as "Excluded Employees" in Schedule 6.1, which shall be delivered by Purchaser
to Seller at the Closing. Those employees not actively at work with FSI due to
illness or injury in benefit payment status on the Closing Date shall not be
offered employment at the Closing and shall continue to draw payments related
to such disability from Seller or Seller's Benefit Plans. Upon rehabilitation,
such employees shall be offered employment with Purchaser, FSI or an affiliate;
provided, however, that unless all interests of Seller and its subsidiaries in
any reserves or cash collected under any insurance policy for the purpose of
paying any claim made with respect to such disability for treatment or other
disability payments after such employee's return to work are transferred to
Purchaser or FSI, Seller shall remain liable for any payments related to such
disability after such employee's return to work. Within 15 days from the date
hereof, Seller shall provide to Purchaser a preliminary list of all employees
of FSI or an FSI Subsidiary, with a final list to be provided at least two
weeks prior to the Closing. Such employees so hired or continued in employment
by Purchaser, FSI or an affiliate are collectively referred to as "Covered
Employees". Seller agrees to employ all Excluded Employees following the
Closing Date or to pay any amounts of severance pay or amounts under the
Benefit Plans (other than the Western Union Pension Plan) to which they are
entitled.
(b) If Purchaser elects to include Covered Employees
in any employee benefit plan of Purchaser or an affiliate, Purchaser shall
recognize service with Seller, FSI or any FSI Subsidiary for the purposes of
eligibility, vesting and qualification for benefit payments in such employee
benefit plans.
(c) Schedule 6.1 lists all employment, severance or
similar agreements or arrangements to which Seller or any subsidiary is a party
or by which any of them are bound. If any Covered Employee is a party to an
employment, severance or similar agreement or arrangement with FSI or Seller,
Purchaser will, or will cause FSI to, assume such agreement or arrangement and
relieve Seller of any further obligation thereunder.
34
<PAGE> 40
6.2. BENEFITS, COMPENSATION AND WORKING CONDITIONS. As of the
Closing Date, all Covered Employees eligible to participate in Seller's
employee benefit plans shall be immediately eligible to participate in all of
Purchaser's employee benefit plans, which are generally applicable to
comparable Purchaser employees, or, at Purchaser's option, shall be eligible to
participate in plans the benefits of which are comparable to the benefits of
current FSI Benefit Plans.
6.3. VACATION. Purchaser shall allow the exercise of any
accumulated but unused vacation by Covered Employees for the 1994 calendar
year. Covered Employees will be eligible for Purchaser's vacation schedule
beginning January 1, 1995, or at Purchaser's option will continue in the
current FSI vacation plan. As soon as practicable after the Closing Date,
Seller shall provide Purchaser with a listing of vacation eligibility for all
Covered Employees.
6.4. INCENTIVE COMPENSATION PLANS. (a) Seller shall be liable
for unpaid or vested incentive compensation for Covered Employees or other
employees of FSI and the FSI Subsidiaries which is earned through June 30, 1994
and Purchaser shall be liable for incentive compensation earned thereafter.
Seller agrees to pay all incentive compensation awards earned by Covered
Employees or other employees of FSI and the FSI Subsidiaries according to the
terms and conditions of the various FSI incentive plans up through June 30,
1994. Incentive compensation will include all awards for employees covered
under the Senior Management Incentive Plan, the Management Incentive Plan, Long
Term Incentive Plan I and the various Sales and Marketing Incentive Plans
effective for the 1994 calendar year.
(b) Seller and Purchaser agree that, to the extent any
liability for incentive compensation is reflected on the Audited Pro Forma
Balance Sheet, Seller shall be deemed to have fulfilled its obligation
hereunder to make such payment, and Purchaser will, or will cause FSI to,
actually make the payment to the employee in accordance with the terms of the
relevant incentive plan. It is the intention of the parties that incentive
obligations to Covered Employees as of June 30, 1994 will be so reflected on
the Audited Pro Forma Balance Sheet and that incentive obligations to all other
employees of Seller or FSI or any of the FSI Subsidiaries will be removed from
said Audited Pro Forma Balance Sheet and actually paid by Seller.
6.5. SEVERANCE BENEFITS. (a) Purchaser agrees that the
continued employment by Purchaser, FSI, or an affiliate thereof, of the Covered
Employees shall not be considered a severance of employment by Seller, and
Seller agrees that transfer from FSI to Seller and continued employment by
Seller of persons who are not Covered Employees shall not be considered a
severance of employment by Purchaser or FSI, for purposes of any severance,
salary continuation or similar policy, plan, program or arrangement of
35
<PAGE> 41
Seller.
(b) Effective as of the Closing Date, Purchaser shall
provide a severance benefit plan for Covered Employees that is comparable to
the plan for similarly situated Purchaser employees, or at Purchaser's option
Covered Employees may remain in the current FSI severance plan.
6.6. BENEFIT PLANS. (a) As of the Closing Date, in respect of
all Covered Employees who are participants in any Benefit Plan that is an
"individual account plan" within the meaning of Section 3(34) of ERISA (a
"Seller Individual Account Plan"), Seller and Purchaser shall take such actions
as shall be necessary to cause the accounts of Covered Employees in all Seller
Individual Account Plans to be transferred into Purchaser's individual account
plan ("Purchaser's Savings Plus Plan"), maintaining the accounts of
participants in such plans as a separate subpart or subparts of such
Purchaser's Savings Plus Plan. Such separate subpart or subparts of
Purchaser's Savings Plus Plan shall have the same trustee, contribution,
eligibility, vesting and loan provisions and investment choices as applied to
each such participant in the Seller Individual Account Plan from which such
accounts were transferred, each such subpart being referred to as a "mirror
subpart." Purchaser agrees to maintain each mirror subpart that is similar to a
Seller Individual Account Plan referred to in a Collective Bargaining Agreement
during the current term of such agreement. Purchaser agrees to maintain each
other mirror subpart for a reasonable transition period, provided, however,
that maintenance of such subpart shall not endanger, in Purchaser's judgment,
the qualification of Purchaser's Savings Plus Plan. In lieu of transferring
accounts to become a subpart of Purchaser's Savings Plus Plan, Purchaser may
establish a separate individual account plan having the same trustee,
contribution, eligibility, vesting and loan provisions and investment choices
as one of Seller's Individual Account Plans. If Purchaser establishes such a
separate plan, Purchaser agrees to continue such separate plan during the
transition period described in Section 410(b)(6)(C)(ii) of the Code.
(b) As of the Closing Date, in respect of all Covered
Employees who are participants in any Benefit Plan that is a "defined benefit
plan" (within the meaning of Section 3(35) of ERISA) and that is maintained by
Purchaser, FSI or an affiliate after the Closing, including the Western Union
Pension Plan, Purchaser shall take such actions as shall be necessary to cause
such Benefit Plan (i) to provide that Covered Employees may not commence
receiving any benefits for which they are eligible under the terms of such
Benefit Plan unless employment with Purchaser, FSI and their affiliates is
terminated, and (ii) to recognize service with Purchaser, FSI and their
affiliates on and after the Closing Date under any such Benefit Plan, to the
extent and under the terms and conditions recognized under such Benefit Plan,
solely
36
<PAGE> 42
for purposes of vesting and eligibility for retirement benefits. Seller agrees
that prior to the Closing Date it shall take such actions as shall be necessary
to cause such Benefit Plan to provide that any transfer of employment from
Seller, FSI or an FSI Subsidiary to Purchaser, FSI or an affiliate of Purchaser
shall not be deemed a termination of employment for purposes of such Benefit
Plan with respect to any individual who after the Closing continues to perform
essentially the same services with Purchaser, FSI or an affiliate of Purchaser
as he or she performed prior to the Closing.
(c) As of the Closing Date, with respect to those
employees of FSI on the Closing Date who are participants in the Western Union
Pension Plan and who continue as employees of Seller or its affiliates on or
after the Closing Date, Purchaser will cause such Pension Plan to be amended to
provide that (i) such employees may not commence receiving any benefits for
which they are eligible under the terms of such Benefit Plan unless employment
with Seller and its affiliates is terminated, and (ii) employment with Seller
and its affiliates on and after the Closing Date shall be recognized under such
Pension Plan for purposes of vesting and eligibility for retirement benefits.
(d) As of the Closing Date, Covered Employees shall
cease to participate in any Benefit Plan that is a "welfare plan" (within the
meaning of Section 3(1) of ERISA), and Seller shall be responsible for all
claims of such employees relating to any treatment which was performed prior to
the Closing Date and which are payable under the terms and conditions of any
such Benefit Plan. As of the Closing Date, Seller shall take such actions as
shall be necessary to transfer the accounts of Covered Employees who are
participants in Benefit Plans funded under the Western Union Corporation
Preservation Trust for Employee Welfare Benefits and the Western Union
Corporation Conservation Trust for Employee Related Programs to trusts
maintained by Purchaser, FSI or an affiliate pursuant to comparable welfare
plans of Purchaser, FSI or an affiliate. With respect to Covered Employees,
Purchaser shall cause each applicable "welfare plan" of Purchaser, FSI or their
affiliates to waive any pre-existing conditions exclusions, physical
examination requirements and actively-at-work requirements, except that claims
of any such Covered Employee who is hospitalized on the Closing Date will
remain the responsibility of Seller until the hospitalization is ended, and to
provide that any expenses incurred on or before the Closing Date shall be taken
into account under such plans for purposes of satisfying applicable deductible,
co-insurance and maximum out-of-pocket provisions with respect to calendar year
1994 and for purposes of applying any annual, lifetime or other benefit
limitation. Claims of Covered Employees who are receiving ongoing out patient
services for alcohol/substance abuse or psychiatric reasons shall remain the
responsibility of Seller until the earlier of recovery or rehabilitation or the
exhaustion of benefits for that cause and time period.
37
<PAGE> 43
(e) Seller shall remain responsible for all
liabilities and obligations in connection with claims for post-employment
medical and dental benefits that may be required under Section 4980B of the
Code made by or in respect of any employee of Seller or any of its subsidiaries
whose employment terminated prior to the Closing Date and any "qualified
beneficiary" (within the meaning of Section 4980B of the Code) of any such
employee who is receiving post-employment medical and dental benefits, or is
eligible to elect such benefits as of the Closing Date. Seller shall also be
responsible for medical or other benefits under the Benefit Plans for any
employees of Seller or any of its subsidiaries who retire prior to or as of the
Closing Date. On and after the Closing Date, active Covered Employees shall
accrue no further benefits under any of Seller's Benefit Plans, and Seller
shall cease to have any further liability or obligation for medical or other
benefits with respect to Covered Employees under any Benefit Plan, except as
set forth in Section 6.1 and 6.6(d).
(f) As to any governmental pension plan to which
Seller makes contributions for employees who are not U.S. citizens, Seller
shall prepare a schedule listing all such employees who are Covered Employees,
the name of the governmental pension plan or plans to which contributions are
made for such Covered Employees, the current amount of the contribution made by
Seller and the employee, if any, and the formula or method used to determine
the amount of the contribution made by Seller and the employee to such plans.
Such schedule shall be delivered to Purchaser prior to the Closing Date.
Seller shall make any contributions required to be made by Seller to such plans
through the Closing Date. Purchaser agrees to comply, or to cause FSI to
comply, with all applicable legal requirements regarding the maintenance,
modification or termination of such arrangements on and after the Closing Date.
Seller further agrees that it shall take such actions as shall be necessary and
permissible under applicable law to cause any transfer of employment from
Seller, FSI or an FSI Subsidiary to Purchaser, FSI or an affiliate of Purchaser
incident to the Closing to be deemed not a termination of employment for
purposes of any such governmental plan or arrangement with respect to any
individual who after the Closing continues to perform essentially the same
services with Purchaser, FSI or an affiliate of Purchaser as he or she
performed prior to the Closing.
(g) On or before December 1, 1994, Seller, upon
request by Purchaser, will file appropriate notice with the Internal Revenue
Service on Form 5310 as to the division effective December 31, 1994 of the
assets and liabilities of the Western Union Pension Plan into two plans, one
benefitting the retired and vested terminated former employee participants and
one benefitting the active employee participants of such plans and the division
shall be effective on December 31, 1994 if the Closing shall occur on or before
such date. If the Closing Date is postponed beyond December 31, 1994, Seller
will use its reasonable best efforts to
38
<PAGE> 44
take all actions necessary or appropriate to permit the above described
division of the Western Union Pension Plan to be effected as of the Closing
Date.
6.7. PURCHASER'S PLANS. To the extent that Purchaser elects to
have Covered Employees participate in Purchaser's benefit plans, no Covered
Employee shall be entitled to any pension or welfare benefit from Purchaser
except to the extent such benefits accrue after his or her employment with
Purchaser or an affiliate commences. However, for purposes of eligibility for
benefits under Purchaser's pension or retirement plans, Purchaser shall
recognize Covered Employees' service with Seller and its affiliates for those
Covered Employees deemed by Purchaser to be participants in Purchaser's non
union pension plan(s). Purchaser shall recognize and give credit to Covered
Employees in respect of Covered Employees' service with Seller and its
affiliates for purposes of vacation accrual, medical, dental, disability and
life insurance benefits and eligibility under any qualified individual account
plan to the extent such service is recognized under any Benefit Plan, program
or arrangement in effect as of the Closing Date.
6.8. PLANS SUBJECT TO COLLECTIVE BARGAINING AGREEMENTS. (a)
Seller shall pay any contributions in respect of any Benefit Plan that covers
any employee of Seller and its affiliates and is required pursuant to the terms
of collective bargaining agreements listed in Schedule 3.24 with respect to
periods ended on or before the Closing Date and those portions of contributions
due and payable with respect to periods ended after the Closing Date as are
allocable to the portions of such periods from the first day thereof to the
Closing Date. On and after the Closing Date, Seller shall cease to have any
liability or obligation for benefits in respect of Covered Employees under any
such Benefit Plan. Any arrearages in such Benefit Plans up to the Closing Date
are the responsibility of Seller.
(b) As of the Closing Date, in respect of all Covered
Employees covered by a collective bargaining agreement who are participants in
any Benefit Plan that is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA), and that is maintained by Purchaser, FSI or an
affiliate after the Closing, Purchaser shall take such actions as shall be
necessary to cause such Benefit Plan to recognize service of such Employees
with Purchaser, FSI and their affiliates on and after the Closing Date under
any such Benefit Plan, to the extent and under terms and conditions recognized
under such Benefit Plan, solely for purposes of vesting and eligibility for
retirement benefits and subject to applicable current collective bargaining
agreements.
(c) Nothing contained in this Agreement shall require
Seller or any of its subsidiaries to breach any collective bargaining agreement
listed in Schedule 3.24.
39
<PAGE> 45
6.9. OBLIGATIONS OF PURCHASER AND SELLER. Purchaser and Seller
shall cooperate and Purchaser shall make appropriate arrangements for the
payment of benefits in respect of Covered Employees that become due and payable
under the terms and conditions of any Benefit Plans on or after the Closing
Date. Seller shall deliver to Purchaser, as soon as practicable following the
Closing Date, pertinent information from personnel and other employment records
in respect of Covered Employees that is required in order to carry out
Purchaser's obligations.
6.10. ACKNOWLEDGMENTS. Except as provided in Section 6.6(a),
Purchaser and Seller acknowledge that, other than as required by any collective
bargaining agreement listed in Schedule 3.24, nothing in this Article VI shall
be construed as (i) requiring Purchaser or FSI or any of the FSI Subsidiaries
to continue the employment of any Covered Employee or prohibiting the
termination of or change in terms of employment of any Covered Employee, (ii)
vesting in any Covered Employee any right to continued employment, (iii)
requiring Purchaser or FSI or any of the FSI Subsidiaries to continue any
particular employee benefit plan, program, policy or practice for any
particular period of time after the Closing or (iv) prohibiting or in any way
limiting Purchaser or FSI or any of the FSI Subsidiaries from amending or
terminating any such plan, program, policy or practice after the Closing.
ARTICLE VII. BANKRUPTCY MATTERS.
7.1. CONFIRMATION AND SALE ORDERS. Seller shall use its
reasonable best efforts to obtain the entry by the Bankruptcy Court of the
Confirmation Order and the Sale Order as soon as practicable following the
hearing on confirmation of the Amended Plan, both in form and substance
reasonably satisfactory to Purchaser and to have included in the Confirmation
Order provisions which: (a) permanently enjoin the assertion against Purchaser
or FSI or any of the FSI Subsidiaries of any claims that are subject to
discharge under Section 1141 of the Bankruptcy Code; and (b) provide that if
the Closing does not occur on or prior to December 31, 1994, the Internal
Revenue Service and all state or local tax authorities shall be required to
assert any claims for unpaid taxes due with respect to any taxable year which
includes any period through the Closing Date, as a claim against Seller, or be
forever barred from assertion of such claim against any other person; provided,
however, that if Seller is unsuccessful in its efforts to obtain inclusion of
these provisions in the Confirmation Order, such failure shall not be deemed a
breach of this Agreement.
40
<PAGE> 46
7.2. CERTAIN BANKRUPTCY UNDERTAKINGS BY SELLER.
(a) Seller shall use its reasonable best efforts to
(and shall cause its affiliates including FSI to use their reasonable best
efforts to) effect the transactions contemplated by this Agreement and to
consummate the Amended Plan expeditiously in accordance with the Confirmation
Order, the Sale Order and the Procedures Order.
(b) From and after the date hereof, Seller shall not
(and shall cause its affiliates including FSI not to) take any action, or fail
to take any action, which action or failure to act might (i) prevent, impede,
or result in the revocation of the confirmation of, the Amended Plan, (ii)
prevent or impede the consummation of the Acquisition in accordance with the
Amended Plan or (iii) result in the reversal, avoidance or modification (in any
manner that could, in the reasonable judgment of Purchaser, materially and
adversely affect Purchaser's rights hereunder) of the Confirmation Order or the
Sale Order.
(c) Seller shall provide actual notice of any hearing
on the Confirmation Order or any other matter before the Bankruptcy Court that
may materially affect the consummation of the Acquisition, in each case in form
and substance and to such parties as requested in good faith by Purchaser.
Seller shall promptly provide to Purchaser such copies of motions, orders,
briefs, hearing transcripts, reports and other pleadings filed in the
Bankruptcy Court or in related court proceedings as Purchaser may reasonably
request.
(d) Seller shall comply in all material respects with
the Bankruptcy Code and all other laws, rules, regulations, decrees and orders
promulgated thereunder.
(e) If the Closing shall not have occurred on or prior
to December 31, 1994, Seller shall, simultaneously with the filing of any tax
return for any taxable year which includes the Closing Date, request a
determination of any unpaid liability for any tax incurred with respect to such
taxable year in accordance with Section 505 of the Bankruptcy Code.
7.3. CERTAIN BANKRUPTCY UNDERTAKINGS BY PURCHASER. Purchaser
agrees to use its reasonable best efforts to cooperate with Seller to
effectuate the Acquisition as promptly as practicable in accordance with the
Solicitation Procedures, the Procedures Order, the Confirmation Order and the
Sale Order, including providing Seller with such information relating to
Purchaser as may be necessary or appropriate in connection with the preparation
of any amended disclosure statement and attending hearings before the
Bankruptcy Court related to the Acquisition.
41
<PAGE> 47
ARTICLE VIII. TERMINATION.
8.1. TERMINATION. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing:
(a) by mutual written consent of Seller and Purchaser,
subject to any necessary approval of the Bankruptcy Court;
(b) by the party not in breach in the event of a
material breach of this Agreement by the other party which is not
cured within ten (10) days after written notice thereof;
(c) by Purchaser (i) unless, prior to November 15,
1994, the Confirmation Order and the Sale Order have been entered by
the Bankruptcy Court and the time for appeal of the Sale Order has
expired without a stay of the Sale Order having been granted and not
lifted; (ii) if after entry of the Confirmation Order and the Sale
Order, the Confirmation Order or the Sale Order shall have been
reversed, revoked, voided, modified (in any manner that could in the
reasonable judgment of Purchaser materially and adversely affect
Purchaser's rights hereunder), or stayed by an order of a court of
competent jurisdiction in any manner not satisfactory to Purchaser;
(iii) if an order by the Bankruptcy Court is entered confirming any
plan of reorganization of Seller which plan does not incorporate the
Acquisition in accordance with the terms hereof; (iv) if the plan of
reorganization of Seller confirmed by the Bankruptcy Court is modified
in such a manner as to be materially inconsistent with the terms of
this Agreement; or (v) if Seller proposes confirmation of a plan of
reorganization of Seller or amendment to Seller's currently proposed
plan of reorganization of Seller which is materially inconsistent with
the terms of this Agreement;
(d) by Purchaser or Seller in the event that the
Bankruptcy Court enters an order confirming any plan of reorganization
of Seller based upon, or an order authorizing or resulting in, a sale
of all or substantially all of the assets of Seller or FSI or a sale
of all or substantially all of the capital stock of FSI to a person
other than Purchaser which plan would result in a distribution under
such plan to creditors and interestholders having a value in the
aggregate in excess of the value of the distribution proposed to be
made under the Amended Plan; or
(e) by Purchaser if the Closing has not occurred on or
before December 31, 1994, or by Seller if the Closing Date has not
occurred by the sixtieth day following the date on which the Sale
Order is entered.
42
<PAGE> 48
8.2. EFFECT OF TERMINATION. If this Agreement is terminated and
the transactions contemplated hereby are not consummated as provided above,
this Agreement shall become void and be of no further force or effect and no
party shall have any further liability to the other party hereunder as a result
of such termination, except for (i) damages for breach in the event of
termination pursuant to Section 8.1(b), (ii) expenses pursuant to Section 11.6,
and (iii) in the case of a termination pursuant to Section 8.1(d), Liquidated
Damages pursuant to Section 10.5.
ARTICLE IX. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES.
9.1. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement and the Related Agreements is subject to the satisfaction, at or
before the Closing Date, of all of the following conditions (subject to the
right of Purchaser to waive any such condition in writing).
(a) The representations and warranties of Seller
contained in this Agreement and in any statement, certificate, exhibit,
schedule or other document delivered by Seller pursuant to this Agreement or
the Related Agreements or in connection with the transactions contemplated
hereby or thereby shall have been true and correct in all material respects as
of the date of this Agreement and shall be true and correct in all material
respects at and as of the Closing Date as if made on and as of the Closing
Date; Seller shall have performed all of its obligations under this Agreement,
any Related Agreement and any Bankruptcy Court order relating to this Agreement
or the Related Agreements to be performed at or prior to the Closing Date; and
Purchaser shall have received at the time of the Closing a certificate from
Seller reasonably satisfactory in form and substance to Purchaser certifying to
the satisfaction of all of the conditions set forth in this Section 9.1(a).
(b) No temporary restraining order, injunction or
other order shall have been issued by the Bankruptcy Court or any other court
or Governmental Agency with jurisdiction restraining, prohibiting or staying,
and no other Legal Requirement shall have come into effect making illegal,
performance of this Agreement or the Related Agreements or the consummation of
any of the transactions contemplated hereby or thereby.
(c) The Authorizations of all Governmental Agencies
and third parties which are necessary or required to (i) consummate the
transactions contemplated hereby or by the Related Agreements, and (ii) permit
Purchaser or FSI to operate the Business substantially as operated on the date
hereof (free of any restrictions or limitations arising out of Seller's status
as a debtor in possession under the Bankruptcy Code) shall have been
43
<PAGE> 49
obtained, and such Authorizations shall not contain any conditions, which,
individually or in the aggregate, could be reasonably expected to have a
Material Adverse Effect, and all waiting periods specified under all Legal
Requirements applicable to the Acquisition, and all extensions thereof, the
passing of which is required for such consummation, shall have passed.
(d) The Bankruptcy Court shall have entered the Sale
Order, and, as of the Closing Date, the Sale Order shall be in full force and
effect and shall not have been stayed pending appeal.
(e) No motion to convert the Case to a proceeding
under Chapter 7 of the Bankruptcy Code or to appoint a Chapter 11 trustee shall
have been granted.
(f) Since June 30, 1994, there shall not have occurred
any change in the condition (financial or other), business, assets,
liabilities, properties, cash flows, prospects or results of operations of the
Business which has had or is reasonably likely to have a Material Adverse
Effect and no event shall have occurred that in the reasonable judgment of
Purchaser would be likely to have a Material Adverse Effect other than as
disclosed in the Schedules hereto.
(g) Except as provided in Section 2.7, Seller and its
subsidiaries shall have duly executed and delivered to Purchaser (i) such
instruments of transfer, conveyance and assignment as are reasonably necessary
to vest in Purchaser good and marketable title to the Shares and, subject to
Permitted Liens, the Related Assets, and (ii) all Related Agreements to which
Seller and its subsidiaries are parties.
(h) Purchaser shall have received written opinions of
John C. Walters, Senior Vice President and General Counsel of Seller, and Mudge
Rose Guthrie Alexander & Ferdon, Seller's counsel, addressed to Purchaser,
substantially in the forms attached hereto as Exhibits H and I, respectively.
9.2. CONDITIONS TO THE OBLIGATION OF SELLER. The obligation of
Seller to consummate the transactions contemplated by this Agreement and the
Related Agreements is subject to the satisfaction, at or before the Closing
Date, of the following conditions (subject to the right of Seller to waive any
such condition in writing):
(a) The representations and warranties of Purchaser
contained herein and in the Related Agreements and in any statement,
certificate, exhibit, schedule or other document delivered by Purchaser
pursuant to this Agreement or the Related Agreements or in connection with the
transactions contemplated hereby or thereby shall have been true and correct in
all material respects as of the date of this Agreement and shall be true and
44
<PAGE> 50
correct in all material respects at and as of the Closing Date as if made on
and as of the Closing Date; Purchaser shall have performed all of its
obligations under this Agreement and the Related Agreements to be performed at
or prior to the Closing Date; and Seller shall have received at the time of the
Closing a certificate from Purchaser reasonably satisfactory in form and
substance to Seller certifying to the satisfaction of all of the conditions set
forth in this Section 9.2(a).
(b) No temporary restraining order, injunction or
other order shall have been issued by the Bankruptcy Court or any other court
or Governmental Agency with jurisdiction restraining, prohibiting or staying,
and no other Legal Requirement shall have come into effect making illegal,
performance of this Agreement or the Related Agreements or the consummation of
any of the transactions contemplated hereby or thereby.
(c) The Authorizations of all Governmental Agencies
and third parties which are necessary or required to consummate the
transactions contemplated hereby or by the Related Agreements shall have been
obtained, and all waiting periods specified under all Legal Requirements
applicable to the Acquisition and all extensions thereof, the passing of which
is required for such consummation, shall have passed.
(d) The Bankruptcy Court shall have entered the
Confirmation Order and the Sale Order pursuant to this Agreement, which orders
as of the Closing Date shall be in full force and effect and the Sale Order
shall not have been stayed pending appeal.
(e) No motion to convert the Case to a proceeding
under Chapter 7 of the Bankruptcy Code or to appoint a Chapter 11 trustee shall
have been granted.
(f) Purchaser and its affiliates shall have duly
executed and delivered to Seller (i) such instruments of assumption as are
reasonably necessary to assume the Assumed Liabilities, and (ii) all Related
Agreements to which they are parties.
(g) Seller shall have received an opinion from
Purchaser's counsel, addressed to Seller substantially in the form attached
hereto as Exhibit J.
(h) Purchaser shall have delivered to Seller the funds
set forth in Section 2.1 and all Related Agreements to which it or FSI is a
party, in each case duly executed by Purchaser and FSI.
(i) Seller shall have received the Escrow Agreement,
duly executed and delivered by Purchaser and the Escrow Agent.
45
<PAGE> 51
ARTICLE X. SURVIVAL; INDEMNIFICATION; LIQUIDATED DAMAGES.
10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Sections 3.1, 3.2, 3.4, 3.7, 3.14,
3.18 and 3.22 and all representations and warranties of Seller regarding tax
liabilities shall survive until the applicable statute of limitations has
expired; all other representations and warranties of Seller and Purchaser
contained in this Agreement shall survive for a period of 18 months following
the Closing Date.
10.2. INDEMNIFICATION. Purchaser on the one hand and Seller on
the other hand each agree to indemnify and hold harmless the other and
their respective affiliates, directors, officers, employees and agents from and
against any loss, liability, damage or deficiency (including, without
limitation, costs, interest, penalties and reasonable attorneys' fees) arising
out of or due to any breach of any covenant or any surviving representation or
warranty made by such party in this Agreement. There shall be no limitation
whatsoever on indemnification for any breaches by Seller of any provisions of
Article I, Article II or Section 3.7 hereof or for any breaches of
representations, warranties or covenants of Seller under this Agreement
regarding tax liabilities, but the total amount due for all breaches of other
representations, warranties and covenants of Seller under this Agreement shall
in no event exceed $45 million. In addition, no claim for indemnification shall
be made by the Purchaser under this Section 10.2 for the failure to list a Lien
in Schedule 1.1 to the extent such Lien would be discharged by the
satisfaction by Purchaser or FSI of (i) an Assumed Liability or (ii) a
liability of FSI if the existence of such liability would not be a breach of
Section 3.19. Promptly after the receipt by any party hereto of notice of any
claim or the commencement of any action or proceeding, such party will, if a
claim with respect thereto is to be made against any party obligated to provide
indemnification hereunder (the "Indemnifying Party"), give such Indemnifying
Party written notice of such claim or the commencement of such action or
proceeding, but any failure to timely notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder except to the
extent it was prejudiced thereby. Such Indemnifying Party shall have the right,
at its option to compromise or defend, at its own expense and with its own
counsel, any such claim, action or proceeding involving the asserted liability
of the party seeking such indemnification (the "Indemnified Party"). If any
Indemnifying Party undertakes to compromise, settle or defend any such asserted
liability, it shall promptly notify the Indemnified Party of its intention to
do so, and the Indemnified Party agrees to cooperate fully with the
Indemnifying Party and its counsel in the compromise of, or defense against,
any such asserted liability. The Indemnified Party may appoint, at its own
expense, associate counsel to participate in the joint defense of any such
matter. No Indemnified Party shall settle, compromise or consent to the entry
of any judgment in any pending or threatened claim, action or
46
<PAGE> 52
proceeding except with the consent of the Indemnifying Party (which
consent shall not be unreasonably withheld). All indemnification by the Seller
under this Article X, other than indemnification for any breaches by Seller of
any provisions of Article I, Article II or Section 3.7 hereof or for any
breaches of representations, warranties or covenants of Seller under this
Agreement regarding tax liabilities, shall be made first from the Escrowed
Funds in accordance with the terms of the Escrow Agreement.
10.3. LIMITATIONS. (a) Purchaser shall not be entitled to make
any claim against Seller under Section 10.2 unless and until the aggregate
amount of losses, liabilities, damages and deficiencies (including costs,
interest, penalties and reasonable attorneys' fees) with respect to all such
claims exceeds $2.5 million, in which event, Purchaser may assert its right to
indemnification to the extent such claims exceed $2.5 million.
(b) Notwithstanding the other provisions of this
Article, the limitations on amounts contained in Section 10.2 and in paragraph
(a) of this Section 10.3 shall not apply to the breach of any provisions of
Article I, Article II or Section 3.7 hereof or for any breaches of
representations, warranties or covenants of Seller under this Agreement
regarding tax liabilities.
10.4. TREATMENT OF CLAIMS FOR INDEMNITY. An Indemnified Party's
claim for indemnification hereunder shall be treated as an allowed
administrative expense under Section 503(b) of the Bankruptcy Code entitled to
priority under Section 507(a)(1) of the Bankruptcy Code.
10.5. LIQUIDATED DAMAGES. (a) Whether or not the Acquisition is
consummated, Seller acknowledges and agrees that Purchaser has made a
substantial investment of management time and incurred substantial
out-of-pocket expenses in connection with the negotiation and execution of this
Agreement and the effort to consummate the Acquisition. If the Acquisition is
not consummated and a "Liquidated Damages Event" (as defined below) shall have
occurred, Seller shall pay to Purchaser an amount equal to the sum of (i)
$25,000,000 plus (ii) the aggregate amount of expense reimbursement payable by
Seller to Purchaser under Section 11.6 ("Liquidated Damages"). As used herein,
a "Liquidated Damages Event" shall be a termination of this Agreement by Seller
or Purchaser pursuant to Section 8.1(d), provided Purchaser is not in default
hereunder at the time of such termination.
(b) Upon the occurrence of a Liquidated Damages Event,
Purchaser shall provide written notice to Seller of Purchaser's entitlement to
Liquidated Damages and Seller shall be liable for the payment of Liquidated
Damages and shall pay to Purchaser within 10 business days thereafter the
Liquidated Damages by wire transfer of immediately available funds to an
account or accounts designated by Purchaser. Until Seller's obligation to pay
Liquidated Damages
47
<PAGE> 53
is fully and indefeasibly discharged, Purchaser's claim for Liquidated Damages
shall be treated as an allowed administrative claim pursuant to section 503(b)
of the Bankruptcy Code entitled to priority under section 507(a)(1) of the
Bankruptcy Code.
ARTICLE XI. MISCELLANEOUS.
11.1. PUBLIC ANNOUNCEMENTS; NOTICES. (a) From the date hereof
until the Closing Date, no party hereto (nor any of their respective
affiliates) shall make any public announcement or other public disclosure
regarding the Acquisition or the terms of this Agreement without the consent of
the other (which consent shall not be unreasonably withheld) except to the
extent that such disclosure is required by applicable law. Notwithstanding the
foregoing, the parties may communicate with their respective employees,
customers, suppliers, creditors, shareholders, relevant Governmental Agencies
and the other parties in interest in the Case as may be necessary and
appropriate in connection with the implementation and consummation of the terms
of this Agreement. In addition, the parties shall cooperate and coordinate
with one another on the form and substance of an initial press release
announcing the execution and delivery of this Agreement.
(b) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally
(including by courier), sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, or if sent by facsimile transmission, when
transmitted, or, if mailed, four days after the date of deposit in the United
States mail, as follows:
(i) if to Purchaser, to:
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Attention: Randolph L.M. Hutto, Esq.
with a copy to:
Sutherland, Asbill & Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: George L. Cohen, Esq.
48
<PAGE> 54
(ii) if to Seller to:
New Valley Corporation
One Mack Centre Drive
Paramus, NJ 07652
Attention: General Counsel
with a copy to:
Mudge Rose Guthrie
Alexander & Ferdon
180 Maiden Lane
New York, New York 10038
Attention: Arnold H. Tracy, Esq.
Any party may, by notice given in accordance with this Section 11.1 to the
other party, designate another address or person for receipt of notices
hereunder.
11.2. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties with respect to the Acquisition
and supersedes all prior discussions, agreements and undertakings, written or
oral, of any and every nature with respect thereto.
11.3. GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED IN
ALL RESPECTS, INCLUDING VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT, BY
THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW).
(b) Each of the parties hereto agrees to submit to the
exclusive jurisdiction of the Bankruptcy Court and, in the event the Bankruptcy
Court no longer retains jurisdiction over the Case, the Federal District Court
for the Southern District of New York.
11.4. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY BENEFICIARY.
Subject to the entry of an appropriate order of the Bankruptcy Court approving
the execution and delivery of this Agreement, this Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns. This Agreement shall survive entry of the Confirmation
Order and the occurrence of the Effective Date of the Amended Plan. This
Agreement is not assignable without the prior written consent of each of the
parties hereto; provided, however, that Purchaser may assign its rights under
this Agreement to a wholly-owned subsidiary without such prior written consent,
but no such assignment shall relieve Purchaser of any of its obligations
hereunder. This Agreement does not create any rights, claims or benefits
inuring to any person that is not a party hereto or create or establish any
third party beneficiary hereto.
49
<PAGE> 55
11.5. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts which together shall constitute one and
the same instrument.
11.6. EXPENSES. Except as otherwise provided in Article II or
Section 10.5, and whether or not the Closing occurs, Seller shall reimburse
Purchaser for all of Purchaser's out-of-pocket costs and expenses incurred in
connection with its due diligence investigation of the Business, the
negotiation and preparation of this Agreement, the carrying out of the
provisions hereof and the consummation of the transactions contemplated hereby,
to the extent approved by the Bankruptcy Court; provided, however, that
Purchaser shall not be entitled to any reimbursement for, and shall indemnify
and hold Seller and its subsidiaries harmless from and against any loss
liability, damage or deficiency (including, without limitation, costs,
interest, penalties and reasonable attorneys' fees) resulting from, any
brokerage fees, commissions or finders' fees incurred by Purchaser in
connection with the transactions contemplated by this Agreement, other than
fees to Morgan Stanley & Co. Incorporated in connection with the Acquisition.
11.7. CONSTRUCTION AND REPRESENTATION BY COUNSEL. The parties
hereto represent that in the negotiation and drafting of this Agreement they
have been represented by and relied upon the advice of counsel of their choice.
The parties affirm that their counsel have had a substantial role in the
drafting and negotiation of this Agreement and, therefore, the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any exhibit or schedule attached hereto.
11.8. TAXES. (a) Seller shall join with Purchaser in making an
election under Sections 338(g) and 338(h)(10) of the Code and any corresponding
elections under state, local, or foreign tax law (collectively, a "Section
338(h)(10) Election") with respect to the purchase and sale of the Shares.
Seller shall pay any Federal, state, local and foreign income taxes (including
any interest or penalties that may become payable in respect thereof) imposed
on FSI and attributable to the making of the Section 338(h)(10) Election
(including any state, local or foreign income taxes imposed on FSI and
attributable to the making of an election under Section 338(g) of the Code, or
any comparable election under state, local or foreign tax law, in a situation
where an election under Section 338(h)(10) of the Code, or a comparable
election under state, local or foreign tax law, is not available with respect
to the purchase and sale of the Shares) and shall indemnify Purchaser and FSI
against any such taxes.
(b) Seller and Purchaser agree to allocate the
purchase price between the Shares and the Related Assets, and to allocate the
purchase price for the Shares (which shall exclude any contingent termination
liability to the PBGC with respect to the
50
<PAGE> 56
Western Union Pension Plan and Purchaser's obligation to satisfy the minimum
funding requirements imposed under Section 412 of the Code with respect to such
Pension Plan, and which shall be determined in accordance with Section 338(b)
of the Code) among the FSI assets deemed purchased for tax purposes in any
reasonable manner determined by Purchaser in accordance with Legal Requirements
and consented to by Seller, which consent may not be unreasonably withheld by
Seller, and to file all tax returns in a manner consistent with such
allocation. The parties agree to make such allocations as soon as possible
after the Closing and in all events no later than 60 days prior to the last
date (determined with regard to extensions) on which a Section 388(h)(10)
election may be filed with any applicable Federal, State, local or foreign
governmental authority. If Purchaser makes the deferred closing election of
Section 2.7, the parties agree to file all income tax returns treating the sale
of the Western Union Name and Trademark as having occurred at the Second
Closing.
(c) Seller shall bear and pay all transfer, stamp or
other similar taxes (if they are not exempted under section 1146 of the
Bankruptcy Code) imposed in connection with the Acquisition.
(d) Seller will indemnify and hold Purchaser and FSI
harmless against (1) any and all liability for Federal, state, local or foreign
taxes (including any interest, penalties or additions to tax that may become
payable in respect thereof) assessed against or payable by FSI with respect to
any period ending on or before the Closing Date or any period ending on or
before the last day of the taxable year of Seller's consolidated group in which
the Closing occurs, to the extent apportioned under Section 11.9(b); and (2)
any liability for Federal, state, local or foreign taxes (including any
interest, penalties or additions to tax that may become payable in respect
thereof) assessed against FSI pursuant to Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law) with respect to any
period ending on or before the last day of the taxable year of Seller's
consolidated group in which the Closing occurs provided, however, that
Purchaser shall not be indemnified for tax liabilities properly accrued and
reflected on the Audited Pro Forma Balance Sheet; and provided, further, that
to the extent any payment which, but for the provisions of this Section
11.8(d), would be payable to Seller by FSI also constitutes an undisclosed
liability which is taken into account in determining the amount payable to
Purchaser pursuant to Section 2.1(b), Seller shall be absolved of any such
liability to Purchaser under this Section 11.8(d).
(e) Purchaser shall pay to Seller, as a post-closing
Purchase Price adjustment, an amount equal to FSI's separate tax liability for
the period July 1, 1994 through the day preceding the Closing Date, determined
in accordance with the Agreement respecting Consolidating Federal Income Tax
Return Allocation of
51
<PAGE> 57
Taxes and Payment for Tax Benefits Utilized dated March 23, 1976 between Seller
and its subsidiaries (the "Tax Sharing Agreement"), less the total amount of
payments made for such period pursuant to Section 11.9, and Seller shall pay to
Purchaser as a post-closing Purchase Price adjustment any amount by which the
payments by FSI to Seller pursuant to Section 11.9 for the period July 1, 1994
through the Closing Date exceeded the amounts payable with respect thereto
pursuant to the Tax Sharing Agreement.
11.9. TAX PROCEDURES.
(a) Tax Sharing Agreements. Any tax sharing
agreement, including the Tax Sharing Agreement, between Seller and any of FSI
and its subsidiaries shall be terminated as to FSI and its subsidiaries as of
the Closing Date and shall have no further effect for any taxable year. FSI
and its subsidiaries may make payments pursuant to the Tax Sharing Agreement
with respect to the period from July 1, 1994 through the Closing Date, but from
and after July 1, 1994 through the Closing Date FSI and its subsidiaries have
not made and shall not make any other payments to Seller under any such
agreements, including any such other payments with respect to any taxable year
within which the Closing Date occurs.
(b) Tax Returns and Payment. Seller shall include the
income of FSI and its subsidiaries in Seller's consolidated federal and
consolidated, combined, or unitary state tax returns for all periods through
the Closing Date and pay any federal, state or local income taxes attributable
to such income. Income and tax liability of FSI and its subsidiaries shall be
apportioned to the period through the Closing Date by closing the books of FSI
and its subsidiaries as of the end of the Closing Date. Seller shall allow FSI
an opportunity to review and comment on any tax returns to be filed for any
period which includes the Closing Date.
(c) Audits. Seller shall allow FSI and its
representatives to participate in any audits and any tax contests of Seller's
consolidated, combined, or unitary tax returns to the extent such returns
related to FSI and its subsidiaries. Seller shall not settle any such audit in
a manner which would adversely affect FSI or its subsidiaries after the Closing
Date without the prior written consent of Purchaser, which consent shall not
unreasonably be withheld. To the extent reasonably required by Seller,
Purchaser will, and will cause FSI and its representatives to, cooperate with
and assist Seller in connection with any such audits or tax contests covering
any period prior to the Closing or any period during which FSI and the FSI
Subsidiaries were members of the consolidated group of which Seller was the
parent.
11.10. WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES;
PRESERVATION OF REMEDIES. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may
52
<PAGE> 58
be waived, only by a written instrument signed by authorized representatives of
each of the parties or, in the case of a waiver, by an authorized
representative of the party waiving compliance. No such written instrument
shall be effective unless it expressly recites that it is intended to amend,
supersede, cancel, renew or extend this Agreement or to waive compliance with
one or more of the terms hereof, as the case may be. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, or any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of
any other such right, power or privilege.
11.11. ARBITRATION. Any dispute, controversy or claim arising out
of or relating to this Agreement shall be settled by arbitration in accordance
with the then-prevailing Commercial Arbitration Rules of the American
Arbitration Association. Such arbitration shall be held before a panel of
three (3) arbitrators, one selected by Purchaser, one selected by Seller and
the third selected by mutual agreement of the first two arbitrators. Each
arbitrator shall be independent and impartial. Judgment upon any award
rendered by the arbitrators may be entered into by any court of competent
jurisdiction. The determination of which party (or combination of them) bears
the costs and expenses, including reasonable attorneys' fees, incurred in
connection with any such arbitration proceeding shall be made by the
arbitrators.
ARTICLE XII. DEFINITIONS.
12.1. DEFINED TERMS. Capitalized terms used herein shall have
the meanings set forth in the Sections referred to below:
<TABLE>
<CAPTION>
Defined Terms Section Reference
- - ------------- -----------------
<S> <C>
Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Amended Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Amended Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Audited Pro Forma Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(3)
Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(b)
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Bankruptcy Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Collective Bargaining Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
</TABLE>
53
<PAGE> 59
<TABLE>
<S> <C>
Confirmation Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
Covered Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
CWA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
Datek Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Escrowed Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Evaluation Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(a)
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Excluded Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)
Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
FSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
FSI Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
Governmental Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(b)
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(d)
Intellectual Property Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(a)
Intercompany Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
ISRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18(d)
Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5(a)
Liquidated Damages Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5(a)
Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7(d)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Material Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(1)
Messaging Services Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Permitted Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Permitted Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(a)
Plan Proponents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Pro Forma Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Procedures Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Purchaser's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(2)
Purchaser's Savings Plus Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6(a)
Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Related Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Restricted Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
Sale Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
Second Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
Section 338(h)(10) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8(a)
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Seller's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(2)
Seller Individual Account Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6(a)
Seller's Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
Shared Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Solicitation Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
</TABLE>
54
<PAGE> 60
<TABLE>
<S> <C>
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
Tax Sharing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8(e)
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(1)
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)(1)
Western Union Name and Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
</TABLE>
IN WITNESS WHEREOF, each of the parties hereto has caused its duly authorized
representative to execute this Agreement as of the date first set forth above.
NEW VALLEY CORPORATION FIRST FINANCIAL MANAGEMENT CORPORATION
By /s/ Robert J. Amman By /s/ Randolph L. M. Hutto
------------------------------- -------------------------------
Name: Robert J. Amman Name: Randolph L. M. Hutto
Title: Title:
55
<PAGE> 1
EXHIBIT 10.1
MTH&M Draft of 11/02/94
File No.: 28418-00100
MDMS No.: 583850
________________________________________________________________________________
FIRST FINANCIAL MANAGEMENT CORPORATION
FIRST FINANCIAL BANK
______________________
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of June 25, 1992
Amended and Restated as of November 8, 1994
______________________
$1,000,000,000
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2. Commitments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.01 Syndicated Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.02 Borrowings of Syndicated Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.03 Changes of Commitments; Extension of Commitment Termination Date . . . . . . . . . . . . . . . . . . . . . . 25
2.04 Money Market Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.05 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.06 Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.07 Several Obligations; Remedies Independent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.08 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.09 Optional Prepayments and Conversions or Continuation of Loans . . . . . . . . . . . . . . . . . . . . . . . 35
2.10 Swingline Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3. Payments of Principal and Interest; Mandatory Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . 37
3.01 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.02 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.03 Mandatory Commitment Reductions and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.02 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.03 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.04 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.05 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.06 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.07 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5. Yield Protection and Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.02 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.04 Treatment of Affected Loans under Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.05 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.06 Withholding Tax Exemption; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.01 Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.02 Initial and Subsequent Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.01 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.02 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
Credit Agreement
<PAGE> 3
(ii)
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.04 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.05 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.06 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.07 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.10 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.11 Credit Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.12 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.13 Subsidiaries, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.14 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.15 Accuracy and Completeness of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.16 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.17 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.02 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.03 Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.04 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.05 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.06 Limitation on Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.07 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.08 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.09 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.10 Debt to Cash Flow Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.11 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.12 [Intentionally omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.13 [Intentionally omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.16 Modifications of Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.17 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 10. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.01 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.02 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.03 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.04 Rights as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.05 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.06 Non-Reliance on Agent and other Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.07 Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.08 Resignation or Removal of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.09 Consents Under Basic Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
Credit Agreement
<PAGE> 4
(iii)
<TABLE>
<CAPTION>
Page
----
<S> <C>
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.03 Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.04 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.06 Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.07 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.08 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.10 Governing Law; Submission to Jurisdiction; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.13 Subsidiary Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SCHEDULE I - Credit Agreements
SCHEDULE II - Environmental Matters
SCHEDULE III - Subsidiaries and Investments
SCHEDULE IV - Litigation and Approvals
SCHEDULE V - Liens
EXHIBIT A-1 - Form of Note for Syndicated Loans
EXHIBIT A-2 - Form of Note for Money Market Loans
EXHIBIT A-3 - Form of Note for Swingline Loans
EXHIBIT B - Form of Company Guarantee
EXHIBIT C-1 - Form of Opinion of Special Georgia Counsel to
the Borrowers
EXHIBIT C-2 - Form of Opinion of General Counsel of the
Borrowers
EXHIBIT D - Form of Opinion of Special New York Counsel
to the Banks
EXHIBIT E - Form of Compliance Certificate
EXHIBIT F - Form of Confidentiality Agreement
EXHIBIT G - Form of Money Market Quote Request
EXHIBIT H - Form of Money Market Quote
</TABLE>
Credit Agreement
<PAGE> 5
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 25,
1992, amended and restated as of November 8, 1994 between: FIRST FINANCIAL
MANAGEMENT CORPORATION, a corporation duly organized and validly existing under
the laws of the State of Georgia (together with its successors and assigns, the
"Company"); FIRST FINANCIAL BANK, a banking corporation duly organized and
validly existing under the laws of the State of Georgia and an indirect
Wholly-Owned Subsidiary of the Company (together with its successors and
assigns, "FFB"); each of the banks that is a signatory hereto (together with
its successors and assigns, individually, a "Bank" and, collectively, the
"Banks"); THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as the swingline
bank pursuant to Section 2.10 hereof (in such capacity, together with its
successors in such capacity, the "Swingline Bank"; and THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as agent for the Banks (in such capacity, together with
its successors in such capacity, the "Agent").
The Company, each of the Banks and the Agent are parties to a
Credit Agreement dated as of June 25, 1992 (as amended, supplemented and in
effect immediately prior to the Amendment Effective Date referred to below, the
"1992 Credit Agreement").
The Company and FFB have requested that the Banks and the
Agent agree, and the Banks and the Agent are willing, to amend and restate the
1992 Credit Agreement for the purpose of, among other things: (i)
incorporating a $450,000,000 swingline loan facility, (ii) deleting references
to Georgia Federal Bank, FSB (which has been sold), (iii) including FFB as a
borrower under this Agreement, (iv) increasing the aggregate amount of the
Commitments from $450,000,000 to $1,000,000,000 and (v) adding certain banks
and removing certain other banks. Accordingly, the parties hereto agree to
amend and restate the 1992 Credit Agreement so that, as amended and restated,
it reads as provided herein:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Acquisition" shall mean any transaction, or any series of
related transactions, consummated after the date of this Agreement, by which
the Company and/or one or more of its Subsidiaries (in one transaction or as
the most recent transaction in a series of related transactions) (i) acquires
any going business or all or substantially all of the assets of any firm or
corporation (or division or operating unit thereof), whether through purchase
of assets, merger or otherwise,
Credit Agreement
<PAGE> 6
- 2 -
(ii) directly or indirectly acquires control of at least a majority (in number
of votes) of the securities of a corporation which have ordinary voting power
for the election of directors or (iii) directly or indirectly acquires control
of an ownership interest in any partnership or joint venture (including a joint
venture in corporate form).
"Additional Commitment Bank" shall have the meaning assigned
to such term in Section 2.03(c) hereof.
"Additional Costs" shall have the meaning assigned to such
term in Section 5.01 hereof.
"Affected Bank" shall have the meaning assigned to such term
in Section 5.01(e) hereof.
"Affiliate" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by
any such member or trust. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 5% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 5% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, (a) no individual shall be deemed to be an
Affiliate of a corporation solely by reason of his or her being an officer or
director of such corporation, (b) the Company and its Subsidiaries shall not be
Affiliates of each other and (c) neither the Agent nor any Bank shall be an
Affiliate of the Company or any of its Subsidiaries.
"Amendment Effective Date" shall mean the date on which all of
the conditions set forth in Section 6.01 hereof shall have been satisfied or
waived by the Banks or the Agent on behalf of the Banks.
"Applicable Facility Fee Percentage" shall mean 0.3125%;
provided that:
(i) the Applicable Facility Fee Percentage, for any Quarterly
Period following the date on which the Company
Credit Agreement
<PAGE> 7
- 3 -
shall deliver to the Agent a Facility Fee and Margin Certificate
demonstrating that the Debt to Cash Flow Ratio, as of the last day of
the most recent Computation Period, is within one of the ranges set
forth below, shall be reduced to the percentage set forth below
opposite such range:
<TABLE>
<CAPTION>
Applicable Facility
Range Fee Percentage
----- -------------------
<S> <C>
Less than 2.00 to 1 0.1250%
Less than 2.50 to 1
but greater than or 0.1500%
equal to 2.00 to 1
Less than 3.25 to 1
but greater than or 0.1875%
equal to 2.50 to 1
Less than 3.75 to 1 0.2500%
but greater than or
equal to 3.25 to 1
</TABLE>
(ii) notwithstanding the foregoing clause (i), the Applicable
Facility Fee Percentage, for the period from and including the date of
the initial Loans hereunder to but excluding the Quarterly Date
falling in March of 1995, shall be 0.1500%; and
(iii) notwithstanding the foregoing clauses (i) and (ii), the
Applicable Facility Fee Percentage, for any period during which any
Event of Default shall have occurred and be continuing, shall equal
0.3125%.
"Applicable Lending Office" shall mean, for each Bank, the
Lending Office of such Bank (or of an affiliate of such Bank) designated for
its Loans of each type on the signature pages hereof or such other office of
such Bank (or of an affiliate of such Bank) as such Bank may from time to time
specify to the Agent and the Company as the office by which the Loan is to be
made and maintained.
"Applicable Margin" shall mean: (a) with respect to Base Rate
Loans, 0%; and (b) with respect to Eurodollar Loans, 0.4375%; provided that:
(i) the Applicable Margin for Eurodollar Loans, for any
Quarterly Period following the date on which the Company shall deliver
to the Agent a Facility Fee and Margin Determination Certificate
demonstrating that the Debt to Cash Flow Ratio, as of the last day of
the most recent Computation Period, is within one of the ranges set
forth
Credit Agreement
<PAGE> 8
- 4 -
below, shall be reduced to the percentage set forth below opposite
such range:
<TABLE>
<CAPTION>
Eurodollar
Range Loans
----- ----------
<S> <C>
Less than 2.00 to 1 0.1500%
Less than 2.50 to 1 0.2000%
but greater than or
equal to 2.00 to 1
Less than 3.25 to 1 0.2625%
but greater than or
equal to 2.50 to 1
Less than 3.75 to 1 0.3750%
but greater than or
equal to 3.25 to 1
</TABLE>
(ii) notwithstanding the foregoing clause (i), the Applicable
Margin for Eurodollar Loans, for the period from and including the
date of the initial Loans hereunder to but excluding the Quarterly
Date falling in March of 1995, shall be 0.2000%; and
(iii) notwithstanding the foregoing clauses (i) and (ii), the
Applicable Margin for Eurodollar Loans, for any period during which
any Event of Default shall have occurred and be continuing, shall
equal 0.4375%.
"Assenting Bank" shall have the meaning assigned to that term
in Section 5.01(e) hereof.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of
1978, as amended from time to time.
"Base Rate" shall mean, with respect to any Base Rate Loan,
for any day, the higher of (a) the Federal Funds Rate for such day plus 0.50%
per annum and (b) the Prime Rate for such day. Each change in any interest
rate provided for herein based upon the Base Rate resulting from a change in
the Base Rate shall take effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Syndicated Loans the interest
rates on which are determined on the basis of the Base Rate.
"Basic Documents" shall mean, collectively, this Agreement,
the Notes and the Company Guarantee.
Credit Agreement
<PAGE> 9
- 5 -
"Basle Accord" shall mean the proposals for a risk-based
capital framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as at any time
amended or otherwise modified or replaced.
"Borrowers" shall mean the Company and FFB.
"Business Day" shall mean any day on which commercial banks
are not authorized or required to close in New York City and, if such day
relates to the giving of notices or quotes in connection with a LIBOR Auction
or to a borrowing of, a payment or prepayment of principal of or interest on,
or a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a
LIBOR Market Loan or a notice by the Company with respect to any such
borrowing, payment, prepayment, Conversion or Interest Period, which is also a
day on which dealings in Dollar deposits are carried out in the London
interbank market.
"Capital Expenditures" shall mean, for any period, with
respect to any Person, expenditures (including the aggregate amount of Capital
Lease Obligations incurred during such period) made by such Person to acquire
or construct fixed assets, plant and equipment (including renewals,
improvements and replacements, but excluding repairs) during such period
computed in accordance with GAAP. For purposes of this Agreement, (a) other
than described in clause (b) below, additions to capitalized software computed
in accordance with GAAP shall be deemed to be Capital Expenditures and (b)
acquisitions (including, without limitation, Acquisitions) of fixed assets,
plant, equipment and capitalized software expressly permitted by Section 8.05
hereof (other than expenditures referred to in Section 8.05(b)(ii) hereof)
shall be deemed not to be Capital Expenditures.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital or
financing lease on a balance sheet of such Person under GAAP (including
Statement of Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board and amendments thereto and interpretations thereof) and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13 and amendments thereto and interpretations thereof).
Credit Agreement
<PAGE> 10
- 6 -
"Cash Flow" shall mean, for any period, the sum, for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of (a) EBIT for such period plus (b)
depreciation, amortization and other non-cash charges (to the extent deducted
in determining EBIT) for such period minus (c) Net Capital Expenditures made
(other than the aggregate amount of Capital Lease Obligations incurred) during
such period minus (d) the aggregate amount of Interest Expense during such
period accrued or capitalized in respect of Qualified Subordinated Indebtedness
plus (e) the aggregate amount of dividends or other distributions received in
cash during such period by the Company and its Subsidiaries in respect of
common stock issued by or other ownership interests in any Person that is not a
Subsidiary of the Company; provided that:
(i) with respect to each Subsidiary of the Company that is
not a Wholly-Owned Subsidiary of the Company, there shall be excluded
from "Cash Flow" for such period the Minority Share of the amounts set
forth in the foregoing clauses (a), (b) and (c) for such period which
are properly attributable to such Subsidiary; and
(ii) in connection with any acquisition or disposition of any
shares of capital stock or other ownership interests resulting in any
of the Subsidiaries of the Company becoming or ceasing to be a
Subsidiary of the Company, there shall (in connection with any such
acquisition) be included in or (in connection with any such
disposition) be excluded from Cash Flow, for the period (the
"Designated Period") from and including the first day of the
Computation Period ending on or immediately prior to the date of such
acquisition or disposition to and including the date of such
acquisition or disposition, the portion of Cash Flow properly
attributable to such Person had such Person (in connection with any
acquisition) been a Subsidiary of the Company or (in connection with
any disposition) not been a Subsidiary of the Company on the first day
of the Designated Period; provided that, in connection with any
acquisition resulting in any Person becoming a Subsidiary of the
Company, the portion of Cash Flow properly attributable to such Person
had such Person been a Subsidiary of the Company on the first day of
the Designated Period shall only be included in Cash Flow for the
Designated Period (or any portion of such Designated Period) for which
the Company shall have provided the Agent and the Banks a copy of
financial statements (including a statement of cash flows) for such
Person, accompanied by a certificate of a senior financial officer of
the Company, or a report thereon of independent certified public
accountants, stating that such financial statements present fairly in
all material respects the financial
Credit Agreement
<PAGE> 11
- 7 -
position and results of operations of such Person in accordance with
generally accepted accounting principles; and provided further that
Cash Flow attributable to such acquired Person may only be included in
Cash Flow for any period if Debt used to finance in whole or in part
such acquisition, together with Debt of such acquired Person
outstanding when it became a Subsidiary of the Company, is treated as
having been outstanding Debt as at the last day of such period.
"Change in Control" shall be deemed to have occurred if any
Person or related group of Persons shall possess, directly or indirectly, the
power to direct or cause the direction of or the power to veto (or shall in
fact exercise any such power) the management and policies of the Company
through the ownership or control of more than 50% of the voting securities of
the Company (whether through ownership of said securities or partnership or
other ownership interests, by contract or otherwise).
"Chase" shall mean The Chase Manhattan Bank (National
Association).
"Closing Date" shall mean June 26, 1992.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" shall mean, as to each Bank, the obligation of
such Bank to make Syndicated Loans in an aggregate amount up to but not
exceeding the amount set opposite such Bank's name on the signature pages
hereof under the caption "Commitment" (as the same may be reduced at any time
or from time to time pursuant to Section 2.03 hereof). The original aggregate
amount of the Commitments as of the Amendment Effective Date is $1,000,000,000.
"Commitment Termination Date" shall mean the date three years
after the Restatement Date (as such date may be extended in accordance with
Section 2.03(c) hereof); provided that if such date is not a Business Day, the
"Commitment Termination Date" shall mean the Business Day immediately preceding
such date.
"Committed Swingline Loan" shall have the meaning assigned to
such term in Section 2.10(a) hereof.
"Company Business" shall mean (a) the information and
transactions processing business; (b) any other businesses in which the Company
or any of its Subsidiaries is engaged as of the Restatement Date; (c) any
business in which a "credit card bank", as defined in the Bank Holding Company
Act of 1956, as amended,
Credit Agreement
<PAGE> 12
- 8 -
may engage; (d) businesses and activities associated with the provision of
health care management services; and (e) any business reasonably incidental to
any such business or businesses.
"Company Guarantee" shall mean the guarantee agreement
executed and delivered by the Company, in substantially the form of Exhibit B-3
hereto and as at any time amended or otherwise modified.
"Compliance Certificate" shall have the meaning assigned to
that term in the last paragraph of Section 8.01 hereof.
"Computation Period" shall mean any period of four consecutive
fiscal quarters of the Company for which financial statements have been
delivered pursuant to Section 8.01(a) or (b) hereof.
"Consent Date" shall have the meaning assigned to such term in
Section 2.03(c) hereof.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.09 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.09 hereof of Base Rate Loans into Eurodollar
Loans, or of Eurodollar Loans into Base Rate Loans, which may be accompanied by
the transfer by a Bank (at its sole discretion) of a Loan from one Applicable
Lending Office to another.
"Current Termination Date" shall have the meaning assigned to
such term in Section 2.03(c) hereof.
"date of this Agreement" and "date hereof" shall mean June 25,
1992.
"Debt" shall mean, at any time, the aggregate principal amount
of all Indebtedness of the Company and its Subsidiaries at such time that is,
or would be, reflected on a consolidated balance sheet of the Company and its
Subsidiaries as at such time (determined on a consolidated basis without
duplication in accordance with GAAP).
"Debt to Cash Flow Ratio" shall mean, on any date, the ratio
of (a) Debt on such date to (b) Cash Flow for the
Credit Agreement
<PAGE> 13
- 9 -
Computation Period ending on, or most recently ended prior to, such date.
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of Default.
"Disposition" shall have the meaning assigned to that term in
Section 8.05(c) hereof. The terms "Dispose" and "Disposed" used as a verb
shall have a correlative meaning.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBIT" shall mean, for any period, the sum of the following
for the Company and its Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP): (a) Net Income for such period
plus (b) amounts deducted from revenues in determining such Net Income on
account of (i) Interest Expense, (ii) Federal, state or foreign income taxes
and (iii) non-recurring losses minus (c) amounts added to revenues in
determining such Net Income on account of (i) interest income (other than such
interest income that is deemed to be part of operating income) and (ii)
non-recurring gains.
"Environmental Laws" shall mean any and all Federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as the Company or is under common
control (within the meaning of Section 414(c) of the Code) with the Company.
Credit Agreement
<PAGE> 14
- 10 -
"Eurodollar Loans" shall mean Syndicated Loans the interest
rates on which are at the time determined on the basis of the Fixed Base Rate.
"Event of Default" shall have the meaning assigned to such
term in Section 9 hereof.
"Facility Fee and Margin Determination Certificate" shall mean
a certificate signed by a senior financial officer of the Company,
substantially in the form of Exhibit E-2 hereto, demonstrating the Debt to Cash
Flow Ratio for the most recent Computation Period for the purposes of
determining the Applicable Facility Fee Percentage and the Applicable Margin.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if such rate is not
so published for any day, the Federal Funds Rate for such day shall be the
average rate charged to Chase on such day on such transactions as determined by
the Agent.
"Fixed Base Rate" shall mean, with respect to any Fixed Rate
Loan, the arithmetic mean (rounded upwards, if necessary, to the nearest 1/16
of 1%), as determined by the Agent, of the rate per annum quoted by each
Reference Bank at approximately 11:00 a.m. London time (or as soon thereafter
as practicable) on the date two Business Days prior to the first day of the
Interest Period for such Loan for the offering by such Reference Bank to
leading banks in the London interbank market of Dollar deposits having a term
comparable to such Interest Period and in an amount comparable to the principal
amount of the Eurodollar Loan or LIBOR Market Loan to be made by such Reference
Bank for such Interest Period. If any Reference Bank is not participating in
any Fixed Rate Loan during any Interest Period therefor, the Fixed Base Rate
for such Loan for such Interest Period shall be determined by reference to the
amount of the Fixed Rate Loan which such Reference Bank would have made or had
outstanding had it been participating in such Fixed Rate Loan during such
Interest Period. If any Reference Bank does not timely furnish such
information for determination of any Fixed Base Rate, the Agent shall determine
such Fixed Base Rate on the basis of information timely furnished by the
remaining Reference Banks.
Credit Agreement
<PAGE> 15
- 11 -
"Fixed Rate" shall mean, for any Fixed Rate Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Agent to be equal to the Fixed Base
Rate for such Loan for such Interest Period divided by (1 minus the Reserve
Requirement for such Loan for such Interest Period).
"Fixed Rate Loans" shall mean Eurodollar Loans and, for the
purposes of the definition of "Fixed Base Rate" herein and Section 5 hereof,
LIBOR Market Loans.
"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those which, in accordance with (and to the
extent provided by) the second sentence of Section 1.02(a) hereof, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Guarantee" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or with
respect to, the Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock of any corporation, or an agreement to purchase,
sell or lease (as lessee or lessor) property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of his,
her or its obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank to open a letter of credit for
the benefit of another Person, but excluding endorsements for collection or
deposit in the ordinary course of business. The terms "Guarantee" and
"Guaranteed" used as a verb shall have a correlative meaning.
"Indebtedness" shall mean, as to any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan
or the issuance and sale of debt securities); (b) obligations of such Person to
pay the deferred purchase or acquisition price of property or services (to the
extent required to be accrued as a liability on the balance sheet of such
Person in accordance with GAAP), other than trade accounts payable (other than
for borrowed money) arising, and accrued expenses incurred, in the ordinary
course of business so long as such trade accounts payable are payable within 90
days of the date the respective goods are delivered or the respective services
are rendered; (c) Indebtedness of others secured by a Lien on the property of
such Person, whether or not the respective indebtedness so secured has been
assumed by such Person; (d) obligations (contingent or otherwise) of such
Person
Credit Agreement
<PAGE> 16
- 12 -
in respect of letters of credit, bankers' acceptances or similar instruments
issued or accepted by banks and other financial institutions for account of
such Person; (e) Capital Lease Obligations of such Person; and (f) Indebtedness
of others Guaranteed by such Person.
"Interest Coverage Ratio" shall mean, for any Computation
Period, the ratio of (a) EBIT for such Computation Period to (b) Interest
Expense for such Computation Period.
"Interest Expense" shall mean, for any period, the sum of the
following for the Company and its Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP): (a) all interest accrued
or capitalized in respect of Indebtedness during such period (whether or not
actually paid during such period) plus (b) the net amounts payable (or minus
the net amounts receivable) under Interest Rate Protection Agreements accrued
during such period (whether or not actually paid or received during such
period).
"Interest Period" shall mean:
(a) with respect to any Eurodollar Loan, each period
commencing on the date such Eurodollar Loan is made or Converted from
a Base Rate Loan or the last day of the next preceding Interest Period
for such Loan and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the
Company may select as provided in Section 4.05 hereof, except that
each such Interest Period which commences on the last Business Day of
a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall
end on the last Business Day of the appropriate subsequent calendar
month;
(b) with respect to any Set Rate Loan, the period commencing
on the date such Set Rate Loan is made and ending on any Business Day
up to 180 days thereafter, as the Company may select as provided in
Section 2.04(b) hereof; and
(c) with respect to any LIBOR Market Loan, the period
commencing on the date such LIBOR Market Loan is made and ending on
the numerically corresponding day in the first, second, third or sixth
calendar month thereafter, as the Company may select as provided in
Section 2.04(b) hereof, except that each such Interest Period which
commences on the last Business Day of a calendar month (or any day for
which there is no numerically corresponding day in the appropriate
Credit Agreement
<PAGE> 17
- 13 -
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) if any Interest Period for Syndicated Loans
would otherwise commence before and end after the Commitment Termination Date,
such Interest Period shall end on the Commitment Termination Date; (ii) each
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day (or if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (iii) notwithstanding clause (i), no Interest Period for
Eurodollar Loans or LIBOR Market Loans shall have a duration of less than one
month (and, if any Eurodollar Loan or LIBOR Market Loan would otherwise have an
Interest Period of a shorter duration, such Loan shall not be available
hereunder).
"Interest Rate Protection Agreement" shall mean an interest
rate swap, cap or collar agreement or similar arrangement between any Person
and one or more financial institutions providing for the transfer or mitigation
of interest risks either generally or under specific contingencies.
"Investment" shall mean, for any Person: (a) the acquisition
(whether for cash, property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person; (b) the making of any deposit with, or
advance, loan or other extension of credit to, any other Person (other than any
such advance, loan or extension of credit having a term not exceeding 90 days
representing the purchase price of inventory or supplies purchased in the
ordinary course of business) or Guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of any other Person and
(without duplication) any amount committed to be advanced, lent or extended to
any other Person; (c) the making of acquisitions of the type referred to in
clause (i) or (iii) of the definition of "Acquisition" in this Section 1.01;
and (d) the entering into of any Interest Rate Protection Agreement.
"LIBO Rate" shall mean, for any LIBOR Market Loan, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Agent to be equal to the rate of interest specified in the definition of
"Fixed Base Rate" in this Section 1.01 for the Interest Period for such Loan
divided by (1 minus the Reserve Requirement for such Loan for such Interest
Period).
Credit Agreement
<PAGE> 18
- 14 -
"LIBOR Auction" shall mean a solicitation of Money Market
Quotes setting forth Money Market Margins based on the LIBO Rate pursuant to
Section 2.04 hereof.
"LIBOR Market Loans" shall mean Money Market Loans the
interest rates on which are determined on the basis of LIBO Rates pursuant to a
LIBOR Auction.
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such asset. For purposes of this Agreement and the other Basic Documents, a
Person shall be deemed to own subject to a Lien any asset which it has acquired
or holds subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
"Litigation" shall have the meaning assigned to that term in
Section 7.03 hereof.
"Loans" shall mean the Money Market Loans, Syndicated Loans
and Swingline Loans.
"Majority Banks" shall mean Banks holding more than 50% of the
aggregate amount of the Commitments or, if no Commitments are then outstanding,
Banks holding more than 50% of the aggregate unpaid principal amount of the
Loans.
"Margin Stock" shall mean margin stock within the meaning of
Regulations U and X.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the consolidated financial condition, operations or business of the
Company and its Subsidiaries taken as a whole, (b) the ability of any Obligor
to perform its obligations under any of the Basic Documents to which it is a
party, (c) the validity or enforceability of any of the Basic Documents, (d)
the rights and remedies of the Banks and the Agent under any of the Basic
Documents or (e) the timely payment of the principal of or interest on the
Loans or other amounts payable in connection therewith.
"Material Subsidiary" shall mean (i) any Subsidiary of the
Company listed on Schedule III hereto under the heading "Material
Subsidiaries", (ii) any Subsidiary of the Company acquired after the
Restatement Date for a purchase price (computed in accordance with GAAP) in
excess of $80,000,000 or (iii) any Subsidiary of the Company having annual net
revenues, or having total assets with an aggregate book value, in excess of
$80,000,000.
Credit Agreement
<PAGE> 19
- 15 -
"Minority Share" shall mean, with respect to any Subsidiary of
the Company that is not a Wholly-Owned Subsidiary of the Company, the aggregate
percentage of ownership interests in such Subsidiary not owned by the Company
and/or one or more of its Subsidiaries.
"Money Market Borrowing" shall have the meaning assigned to
such term in Section 2.04(b) hereof.
"Money Market Loans" shall mean the loans provided for by
Section 2.04 hereof.
"Money Market Margin" shall have the meaning assigned to such
term in Section 2.04(c)(ii)(C) hereof.
"Money Market Quote" shall mean an offer in accordance with
Section 2.04(c) hereof by a Bank to make a Money Market Loan with one single
specified interest rate.
"Money Market Quote Request" shall have the meaning assigned
to such term in Section 2.04(b) hereof.
"Money Market Rate" shall have the meaning assigned to such
term in Section 2.04(c)(ii)(D) hereof.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been made by the
Company or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Capital Expenditures" shall mean, for any period for any
Person, the excess (if any) of (a) aggregate amount of Capital Expenditures for
such period over (b) the sum of (i) the value of all consideration received in
connection with the disposition by such Person of fixed assets, plant,
equipment and capitalized software disposed in the same or a related
transaction during such period whether giving rise to an offset to or credit
against the cost of the fixed assets, plant and equipment being acquired or
otherwise plus (ii) casualty insurance proceeds received by such Person during
such period with respect to fixed assets, plant and equipment of a similar
type.
"Net Carrying Value" shall mean, with respect to any asset,
the historical cost (less accumulated depreciation, amortization and other
valuation allowances) of such asset determined in accordance with GAAP.
Credit Agreement
<PAGE> 20
- 16 -
"Net Income" shall mean, for any period, consolidated net
income (or loss) of the Company and its Subsidiaries for such period
(determined on a consolidated basis without duplication in accordance with
GAAP).
"Net Worth" shall mean, on any date, the shareholders' equity
of the Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP).
"Non-Consenting Bank" shall have the meaning assigned to that
term in Section 2.03(c) hereof.
"Notes" shall mean the promissory notes provided for by
Section 2.08 hereof.
"Obligors" shall mean the Company and FFB.
"Participation Agreement" shall have the meaning assigned to
that term in Section 11.06(c) hereof.
"Payor" shall have the meaning assigned to that term in
Section 4.06 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted FFB Investments" shall mean (i) Permitted
Investments and (ii) transactions in Federal funds with members of the Federal
Reserve System.
"Permitted Investments" of any Person shall mean: (a) direct
obligations of the United States of America, or of any agency thereof, or
obligations guaranteed as to principal and interest by the United States of
America, or of any agency thereof; (b) direct obligations of any state of the
United States of America, or any political subdivision of any such state or any
public instrumentality thereof having an investment grade rating from either
S&P or Moody's; (c) certificates of deposit and bankers' acceptances issued by
any bank, thrift institution or trust company organized under the laws of the
United States of America or any state thereof and having capital, surplus and
undivided profits of at least $500,000,000; (d) time deposits with any
commercial bank (whether domestic or foreign) whose short-term commercial paper
(or that of its bank holding company) is rated A-1 or better or P-1 or better
by S&P or Moody's, respectively, (e) commercial paper rated A-1 or better or
P-1 or better by S&P or Moody's, respectively; (f) repurchase and reverse
repurchase arrangements with respect to underlying securities of the types
described in clauses (a) through (e)
Credit Agreement
<PAGE> 21
- 17 -
above; and (g) shares of any open-end mutual fund substantially all of whose
investments are of the type described in clauses (a) through (f) above.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by the Company or any ERISA Affiliate and which is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount payable by any Borrower under any Basic Document
that is not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period from and including the due date
to but excluding the date on which such amount is paid in full equal to 2% plus
the Base Rate as in effect from time to time plus the Applicable Margin
(provided that, if the amount so in default is principal of a Eurodollar Loan
or a Money Market Loan and the due date thereof is a day other than the last
day of an Interest Period therefor, the "Post-Default Rate" for such principal
shall be, for the period from and including the due date and to but excluding
the last day of such Interest Period, 2% plus the interest rate for such Loan
as provided in Section 3.02 hereof and, thereafter, the rate provided for above
in this definition).
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial lending
rate.
"Principal Office" shall mean the principal office of the
Agent and Chase, presently located at 1 Chase Manhattan Plaza, New York, New
York 10081.
"Qualified Subordinated Indebtedness" shall mean unsecured
Indebtedness issued after the date hereof:
(a) for which the Company is directly and primarily liable,
(b) in respect of which none of the Subsidiaries of the
Company is obligated, whether as a direct obligor or under any
Guarantee,
(c) which is subordinated in right of payment to the
obligations of the Company hereunder and under the Notes,
Credit Agreement
<PAGE> 22
- 18 -
(d) which is convertible into shares of common stock of the
Company, and
(e) in respect of which no payment of principal, or sinking
fund or similar payment, is scheduled to occur (whether at stated
maturity, by mandatory prepayment or otherwise) on or prior to the
date six months after the Commitment Termination Date in effect at the
date of issuance of such Indebtedness.
"Quarterly Dates" shall mean the last Business Day of each
March, June, September and December in each year, the first of which shall be
the first such Business Day after the date of this Agreement.
"Quarterly Period" shall mean (a) the period from and
including the Closing Date to but excluding the Quarterly Date next succeeding
the first date on which the Company is required to deliver financial statement
pursuant to Section 8.01(a), (b), (c) or (d) hereof and (b) each period,
following the period referred to in clause (a), from and including a Quarterly
Date to but excluding the next succeeding Quarterly Date.
"Reference Banks" shall mean, subject to Sections 2.03(c) and
5.01(e) hereof, Chase, The Bank of New York and Wachovia Bank of Georgia, N.A.
(or their Applicable Lending Offices, as the case may be).
"Regulations A, D, U and X" shall mean, respectively,
Regulations A, D, U and X of the Board of Governors of the Federal Reserve
System (or any successor), as the same may be amended or supplemented from time
to time.
"Regulatory Change" shall mean, with respect to any Bank, any
change after the date of this Agreement in United States Federal, state or
foreign law or regulations (including, without limitation, Regulation D) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks including such Bank of or under any United States
Federal, state or foreign law or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Replacement Bank" shall have the meaning assigned to that
term in Section 5.01(e) hereof.
"Required Payment" shall have the meaning assigned to that
term in Section 4.06 hereof.
Credit Agreement
<PAGE> 23
- 19 -
"Reserve Requirement" shall mean, for any Interest Period for
any Eurodollar Loan or LIBOR Market Loan, the average maximum rate at which
reserves (including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall include any other reserves required to be maintained
by such member banks by reason of any Regulatory Change against (a) any
category of liabilities which includes deposits by reference to which the Fixed
Base Rate for Eurodollar Loans or LIBOR Market Loans (as the case may be) is to
be determined as provided in the definition of "Fixed Base Rate" or "LIBO Rate"
in this Section 1.01 or (b) any category of extensions of credit or other
assets which include Eurodollar Loans or LIBOR Market Loans. Each Bank
confirms that, on the Restatement Date, no reserves are required to be
maintained under Regulation D by member banks of the Federal Reserve System in
New York City with deposits exceeding one billion Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D).
"Restatement Date" shall mean November 8, 1994.
"S&P" shall mean Standard & Poor's Ratings Group and its
successors.
"Set Rate Auction" shall mean a solicitation of Money Market
Quotes setting forth Money Market Rates pursuant to Section 2.04 hereof.
"Set Rate Loans" shall mean Money Market Loans the interest
rates on which are determined on the basis of Money Market Rates pursuant to a
Set Rate Auction.
"Specified Company Indebtedness" shall mean unsecured
Indebtedness (which may include Subordinated Indebtedness of the type referred
to in clause (b) of the definition thereof):
(a) for which the Company is directly and primarily liable,
(b) in respect of which none of the Subsidiaries of the
Company is obligated, whether as a direct obligor or under any
Guarantee,
(c) that, on the date of its creation or incurrence, provides
for no payments of principal (whether due to scheduled payments,
mandatory prepayments or similar
Credit Agreement
<PAGE> 24
- 20 -
provisions) on or prior to the Commitment Termination Date then in
effect, and
(d) contains covenants and events of default no more onerous
on the Company and its Subsidiaries than the covenants and events of
default contained in this Agreement.
"Subordinated Indebtedness" shall mean, collectively, (a)
Qualified Subordinated Indebtedness and (b) all other Indebtedness of the
Company which is subordinated in right of payment to the obligations of the
Company hereunder and under the Notes.
"Subsidiary" shall mean, with respect to any Person, any
corporation (whether now existing or hereafter created or acquired) of which at
least a majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person and/or one or more Subsidiaries
of such Person. "Wholly-Owned Subsidiary" shall mean, with respect to any
Person, any such corporation of which all of such shares, other than directors'
qualifying shares, are owned or controlled by such Person and/or one or more
Wholly-Owned Subsidiaries of such Person.
"Swingline Amount" shall mean at any time the lesser of (i)
$450,000,000 (as the same may be reduced at any time or from time to time by
not less than 30 days' notice from the Swingline Bank to FFB) and (ii) the
aggregate amount of the Commitments at such time.
"Swingline Bank" shall mean Chase, together with its
successors and assigns in such capacity.
"Swingline Borrowing" shall have the meaning assigned to such
term in Section 2.10(b) hereof.
"Swingline Borrowing Date" shall have the meaning assigned to
such term in Section 2.10(b) hereof.
"Swingline Loans" shall mean the loans provided for by
Section 2.10 hereof.
"Swingline Margin" shall have the meaning assigned to such
term in Section 2.10(c) hereof.
Credit Agreement
<PAGE> 25
- 21 -
"Swingline Maturity Date" shall have the meaning assigned to
such term in Section 3.01(c) hereof.
"Swingline Note" shall mean the promissory note provided for
by Section 2.08(d) hereof.
"Swingline Quote" shall mean an offer in accordance with
Section 2.10(c) hereof by the Swingline Bank to make an Uncommitted Swingline
Loan with a specified Swingline Margin.
"Swingline Request" shall have the meaning assigned to such
term in Section 2.10(b) hereof.
"Syndicated Loans" shall mean the loans provided for by
Section 2.01 hereof.
"Total Assets" shall mean, on any date, the aggregate book
value of all of the assets of the Company and its Subsidiaries at such date
(determined on a consolidated basis without duplication in accordance with
GAAP).
"Uncommitted Swingline Loan" shall have the meaning assigned
to such term in Section 2.10(a) hereof.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered
to the Banks hereunder shall (unless otherwise disclosed to the Banks at the
time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied
on a basis consistent with those used in the preparation of the latest
financial statements furnished to the Banks hereunder after the date hereof
(or, if no such financial statements have yet been delivered under Section 8.01
hereof, with those used in the preparation of the relevant financial statements
referred to in Section 7.02 hereof). All calculations made for the purposes of
determining compliance with the terms of this Agreement shall (except as
otherwise expressly provided herein) be made by application of generally
accepted accounting principles applied on a basis consistent with those used in
the preparation of the annual or quarterly financial statements furnished to
the Banks pursuant to Section 8.01 hereof unless (i) the Company shall have
objected, on the grounds stated in the next succeeding sentence, to determining
such compliance on such basis at the time of delivery of such financial
statements or (ii) the Majority Banks shall so object in a notice to the
Company given within 30 days after delivery of such financial
Credit Agreement
<PAGE> 26
- 22 -
statements, in either of which events such calculations shall be made on a
basis consistent with those used in the preparation of the latest financial
statements as to which such objection shall not have been made (which, if
objection is made in respect of the first financial statements delivered under
Section 8.01 hereof, shall mean the relevant financial statements referred to
in Section 7.02 hereof); provided that any certification required of the
Company or any other Person regarding calculations made on such basis may be
qualified to reflect the failure to apply generally accepted accounting
principles then in effect. Either the Company or the Majority Banks shall have
the right to object as stated in clauses (i) and (ii) of the preceding sentence
only if generally accepted accounting principles as applied in the preparation
of the financial statements as to which such objection has been made have
changed from generally accepted accounting principles as applied in the
preparation of the last financial statements furnished to the Banks in
accordance with Section 8.01 hereof as to which an objection shall not have
been made and as a result of that change the basis of such calculations has
been altered or changed in a material way.
(b) The Company shall deliver to the Banks at the same time
as the delivery of any annual or quarterly financial statement under Section
8.01 hereof a description in reasonable detail of any material variation (as
determined by the Company and its auditors) between the application of
accounting principles employed in the preparation of such statement and the
application of accounting principles employed in the preparation of the next
preceding annual or quarterly financial statements as to which no objection has
been made in accordance with the penultimate sentence of subsection (a) above,
and reasonable estimates of the difference between such statements arising as a
consequence thereof.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 8 hereof, the Company will
not, and will not permit any of its Subsidiaries to, change the last day of its
fiscal year from December 31, or the last days of the first three fiscal
quarters in each of its fiscal years from March 31, June 30 and September 30,
respectively.
Section 2. Commitments and Loans.
2.01 Syndicated Loans. Each Bank severally agrees, on the
terms of this Agreement, to make loans (each a "Syndicated Loan") to the
Company in Dollars during the period from and including the date hereof to but
not including the Commitment Termination Date in an aggregate principal amount
at any one time outstanding up to but not exceeding the amount of such Bank's
Credit Agreement
<PAGE> 27
- 23 -
Commitment as then in effect. Subject to the terms of this Agreement, during
such period the Company may borrow, repay and reborrow the amount of the
Commitments; provided that the aggregate principal amount of all Syndicated
Loans, together with the aggregate principal amount of all Money Market Loans
and Swingline Loans, at any one time outstanding shall not exceed the aggregate
amount of the Commitments at such time. Syndicated Loans may be Base Rate
Loans and/or Eurodollar Loans (each a "type" of Syndicated Loan). The Company
may Convert Syndicated Loans of one type into Syndicated Loans of the other
type (as provided in Section 2.09 hereof) or Continue Syndicated Loans of one
type as Syndicated Loans of the same type (as provided in Section 2.09 hereof).
There may be no more than fifteen different Interest Periods for both
Syndicated Loans and Money Market Loans outstanding at the same time (for which
purpose Interest Periods described in different lettered clauses of the
definition of the term "Interest Period" shall be deemed to be different
Interest Periods even if they are coterminous).
2.02 Borrowings of Syndicated Loans.
(a) The Company shall give the Agent (which shall promptly
notify the Banks) notice of each borrowing hereunder as provided in Section
4.05 hereof. Not later than 1:00 p.m. New York time on the date of each
borrowing of Syndicated Loans, each Bank shall, subject to the terms and
conditions of this Agreement, make available the amount of each Syndicated Loan
to be made by it on such date to the Agent, at account number
NYAO-DI-900-9-000002 maintained by the Agent with Chase at the Principal
Office, in immediately available funds, for account of the Company. The amount
so received by the Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company by depositing the same on the date
received, in immediately available funds, in an account of the Company
maintained with Chase at the Principal Office designated by the Company.
(b) At any time from the date on which a Swingline Loan is
made until such Swingline Loan shall have been paid in full, the Swingline Bank
may, and the Company hereby irrevocably authorizes and empowers (which power is
coupled with an interest) the Swingline Bank to, deliver, on behalf of the
Company, to the Agent a notice of borrowing of Syndicated Loans that are Base
Rate Loans in an amount equal to the then unpaid principal amount of such
Swingline Loan. The proceeds of such Syndicated Loans shall be applied solely
to refinance the Swingline Loan and the Company shall be deemed to have
advanced the proceeds of such Syndicated Loans to FFB. In the event that the
power of the Swingline Bank to give such notice of borrowing on behalf of the
Company is terminated for any reason whatsoever (including,
Credit Agreement
<PAGE> 28
- 24 -
without limitation, a termination resulting from the occurrence of an event
specified in clause (g) or (h) of Section 9 hereof with respect to the
Company), or the Swingline Bank is otherwise precluded for any reason
whatsoever from giving a notice of borrowing on behalf of the Company as
provided in the preceding sentence, each Bank shall, upon notice from the
Swingline Bank, promptly purchase from the Swingline Bank a participation in
(or, if and to the extent specified by the Swingline Bank, a direct interest
in) such Swingline Loan in the amount of the Base Rate Loan it would have been
obligated to make pursuant to such notice of borrowing. Anything in Sections
2.02(a) or 4.05 hereof to the contrary notwithstanding, each Bank shall, not
later than 4:00 p.m. New York time on the Business Day on which such notice is
given (if such notice is given by 2:15 p.m. New York time) or 9:00 a.m. New
York time on the next succeeding Business Day (if such notice is given after
2:15 p.m. New York time), make available the amount of the Base Rate Loan to be
made by it (or the amount of the participation or direct interest to be
purchased by it, as the case may be) to the Agent at the account specified in
Section 2.02(a) hereof and the amount so received by the Agent shall be made
available to the Swingline Bank by depositing the same, in immediately
available funds, in an account of the Swingline Bank maintained with Chase at
the Principal Office designated by the Swingline Bank. Promptly following its
receipt of any payment in respect of a Swingline Loan, the Swingline Bank shall
pay to each Bank that has acquired a participation in such Loan such Bank's
proportionate share of such payment.
Anything in this Agreement to the contrary notwithstanding
(including, without limitation, in Section 6.02 hereof), the obligation of each
Bank to make its Base Rate Loan (or purchase its participation or direct
interest in the Swingline Loan, as the case may be) pursuant to this Section
2.02(b) is unconditional under any and all circumstances whatsoever and shall
not be subject to set-off, counterclaim or defense to payment that such Bank
may have or have had against the Company, FFB, the Agent, the Swingline Bank or
any other Bank and, without limiting any of the foregoing, shall be
unconditional irrespective of (i) the occurrence of any Default, (ii) the
financial condition of the Company, any Subsidiary or Affiliate of the Company,
the Agent, the Swingline Bank or any other Bank or (iii) the termination or
cancellation of the Commitments. The Company and FFB agree that any Bank so
purchasing a participation (or direct interest) in such Swingline Loan may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Bank were a direct
holder of a Swingline Loan in the amount of such participation.
Credit Agreement
<PAGE> 29
- 25 -
If any Bank shall default in its obligation to make its Base
Rate Loan to refinance the Swingline Loan (or purchase its participation or
direct interest in such Swingline Loan, as the case may be) pursuant to the
first paragraph of this Section 2.02(b), then for so long as such default shall
continue, the Agent shall at the request of the Swingline Bank, withhold from
any payments received by the Agent under this Agreement or any Note for account
of such Bank the amount so in default and the Agent shall pay the same to the
Swingline Bank up to the amount and in satisfaction of such defaulted
obligation, which amount the Swingline Bank will apply to the repayment of the
principal of such Swingline Loan (if such Bank defaulted in its obligation to
make its Base Rate Loan) or otherwise to the purchase of the participation or
direct interest to be purchased by such Bank.
2.03 Changes of Commitments; Extension of Commitment
Termination Date.
(a) Optional. (1) The Company shall have the right to
terminate or reduce the aggregate unused amount of the Commitments (for which
purpose the amount of any Money Market Loans or Swingline Loans shall be deemed
to be a pro rata (based on the Commitments) utilization of each Bank's
Commitment) at any time or from time to time in accordance with the provisions
of Sections 4.04 and 4.05 hereof.
(2) The Company shall have the right to terminate the
Commitment of any Bank ("Terminated Bank") in whole but not in part at any time
upon not less than five Business Days' notice to the Terminated Bank and the
Agent; provided that (i) the aggregate amount of the Commitments of all
Terminated Banks pursuant to this provision shall not exceed $100,000,000; (ii)
after giving effect to such termination the aggregate outstanding principal
amount of Loans shall not exceed the aggregate amount of the Commitments; (iii)
no Default shall have occurred and be continuing at the time of any such
termination; (iv) (A) no Loan shall be outstanding hereunder at the time of
such termination or (B) if any Loan is outstanding hereunder at such time, then
the consent of the Majority Banks to such termination shall have been obtained;
and (v) all principal of, and interest on, the Loans made by the Terminated
Bank, and all other amounts then owing to such Terminated Bank hereunder
(including, without limitation, any amounts payable under Section 5.05 hereof),
shall be paid at the time of such termination; provided further that, at any
one time during the one-year period following the Restatement Date, the Company
shall have the right to terminate the Commitment of any one Bank having a
Commitment not in excess of $50,000,000 without complying with clause (iv)
above so long as at the time of such termination the Company shall have
unsecured, unguaranteed long-term senior debt securities outstanding with a
Credit Agreement
<PAGE> 30
- 26 -
rating by Moody's of not less than Baa3 and also by S&P of not less than BBB-
and the Company shall not be on "credit watch" with a view to downgrading by
either of such rating agencies.
(b) Mandatory. The aggregate amount of the Commitments shall
be automatically reduced to zero on the Commitment Termination Date.
(c) Extension of Commitment Termination Date. The Company
may, by notice to the Agent (which shall promptly deliver a copy thereof to
each of the Banks) not less than 60 days and not more than 150 days prior to
the date one year prior to the Commitment Termination Date then in effect (the
"Current Termination Date"), request that the Commitment Termination Date be
extended to the date falling one year after the Current Termination Date;
provided that in no event may the Company request more than two such extensions
pursuant to this Section 2.03(c) after the Restatement Date. If the Company
shall so request such an extension, each Bank, acting in its sole discretion,
may, by notice to the Company and the Agent not less than 30 days prior to the
date one year prior to the Current Termination Date (the "Consent Date" with
respect to such requested extension), advise whether or not such Bank agrees to
extend the Commitment Termination Date to the date falling one year after the
Current Termination Date; provided that any Bank that does not advise the Agent
and the Company on or before the Consent Date shall be deemed to have agreed to
such requested extension (each Bank that advises the Agent and the Company that
it does not agree to a requested extension is herein called a "Non-Consenting
Bank"). The election of any Bank to agree to such extension shall not obligate
any other Bank to agree.
The Company shall have the right on or before the Current
Termination Date, to replace each Non-Consenting Bank with one or more other
banks (which may include any Bank, each an "Additional Commitment Bank"), each
of which Additional Commitment Banks shall have entered into an agreement in
form and substance satisfactory to the Company and the Agent pursuant to which
such Additional Commitment Bank shall undertake all or any portion of the
Commitment(s) of one or more Non-Consenting Banks (if any such Additional
Commitment Bank is a Bank, its Commitment shall be in addition to such Bank's
Commitment hereunder on such date. Each Additional Commitment Bank shall
thereupon become a "Bank" for all purposes of this Agreement.
If Banks holding Commitments (not including the Commitments of
the Additional Commitment Banks) that aggregate more than 66-2/3% of the
aggregate amount of the Commitments (not including the Commitments of the
Additional Commitment Banks) shall, by the Consent Date, have agreed (or be
deemed to have
Credit Agreement
<PAGE> 31
- 27 -
agreed as provided above) to extend the Current Termination Date, then,
effective as of the Consent Date, the Commitment Termination Date shall be
extended to the date falling one year after the Current Termination Date
(provided, if such date is not a Business Day, then such Commitment Termination
Date as so extended shall be the next preceding Business Day).
Notwithstanding the foregoing, the extension of the Current
Termination Date shall not be effective unless (i) no Default shall have
occurred and be continuing either on the date of the notice requesting such
extension or on the Consent Date, (ii) each of the representations and
warranties of the Company in Section 7 hereof shall be true and complete in all
material respects on and as of each of the date of such notice and the Consent
Date with the same force and effect as if made on and as each such date (or, if
any such representation or warranty is expressly stated to have been made as of
a specific date.
Even if the Current Termination Date is extended as aforesaid,
the Commitment of each Non-Consenting Bank shall terminate on the Current
Termination Date and all principal of and interest on the Loans made by each
such Non-Consenting Bank, and all other amounts then owing to such
Non-Consenting Bank hereunder (including, without limitation, any amounts
payable under Section 5.05 hereof), shall be paid on the then Current
Termination Date.
Without affecting the rights or obligations of the Company or
any Bank under this Section 2.03(c) (and without liability to the Company or
any Bank for any failure to do so), the Agent will endeavor to remind the
Company, not less than 90 days prior to the date one year prior to the Current
Termination Date, of any right the Company may have under this Section 2.03(c)
to extend the Current Termination Date.
If the Company causes one or more Additional Commitment Banks
to become party hereto at any time that there are Syndicated Loans outstanding,
the Company shall cause such Additional Commitment Banks to make Syndicated
Loans to the Company and/or shall prepay the then outstanding Syndicated Loans,
in accordance with Section 4.02 hereof, so that, after giving effect to such
Syndicated Loans and prepayments, the Syndicated Loans shall be held by the
Banks pro rata in accordance with the respective amounts of their Commitments.
If any Non-Consenting Bank is a Reference Bank (or whose
Applicable Lending Office is a Reference Bank, as the case may be), such
Reference Bank shall cease to be a Reference Bank at the close of business on
the date five (5) Business Days prior to the then Current Termination Date and,
if as a result of the
Credit Agreement
<PAGE> 32
- 28 -
foregoing, there shall be less than three Reference Banks remaining, then the
Agent (with the consent of the Company) shall, by notice to the Company and the
Banks, designate additional Bank(s) as Reference Bank(s), so that there shall
at all times be at least three Reference Banks.
If the Swingline Bank is a Non-Consenting Bank the provisions
of Section 2.10 hereof shall cease being available on the then Current
Termination Date unless another Bank shall have agreed to be the Swingline
Bank.
(d) No Reinstatement. The Commitments once terminated or
reduced may not be reinstated.
2.04 Money Market Loans.
(a) In addition to borrowings of Syndicated Loans, at any
time prior to the Commitment Termination Date, the Company may, as set
forth in this Section 2.04, request the Banks to make offers to make
Money Market Loans to the Company in Dollars. The Banks may, but
shall have no obligation to, make such offers and the Company may, but
shall have no obligation to, accept any such offers in the manner set
forth in this Section 2.04. Money Market Loans may be LIBOR Market
Loans or Set Rate Loans (each a "type" of Money Market Loan), provided
that:
(i) there may be no more than fifteen different
Interest Periods for both Syndicated Loans and Money Market
Loans outstanding at the same time (for which purpose Interest
Periods described in different lettered clauses of the
definition of the term "Interest Period" shall be deemed to be
different Interest Periods even if they are coterminous);
(ii) the aggregate principal amount of all Money Market
Loans, together with the aggregate principal amount of all
Syndicated Loans and Swingline Loans, at any one time
outstanding shall not exceed the aggregate amount of the
Commitments at such time; and
(iii) the Interest Period for any Money Market Loan shall
end on a date no later than the Commitment Termination Date.
(b) When the Company wishes to request offers to make Money
Market Loans, it shall give the Agent (which shall promptly notify the
Banks) notice (a Money Market Quote Request") so as to be received no
later than 11:00 a.m. New York time on (x) the fourth Business Day
prior to the date of borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Business Day next preceding the date
Credit Agreement
<PAGE> 33
- 29 -
of borrowing proposed therein, in the case of a Set Rate Auction (or,
in any such case, such other time and date as the Company and the
Agent, with the consent of the Majority Banks, may agree). The
Company may request offers to make Money Market Loans for up to three
different Interest Periods in a single notice (for which purpose
Interest Periods in different lettered clauses of the definition of
the term "Interest Period" shall be deemed to be different Interest
Periods even if they are coterminous); provided that the request for
each separate Interest Period shall be deemed to be a separate Money
Market Quote Request for a separate borrowing (a Money Market
Borrowing"). Each such notice shall be substantially in the form of
Exhibit G hereto and shall specify as to each Money Market Borrowing:
(i) the proposed date of such borrowing, which shall be
a Business Day;
(ii) the aggregate amount of such Money Market Borrowing,
which shall be at least $25,000,000 (or in larger multiples of
$500,000) but shall not cause the limits specified in Section
2.04(a) hereof to be violated;
(iii) the duration of the Interest Period applicable
thereto;
(iv) whether the Money Market Quotes requested for a
particular Interest Period are to be quotes for LIBOR Market
Loans or Set Rate Loans; and
(v) if the Money Market Quotes requested are to set
forth a Money Market Rate, the date on which the Money Market
Quotes are to be submitted if it is before the proposed date
of borrowing (the date on which such Money Market Quotes are
to be submitted is called the "Quotation Date").
Except as otherwise provided in this Section 2.04(b), no Money Market
Quote Request shall be given within five Business Days (or such other
number of days as the Company and the Agent, with the consent of the
Majority Banks, may agree) of any other Money Market Quote Request.
(c) (i) Each Bank may submit one or more Money Market
Quotes, each containing an offer to make a Money Market Loan in
response to any Money Market Quote Request; provided that, if the
Company's request under Section 2.04(b) hereof
Credit Agreement
<PAGE> 34
- 30 -
specified more than one Interest Period, such Bank may make a single
submission containing one or more Money Market Quotes for each such
Interest Period. Each Money Market Quote must be submitted to the
Agent not later than (x) 2:00 p.m. New York time on the fourth
Business Day prior to the proposed date of borrowing, in the case of a
LIBOR Auction or (y) 10:00 a.m. New York time on the Quotation Date,
in the case of a Set Rate Auction (or, in any such case, such other
time and date as the Company and the Agent, with the consent of the
Majority Banks, may agree); provided that any Money Market Quote
submitted by Chase (or its Applicable Lending Office) may be
submitted, and may only be submitted, if Chase (or such Applicable
Lending Office) notifies the Company of the terms of the offer
contained therein not later than (x) 1:00 p.m. New York time on the
fourth Business Day prior to the proposed date of borrowing, in the
case of a LIBOR Auction or (y) 9:45 a.m. New York time on the
Quotation Date, in the case of a Set Rate Auction. Subject to
Sections 5.02(b), 5.03, 7.02 and 10 hereof, any Money Market Quote so
made shall be irrevocable except with the consent of the Agent given
on the instructions of the Company. Except for submissions to the
Agent as provided above, no Bank shall, directly or indirectly,
communicate with any other Bank regarding the terms contained in, or
under consideration for, any Money Market Quote. Chase shall not
consider the terms of any other Bank's Money Market Quote in deciding
the terms of any Money Market Quote it may decide to submit to the
Company.
(ii) Each Money Market Quote shall be substantially in the form
of Exhibit H hereto and shall specify:
(A) the proposed date of borrowing and the Interest
Period therefor;
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which principal
amount shall be at least $5,000,000 or a larger multiple of
$500,000; provided that the aggregate principal amount of all
Money Market Loans for which a Bank submits Money Market
Quotes (x) may be greater or less than the Commitment of such
Bank but (y) may not exceed the principal amount of the Money
Market Borrowing for a particular Interest Period for which
offers were requested;
(C) in the case of a LIBOR Auction, the margin above
or below the applicable LIBO Rate (the Money Market Margin")
offered for each such Money Market Loan, expressed as a
percentage (expressed to the
Credit Agreement
<PAGE> 35
- 31 -
nearest 1/10,000 of 1%) to be added to or subtracted from the
applicable LIBO Rate;
(D) in the case of a Set Rate Auction, the rate of
interest per annum (expressed to the nearest 1/10,000 of 1%)
offered for each such Money Market Loan (the "Money Market
Rate"); and
(E) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Company, no Money Market
Quote shall contain qualifying, conditional or similar language or
propose terms other than or in addition to those set forth in the
applicable Money Market Quote Request and, in particular, no Money
Market Quote may be conditioned upon acceptance by the Company of all
(or some specified minimum) of the principal amount of the Money
Market Loan for which such Money Market Quote is being made.
(d) The Agent shall (x) in the case of a Set Rate Auction, as
promptly as practicable after the Money Market Quote is submitted (but
in any event not later than 10:15 a.m. New York time on the Quotation
Date) or (y) in the case of a LIBOR Auction, by 4:00 p.m. New York
time on the day a Money Market Quote is submitted, notify the Company
of the terms (i) of any Money Market Quote submitted by a Bank that is
in accordance with Section 2.04(c) hereof and (ii) of any Money Market
Quote that amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with respect to the
same Money Market Quote Request. Any such subsequent Money Market
Quote shall be disregarded by the Agent and the Company unless such
subsequent Money Market Quote is submitted solely to correct a
manifest error in such former Money Market Quote. The Agent's notice
to the Company shall specify (A) the aggregate principal amount of the
Money Market Borrowing for which offers have been received and (B) the
respective principal amounts and Money Market Margins or Money Market
Rates, as the case may be, so offered by each Bank (identifying the
Bank that made each Money Market Quote).
(e) Not later than 11:00 a.m. New York time on (x) the third
Business Day prior to the proposed date of borrowing, in the case of a
LIBOR Auction or (y) the Quotation Date, in the case of a Set Rate
Auction (or, in any such case, such other time and date as the Company
and the Agent, with the consent of the Majority Banks, may agree), the
Company shall notify the Agent of its acceptance or nonacceptance of
the offers so notified to it pursuant to Section 2.04(d) hereof (and
the failure of the Company to give such notice by such
Credit Agreement
<PAGE> 36
- 32 -
time shall constitute nonacceptance) and the Agent shall promptly
notify each affected Bank. In the case of acceptance, such notice
shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Company may accept any Money
Market Quote in whole or in part (provided that, except for
acceptances in part contemplated by the penultimate sentence of this
Section 2.04(e), any Money Market Quote accepted in part shall be at
least $5,000,000 or in larger multiples of $100,000); provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set
forth in the related Money Market Quote Request;
(ii) the aggregate principal amount of each Money
Market Borrowing shall be at least $25,000,000 (or in larger
multiples of $500,000) but shall not cause the limits
specified in Section 2.04(a) hereof to be violated;
(iii) acceptance of offers may be made only in
ascending order of Money Market Margins or Money Market Rates,
as the case may be, in each case beginning with the lowest
rate so offered; and
(iv) the Company may not accept any offer where the
Agent has advised the Company that such offer fails to comply
with Section 2.04(c)(ii) hereof or otherwise fails to comply
with the requirements of this Agreement (including, without
limitation, Section 2.04(a) hereof).
If offers are made by two or more Banks with the same Money Market
Margins or Money Market Rates, as the case may be, for a greater
aggregate principal amount than the amount in respect of which offers
are accepted for the related Interest Period, the principal amount of
Money Market Loans in respect of which such offers are accepted shall
be allocated by the Company among such Banks as nearly as possible (in
amounts of at least $5,000,000 or larger multiples of $100,000) in
proportion to the aggregate principal amount of such offers.
Determinations by the Company of the amounts of Money Market Loans
shall be conclusive in the absence of manifest error.
(f) Any Bank whose offer to make any Money Market Loan has
been accepted shall, not later than 1:00 p.m. New York time on the
date specified for the making of such Loan, make the amount of such
Loan available to the Agent at account
Credit Agreement
<PAGE> 37
- 33 -
number NYAO-DI-900-9-000002 maintained by the Agent with Chase at the
Principal Office in immediately available funds, for account of the
Company. The amount so received by the Agent shall, subject to the
terms and conditions of this Agreement, be made available to the
Company by depositing the same on the date received by the Agent, in
immediately available funds, in an account of the Company maintained
with Chase at the Principal Office designated by the Company.
(g) Except for the purpose and to the extent expressly stated
in Sections 2.03(a) and 2.05(a) hereof, the amount of any Money Market
Loan made by any Bank shall not constitute a utilization of such
Bank's Commitment.
2.05 Fees.
(a) Facility Fee. The Company shall pay to the Agent for
account of each Bank a facility fee on the amount of such Bank's Commitment
(whether or not utilized) for the period from and including the Amendment
Effective Date to but not including the earlier of the date such Commitment is
terminated and the Commitment Termination Date, at a rate per annum equal to
the Applicable Facility Fee Percentage. Accrued facility fee shall be payable
on each Quarterly Date and on the earlier of the date such Commitment is
terminated and the Commitment Termination Date.
(b) Money Market Quote Request Fee. The Company shall pay to
the Agent a solicitation fee equal to $2,000 for each Money Market Quote
Request made by the Company. Accrued solicitation fees shall be payable on
each Quarterly Date and on the earlier of the date the Commitments are
terminated and the Commitment Termination Date.
2.06 Lending Offices. The Loans of each type made by each
Bank shall be made and maintained at such Bank's Applicable Lending Office for
Loans of such type.
2.07 Several Obligations; Remedies Independent. The failure
of any Bank to make any Loan to be made by it on the date specified therefor
shall not relieve any other Bank of its obligation to make its Loan on such
date, but neither any Bank nor the Agent shall be responsible for the failure
of any other Bank to make a Loan to be made by such other Bank. The amounts
payable by the Company at any time hereunder and under the Notes to each Bank
shall be a separate and independent debt and each Bank shall be entitled to
protect and enforce its rights arising out of this Agreement and the Notes, and
it shall not be necessary for any other Bank or the Agent to consent to, or be
Credit Agreement
<PAGE> 38
- 34 -
joined as an additional party in, any proceedings for such purposes. The
provisions of the preceding sentence shall apply mutatis mutandis to the
Swingline Loans made by the Swingline Bank to FFB.
2.08 Notes.
(a) The Syndicated Loans made by each Bank shall be evidenced
by a single promissory note of the Company in substantially the form of Exhibit
A-1 hereto, dated the Restatement Date, payable to such Bank in a principal
amount equal to the amount of its Commitment as originally in effect and
otherwise duly completed. The date, amount, type and interest rate of each
Syndicated Loan made by each Bank to the Company, and each payment made on
account of the principal thereof, shall be recorded by such Bank on its books
and, prior to any transfer of such Note held by it, endorsed by such Bank on
the schedule attached to such Note or any continuation thereof; provided that
any failure by any Bank to make such endorsements on the schedule attached to
the Note held by it shall not affect the validity of the Company's obligation
to repay the unpaid principal amount of the Loans made by such Bank with
interest thereon in accordance with the terms of this Agreement.
(b) The Money Market Loans made by any Bank shall be
evidenced by a single promissory note of the Company in substantially the form
of Exhibit A-2 hereto, dated the Restatement Date, payable to such Bank and
otherwise duly completed. The date, amount, type, interest rate and maturity
date of each Money Market Loan made by each Bank to the Company, and each
payment made on account of the principal thereof, shall be recorded by such
Bank on its books and, prior to any transfer of such Note held by it, endorsed
by such Bank on the schedule attached to such Note or any continuation thereof;
provided that any failure by any Bank to make such endorsements on the schedule
attached to the Note held by it shall not affect the validity of the Company's
obligation to repay the unpaid principal amount of the Loans made by such Bank
with interest thereon in accordance with the terms of this Agreement.
(c) The Swingline Loans made by the Swingline Bank shall be
evidenced by a single promissory note of FFB in substantially the form of
Exhibit A-3 hereto, dated the Restatement Date, payable to the Swingline Bank
and otherwise duly completed. The date, amount and interest rate of each
Swingline Loan made to FFB, and each payment made on account of the principal
thereof, shall be recorded by the Swingline Bank on its books and, prior to any
transfer of such Note held by it, endorsed by the Swingline Bank on the
schedule attached to such Note or any continuation thereof; provided that any
failure by
Credit Agreement
<PAGE> 39
- 35 -
the Swingline Bank to make such endorsements on the schedule attached to the
Note held by it shall not affect the validity of FFB's obligation to repay the
unpaid principal amount of the Swingline Loans with interest thereon in
accordance with the terms of this Agreement.
(d) Neither the Swingline Bank nor any Bank shall be entitled
to have its Notes subdivided, by exchange for promissory notes of lesser
denominations or otherwise, except in connection with a permitted assignment of
all or any portion of such Bank's Commitment, Loans and Notes pursuant to
Section 5.01(e) or Sections 11.06(b), (e) or (g) hereof.
2.09 Optional Prepayments and Conversions or Continuation of
Loans. Subject to Section 4.04 hereof, the Company shall have the right to
prepay Syndicated Loans and subject to the terms thereof, Money Market Loans
(without premium or penalty but subject to the provisions of Section 5 hereof),
in such order as it may select as between Syndicated Loans, and subject to the
terms thereof, Money Market Loans or to Convert Syndicated Loans of one type
into Syndicated Loans of another type or Continue Syndicated Loans of one type
as Syndicated Loans of the same type, at any time or from time to time,
provided that: (i) the Company shall give the Agent notice of each such
prepayment, Conversion or Continuation as provided in Section 4.05 hereof; and
(ii) Eurodollar Loans may be prepaid or Converted only on the last day of an
Interest Period for such Loans.
2.10 Swingline Loans.
(a) FFB may, on any Business Day prior to the Commitment
Termination Date, request the Swingline Bank (i) to make an offer on such
Business Day to make a Swingline Loan (an "Uncommitted Swingline Loan"), or
(ii) to make a Swingline Loan (a "Committed Swingline Loan"), to FFB on such
Business Day in Dollars in the manner set forth in this Section 2.10; provided
that the aggregate unpaid principal amount of all Swingline Loans may not, at
any one time outstanding, exceed (i) the Swingline Amount or (ii) together with
the aggregate unpaid principal amount of all Syndicated Loans and Money Market
Loans, the aggregate amount of the Commitments at such time; provided further,
that Swingline Loans may not be outstanding for more than five (5) consecutive
Business Days. The Swingline Bank may, but shall have no obligation to, make
any such offer to make an Uncommitted Swingline Loan and FFB may, but shall
have no obligation to, accept any such offer to make an Uncommitted Swingline
Loan.
Credit Agreement
<PAGE> 40
- 36 -
(b) When FFB wishes to request an offer from the Swingline
Bank to make an Uncommitted Swingline Loan, or a Committed Swingline Loan, on
the date (a "Swingline Borrowing Date") on which it proposes to borrow a
Swingline Loan (a "Swingline Borrowing"), it shall give the Swingline Bank
notice (a "Swingline Request"), which notice shall be effective only if
received by the Swingline Bank (unless the Swingline Bank shall otherwise
consent) no later than (i) 3:00 p.m. New York time, in the case of a Swingline
Borrowing in a principal amount up to but not exceeding $50,000,000, (ii) 2:00
p.m. New York time, in the case of a Swingline Borrowing in a principal amount
greater than $50,000,000 and up to but not exceeding $200,000,000, (iii) 1:00
p.m. New York time, in the case of a Swingline Borrowing in a principal amount
greater than $200,000,000 and up to but not exceeding $250,000,000 and (iv)
noon New York time, in the case of a Swingline Borrowing in a principal amount
greater than $250,000,000. Each such Swingline Request shall specify the
principal amount of the Swingline Borrowing (which shall be at least $5,000,000
and in larger multiples of $1,000,000).
(c) Upon receipt of a Swingline Request for an Uncommitted
Swingline Loan, the Swingline Bank may, but shall not be obligated to, submit a
Swingline Quote to FFB, which Swingline Quote shall contain an offer to make a
Swingline Loan in response to such Swingline Request. Each Swingline Quote
must specify (i) the principal amount of the Swingline Borrowing for which such
offer is being made (which principal amount shall be at least $5,000,000 or a
larger multiple of $1,000,000) and (ii) a quote of a margin (the "Swingline
Margin") above the Federal Funds Rate which, when added to the Federal Funds
Rate, will be the interest rate per annum applicable to the Swingline Loan to
be borrowed.
(d) Upon receipt of a Swingline Quote in response to its
Swingline Request for an Uncommitted Swingline Loan, FFB shall within five
minutes of receipt of such Swingline Quote notify the Swingline Bank of its
acceptance or nonacceptance of such Swingline Quote; provided that a failure of
FFB so to notify the Swingline Bank shall be nonacceptance of such Swingline
Quote.
(e) Promptly upon FFB's acceptance of a Swingline Quote, and
within an hour of a Swingline Request for a Committed Swingline Loan, the
Swingline Bank shall make the amount of the Swingline Loan to be made by it on
such date available to FFB on such date by depositing the same, in immediately
available funds, in an account of FFB maintained with Chase at the Principal
Office designated by FFB. The Swingline Bank shall thereupon promptly notify
the Agent (which shall promptly notify the Banks) that a Swingline Loan has
been made and the amount thereof.
Credit Agreement
<PAGE> 41
- 37 -
(f) Anything in this Section 2.10 to the contrary
notwithstanding, the Swingline Bank's obligation to make Committed Swingline
Loans may be terminated or reduced by the Swingline Bank by not less than 30
days' notice and may be terminated under Section 9 hereof.
Section 3. Payments of Principal and Interest; Mandatory
Prepayments.
3.01 Repayment of Loans.
(a) Syndicated Loans. The Company will pay to the Agent for
account of each Bank the aggregate unpaid principal amount of such Bank's
Syndicated Loans outstanding, and each Syndicated Loan shall mature, on the
Commitment Termination Date.
(b) Money Market Loans. The Company will pay to the Agent
for account of each Bank holding a Money Market Loan the unpaid principal
amount of each Money Market Loan held by such Bank, and each Money Market Loan
shall mature, on the last day of the Interest Period therefor.
(c) Swingline Loans. FFB will pay (or cause to be paid) to
the Agent for account of the Swingline Bank the principal amount of each
Swingline Loan at or prior to, and each Swingline Loan shall mature at, 1:00
p.m. New York time on the Business Day immediately following the Swingline
Borrowing Date (the "Swingline Maturity Date").
3.02 Interest. (a) The Company will pay to the Agent for
account of each Bank interest on the unpaid principal amount of each Loan made
by such Bank for the period from and including the date of such Loan to but
excluding the date such Loan shall be paid in full, at the following rates per
annum:
(i) during such period such Loan is a Base Rate Loan, the
Base Rate (as in effect from time to time) plus the Applicable Margin;
(ii) during such period such Loan is a Eurodollar Loan, for
each Interest Period relating thereto, the Fixed Rate for such Loan
for such Interest Period plus the Applicable Margin;
(iii) during such period such Loan is a LIBOR Market Loan,
the LIBO Rate for such Loan for the Interest Period therefor plus (or
minus) the Money Market Margin quoted by the Bank making such Loan in
accordance with Section 2.04 hereof; and
Credit Agreement
<PAGE> 42
- 38 -
(iv) during such period such Loan is a Set Rate Loan, the
Money Market Rate for such Loan for the Interest Period therefor
quoted by the Bank making such Loan in accordance with Section 2.04
hereof.
(b) FFB will pay to the Agent for account of the Swingline
Bank interest on the unpaid principal amount of each Swingline Loan made by the
Swingline Bank, for the period from and including the date on which such
Swingline Loan is made to but excluding the Swingline Maturity Date applicable
thereto, at (i) in the case of an Uncommitted Swingline Loan, the Federal Funds
Rate (as in effect for the Swingline Borrowing Date) plus the applicable
Swingline Margin and (ii) in the case of a Committed Swingline Loan, the Base
Rate.
(c) Notwithstanding the foregoing provisions of this Section
3.02, the relevant Borrower will pay to the Agent for account of each Bank
(including for these purposes, the Swingline Bank) interest at the applicable
Post-Default Rate on any principal of any Loan made by such Bank or the
Swingline Bank, and on any other amount payable by the Borrowers under any
other Basic Document to or for account of such Bank, which shall not be paid in
full when due (whether at stated maturity, by acceleration or otherwise), for
the period from and including the due date thereof to but excluding the date
the same is paid in full.
(d) Accrued interest on each Loan shall be payable (i) in the
case of a Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the case of
a Eurodollar Loan or LIBOR Market Loan, on the last day of each Interest Period
therefor and, if such Interest Period is longer than three months at
three-month intervals following the first day of such Interest Period, (iii) in
the case of a Set Rate Loan, on the last day of each Interest Period therefor
and, if such Interest Period is longer than 90 days at 90-day intervals
following the first day of such Interest Period, (iv) in the case of a
Swingline Loan, on the Swingline Maturity Date therefor, and (v) in the case of
any Loan, upon the payment or prepayment thereof or the Conversion of such Loan
to a Loan of another type (but only on the principal amount so paid, prepaid or
Converted), except that interest payable at the Post-Default Rate shall be
payable from time to time on demand and interest on any Eurodollar Loan or
LIBOR Market Loan that is Converted into a Base Rate Loan (pursuant to Section
5.04 hereof) shall be payable on the date of Conversion. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Agent shall give notice thereof to the Banks and the Swingline Bank to
which such interest is payable and the Company and FFB.
Credit Agreement
<PAGE> 43
- 39 -
3.03 Mandatory Commitment Reductions and Prepayments. Upon
the occurrence of a Change in Control, the Majority Banks may, by notice
(through the Agent) to the Company, terminate the Commitments, whereupon the
Commitments shall automatically terminate, and the Borrowers shall, on the date
such notice is given (or if such day is not a Business Day, on the next
succeeding Business Day), prepay all Loans outstanding and pay all other
obligations of the Borrowers hereunder and under any other Basic Document then
due. The Company shall give the Agent and the Banks prompt notice of the
occurrence of any Change in Control.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by any Borrower
under this Agreement and the Notes shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Agent at
account number NYAO-DI-900-9-000002 maintained by the Agent with Chase at the
Principal Office, not later than 1:00 p.m. New York time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made (except for purposes of Section 9
hereof) on the next succeeding Business Day).
(b) Any Bank (including, for these purposes, the Swingline
Bank) for whose account any such payment is to be made may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the relevant Borrower with such Bank
(with notice to such Borrower and the Agent).
(c) The Borrowers shall, at the time of making each payment
under this Agreement or any Note, specify to the Agent whether such payment is
to be applied to the Loans or to other amounts payable by the Borrowers
hereunder (and in the event that it fails to so specify, or if an Event of
Default specified in Section 9(a) hereof has occurred and is continuing, the
Agent may distribute such payment to the Banks in such manner as the Majority
Banks may determine to be appropriate, subject to Section 4.02 hereof).
(d) Except to the extent otherwise provided in the last
sentence of Section 2.02(b) hereof, each payment received by the Agent under
this Agreement or any Note for account of a Bank (including for these purposes,
the Swingline Bank) shall be paid
Credit Agreement
<PAGE> 44
- 40 -
promptly to such Bank, in immediately available funds, for account of such
Bank's Applicable Lending Office for the Loan in respect of which such payment
is made.
(e) If the due date of any payment under this Agreement or
any Note would otherwise fall on a day which is not a Business Day, such date
shall be extended to the next succeeding Business Day and interest shall be
payable on any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each borrowing from the Banks under Section 2.01 hereof
shall be made from the Banks and each payment of facility fee under Section
2.05 hereof shall be made for account of the Banks, and each termination or
reduction of the amount of the Commitments under Sections 2.03 and 3.03 hereof
shall be applied to the Commitments of the Banks, pro rata according to the
amounts of their respective Commitments; (b) the making, Conversion and
Continuation of Loans of a particular type (other than Conversions provided for
by Section 5.04 hereof) shall be made pro rata among the Banks according to the
amounts of their respective Commitments, and Eurodollar Loans having the same
Interest Period shall be allocated pro rata among the Banks according to the
amounts of their respective Eurodollar Loans; (c) each payment or prepayment of
principal of Syndicated Loans by the Company shall be made for account of the
Banks pro rata in accordance with the respective unpaid principal amounts of
the Syndicated Loans held by the Banks; and (d) each payment of interest on
Syndicated Loans by the Company shall be made for account of the Banks pro rata
in accordance with the respective amounts of interest due on Syndicated Loans
and payable to the Banks.
4.03 Computations. Interest on Eurodollar Loans, interest on
Money Market Loans and facility fee payable under Section 2.05 hereof shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable, and interest on Base Rate Loans shall be computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable.
4.04 Minimum Amounts. Except for Conversions or prepayments
made pursuant to Sections 3.03 or 5.04 hereof, each borrowing, Conversion and
prepayment of principal of Syndicated Loans shall be in an aggregate amount at
least equal to $5,000,000 (borrowings, prepayments or Conversions of or into
Syndicated Loans of different types or, in the case of Eurodollar Loans, having
different Interest Periods at the same time
Credit Agreement
<PAGE> 45
- 41 -
hereunder to be deemed separate borrowings, Conversions and prepayments for
purposes of the foregoing, one for each type or Interest Period). Each
reduction of Commitments in accordance with Section 2.03(a) hereof shall be in
an aggregate amount at least equal to $1,000,000. Anything in this Agreement
to the contrary notwithstanding, the aggregate principal amount of Eurodollar
Loans having the same Interest Period shall be at least equal to $10,000,000
and, if the aggregate amount of Eurodollar Loans having the same Interest
Period would otherwise be in a lesser aggregate principal amount for any
period, such Loans shall be Base Rate Loans during such period.
4.05 Certain Notices. Except as otherwise expressly provided
herein, notices by the Company to the Agent of terminations or reductions of
Commitments, of borrowings, Conversions, Continuations and prepayments of
Syndicated Loans, of type of Syndicated Loans and of the duration of Interest
Periods shall be irrevocable and shall be effective only if received by the
Agent not later than 10:00 a.m. New York time on the number of Business Days
prior to the date of the relevant termination, reduction, borrowing,
Conversion, Continuation or prepayment or the first day of such Interest Period
specified below:
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
------ ----------
<S> <C>
Termination or
reduction of Commitments 3
Borrowing or prepayment of,
or Conversions into,
Base Rate Loans same Day
Borrowing or prepayment of,
Conversions into, Continuations as,
or duration of Interest Period
for, Eurodollar Loans 3
</TABLE>
Each such notice of termination or reduction shall specify the aggregate amount
of the Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or prepayment shall specify the Syndicated Loans to be
borrowed, Converted, Continued or prepaid and the aggregate amount (subject to
Section 4.04 hereof) and type of the Syndicated Loans to be borrowed,
Converted, Continued or prepaid (and, in the case of a Conversion, the type of
Syndicated Loans to result from such Conversion) and the date of borrowing,
Conversion, Continuation or prepayment (which shall be a Business Day) and, if
such Loans are Eurodollar Loans, the duration of the Interest Period
Credit Agreement
<PAGE> 46
- 42 -
therefor. The Agent shall promptly notify the Banks of the contents of each
such notice. In the event that the Company fails to select the type of
Syndicated Loan, or the duration of any Interest Period for any Eurodollar
Loan, within the time period and otherwise as provided in this Section 4.05,
such Loan (if outstanding as a Eurodollar Loan) will be automatically Converted
into a Base Rate Loan on the last day of the then current Interest Period for
such Loan or (if outstanding as a Base Rate Loan) will remain as, or (if not
then outstanding) will be made as, a Base Rate Loan.
4.06 Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Company (the "Payor") prior to the
date on which the Payor is scheduled to make payment to the Agent of (in the
case of a Bank) the proceeds of a Loan to be made by it hereunder or (in the
case of the Company) a payment to the Agent for account of one or more of the
Banks hereunder (such payment being herein called the "Required Payment") which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to) make the amount thereof available to the intended recipient(s)
on such date and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient(s) of such payment shall, on demand, repay to the Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such day and, if such recipient(s) shall
fail promptly to make such payment, the Agent shall be entitled to recover such
amount, on demand, from the Payor, together with interest as aforesaid.
4.07 Sharing of Payments, Etc.
(a) The Company agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim a Bank may
otherwise have, each Bank shall be entitled, at its option, to offset balances
held by it for account of the Company at any of its offices, in Dollars or in
any other currency, against any principal of or interest on such Bank's Loan,
or any other amount payable to such Bank hereunder, which is not paid when due
(regardless of whether such balances are then due to the Company), in which
case it shall promptly notify the Company and the Agent thereof, provided that
such Bank's failure to give such notice shall not affect the validity thereof.
Credit Agreement
<PAGE> 47
- 43 -
(b) If any Bank shall obtain payment of any principal of or
interest on any Syndicated Loan made by it to the Company under this Agreement
through the exercise of any right of set-off, banker's lien or counterclaim or
similar right, debit pursuant to Section 4.01(b) hereof, or otherwise, and, as
a result of such payment, such Bank shall have received a greater percentage of
the principal or interest then due hereunder by the Company to such Bank in
respect of Syndicated Loans than the percentage received by any other Bank, it
shall promptly purchase from the other Banks participations in (or, if and to
the extent specified by any such other Bank, direct interests in) the
Syndicated Loans made by such other Banks (or in interest due thereon, as the
case may be) in such amounts, and make such other adjustments from time to time
as shall be equitable, to the end that all the Banks shall share the benefit of
such excess payment (net of any expenses which may be incurred by such Bank in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal and/or interest on the Syndicated Loans held by each Bank. To
such end all the Banks shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment is rescinded or
must otherwise be restored.
(c) The Company agrees that any Bank purchasing a
participation (or direct interest) in the Syndicated Loans made by other Banks
(or in interest due thereon, as the case may be) in accordance with Section
4.07(b) hereof may exercise all rights of set-off, bankers' lien, counterclaim
or similar rights with respect to such participation as fully as if such Bank
were a direct holder of Loans in the amount of such participation.
(d) Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Company. If, under any applicable
bankruptcy, insolvency or other similar law, any Bank receives a secured claim
in lieu of a set-off to which this Section 4.07 applies, such Bank shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Banks entitled under this Section
4.07 to share in the benefits of any recovery on such secured claim.
Credit Agreement
<PAGE> 48
- 44 -
Section 5. Yield Protection and Illegality.
5.01 Additional Costs.
(a) The Company shall pay directly to each Bank from time to
time such amounts as such Bank may determine to be necessary to compensate it
for any costs which such Bank determines are attributable to its making or
maintaining of any Fixed Rate Loans or its obligation to make any Fixed Rate
Loans hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of any of such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Note in respect of any of such
Loans (other than taxes imposed on or measured by the overall net
income of such Bank or of its Applicable Lending Office for any of
such Loan); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements (other than the Reserve Requirement utilized in
the determination of the Fixed Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Bank (including such Loan or any deposits
referred to in the definition of "Fixed Base Rate" in Section 1.01
hereof), or any commitment of such Bank (including the Commitment of
such Bank hereunder); or
(iii) imposes any other condition affecting this Agreement or
any of its Notes (or any of such extensions of credit or liabilities)
or its Commitments.
If any Bank requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Bank (with a copy to the Agent), suspend the
obligation of such Bank to make or Continue its Loans of the type with respect
to which such compensation is requested, or to Convert its Base Rate Loan into
a Loan of such type, until the Regulatory Change giving rise to such request
ceases to be in effect (in which case the provisions of Section 5.04 hereof
shall be applicable).
(b) Without limiting the effect of the provisions of Section
5.01(a) hereof, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest
Credit Agreement
<PAGE> 49
- 45 -
rate on Eurodollar Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of such Bank which includes
Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such
a category of liabilities or assets which it may hold, then, if such Bank so
elects by notice to the Company (with a copy to the Agent), the obligation of
such Bank to make or Continue, or to Convert its Base Rate Loan into, a
Eurodollar Loan hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 5.04 hereof
shall be applicable).
(c) Without limiting the effect of the foregoing provisions
of this Section 5.01 (but without duplication), the Company shall pay directly
to each Bank from time to time on request such amounts as such Bank may
determine to be necessary to compensate such Bank for any costs which it
determines are attributable to the maintenance by such Bank (or any Applicable
Lending Office), pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law) of any court or
governmental or monetary authority (i) following any Regulatory Change or (ii)
implementing any risk-based capital guideline or requirement (whether or not
having the force of law and whether or not the failure to comply, therewith
would be unlawful) heretofore or hereafter issued by any government or
governmental or supervisory authority implementing at the national level the
Basle Accord, of capital in respect of its Commitment or any of its Loans (such
compensation to include, without limitation, an amount equal to any reduction
of the rate of return on assets or equity of such Bank (or any Applicable
Lending Office) to a level below that which such Bank (or any Applicable
Lending Office) could have achieved but for such law, regulation,
interpretation, directive or request).
(d) Each Bank will notify the Company of any event occurring
after the date of this Agreement that will entitle such Bank to compensation
under paragraph (a) or (c) of this Section 5.01 as promptly as practicable, but
in any event within 45 days, after such Bank obtains actual knowledge thereof;
provided that (i) if any Bank fails to give such notice within 45 days after it
obtains actual knowledge of such an event, such Bank shall, with respect to
compensation payable pursuant to this Section 5.01 in respect of any costs
(including, without limitation, Additional Costs) resulting from such event,
only be entitled to payment under this Section 5.01 for costs incurred from and
after the date 45 days prior to the date that such Bank does give such notice
and (ii) each Bank will designate a different Applicable Lending Office for the
Loan of such Bank affected by such event if such designation will avoid the
need
Credit Agreement
<PAGE> 50
- 46 -
for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Bank, be disadvantageous to such Bank, except that such Bank
shall have no obligation to designate an Applicable Lending Office located in
the United States of America. Each Bank will furnish to the Company a
certificate setting forth the basis and amount of each request by such Bank for
compensation under paragraph (a) or (c) of this Section 5.01. Determinations
and allocations by any Bank for purposes of this Section 5.01 of the effect of
any Regulatory Change pursuant to Section 5.01(a) or (b) hereof, or of the
effect of capital maintained pursuant to Section 5.01(c) hereof, on its costs
or rate of return of maintaining Loans or its obligation to make Loans, or on
amounts receivable by it in respect of Loans, and of the amounts required to
compensate such Bank under this Section 5.01, shall be prima facie evidence
thereof, provided that such determinations and allocations are made on a
reasonable basis.
(e) If any Bank (an "Affected Bank"), claims compensation
from the Company under Section 5.01(a), 5.01(b) or 5.01(c) hereof (without
prejudice to any amounts then due to such Bank under said Sections), the
Company may exercise any one of the following options:
(i) The Company may request one or more of the non-Affected
Banks to take over all (but not part) of such Affected Bank's then
outstanding Syndicated Loans and to assume all (but not part) of such
Affected Bank's Commitment and obligations hereunder. If one or more
Banks (each, an "Assenting Bank") shall so agree, pursuant to such
documentation as is satisfactory in form and substance to the Company,
such Affected Bank, each Assenting Bank and the Agent (x) the
Commitment to make Syndicated Loans of each Assenting Bank and the
obligations of such Assenting Bank with respect to Syndicated Loans
under this Agreement shall be increased by its respective share of the
Commitment to make such Loans and of the obligations of such Affected
Bank with respect to Syndicated Loans under this Agreement taken over
by such Assenting Bank and (y) each Assenting Bank shall make
Syndicated Loans to the Company,pro rata according to such Assenting
Bank's respective share of the Commitment of such Affected Bank to
make such Loans taken over by such Assenting Bank, in an aggregate
principal amount equal to such share of the outstanding principal
amount of such Loans of such Affected Bank and otherwise on the same
terms as such Loans, on a date mutually acceptable to the Assenting
Banks, such Affected Bank and the Company. The proceeds of such
Loans, together with funds of the Company, shall be used to prepay
such Loans of such Affected Bank, together with all interest accrued
thereon, and all
Credit Agreement
<PAGE> 51
- 47 -
other amounts owing to such Affected Bank hereunder in respect of the
Syndicated Loans and, upon such assumption by the Assenting Banks and
prepayment by the Company, such Affected Bank shall cease to be a
"Bank" for purposes of this Agreement in respect of the Syndicated
Loans and shall no longer have any obligations hereunder in respect of
the Syndicated Loans.
(ii) The Company may designate a bank acceptable to the Agent
to assume all (but not part of) the Commitment and the obligations of
each such Affected Bank hereunder, and to purchase the outstanding
Notes of such Affected Bank and such Affected Bank's rights hereunder
and with respect thereto (a Replacement Bank"), in each case on a date
mutually acceptable to the Replacement Bank, such Affected Bank, and
the Company, without recourse upon, or warranty by, or expense to,
such Affected Bank, for a purchase price equal to the outstanding
principal amount of the Loans of such Affected Bank plus all interest
accrued thereon and all other amounts owing to such Affected Bank
hereunder, and upon such assumption and purchase by the Replacement
Bank, such Replacement Bank shall be deemed to be a Bank" for purposes
of this Agreement and such Affected Bank shall cease to be a "Bank"
for purposes of this Agreement and such Affected Bank shall no longer
have any obligations hereunder.
(iii) So long as no Default shall have occurred and be
continuing, the Company may terminate such Affected Bank's Commitment
and prepay all of such Affected Bank's Loans, together with all
interest accrued thereon, and all other amounts owing to such Affected
Bank hereunder (including, without limitation, all amounts payable
under Sections 5.01 and 5.05 hereof).
If any Affected Bank that ceases being a "Bank" for purposes of this Agreement
is a Reference Bank (or whose Applicable Lending Office is a Reference Bank, as
the case may be), such Reference Bank shall cease to be a Reference Bank and,
if as a result of the foregoing, there shall be less than three Reference Banks
remaining, then the Agent (with the consent of the Company) shall, by notice to
the Company and the Banks, designate additional Bank(s) as Reference Bank(s),
so that there shall at all times be at least three Reference Banks.
5.02 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any Fixed
Base Rate for any Interest Period:
Credit Agreement
<PAGE> 52
- 48 -
(a) the Agent determines (or any Bank that has outstanding a
Money Market Quote with respect to a LIBOR Market Loan determines),
which determination shall be conclusive, that quotations of interest
rates for the relevant deposits referred to in the definition of
"Fixed Base Rate" in Section 1.01 hereof are not being provided in the
relevant amounts or for the relevant maturities for purposes of
determining rates of interest for any type of Fixed Rate Loans as
provided herein; or
(b) the Majority Banks determine (or any Bank that has
outstanding a Money Market Quote with respect to a LIBOR Market Loan
determines), which determination shall be conclusive, and notify (or
notifies, as the case may be), the Agent that the relevant rates of
interest referred to in the definition of "Fixed Base Rate" in Section
1.01 hereof upon the basis of which the rate of interest for
Eurodollar Loans (or LIBOR Market Loans, as the case may be), for such
Interest Period is to be determined are not likely to cover adequately
the cost to such Banks (or such quoting Bank) of making or maintaining
such type of Loans for such Interest Period;
then the Agent shall give the Company and each Bank prompt notice thereof, and
so long as such condition remains in effect, the Banks (or such quoting Bank)
shall be under no obligation to make additional Eurodollar Loans (or a LIBOR
Market Loan, as the case may be), to Continue Eurodollar Loans or to Convert
Base Rate Loans into Eurodollar Loans and the Company shall, on the last day(s)
of the then current Interest Period(s) for the outstanding Eurodollar Loans (or
LIBOR Market Loans), either prepay such Loans or Convert such Loans into Base
Rate Loans in accordance with Section 2.09 hereof.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Eurodollar Loans or
LIBOR Market Loans hereunder, then such Bank shall promptly notify the Company
thereof (with a copy to the Agent) and such Bank's obligation to make or
Continue, or to Convert a Base Rate Loan into, a Eurodollar Loan shall be
suspended until such time as such Bank may again make and maintain a Eurodollar
Loan (in which case the provisions of Section 5.04 hereof shall be applicable),
and such Bank shall no longer be obligated to make any LIBOR Market Loan that
it has offered to make.
5.04 Treatment of Affected Loans under Certain Circumstances.
If the obligation of any Bank to make or Continue, or to Convert a Base Rate
Loan into, a Eurodollar Loan or LIBOR Market Loan is suspended pursuant to
Section 5.01 or 5.03 hereof, such Bank's Eurodollar Loan
Credit Agreement
<PAGE> 53
- 49 -
or LIBOR Market Loan shall be automatically Converted into a Base Rate Loan on
the last day of the then current Interest Period for its Eurodollar Loan or
LIBOR Market Loan (or, in the case of a Conversion required by Section 5.01(b)
or 5.03 hereof, on such earlier date as such Bank may specify to the Company
with a copy to the Agent) and, unless and until such Bank gives notice as
provided below that the circumstances specified in Section 5.01 or 5.03 hereof
which gave rise to such Conversion no longer exist:
(a) to the extent that such Bank's Eurodollar Loan or LIBOR
Market Loan has been so Converted, all payments and prepayments of
principal which would otherwise be applied to such Bank's Eurodollar
Loan or LIBOR Market Loan shall be applied instead to its Base Rate
Loan; and
(b) a Loan which would otherwise be made or Continued by such
Bank as a Eurodollar Loan shall be made or Continued instead as a Base
Rate Loan and the Base Rate Loan of such Bank which would otherwise be
Converted into a Eurodollar Loan shall remain as a Base Rate Loan.
If such Bank gives notice to the Company (with a copy to the Agent) that the
circumstances specified in Section 5.01 or 5.03 hereof which gave rise to the
Conversion of such Bank's Eurodollar Loan or LIBOR Market Loan pursuant to this
Section 5.04 no longer exist (which such Bank agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans are then
outstanding, such Bank's Base Rate Loans shall be automatically Converted, on
the first day of the next succeeding Interest Period for such Eurodollar Loans
so that, after giving effect thereto, to the extent possible all Syndicated
Loans held by the Banks are Eurodollar Loans.
5.05 Compensation. The Company shall pay to the Agent for
account of each Bank, upon the request of such Bank through the Agent, such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any loss, cost or expense which such Bank reasonably
determines are attributable to:
(a) any payment, prepayment or Conversion (other than
pursuant to Section 5.01 (b) or 5.03 hereof) of a Fixed Rate Loan or a
Set Rate Loan made by such Bank for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 9
hereof) on a date other than the last day of the Interest Period for
such Loan; or
Credit Agreement
<PAGE> 54
- 50 -
(b) any failure by the Company for any reason (other than as
a consequence of the delivery by such Bank of the notice referred to
in Sections 5.01(a), 5.01(b), 5.02 or 5.03 hereof but including,
without limitation, the failure of any of the conditions precedent
specified in Section 6 hereof to be satisfied) to borrow a Fixed Rate
Loan or a Set Rate Loan (with respect to which, in the case of a Money
Market Loan, the Company has accepted a Money Market Quote) from such
Bank on the date for such borrowing specified in the relevant notice
of borrowing given pursuant to Section 2.02 or 2.04(b) hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid, prepaid or
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the interest component of the amount such Bank would have
bid in the London interbank market (if such Loan is a Eurodollar Loan or a
LIBOR Market Loan) or the United States secondary certificate of deposit market
(if such Loan is a Set Rate Loan) for Dollar deposits of leading banks in
amounts comparable to such principal amount and with maturities comparable to
such period (as reasonably determined by such Bank).
5.06 Withholding Tax Exemption; Etc. Each Bank which is
organized outside of the United States of America shall deliver to the Company
(with a copy to the Agent) such certificates, documents or other evidence as
may be required from time to time, including, without limitation, any
certificate or statement of exemption required by Treasury Regulation Section
1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof, properly
completed and duly executed by such Bank, to establish that such Bank is not
subject to withholding under Section 1441 or 1442 of the Code, or comparable
successor provisions, because payments to such Bank are effectively connected
with the conduct by such Bank of a trade or business in the United States of
America or exempt from United States tax under a provision of an applicable tax
treaty. Notwithstanding any provision herein to the contrary, the Company
shall not have any obligation to pay to any Bank any amount which the Company
is liable to withhold due to failure of such Bank to timely file with the
Company such certificate or statement of exemption by such time or times as set
forth in such Regulations or otherwise.
Credit Agreement
<PAGE> 55
- 51 -
Section 6. Conditions Precedent.
6.01 Conditions to Effectiveness. The effectiveness of the
amendment and restatement of the 1992 Credit Agreement provided for hereby is
subject to the receipt by the Agent on behalf of the Banks or the Swingline
Bank, as the case may be, of the following documents, each of which shall be
satisfactory to the Agent in form and substance:
(a) Principal Documents.
(i) Notes. The Syndicated Notes and the Money Market Notes,
duly completed and executed by the Company, dated the Restatement
Date, in exchange for the promissory notes issued under the 1992
Credit Agreement; and the Swingline Note duly executed and completed
by FFB, dated the Restatement Date.
(ii) Company Guarantee. Company Guarantee, duly executed and
delivered by the Company.
(b) Corporate Documents and Regulatory Certificates.
(i) Charter, By-Laws and Corporate Action. Certified copies
of the charter and by-laws of each of the Obligors and all corporate
action taken by each of the Obligors (including, without limitation,
the resolutions of the Board of Directors of each Obligor authorizing
the transactions contemplated hereby.
(ii) Incumbency. Certificates of each of the Obligors in
respect of the incumbency and specimen signature of each of the
officers (x) who is authorized to sign on its behalf each of the Basic
Documents to which it is a party and (y) who will, until replaced by
another officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving
notices and other communications in connection with the Basic
Documents and the transactions contemplated thereby (and the Agent and
each Bank may conclusively rely on such certificate until it receives
notice from any Borrower to the contrary).
(iii) Good Standing Certificate. A true, correct and
complete copy of a certificate of good standing and existence for each
Obligor, in each case issued by the Secretary of State (or equivalent
official) of the State in which such Person is organized.
(c) Certificates.
Credit Agreement
<PAGE> 56
- 52 -
(i) Opening Compliance Certificate. A Compliance
Certificate, dated the Amendment Effective Date, of the Company signed
by a senior officer of the Company setting forth the calculations
therein as of the last day of the fiscal quarter of the Company most
recently ended (or, if such date is less than 45 days prior to the
Restatement Date, as of the last day of the immediately preceding
fiscal quarter of the Company).
(ii) Closing Certificate. A certificate, dated the Amendment
Effective Date, of the Company signed by a senior officer of the
Company to the effect set forth in the first sentence of Section 6.02
hereof.
(d) Opinions.
(i) Opinion of Special Georgia Counsel to the Borrowers. An
opinion of Sutherland, Asbill & Brennan, special Georgia counsel to
the Borrowers, substantially in the form of Exhibit C-1 hereto. The
Borrowers hereby instruct such counsel to deliver such opinion to the
Agent and the Banks.
(ii) Opinion of General Counsel of the Borrowers. An opinion
of Randolph L.M. Hutto, Esq., General Counsel of each of the
Borrowers, substantially in the form of Exhibit C-2 hereto. The
Borrowers hereby instruct such counsel to deliver such opinion to the
Agent and the Banks.
(iii) Opinion of Special New York Counsel to the Banks. An
opinion of Milbank, Tweed, Hadley & McCloy, special New York counsel
to the Banks, substantially in the form of Exhibit D hereto.
(e) Fees. The Company shall have paid to the Agent for
account of the Banks the commitment fees and facility fees under the 1992
Credit Agreement accrued to the Amendment Effective Date and unpaid.
(f) Other Requested Documents. Such other documents relating
to the transactions contemplated hereby as the Agent or any Bank or special New
York counsel to the Banks may reasonably request.
The effectiveness of the amendment and restatement of the 1992 Credit Agreement
is also subject to the payment by the Company of such fees as the Company shall
have agreed to pay or deliver to any Bank or the Agent in connection herewith,
including, without limitation, the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to the Banks in
Credit Agreement
<PAGE> 57
- 53 -
connection with the negotiation, preparation, execution and delivery of this
Agreement and the Swingline Note (to the extent that statements for such fees
and expenses have been delivered to the Company).
6.02 Initial and Subsequent Loans. The obligation of any
Bank (including, for these purposes, the Swingline Bank) to make any Loan
(including any Money Market Loan and its initial Syndicated Loan, and, in the
case of the Swingline Bank, any Swingline Loan) is subject to the further
conditions precedent that, both immediately prior to making such Loan and also
after giving effect thereto:
(a) no Default shall have occurred and be continuing; and
(b) the representations and warranties made by the Company in
Section 7 hereof, and by the Company and the other Obligors in the
other Basic Documents, shall be true and complete in all material
respects on and as of the date of such Loan with the same force and
effect as if made on such date (or, if expressly stated to have been
made on and as of a specific date, on and as of such specific date).
Each notice of borrowing by the Company hereunder, each Money Market Loan
Request and each acceptance by the Company of any Money Market Quote, and each
Swingline Quote Request and each acceptance by FFB of any Swingline Quote,
shall constitute a certification by the Company to the effect set forth in the
preceding sentence (both as of the date of such notice, request or acceptance
(as the case may be) and, unless the Company otherwise notifies the Agent prior
to the date of such borrowing, as of the date of such borrowing).
Section 7. Representations and Warranties. The Company
represents and warrants to the Banks that:
7.01 Corporate Existence. Each of the Company and its
Subsidiaries (other than inactive Subsidiaries): (a) is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation; (b) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals, necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary
and where failure so to qualify would have a Material Adverse Effect.
Credit Agreement
<PAGE> 58
- 54 -
7.02 Financial Condition. The consolidated balance sheet of
the Company and its Subsidiaries as at December 31, 1993 and the related
consolidated statements of income, shareholders' equity and cash flows of the
Company and its Subsidiaries for the fiscal year ended on said date, with the
opinion thereon of Deloitte & Touche, and the consolidated balance sheet of the
Company and its Subsidiaries as at June 30, 1994 and the related consolidated
statements of income and cash flows of the Company and its Subsidiaries for the
six-month period ended on said date, in each case, heretofore furnished to each
of the Banks, present fairly in all material respects the consolidated
financial condition of the Company and its Subsidiaries as at said dates and
the consolidated results of the operations of the Company and its Subsidiaries
for the fiscal year and six-month period ended on said dates, all in accordance
with generally accepted accounting principles consistently applied (with, in
the case of such financial statements as at June 30, 1994, accruals being
subject to year-end adjustments). Neither the Company nor any of its
Subsidiaries had on said dates any material contingent liabilities, liabilities
for taxes, unusual forward or long term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in said consolidated balance sheet or the notes
thereto as at said dates. Since December 31, 1993, there has been no material
adverse change in the financial condition, operations or business of the
Company and its Subsidiaries taken as a whole from that set forth in said
financial statements as at said date.
7.03 Litigation. Except as disclosed on Schedule IV hereto,
there are no legal or arbitral proceedings or any proceedings by or before any
governmental or regulatory authority or agency (each a "Litigation"), pending
or (to the knowledge of the Company) threatened against the Company or any of
its Subsidiaries which individually or in the aggregate are reasonably likely,
in the reasonable judgment of the Company, to have a Material Adverse Effect.
7.04 No Breach. None of the execution and delivery of the
Basic Documents, the consummation of the transactions herein contemplated and
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, the charter or by-laws of the
Company or any of its Subsidiaries, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument relating to Indebtedness of the Company
or any of its Subsidiaries (or any other material agreement or instrument) to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound or to which any of them is subject, or constitute a default
Credit Agreement
<PAGE> 59
- 55 -
under any such agreement or instrument, or result in the creation or imposition
of any Lien upon any of the revenues or assets of the Company or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
7.05 Corporate Action. Each Obligor has all necessary
corporate power and authority to execute, deliver, and perform its obligations
under each of the Basic Documents to which it is a party; the execution,
delivery and performance by each Obligor of each of the Basic Documents to
which it is a party have been (or will have been prior to the Amendment
Effective Date) duly authorized by all necessary corporate action on its part;
and this Agreement has been duly and validly executed and delivered by the
Company and constitutes, and each of the Notes and the other Basic Documents
when executed and delivered by each Obligor party thereto (in the case of the
Notes, for value) will constitute, a legal, valid and binding obligation of
each Obligor party thereto, enforceable against each such Obligor in accordance
with its terms.
7.06 Approvals. Except as set forth on Schedule IV hereto,
no authorizations, approvals or consents of, and no filings or registrations
with, any governmental or regulatory authority or agency (including, without
limitation, the Georgia Department of Banking and Finance (and any successor
thereto)) are necessary for the execution, delivery or performance by any of
the Obligors of any of the Basic Documents to which it is a party or for the
legality, validity, binding effect or enforceability thereof against such
Obligor.
7.07 Margin Stock. Not more than 25% of the value of the
properties of the Company and its Subsidiaries subject to the restrictions
contained in Sections 8.05(c) and/or 8.06 hereof is represented by properties
constituting Margin Stock.
7.08 ERISA. The Company and the ERISA Affiliates have
fulfilled their respective obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability in excess of $1,000,000 to the PBGC
or any Plan or Multiemployer Plan (other than to make contributions or premium
payments in the ordinary course of business).
7.09 Taxes. United States Federal income tax returns of the
Company and its Subsidiaries have been examined and closed through the fiscal
year of the Company ended December 31, 1987. The Company and its Subsidiaries
have filed all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid all taxes
Credit Agreement
<PAGE> 60
- 56 -
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its Subsidiaries. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the Company, adequate.
7.10 Investment Company Act. The Company is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
7.11 Credit Agreements. Schedule I hereto is a complete and
correct list, as of the Restatement Date, of each credit agreement, loan
agreement, indenture, purchase agreement, Guarantee or other arrangement
providing for or otherwise relating to any Indebtedness or any extension of
credit (or commitment for any extension of credit) to, or Guarantee by, the
Company or any of its Subsidiaries, the aggregate principal or face amount of
which equals or exceeds (or may equal or exceed) $5,000,000, expressly
identifying the relevant obligor in respect thereof. The aggregate principal
or face amount outstanding or which may become outstanding under each
arrangement required to be listed pursuant to the preceding sentence hereof is
correctly described in said Schedule I.
7.12 Hazardous Materials. Except as set forth on Schedule II
hereto, (a) the Company and each of its Subsidiaries have obtained all permits,
licenses and other authorizations which are required under all Environmental
Laws, except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect and (b) the Company and
each of its Subsidiaries are in compliance with the terms and conditions of all
such permits, licenses and authorizations, and are also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not have a Material
Adverse Effect.
7.13 Subsidiaries, Etc. Set forth in Schedule III hereto is
a complete and correct list, as of the Restatement Date, of all Subsidiaries of
the Company (and the respective jurisdiction of incorporation of each such
Subsidiary) and of all Investments held by the Company and its Subsidiaries in
any joint venture or partnership. Except as disclosed in Schedule III hereto
the Company owns, directly or indirectly, free and clear of Liens, all
outstanding shares of its Subsidiaries, and all
Credit Agreement
<PAGE> 61
- 57 -
such shares are validly issued, fully paid and non-assessable and the Company
(or the respective Subsidiary) also owns, free and clear of Liens, all such
Investments.
7.14 Material Agreements.
(a) Neither the Company nor any of its Subsidiaries is a
party to any agreement or instrument or subject to any corporate restriction
that has or is likely to have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is in
default in any manner that could have a Material Adverse Effect.
7.15 Accuracy and Completeness of Information. Except for
projections and pro forma financial information, no information, report,
financial statement, exhibit or schedule furnished by or on behalf of the
Company to the Agent and the Banks in connection with the negotiation of this
Agreement or included therein or delivered pursuant thereto contains any untrue
statement of material fact or omitted or omits to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading which untrue statement or omission (i) has
not been corrected in a certificate of the Company furnished to the Agent and
the Banks at least one Business Day prior to the Closing Date or (ii) if not so
corrected, relates to matters that would have (or have had) a Material Adverse
Effect. All information furnished after the date hereof by or on behalf of the
Company to the Agent and the Banks in connection with this Agreement and the
transactions contemplated hereby will be true and accurate in every material
respect on the date as of which such information is stated or certified unless
(i) such information has been corrected in a certificate of the Company
furnished to the Agent and the Banks at least five (5) Business Days prior to
any requested borrowing or (ii) if not so corrected, such untrue or inaccurate
information does not relate to matters that would have (or have had) a Material
Adverse Effect. The projections and pro forma financial information delivered
by the Company to the Agent and the Banks prior to the date of this Agreement
are based upon assumptions of the Company believed by the Company to be
reasonable and fair in light of conditions as at the time made, have been
prepared on the basis of assumptions stated therein, and reflect the reasonable
estimate of the Company of the information projected therein. To the best
knowledge of the Company no facts exist which would result in any material
adverse change in any such projections or in any estimate reflected therein.
The parties hereto acknowledge that projections as to future events are not to
be viewed as facts and that actual
Credit Agreement
<PAGE> 62
- 58 -
results during the period or periods covered by such projections may differ
from the projected results.
7.16 Compliance with Applicable Laws. Each of the Company
and its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its respective
business and the ownership of its property (including, without limitation,
applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls), except such noncompliance as would not,
in the aggregate, have a Material Adverse Effect.
7.17 Assets. Each of the Company and its Subsidiaries owns
and has good title to (or, if subject to a lease, has valid leasehold interests
in) all of its properties and assets, free and clear of all Liens or other
encumbrances of any nature other than Liens expressly permitted by Section 8.06
hereof.
Section 8. Covenants of the Company. The Company agrees
that, so long as any of the Commitments are in effect and until payment in full
of all Loans hereunder, all interest thereon and all other amounts payable by
the Borrowers hereunder:
8.01 Financial Statements. The Company will deliver to each
of the Banks:
(a) as soon as available and in any event within 45 days
after the end of each of the first three quarterly fiscal periods of
each fiscal year of the Company, consolidated statements of income and
cash flows of the Company and its Subsidiaries for such period and for
the period from the beginning of the respective fiscal year to the end
of such period, and the related consolidated balance sheet of the
Company and its Subsidiaries as at the end of such period, setting
forth in comparative form the corresponding consolidated figures for
the corresponding period in the preceding fiscal year, accompanied by
a certificate of a senior financial officer of the Company, which
certificate shall state that said consolidated financial statements
present fairly in all material respects the consolidated financial
condition and results of operations of the Company and its
Subsidiaries taken as a whole in accordance with generally accepted
accounting principles, consistently applied, as at the end of, and
for, such period (with accruals being subject to year-end
adjustments);
Credit Agreement
<PAGE> 63
- 59 -
(b) as soon as available and in any event within 90 days
after the end of each fiscal year of the Company, consolidated
statements of income, shareholders' equity and cash flows of the
Company and its Subsidiaries for such fiscal year and the related
consolidated balance sheet of the Company and its Subsidiaries as at
the end of such fiscal year, setting forth in comparative form the
corresponding consolidated figures for the preceding fiscal year, and
accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state
that said consolidated financial statements present fairly in all
material respects the consolidated financial condition and results of
operations of the Company and its Subsidiaries taken as a whole as at
the end of, and for, such fiscal year in accordance with generally
accepted accounting principles, and a certificate of such accountants
stating that, in making the examination necessary for their opinion,
they obtained no knowledge, except as specifically stated, of any
Default under any of Sections 8.07, 8.08, 8.09, 8.10 and 8.11 hereof;
(c) promptly after the filing thereof, the relevant quarterly
"Consolidated Reports of Condition and Income" of FFB (if any) that
FFB shall have filed with the Federal Deposit Insurance Corporation
(or any governmental agency substituted therefor);
(d) promptly after the filing thereof, the annual audited
statements of income, shareholders' equity and cash flows of FFB and
the related balance sheet of FFB (if any) that FFB shall have filed
with the Federal Deposit Insurance Corporation (or any governmental
agency substituted therefor);
(e) promptly upon their becoming available, copies of all
registration statements (in the form in which declared effective) and
regular periodic reports (other than Forms S-8), if any, which the
Company shall have filed with the Securities and Exchange Commission
(or any governmental agency substituted therefor) or any national
securities exchange;
(f) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports and
proxy statements so mailed;
(g) as soon as possible, and in any event within ten days
after the Company knows that any of the events or
Credit Agreement
<PAGE> 64
- 60 -
conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a senior financial
officer of the Company setting forth details respecting such event or
condition and the action, if any, which the Company or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC by the
Company or an ERISA Affiliate with respect to such event or
condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard
of Section 412 of the Code or Section 302 of ERISA shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of
any Plan (other than any such termination that is a "standard
termination" within the meaning of Section 4041(b) of ERISA);
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by PBGC
with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by the
Company or any ERISA Affiliate under Section 4201 or 4204 of
ERISA from a Multiemployer Plan, or the receipt by the Company
or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA; and
(v) the institution of a proceeding by a fiduciary
of any Multiemployer Plan against the Company or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days;
Credit Agreement
<PAGE> 65
- 61 -
(h) promptly after the Company knows that any Default has
occurred, a notice of such Default describing the same in reasonable
detail and stating that such notice is a "Notice of Default" and,
together with such notice or as soon thereafter as possible, a
description of the action that the Company has taken and proposes to
take with respect thereto; and
(i) from time to time such other information regarding
the business, affairs or financial condition of the Company or any of
its Subsidiaries (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Bank or the Agent may reasonably request.
At the time it furnishes each set of financial statements pursuant to paragraph
(a) or (b) above, the Company will furnish to each Bank: (A) a certificate (a
"Compliance Certificate") substantially in the form of Exhibit E-1 hereto
signed by a senior financial officer of the Company (i) to the effect that no
Default has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
that the Company has taken and proposes to take with respect thereto) and (ii)
setting forth in reasonable detail (x) the computations necessary to determine
whether the Company is in compliance with each of the Sections of the Credit
Agreement identified in Annex 1 to the form of Compliance Certificate as of the
end of the respective quarterly fiscal period or fiscal year and (y) to the
extent any computations referred to in clause (x) above use numbers which are
not directly obtainable from the financial statements delivered pursuant to
Section 8.01 hereof, a reconciliation to numbers in such financial statements;
and (B) a Facility Fee and Margin Determination Certificate.
8.02 Litigation. The Company will promptly give to each Bank
notice of any Litigation affecting the Company or any of its Subsidiaries,
except proceedings which individually or in the aggregate are not likely, in
the reasonable judgment of the Company, to have a Material Adverse Effect.
8.03 Corporate Existence, Etc. The Company will, and will
cause each of its Subsidiaries to:
(a) preserve and maintain its corporate existence and all of
its material rights, privileges and franchises (provided that nothing in this
Section 8.03 shall prohibit any transaction expressly permitted by Section 8.05
hereof);
Credit Agreement
<PAGE> 66
- 62 -
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory authorities if
failure to comply with such requirements would have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained;
(d) maintain all of its properties used or useful in its
business in good working order and condition, ordinary wear and tear excepted;
and
(e) permit, to the extent permitted by applicable law or
regulation, representatives of any Bank or the Agent, during normal business
hours after reasonable notice, to examine, copy and make extracts from its
books and records, to inspect its properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested by such Bank
or the Agent (as the case may be).
8.04 Insurance. The Company will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such corporations (subject to
deductibles in reasonable amounts) and carry such other insurance (subject to
such deductibles) as is usually carried by such corporations.
8.05 Prohibition of Fundamental Changes.
(a) The Company will not, and will not permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), except:
(i) any of the Company's Subsidiaries may be merged or
consolidated with or into: (A) the Company, if the Company shall be
the continuing or surviving corporation, or (B) any other Subsidiary
of the Company; provided that if any such transaction shall be between
a Subsidiary of the Company and a Wholly-Owned Subsidiary of the
Company, the continuing or surviving corporation shall be a
Wholly-Owned Subsidiary of the Company;
Credit Agreement
<PAGE> 67
- 63 -
(ii) any of the Company's Subsidiaries may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Company or a Wholly-Owned
Subsidiary of the Company;
(iii) the Company or any of the Company's Subsidiaries may
merge or consolidate with any other Person if (A) in the case of a
merger or consolidation of the Company, the Company is the continuing
or surviving corporation and, in any other case, the continuing or
surviving corporation shall be a Wholly-Owned Subsidiary of the
Company (provided that the continuing or surviving corporation may be
a non-Wholly-Owned Subsidiary of the Company if a Disposition by the
Company of the portion of the capital stock of such continuing or
surviving corporation not owned by the Company and/or one or more of
its Wholly-Owned Subsidiaries would at the time of such merger or
consolidation have been permitted pursuant to Section 8.05(c) hereof)
and (B) before and after giving effect thereto no Default would exist
hereunder.
(b) Except to the extent otherwise expressly permitted by
Section 8.05(a) hereof, the Company will not, and will not permit any of its
Subsidiaries to, acquire any business or assets from, or capital stock of, or
be a party to any acquisition of, any Person except:
(i) the Company and its Subsidiaries may make purchases of
inventory and other assets to be sold or used in the ordinary course
of business (including, without limitation, asset purchases of
merchant credit card portfolios and ancillary assets);
(ii) the Company and its Subsidiaries may make Capital
Expenditures; and
(iii) the Company and its Subsidiaries may make Investments
expressly permitted by Section 8.08 hereof.
(c) The Company will not convey, sell, transfer or otherwise
dispose of, directly or indirectly (each a "Disposition"), any shares of
capital stock of National Bancard Corporation ("Nabanco") or Telecheck
International, Inc. ("Telecheck"), nor will the Company permit either of
Nabanco or Telecheck to make any Disposition, in one or a series of
transactions, of all or any substantial part of its assets or business. In
addition, the Company will not make a Disposition of any shares of capital
stock of any other Subsidiary of the Company that results in such Subsidiary
ceasing to be a Subsidiary of the Company if, after giving effect to such
Disposition and the provisions of paragraph (ii) of the proviso
Credit Agreement
<PAGE> 68
- 64 -
to the definition of the term "Cash Flow" and assuming that the net cash
proceeds of such Disposition had been used to prepay Debt on the last day of
the Computation Period ending on or immediately prior to the date of such
Disposition, the Company would have been in default of the provisions of
Section 8.10 hereof as of the last day of the Computation Period ending on or
immediately prior to the date of such Disposition.
(d) The Company will not, and will not permit any of its
Subsidiaries to, lease any of its assets (as lessor) except: (i) in accordance
with Section 8.05(a)(ii) hereof; or (ii) leases of assets in the ordinary
course of business.
8.06 Limitation on Liens, Etc.
(a) The Company will not, and will not permit any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired,
except:
(i) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or which are being contested in
good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Company or any of
its Subsidiaries, as the case may be, in accordance with GAAP;
(ii) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or
which are being contested in good faith by appropriate proceedings;
(iii) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(iv) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business (including, without limitation, performance obligations under
merchant credit card contracts);
(v) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of property or minor imperfections in title
thereto which, in the
Credit Agreement
<PAGE> 69
- 65 -
aggregate, are not material in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Company or
any of its Subsidiaries;
(vi) Liens on assets of corporations which become (or are
consolidated with or merged into) Subsidiaries of the Company after
the date of this Agreement, provided that such Liens are in existence
at the time the respective corporations become (or are consolidated
with or merged into) Subsidiaries of the Company and were not created
in anticipation thereof;
(vii) Liens upon real and/or tangible personal property acquired
after the Restatement Date (by purchase, construction or otherwise) by
the Company or any of its Subsidiaries, each of which Liens either (A)
existed on such property before the time of its acquisition and was
not created in anticipation thereof or (B) was created solely for the
purpose of securing Indebtedness incurred to finance, refinance or
refund the cost (including the cost of construction) of the respective
property; provided that (x) no such Lien shall extend to or cover any
property of the Company or such Subsidiary other than the respective
property so acquired and improvements thereon and (y) the principal
amount of Indebtedness secured by any such Lien shall at no time
exceed the fair market value (determined in good faith by the Company
in accordance with accepted market practice) of the respective
property at the time it was acquired (by purchase, construction or
otherwise);
(viii) Liens in existence (or granted pursuant to an agreement in
existence) on the Restatement Date and described in Schedule V hereto;
(ix) Liens arising out of or resulting from any judgment or
award, the time for the appeal or petition for rehearing of which
shall not have expired, or in respect of which the Company and its
Subsidiaries are fully covered by insurance (where the insurer has
admitted liability in respect of such judgment) or in respect of which
the Company or any affected Subsidiary shall at any time in good faith
be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review
shall have been secured, and as to which the Company or such
Subsidiary has established appropriate reserves or security;
(x) Liens created after the date hereof covering the land,
buildings and improvements located at 2610 Decker
Credit Agreement
<PAGE> 70
- 66 -
Lake, Salt Lake City, Utah and securing Indebtedness in an amount not
to exceed $20,000,000;
(xi) statutory or contractual bankers liens on monies held in
bank accounts;
(xii) Liens securing Indebtedness permitted by Section
8.07(l) hereof, provided that (x) such Liens are in existence at the
time the related assets were acquired and were not created in
anticipation of such acquisition and (y) such Liens cover only the
assets so acquired;
(xiii) Liens upon the assets of FFB of the type described in
the definition of "Permitted FFB Investments" in Section 1.01 hereof,
which Liens secure Indebtedness permitted by Section 8.07(o) hereof;
and
(xiv) any extension, renewal or replacement of the foregoing;
provided that the Liens permitted by this paragraph shall not be
spread to cover any additional Indebtedness or property (other than a
substitution of like property).
(b) The Company will not, and will not permit any of its
Subsidiaries to, enter into any transaction, or become party to any agreement
or instrument, that would prohibit (i) the making by any Subsidiary of the
Company of any dividend payment or distribution to the Company or any other
Subsidiary of the Company or (ii) the granting of a Lien upon any of its
property, assets or revenues (other than (A) leases or leasehold estates, (B)
licenses or license estates, where the Company or one of its Subsidiaries is
lessee or licensee, as the case may be or (C) prohibitions on the granting of
Liens agreed to in connection with the granting of Liens permitted by clauses
(vi), (vii) and (xii) of Section 8.06(a) hereof on the property subject to such
Liens), whether now owned or hereafter acquired, in favor of the Agent for the
benefit of the Agent and the Banks as collateral security for the obligations
of the Company hereunder and under the other Basic Documents.
8.07 Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
(a) Indebtedness to the Banks hereunder;
(b) Indebtedness outstanding on the Restatement Date and, if
required pursuant to Section 7.11 hereof, listed in Schedule I hereto;
Credit Agreement
<PAGE> 71
- 67 -
(c) Qualified Subordinated Indebtedness;
(d) Capital Lease Obligations;
(e) Indebtedness of newly-acquired Subsidiaries outstanding
at the time of the acquisition thereof (but not incurred in
contemplation of the acquisition thereof);
(f) unsecured Indebtedness of the Company under lines of
credit which (i) are maintained by the Company in an aggregate
principal amount outstanding (including amounts outstanding on the
Restatement Date) not exceeding $100,000,000 and (ii) contain terms
that are no more restrictive than the terms contained in this
Agreement;
(g) letters of credit supporting obligations of the type
described in Section 8.06(a)(iii) or 8.06(a)(iv) hereof;
(h) letters of credit in addition to letters of credit
contemplated by clause (g) above opened in the ordinary course of
business in an aggregate undrawn amount (including the undrawn amount
of such letters of credit outstanding on the date hereof) not to
exceed $50,000,000 at any one time outstanding;
(i) Indebtedness of the Company and its Subsidiaries (other
than FFB) arising as a consequence of Investments permitted by
Sections 8.08(b) and 8.08(g) hereof;
(j) Indebtedness of the type described in clause (b) of the
definition of "Indebtedness" in Section 1.01 hereof arising as a
consequence of an acquisition (including, without limitation, an
Acquisition) consisting of consideration payable to the related seller
or sellers that is required to be accrued as a liability on the
balance sheet of the Company and its Subsidiaries in accordance with
GAAP on the date of such acquisition;
(k) Indebtedness of the type described in clause (b) of the
definition of "Indebtedness" in Section 1.01 hereof arising as a
consequence of an acquisition (including, without limitation, an
Acquisition) consisting of additional contingent consideration to the
related seller or sellers that is required to be accrued as a
liability on the balance sheet of the Company and its Subsidiaries in
accordance with GAAP subsequent to the date of such acquisition;
(l) Indebtedness of the Company or a Subsidiary of the
Company assumed in connection with an Acquisition of the
Credit Agreement
<PAGE> 72
- 68 -
type described in clause (i) of the definition thereof, provided that
such Indebtedness was not created in anticipation of such Acquisition;
(m) Indebtedness for which the Company or one of its
Subsidiaries becomes liable as a result of a transaction permitted by
Section 8.05(a)(i) hereof;
(n) Indebtedness in addition to those contemplated by clauses
(a) through (m) above (other than Capital Lease Obligations) secured
by Liens permitted by Section 8.06(a)(vii) hereof up to but not
exceeding $50,000,000 at any one time outstanding;
(o) Indebtedness of FFB (i) that are of the type described in
clause (a) of the definition of "Indebtedness" in Section 1.01 hereof
and secured by Liens permitted by Section 8.06(a)(xiii) hereof,
provided that FFB shall use the proceeds of such Indebtedness to fund
VISA and Mastercard settlements, (ii) that are short-term advances
made by the Company to fund VISA and Mastercard settlements, which
short-term advances are repaid within five (5) Business Days, and
(iii) arising as a consequence of Investments permitted by Section
8.08(h) hereof; and
(p) additional Indebtedness constituting Specified Company
Indebtedness so long as, both immediately before and immediately after
the creation or incurrence of such Indebtedness, no Default shall have
occurred and be continuing hereunder;
provided that anything in this Section 8.07 to the contrary notwithstanding,
the aggregate unpaid principal amount of the Indebtedness of the Subsidiaries
of the Company (not including Indebtedness of FFB under this Agreement) shall
not exceed 20% of Net Worth at any one time outstanding.
8.08 Investments. The Company will not, and will not permit
any of its Subsidiaries to, make or permit to remain outstanding any
Investments except:
(a) operating deposit accounts with bank, thrift institutions
or trust companies;
(b) Permitted Investments;
(c) Investments in the capital stock of Subsidiaries of the
Company on the date of this Agreement or subsequently acquired in
accordance with clause (d) below or formed in accordance with clause
(e) below;
Credit Agreement
<PAGE> 73
- 69 -
(d) Investments consisting of the acquisition of the capital
stock of any Person; provided that (i) if such acquisition is an
Acquisition, after giving effect to such acquisition, such Person is a
Subsidiary of the Company; (ii) no Default shall have occurred and be
continuing or would result therefrom; and (iii) if such acquisition is
not an Acquisition, the aggregate purchase price of all such
Investments held from time to time by the Company, together with
Investments described in clause (f)(iii) below, is less than 25% of
Total Assets;
(e) Investments in newly-formed Wholly-Owned Subsidiaries;
provided that no Default shall have occurred and be continuing or
would result therefrom;
(f) Investments consisting of acquisitions of the type
referred to in clause (i) or (iii) of the definition of "Acquisition"
in Section 1.01 hereof from or in any Person; provided that (i) after
giving effect to such acquisition, the Company or any of its
Subsidiaries shall own the assets or interests so acquired; (ii) no
Default shall have occurred and be continuing or would result
therefrom; and (iii) in connection with the acquisition of any
ownership interest in any partnership or joint venture, such
partnership or joint venture will not engage in any transaction in
which the Company or any of its Subsidiaries would not be permitted to
engage hereunder and the aggregate purchase price of such ownership
interest, together with Investments described in clause (d)(iii)
above, is less than 25% of Total Assets;
(g) Investments by (i) the Company or any of its Subsidiaries
(other than FFB) consisting of advances to, or Guarantees of, or other
contingent obligations with respect to, Indebtedness or other
liabilities of (other than FFB), in the case of the Company, any of
its Subsidiaries (other than FFB), and in the case of any Subsidiary
of the Company, the Company or any other Subsidiary of the Company
(other than FFB) and (ii) the Company or any of its Subsidiaries
(other than FFB) consisting of Guaranties of, or other contingent
obligations with respect to, Indebtedness or other liabilities of a
Person incurred or assumed by the Company or such Subsidiary (as the
case may be) in connection with an Acquisition of the type described
in clause (i) of the definition thereof, provided that such
Indebtedness or other liability was not created in contemplation of
the Acquisition;
Credit Agreement
<PAGE> 74
- 70 -
(h) in the case of the FFB, Permitted FFB Investments and
Investments in receivables from VISA and Mastercard associations;
(i) Investments outstanding on the Restatement Date and
identified in Schedule III hereto and Investments constituting Liens
permitted by Section 8.06(a)(iv) hereof;
(j) Investments resulting from transactions expressly
permitted by Section 8.05(a) hereof;
(k) Investments by the Company or any of its Subsidiaries
consisting of Guaranties of, or other contingent obligations with
respect to, obligations and other liabilities pertaining to merchant
credit card transactions;
(l) Investments resulting from the acquisition by the Company
of shares of its outstanding common stock; provided that no Default
shall have occurred and be continuing or would result therefrom;
(m) Investments by the Company under Interest Rate Protection
Agreements; and
(n) (i) Investments by the Company in FFB in an aggregate
amount not to exceed 15% of Net Worth and (ii) short-term advances
made by the Company to FFB to fund VISA and Mastercard settlements,
which short-term advances shall be repaid within five (5) Business
Days.
8.09 Net Worth. The Company will not permit Net Worth on any
date occurring on or after the Restatement Date to be less than $1,100,000,000.
8.10 Debt to Cash Flow Ratio. The Company will not permit
the Debt to Cash Flow Ratio on any date occurring on or after the date of this
Agreement to be greater than 3.75 to 1.
8.11 Interest Coverage Ratio. The Company will not permit
the Interest Coverage Ratio for any Computation Period ending on or after March
31, 1992 to be less than or equal to 3.00 to 1.
8.12 [Intentionally omitted.]
8.13 [Intentionally omitted.]
8.14 Transactions with Affiliates. Except as expressly
permitted by this Agreement, the Company will not, nor
Credit Agreement
<PAGE> 75
- 71 -
will it permit any of its Subsidiaries to, directly or indirectly:
(a) make any Investment in any Affiliate of the Company or
any of its Subsidiaries;
(b) transfer, sell, lease, assign or otherwise dispose of any
assets to any such Affiliate;
(c) merge into or consolidate with or purchase or acquire
assets from any such Affiliate; or
(d) enter into any other transaction directly or indirectly
with or for the benefit of any such Affiliate (including, without
limitation, Guarantees and assumptions of obligations of any such
Affiliate);
provided that (x) any Affiliate who is an individual may serve as a director,
officer or employee of the Company or its Subsidiaries and receive reasonable
compensation for his or her services in such capacity and (y) the Company and
its Subsidiaries may enter into transactions (other than Investments by the
Company or any of its Subsidiaries in any such Affiliate) providing for the
leasing of property, the rendering or receipt of services or the purchase or
sale of inventory and other assets in the ordinary course of business if the
monetary or business consideration arising therefrom would be substantially as
advantageous to the Company and its Subsidiaries as the monetary or business
consideration which would obtain in a comparable transaction with a Person not
an Affiliate of the Company or any of its Subsidiaries.
8.15 Use of Proceeds. The Company will use the proceeds of
the Loans hereunder for its general corporate purposes (in compliance with all
applicable legal and regulatory requirements, including, without limitation,
Regulations U and X and the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the regulations thereunder);
provided that, without the consent of each Bank, the Company may not use the
proceeds of any of the Loans hereunder to finance or refinance, directly or
indirectly, an Acquisition of any Person (or the acquisition of (i) more than
50% of the publicly traded stock (of any class) of any Person or (ii) any of
the publicly traded stock (of any class) of any Person after the Company or any
of its Subsidiaries shall have been required to file a Schedule 13D under the
Securities Exchange Act of 1934, as amended, with respect to such stock) unless
such Acquisition (or acquisition) has been approved by the board of directors
of such Person or officers thereof duly authorized to do so (provided that,
with respect to any Bank that does not so consent, the
Credit Agreement
<PAGE> 76
- 72 -
Company may exercise any of the options specified in Section 5.01(e) hereof as
though such Bank were an Affected Bank); and provided that neither the Agent
nor any Bank shall have any responsibility as to the use of any of such
proceeds. FFB will use the proceeds of the Swingline Loans hereunder solely to
fund VISA and Mastercard settlements.
8.16 Modifications of Certain Documents. The Company will
not consent to any modification, supplement or waiver of any of the provisions
of any of the agreements or instruments evidencing or relating to any Qualified
Subordinated Indebtedness without the prior consent of the Agent (with the
approval of the Majority Banks).
8.17 Lines of Business. The Company and its Subsidiaries
will not, to any significant extent, engage in any business other than Company
Business.
Section 9. Events of Default. If one or more of the
following events (herein called "Events of Default") shall occur and be
continuing:
(a) Any Borrower shall default in the payment when due of any
principal of any Loan; or any Borrower shall default in the payment
when due of interest on any Loan and such default shall continue
unremedied for two Business Days; orany Borrower shall default in the
payment when due of any other amount payable by it hereunder and such
default shall continue unremedied for five (5) Business Days; or
(b) The Company or any of its Subsidiaries shall default in
the payment when due of any principal of or interest on any of its
other Indebtedness in the aggregate principal or face amount of
$15,000,000 or more; or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such
Indebtedness (other than Indebtedness which by its terms is payable on
demand in any event) shall occur if the effect of such event is to
cause or (with the giving of any notice or the lapse of time or both)
to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, such Indebtedness
to become due, or to be prepaid in full (whether by redemption,
purchase or otherwise), prior to its stated maturity; provided that in
the event that the Indebtedness involved is purchase money
Indebtedness or a Capital Lease Obligation, the nonpayment or other
event shall not constitute an Event of Default so long as the Company
or such Subsidiary is disputing in good faith its obligation to so pay
or perform; or
Credit Agreement
<PAGE> 77
- 73 -
(c) Any representation, warranty or certification made or
deemed made herein (or in any modification or supplement hereto) by
the Company or in any of the other Basic Documents (or in any
modification or supplement, thereto) by any Obligor, or any
certificate furnished to any Bank or the Agent pursuant to the
provisions hereof or thereof (other than a representation, warranty or
certification relating solely to a Subsidiary of the Company other
than a Material Subsidiary (as determined solely by reference to
clauses (ii) and (iii) of the definition thereof)), shall prove to
have been false or misleading as of the time made or furnished in any
material respect; or any representation, warranty or certification
relating solely to a Subsidiary of the Company other than a Material
Subsidiary (as determined solely by reference to clauses (ii) and
(iii) of the definition thereof) made or deemed made herein (or in any
modification or supplement hereto) by the Company or in any of the
other Basic Documents (or in any modification or supplement thereto)
by any Obligor, or any certificate furnished to any Bank or the Agent
pursuant to the provisions hereof or thereof relating to the same,
shall prove to have been false or misleading as of the time made or
furnished in any material respect and as a result thereof (or as a
result of the matter of the false or misleading representation,
warranty or certification) there shall have occurred a Material
Adverse Effect;
(d) Any Borrower shall default in the performance of any of
its obligations under Section 8.01(h) and 8.05 through 8.16
(inclusive) hereof; or any Borrower shall default in the performance
of any of its other obligations in this Agreement or any other Basic
Document and such default shall continue unremedied for a period of 10
Business Days after notice thereof to the Company by the Agent or any
Bank (through the Agent); or
(e) [Intentionally omitted]
(f) The Company or any of its Subsidiaries shall admit in
writing its failure or inability to, or fail or be unable generally
to, pay its debts as such debts become due; or
(g) The Company or any of its Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under
the Bankruptcy Code, (iv) file a petition seeking to take advantage of
any other law relating to bankruptcy,
Credit Agreement
<PAGE> 78
- 74 -
insolvency, reorganization, winding-up, or composition or readjustment
of debts, (v) fail to controvert in a timely and appropriate manner,
or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(h) A proceeding or case shall be commenced, without the
application or consent of the Company or any of its Subsidiaries, in
any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Company or such
Subsidiary or of all or any substantial part of its assets or (iii)
similar relief in respect of the Company or such Subsidiary under any
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed
and in effect, for a period of 60 or more days; or an order for relief
against the Company or such Subsidiary shall be entered in an
involuntary case under the Bankruptcy Code; or
(i) A final judgment or judgments for the payment of money in
excess of $10,000,000 in the aggregate (exclusive of the portion of
judgment amounts fully covered by insurance where the insurer has
admitted liability in respect of such judgment) shall be rendered by a
court or courts against the Company and/or any of its Subsidiaries and
the same shall not be discharged (or provision shall not be made for
such discharge), or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof and the Company or the
relevant Subsidiary shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(j) An event or condition specified in Section 8.01(g) hereof
shall occur or exist with respect to any Plan or Multiemployer Plan
and, as a result of such event or condition, together with all other
such events or conditions, the Company or any ERISA Affiliate shall
incur or shall be reasonably likely to incur a liability to a Plan, a
Multiemployer Plan or PBGC (or any combination of the foregoing) which
is material in relation to the
Credit Agreement
<PAGE> 79
- 75 -
consolidated financial condition, operations or business, taken as a
whole, of the Company and its Subsidiaries; or
(k) The Company Guarantee shall for any reason cease to be in
full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested by the Company,
or the Company shall deny or disaffirm its obligations under the
Company Guarantee;
THEREUPON: (i) in the case of an Event of Default other than one referred to
in clause (g) or (h) of this Section 9 with respect to the Company, the Agent,
upon request of the Majority Banks shall, by notice to the Company, terminate
the Commitments and/or the Swingline Bank may, by notice to the Company,
terminate the obligation of the Swingline Bank to make Committed Swingline
Loans, and/or the Agent, upon the request of the Majority Banks, shall, by
notice to the Company declare the principal amount then outstanding of, and the
accrued interest on, the Loans and all other amounts payable by the Borrowers
hereunder and under the Notes (including, without limitation, any amounts
payable under Section 5.05 hereof) to be forthwith due and payable whereupon
such amounts shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Borrowers; and (ii) in the case of the occurrence of an Event of
Default referred to in clause (g) or (h) of this Section 9 with respect to the
Company, the Commitments and the obligation of the Swingline Bank to make
Committed Swingline Loans shall automatically be terminated and, if applicable,
the principal amount then outstanding of, and the accrued interest on, the
Loans and all other amounts payable by the Company hereunder and under the
Notes (including, without limitation, any amounts payable under Section 5.05
hereof) shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company.
Section 10. The Agent.
10.01 Appointment, Powers and Immunities. Each Bank and the
Swingline Bank hereby irrevocably appoint and authorize the Agent to act as its
agent hereunder and under the other Basic Documents with such powers as are
specifically delegated to the Agent by the terms of this Agreement and of the
other Basic Documents, together with such other powers as are reasonably
incidental thereto. The Agent (which term as used in this sentence and in
Section 10.05 and the first sentence of Section 10.06 hereof shall include
reference to its affiliates and its own and its affiliates' officers,
directors, employees and agents): (a) shall have no duties or responsibilities
except
Credit Agreement
<PAGE> 80
- 76 -
those expressly set forth) in this Agreement and in the other Basic Documents,
and shall not by reason of this Agreement or any other Basic Document be a
trustee for any Bank or the Swingline Bank; (b) shall not be responsible to the
Banks or the Swingline Bank for any recitals, statements, representations or
warranties contained in recitals or in any other Basic Document, or in any
certificate or other document referred to or provided for in, or received by
any of them under, this Agreement or any other Basic Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Basic Document or any other document referred to or
provided for herein or therein or for any failure by the Company or any other
Person to perform any of its obligations hereunder or thereunder; (c) shall not
be required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Basic Document, except for enforcement of the
Company Guarantee at the request of the Majority Banks; and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or
under any other Basic Document or under any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct. The
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it in good faith. The Agent may deem and treat the payee of any Note as the
holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Agent, together
with the consent of the Company to such assignment or transfer and the Agent
shall have consented to such assignment or transfer.
10.02 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone) believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Agent. As to any matters not expressly provided for by this Agreement
or any other Basic Document, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and thereunder in accordance
with instructions signed by the Majority Banks, and such instructions of the
Majority Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks and the Swingline Bank.
10.03 Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default unless the Agent has
received notice from a Bank, the Swingline Bank or any Borrower specifying such
Default and stating that such notice is
Credit Agreement
<PAGE> 81
- 77 -
a "Notice of Default". In the event that the Agent receives such a notice of
the occurrence of a Default, the Agent shall give prompt notice thereof to the
Banks and the Swingline Bank. The Agent shall (subject to Sections 10.01 and
10.07 hereof) take such action with respect to such Default as shall be
directed by the Majority Banks, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interest of the Banks and the
Swingline Bank.
10.04 Rights as a Bank. With respect to its Commitments and
the Loans made by it, Chase (and any successor acting as Agent) in its capacity
as a Bank (including, for these purposes, the Swingline Bank) hereunder shall
have the same rights and powers hereunder as any other Bank and may exercise
the same as though it were not acting as the Agent, and the term "Bank" or
"Banks" or "Swingline Bank" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. Chase (and any successor acting
as Agent) and its affiliates may (without having to account therefor to any
Bank) accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with the Company (and any of their affiliates)
as if it were not acting as the Agent, and Chase and its affiliates may accept
fees and other consideration from, the Company for services in connection with
this Agreement or otherwise without having to account for the same to the
Banks.
10.05 Indemnification. The Banks agree to indemnify the
Agent (to the extent not reimbursed under Section 11.03 hereof, but without
limiting the obligations of the Company under said Section 11.03) ratably in
accordance with the Commitments of the Banks (or, if the Commitments have been
terminated), ratably in accordance with the aggregate principal amount of the
Loans made by the Banks for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other Basic Document or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby
(including, without limitation, the costs and expenses which the Company is
obligated to pay under Section 11.03 hereof, but excluding, unless a Default
has occurred and is continuing, normal administrative costs and expenses
incident to the performance of its agency duties hereunder and excluding all
out-of-pocket expenses and costs of the Agent referred to in Section
11.03(a)(i) except to the extent that the Company is obligated to reimburse the
Agent for such expenses and costs) or
Credit Agreement
<PAGE> 82
- 78 -
the enforcement of any of the terms hereof or thereof or of any such other
documents, provided that no Bank shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
10.06 Non-Reliance on Agent and other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and its Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any of the other Basic Documents. The Agent shall not be required to keep
itself informed as to the performance or observance by the Company of this
Agreement or any of the other Basic Documents or any other document referred to
or provided for herein or therein or to inspect the properties or books of the
Company or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Company or any of its Subsidiaries (or
any of their affiliates) which may come into the possession of the Agent or any
of its affiliates.
10.07 Failure to Act. Except for action expressly required
of the Agent hereunder and under the other Basic Documents, the Agent shall in
all cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction from
the Banks of their indemnification obligations under Section 10.05 hereof
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.
10.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Banks and the Company,
and the Agent may be removed at any time with or without cause by the Majority
Banks. Upon any such resignation or removal, the Majority Banks shall have the
right to appoint a successor Agent which shall be a Bank or, with the prior
consent of the Company (which consent shall not be unreasonably withheld), any
other bank. If no successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within 30 days after the
retiring
Credit Agreement
<PAGE> 83
- 79 -
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks and the
Swingline Bank, appoint a successor Agent, which shall be a Bank or, with the
prior consent of the Company (which consent shall not be unreasonably withheld)
any other bank which has an office in New York, New York with a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 10 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent.
10.09 Consents Under Basic Documents. Without the prior
consent of the Majority Banks, the Agent will not consent to any modification,
supplement or waiver under the Company Guarantee, provided that without the
prior consent of each Bank and the Swingline Bank, the Agent will not release
the Company from any of its obligations under the Company Guarantee.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Agent, any Bank
or the Swingline Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement or
any Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement or any Note
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
of any remedies provided by law.
11.02 Notices. All notices and other communications provided
for herein (including, without limitation, any modifications of, or waivers,
consents, requests or instructions under, this Agreement) shall be given or
made by telecopy or in writing and telecopied, mailed or delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any party, at such other address as shall be
designated by such party in a notice to each other party; provided that
telephonic notices (promptly confirmed by a method of communication hereinabove
set forth) may be given to the intended recipient at the "Address for Notices"
(or other address) hereinabove referred to. Except as otherwise provided in
this Agreement, all such communications shall be deemed to have been duly given
when transmitted by telecopier, personally
Credit Agreement
<PAGE> 84
- 80 -
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
11.03 Expenses, Etc. The Company agrees to pay or reimburse
the Banks (including, for these purposes, the Swingline Bank) and the Agent for
paying: (a) all reasonable out-of-pocket costs and expenses of the Agent
(including, without limitation, the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to the Banks), in connection
with (i) the negotiation, preparation, execution and delivery of this Agreement
and the other Basic Documents and the making of the Loans hereunder and (ii)
any amendment, modification or waiver of any of the terms of this Agreement or
any of the other Basic Documents; (b) all reasonable costs and expenses of the
Agent and the Banks (including reasonable counsels' fees actually incurred) in
connection with any Default and any enforcement or collection proceedings
resulting therefrom; and (c) all transfer, stamp, documentary or other similar
taxes, assessments or charges levied by any governmental or revenue authority
in respect of this Agreement or any of the other Basic Documents or any other
document referred to herein or therein.
The Company hereby agrees to indemnify the Agent and each Bank
(including, for these purposes, the Swingline Bank) and their respective
directors, officers, employees and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or expenses incurred
by any of them arising out of or by reason of any investigation or litigation
or other proceedings (including any threatened investigation or litigation or
other proceedings) relating to any actual or proposed use by the Company or any
of its Subsidiaries of the proceeds of any of the Loans, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
11.04 Amendments, Etc. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Company, the Agent and
the Majority Banks, or by the Company and the Agent acting with the consent of
the Majority Banks, and any provision of this Agreement may be waived by the
Majority Banks or by the Agent acting with the consent of the Majority Banks;
provided that (a) no amendment, modification or waiver shall, unless by an
instrument signed by all of the Banks or by the Agent acting with the consent
of all of the Banks: (i) increase the amount or extend the term, or extend the
time or waive any requirement for the reduction or termination, of the
Credit Agreement
<PAGE> 85
- 81 -
Commitments, (ii) extend any date fixed for the payment of principal of or
interest on any Loan or any commitment fee or facility fee payable hereunder,
(iii) reduce the amount of any payment of principal thereof or the rate at
which interest is payable thereon or any fee is payable hereunder, (iv) alter
the terms of Section 2.03(a)(2) hereof or this Section 11.04, (v) amend the
definition of the term "Majority Banks", or modify in any other manner the
number or percentage of the Banks required to make any determinations or waive
any rights hereunder or to modify any provision hereof, and (vi) except as
contemplated by Section 10.09 hereof, release any guarantor from any of its
obligations under any Subsidiary Guarantee; (b) any modification or supplement
of any provision hereof relating to the rights or obligations of the Swingline
Bank shall require the consent of the Swingline Bank; and (c) any amendment
that affects the rights or obligations of the Agent hereunder shall require the
consent of the Agent.
11.05 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
11.06 Assignments and Participations.
(a) A Borrower may not assign any of its rights or
obligations hereunder or under the Notes without the prior consent of all of
the Banks, the Swingline Bank and the Agent.
(b) Any Bank may assign any of its Loans, its Notes or its
Commitment with the prior consent (which consent shall not be unreasonably
withheld) of the Company and the Agent; provided that (i) without the consent
of the Company or the Agent, any Bank may assign to another Bank all or
(subject to the clauses (iii) and (iv) below) any portion of its Commitment,
Notes or Loans; (ii) no such assignment shall be made to any Person that is not
a Bank until 10 Business Days after the assigning Bank shall have transmitted
to each other Bank notice of its proposal to effect such assignment (which
notice shall specify the amount of the Commitment and Loans proposed to be
assigned); (iii) the amount of any such partial assignment of its Commitment
shall be in a minimum amount of $15,000,000 (or, in the case of an assignment
to another Bank, $5,000,000); and (iv) each such assignment by a Bank of its
Commitment, its Note evidencing Syndicated Loans and its Syndicated Loans shall
be made in such manner so that the same portion of its Commitment, such Note
and its Syndicated Loans is assigned to the respective assignee. Upon notice
to the Company and the Agent of an assignment by any Bank to any other Bank
permitted by the preceding sentence (which notice shall identify the assignee
Bank and the amount of the assigning Bank's Commitment or Loans assigned in
detail
Credit Agreement
<PAGE> 86
- 82 -
reasonably satisfactory to the Agent) and upon the effectiveness of any
assignment consented to by the Company and the Agent, the assignee shall have,
to the extent of such assignment (unless otherwise provided such assignment
with the consent of the Company and the Agent), the obligations, rights and
benefits of a Bank hereunder holding the Commitment (or portion thereof) as the
case may be, assigned to it (in addition to the Commitment or Loans, as the
case may be, theretofore held by such assignee) and in the event that an
assignment of a Bank's Commitment (or portions thereof) is made, the assigning
Bank shall, to the extent of such assignment, be released from the Commitment
(or portions thereof) so assigned. Upon each such assignment, the assigning
Bank shall pay the Agent an assignment fee of $2,500.
(c) A Bank may sell or agree to sell to one or more other
Persons a participation in all or any part of its Commitment, Syndicated Loans
or its Money Market Loans held by it or the Syndicated Loans or its Money
Market Loans made or to be made by it, in which event each such participant
shall not, except (in the case of a participant that is a Bank) to the extent
provided by Section 4.07(c) hereof, have any rights or benefits under this
Agreement or any Note (the participant's rights against such Bank in respect of
such participation to be those set forth in the agreement (the "Participation
Agreement") executed by such Bank in favor of the participant). All amounts
payable by the Company to any Bank under Section 5 hereof shall be determined
as if such Bank had not sold or agreed to sell any participations in such Loan
and as if such Bank were funding all of such Loan in the same way that it is
funding the portion of such Loan in which no participations have been sold. In
no event shall a Bank that sells a participation be obligated to the
participant under the Participation Agreement to take or refrain from taking
any action hereunder or under such Bank's Note except that such Bank may agree
in the Participation Agreement that it will not, without the consent of the
participant, agree to (i) the increase in the amount or extension of the term,
or the extension of the time or waiver of any requirement for the reduction or
termination, of such Bank's Commitment, (ii) the extension of any date fixed
for the payment of principal of or interest on the related Loan or any portion
of any fees payable to the participant, (iii) the reduction of any payment of
principal thereof, (iv) the reduction of the rate at which either interest is
payable thereon or (if the participant is entitled to any part thereof)
facility fee is payable hereunder to a level below the rate at which the
participant is entitled to receive interest or facility fee (as the case may
be) in respect of such participation, or (v) except as contemplated by Section
10.09 hereof, release the Company from any of its obligations under the Company
Guarantee.
Credit Agreement
<PAGE> 87
- 83 -
(d) A Bank may furnish any information concerning the Company
or any of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 11.12 hereof.
(e) In addition to the assignments and participations
permitted by the foregoing provisions of this Section 11.06, any Bank may
assign and pledge all or any portion of its Loans and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment shall release
the assigning Bank from its obligations hereunder. The provisions of this
Section 11.06(e) shall apply mutatis mutandis to the Swingline Loans made by
the Swingline Bank to FFB.
(f) Anything in this Section 11.06 to the contrary
notwithstanding, the Company shall not, and shall not permit any of its
Subsidiaries or Affiliates to, acquire (by assignment, participation or
otherwise), and no Bank may assign or participate to the Company or any of its
Subsidiaries or Affiliates, any interest in any Commitment or Loan.
(g) The Swingline Bank may not (except as provided in
Sections 2.02(b) and 11.06(e) hereof) assign or sell participations in all or
any part of its Swingline Loans or the Swingline Note; provided that, with the
prior consent of the Agent and the Company, which consent shall not be
unreasonably withheld or delayed, the Swingline Bank may assign to another Bank
all of its obligations, rights and benefits in respect of the Swingline Loans
and the Swingline Note. Upon the effectiveness of any such assignment, the
assignee shall have the obligations, rights and benefits of the Swingline Bank
hereunder holding the Swingline Loans and Swingline Note assigned to it.
11.07 Survival. The obligations of the Company under
Sections 5.01, 5.05 and 11.03 hereof, and the obligations of the Banks under
Section 10.05 hereof, shall survive the repayment of the Loans and the
termination of the Commitments.
11.08 Captions. The table of contents and captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
11.09 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Credit Agreement
<PAGE> 88
- 84 -
11.10 Governing Law; Submission to Jurisdiction; Etc. This
Agreement and the Notes shall be governed by, and construed in accordance with,
the law of the State of New York. The Borrowers hereby submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York County
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Borrower irrevocably
waives, to the fullest extent permitted by applicable law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum.
11.11 Waiver of Jury Trial. EACH OF THE BORROWERS, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
11.12 Confidentiality. Each Bank and the Agent agrees (on
behalf of itself and each of its directors, officers and employees) to use (and
to cause its affiliates and representatives to use) reasonable precautions to
keep confidential, in accordance with customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, any non-public information supplied to it by each Borrower
pursuant to this Agreement which is identified by the Company as being
confidential at the time the same is delivered to the Banks or the Agent,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any of the Banks or the Agent, (iii) to bank examiners and
regulators, auditors, accountants or other professional advisors, (iv) to the
Agent or any other Bank, (v) in connection with any litigation to which any one
or more of the Banks is a party or (vi) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant
(or prospective assignee or participant) first executes and delivers to the
respective Bank and each Borrower a Confidentiality Agreement in substantially
the form of Exhibit F hereto; and provided finally that in no event shall any
Bank or the Agent be obligated or required to return any materials furnished by
each Borrower. The obligations of each Bank under this Section 11.12 shall
supplement (and shall not supersede and replace) the obligations of such Bank
under the confidentiality letter in respect of this financing (x) initially
signed and delivered by such Bank to the Company prior to the date hereof or
(y) signed
Credit Agreement
<PAGE> 89
- 85 -
and delivered by any prospective assignee to the assignor Bank and the Company
on or after the date of this Agreement.
11.13 Subsidiary Guarantees. The Banks and the Agent hereby
agree that the several Subsidiary Guarantees, each dated as of June 25, 1992,
between the Agent and each of Alta Health Strategies, Inc., First Health
Services Corporation, MicroBilt Corporation, NAC Acquisition Corp., National
Bancard Corporation and Nationwide Credit, Inc., respectively, are terminated
as of the Amendment Effective Date.
Credit Agreement
<PAGE> 90
- 86 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
FIRST FINANCIAL MANAGEMENT
CORPORATION
By
------------------------------
Title: Senior Executive Vice
President, Chief
Financial Officer
Address for Notices:
-------------------
First Financial Management
Corporation
3 Corporate Square
Suite 700
Atlanta, Georgia 30329
Telecopier No.: 404-634-6352
Telephone No.: 404-321-0120
Attention: Chief Financial
Officer
FIRST FINANCIAL BANK
By
------------------------------
Title: Executive Vice
President
Address for Notices:
-------------------
First Financial Bank
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Telecopier No.: 404-636-7632
Telephone No.: 404-321-2264
Attention: General Counsel
Credit Agreement
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statement on Form S-3 (No. 33-29267) of
First Financial Management Corporation filed June 19, 1989 and the following
Registration Statements on Form S-8:
Registration Statement
------------------------------------------------------
No Filed
---------------------- ---------------------
2-84870 June 30, 1983
2-96064 February 26, 1985
33-10711 December 10, 1986
33-17834 October 9, 1987
33-18541 November 17, 1987
33-21675 May 5, 1988
33-25340 (a) December 28, 1988
33-32555 December 18, 1989
33-31915 (a) January 17, 1990
33-37532 November 5, 1990
33-40891 June 3, 1991
33-46669 March 25, 1992
33-48619 June 17, 1992
(a) Post Effective Amendment No. 1
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
this Current Report on Form 8-K.
/s/ PRICE WATERHOUSE LLP
- - ------------------------
PRICE WATERHOUSE LLP
Morristown, New Jersey
November 4, 1994
