<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1994
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-10442
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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
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NOT APPLICABLE
- - ------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Number of Shares Outstanding
Title of each class as of August 1, 1994
- - ---------------------------- ----------------------------
Common Stock, $.10 par value 62,437,859
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FIRST FINANCIAL MANAGEMENT CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION NUMBER
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<S> <C> <C>
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets at June 30, 1994
and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income for the
three and six months ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the
six months ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . 9
<CAPTION>
PART II. OTHER INFORMATION
<S> <C> <C>
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 1994 DECEMBER 31, 1993
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ASSETS (Dollars in thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 201,619 $ 186,263
Accounts receivable, net of allowance for doubtful
accounts of $4,143 (1994) and $4,043 (1993) 359,164 323,130
Prepaid expenses and other current assets 94,346 87,797
---------- ----------
Total Current Assets 655,129 597,190
Property and equipment, net 135,574 134,804
Excess of cost over fair value of assets acquired,
less accumulated amortization of $61,412 (1994)
and $52,001 (1993) 677,574 647,746
Customer contracts, less accumulated amortization
of $37,841 (1994) and $31,806 (1993) 152,107 140,124
Other assets 119,929 106,279
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$1,740,313 $1,626,143
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $311,958 $278,637
Income taxes payable 13,047 10,563
Current portion of long-term debt 5,642 6,218
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Total Current Liabilities 330,647 295,418
Long-term debt, less current portion 15,330 8,495
Deferred income taxes payable 63,882 63,347
Other liabilities 10,512 10,919
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Total Liabilities 420,371 378,179
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Commitments
Shareholders' Equity:
Common stock, $.10 par value; authorized
150,000,000 shares, issued 61,348,093
shares (1994) and 59,881,709 shares (1993) 6,135 5,988
Paid-in capital 841,960 828,699
Retained earnings 472,498 413,928
Treasury stock at cost, 20,000 shares (651) (651)
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Total Shareholders' Equity 1,319,942 1,247,964
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$1,740,313 $1,626,143
========== ==========
</TABLE>
See notes to consolidated financial statements.
3
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FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------------------
1994 1993
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(In thousands, except per share amounts)
<S> <C> <C>
REVENUES:
Service revenues $469,547 $365,925
Product sales 17,934 25,817
Other 1,215 1,655
-------- --------
488,696 393,397
-------- --------
EXPENSES:
Operating 389,714 305,994
General and administrative 7,183 5,895
Cost of products sold 11,446 14,179
Depreciation and amortization 23,022 18,854
Interest, net (1,491) 885
-------- --------
429,874 345,807
-------- --------
Income before income taxes 58,822 47,590
Income taxes 24,707 19,703
-------- --------
Net income $ 34,115 $ 27,887
======== ========
Earnings per common share $ 0.56 $ 0.46
======== ========
</TABLE>
See notes to consolidated financial statements.
4
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FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------------------
1994 1993
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(In thousands, except per share amounts)
<S> <C> <C>
Revenues:
Service revenues $883,225 $688,854
Product sales 36,752 49,836
Other 1,574 3,176
-------- --------
921,551 741,866
-------- --------
Expenses:
Operating 738,119 577,934
General and administrative 11,986 10,613
Cost of products sold 22,893 29,509
Depreciation and amortization 44,959 37,440
Interest, net (2,677) 2,220
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815,280 657,716
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Income before income taxes 106,271 84,150
Income taxes 44,635 34,799
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Net income $ 61,636 $ 49,351
======== ========
Earnings per common share $ 1.01 $ 0.81
======== ========
</TABLE>
See notes to consolidated financial statements.
5
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FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1994 1993
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(In thousands)
<S> <C> <C>
Cash and cash equivalents at January 1 $ 186,263 $ 16,823
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Cash flows from operating activities:
Net income 61,636 49,351
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization 44,959 37,440
Interest expense allocated to discontinued operations (636)
Other non-cash items 3,033 1,307
Increase (decrease) in cash, net of effects from
acquisitions and dispositions, resulting from changes in:
Accounts receivable (26,818) (55,646)
Prepaid expenses and other assets (5,884) (3,067)
Accounts payable and accrued expenses 48,144 80,100
Income tax accounts 9,236 (13,384)
--------- ---------
Net cash provided by operating activities 134,306 95,465
--------- ---------
Cash flows from financing activities:
Proceeds from exercise of stock warrants 8,069 1,333
Principal payments on long-term debt (2,027) (144,259)
Payments of other liabilities (2,998) (4,314)
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Net cash provided by (used in) financing activities 3,044 (147,240)
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Cash flows from investing activities:
Acquisitions, net of cash received (46,532) (7,882)
Payments related to businesses previously acquired (35,012) (10,296)
Proceeds, net of expenses, from sale of business 87,955
Proceeds and dividends received from discontinued
operations, net of expenses and taxes paid (3,008) 213,864
Additions to property and equipment, net (13,961) (14,104)
Software development and customer conversions (23,481) (17,698)
--------- ---------
Net cash provided by (used in) investing activities (121,994) 251,839
--------- ---------
Change in cash and cash equivalents 15,356 200,064
--------- ---------
Cash and cash equivalents at June 30 $ 201,619 $ 216,887
========= =========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The consolidated financial statements include the accounts of First
Financial Management Corporation and its wholly-owned subsidiaries
(the "Company" or "FFMC"). All material intercompany profits,
transactions, and balances have been eliminated. The Company operates
in a single business segment, providing a vertically integrated set of
data processing, storage and management products for the capture,
manipulation and distribution of information. Services include
merchant credit card authorization, processing and settlement; check
guarantee and verification; debt collection and accounts receivable
management; data imaging, micrographics and electronic data base
management; health care claims processing and integrated management
services; and the development and marketing of data communication and
information processing systems, including in-store marketing programs
and systems for supermarkets.
The financial information presented should be read in conjunction with
the Company's annual consolidated financial statements and notes
included in its Annual Report on Form 10-K for the year ended December
31, 1993. The foregoing unaudited consolidated financial statements
reflect all adjustments (all of which are of a normal recurring
nature) which are, in the opinion of management, necessary for a fair
presentation of the results of the interim periods. The results for
the interim periods are not necessarily indicative of results to be
expected for the year.
2. Cash and cash equivalents at June 30, 1994 include approximately
$106.8 million in First Financial Bank ("FFB"), of which $70 million
relates to FFB's current capital requirements.
3. On March 22, 1994, the Company entered into an employment agreement
with Patrick H. Thomas, FFMC's Chairman of the Board, President and
Chief Executive Officer, which begins coterminous with the termination
of his current employment agreement on December 31, 1994 and extends
through 1999. Two awards totalling 972,500 restricted shares of FFMC
common stock were granted to Mr. Thomas in connection with the new
employment agreement. The first of these awards, for up to 472,500
shares, is in lieu of any cash bonus. For each calendar year during
the term of the agreement up to 94,500 shares will be earned,
contingent upon Mr. Thomas' continued employment through 1999, subject
to acceleration in the event of death, disability, a "change in
control" of FFMC or certain other circumstances. The number of shares
earned for any year will be equal to 2 1/2% of the pre-tax income of
FFMC, divided by the then current market price of FFMC Common Stock.
If all of the 94,500 shares are not earned in any year or years, the
difference between the number of shares earned and 94,500 will be
forfeited. The vesting of the second of these awards, for 500,000
shares, is contingent upon FFMC's attainment of a performance goal for
1994 and continued employment through 1999, except in the event of
disability, death or involuntary termination.
The value of these awards is adjusted using closing prices of the
Company's common stock on balance sheet dates through the date of
measurement for the FFMC performance goal or the date on which the
number of shares earned in each year is determined, as appropriate.
The Company has assumed that the performance goals will be attained
and that the maximum number of shares will be earned in each calendar
year during the term of the contract. The value of these awards is
being amortized to expense on a straight-line basis from the grant
date over the restriction period.
7
<PAGE> 8
FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(UNAUDITED)
4. Publicly held stock warrants were exercised during the second quarter
of 1994, resulting in the issuance of 303,000 new shares of FFMC
common stock and cash proceeds to the Company of $8.1 million. After
such exercises, 1.3 million shares remained subject to publicly held
warrants at June 30, 1994, with these remaining warrants exercisable
at $26.67 per share during the second quarter of 1995.
5. Earnings per share amounts are computed by dividing income amounts by
the weighted average number of common and common equivalent shares
(when dilutive) outstanding during the period. Common stock
equivalents consist of shares issuable under the Company's stock
option plans and in connection with outstanding warrants. Weighted
average shares used in earnings per share computations were as follows
(amounts in thousands):
<TABLE>
<CAPTION>
1994 1993
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<S> <C> <C>
Three months ended June 30 61,341 60,611
Three months ended March 31 61,222 60,588
Six months ended June 30 61,281 60,600
</TABLE>
6. On June 30, 1994, FFMC signed a definitive agreement to acquire GENEX
Services, Inc. ("GENEX"), a company that provides workers'
compensation programs to self-insured employers, insurance companies,
third party administrators, and government agencies throughout the
United States, Puerto Rico and Canada. This business combination was
consummated on July 21, 1994, and the Company issued or reserved
1,258,000 unregistered shares of FFMC common stock as consideration
for all the outstanding shares and stock options of GENEX.
This transaction will be accounted for as a pooling of interests. The
accompanying financial statements do not reflect the combined
businesses or the additional shares issued or reserved to effect the
merger because the merger occurred subsequent to the end of the
periods presented.
Prior to the merger, GENEX was a Subchapter S Corporation and included
no federal income taxes in its financial statements since its income
was taxed at the shareholder level. The separate results of
operations of GENEX prior to combination with FFMC were as follows
(dollars in thousands):
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1994 December 31, 1993
------------------- -----------------
<S> <C> <C>
Revenues $44,946 $89,965
Net income 2,053 4,169
</TABLE>
The effect of combining the separate results of GENEX with the
Company's results will increase FFMC's earnings per common share by
$.01 per share for the six months ended June 30, 1994 and by $.02 per
share for the year ended December 31, 1993.
The Company paid $46.5 million in cash (net of cash received) and
entered into $7.0 million in notes payable in connection with other
acquisitions in 1994. These other acquisitions include a credit
claims and collection company, two merchant credit card processing
portfolios, and data imaging assets, all of which expanded the markets
for FFMC's existing information services. These other acquisitions
were accounted for as purchases, and their results have been included
in the Company's results from the effective dates of acquisition. The
results of operations of these other acquisitions are immaterial
relative to the overall results of operations of the Company.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
FFMC reported net income of $34.1 million for the second quarter ended June
30, 1994, an increase of 22% from the $27.9 million in the second quarter of
1993. Revenues were $488.7 million for the quarter, or 24% over the $393.4
million in revenues for 1993's second quarter. Earnings per share increased to
$.56 per share in the second quarter of 1994 from $.46 per share in the prior
year's second quarter.
For the six months ended June 30, 1994, the Company reported net income of
$61.6 million, a 25% increase over the $49.4 million for the comparable 1993
period. Revenues were $921.6 million compared with $741.9 million in the first
six months of 1993, an increase of 24%. Earnings per share increased to $1.01
per share for the six months ended June 30, 1994 from the $.81 per share
reported in 1993's first six months.
Record new business (signed in the latter half of 1993 and during 1994)
together with the assimilation of acquisitions contributed to the Company's 24%
revenue growth. Internal growth approximating 13% and 14% for the second
quarter and first six months of 1994, respectively, was the principal component
of the overall revenue increases compared with similar 1993 periods. Over
33,000 new customers were added during the first six months of 1994 (including
18,000 during the second quarter), the majority of which occurred in FFMC's
merchant services areas.
Total expenses also increased 24% for both the second quarter and first six
months of 1994 compared with prior year periods. Operating expenses grew at a
slower rate than service revenues for these same periods due to a continued
emphasis on expense controls, which more than offset the fact that the
strongest growth in service revenues was concentrated in an area (merchant
services) that has a margin lower than the overall Company enjoys. Product
sales declined during the second quarter and six month periods in 1994 compared
with similar periods in 1993, partially from the Company's decision to
eliminate certain ancillary product sales in its imaging business. Changes in
the composition of product sales resulted in a gross profit percentage on
product sales of 37.7% during 1994's first six months compared with 40.8% for
the first six months of 1993.
General and administrative expenses increased in the second quarter and first
six months of 1994 compared with year earlier periods, due primarily to the
amortization of stock compensation costs in 1994's second quarter from an
employment agreement entered into on March 22, 1994. Depreciation and
amortization expense increased in the 1994 periods compared with the second
quarter and six month periods in 1993, due to reinvestment in the business
through equipment purchases and software development activities associated with
the Company's revenue growth and the impact of acquisitions completed in the
preceding twelve months. As a result of proceeds from sales of businesses
during 1993's first six months and strong cash flow from operations, the
Company moved from a net interest expense position in the second quarter and
first six months of 1993 to a net interest income position in the comparable
periods in 1994.
The combination of these revenue and expense changes produced pre-tax margins
during the second quarter and first six months of 1994 that were comparable to
pre-tax margins for the prior year periods. The second quarter pre-tax margin
of 12.0% was similar to the 12.1% for the second quarter of 1993. For the
first six months of 1994 the pre-tax margin was 11.5%, up slightly from the
11.3% in 1993's first six months.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
The Company's effective tax rate for the quarter and six month period ended
June 30, 1994 was 42%, up slightly from the 41.4% effective tax rate during the
comparable 1993 periods. The increase in the effective tax rate is due
primarily to the pooling of interests accounting treatment of a 1993 merger
with a Subchapter S Corporation, which had previously recorded taxes at the
shareholder level.
FFMC's business is not seasonal, except that its revenues, earnings and margins
are favorably affected in the fourth quarter, primarily by increased merchant
credit card and check volume during the holiday season.
Capital Resources and Liquidity
Cash generated from operating activities for the six months ended June 30, 1994
totalled $134.3 million, compared with $95.5 million generated in 1993's first
six months. This increase was due to higher earnings in the 1994 period
(before non-cash expenses for depreciation and amortization) and the favorable
timing of income tax payments compared with the year earlier period.
Amounts reinvested in existing businesses, principally for property and
equipment additions, software development and customer conversions, totalled
$37.4 million in 1994's first six months compared with $31.8 million during the
first six months of 1993. The majority of this increase is due to higher 1994
spending on software development activities in FFMC's health claims processing
business. The Company anticipates that total outlays for these capital
expenditures in its existing businesses for the full year 1994 will be similar
to the total outlays incurred in the year ended December 31, 1993.
Cash from operating activities exceeded reinvestments in existing businesses by
$96.9 million in the six months ended June 30, 1994, as compared with the $63.7
million excess for the first six months of 1993. This excess cash generated in
1994's first six months was utilized primarily to fund $81.5 million in
payments related to current and prior year acquisitions.
Publicly held stock warrants were exercised during the second quarter of 1994,
resulting in the issuance of 303,000 new shares of FFMC common stock and cash
proceeds to the Company of $8.1 million. After such exercises, 1.3 million
shares remained subject to publicly held warrants at June 30, 1994, with these
remaining warrants exercisable at $26.67 per share during the second quarter of
1995.
On January 3, 1994, FFMC paid a cash dividend of $.05 per share to shareholders
of record as of December 1, 1993 (declared by the Company's Board of Directors
on October 27, 1993). On July 1, 1994, FFMC paid a cash dividend of $.05 per
share to shareholders of record as of June 1, 1994 (declared by the Company's
Board of Directors on April 27, 1994).
FFMC's cash and cash equivalents of $201.6 million at June 30, 1994, except for
cash and cash equivalents in its credit card bank (currently $106.8 million),
are available for acquisitions and general corporate purposes. The Company has
an available credit facility of $450 million; no borrowings have been made
under this facility in 1994. If suitable opportunities arise for additional
acquisitions, the Company may use cash, draw on its available credit facility,
or use common stock or other securities as payment of all or part of the
consideration for such acquisitions or FFMC may seek additional funds in the
equity or debt markets. The Company believes that its current level of cash
and future cash flows from operations are sufficient to meet the needs of its
existing businesses.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Amendments 1 and 2 to the FFMC Savings Plus
Plan, dated November 2, 1992 and April 1,
1993, respectively.
10.1 Amendment to the Registrant's 1988 Incentive
Stock Plan, dated March 22, 1994.
10.2 Agreement, Plan of Reorganization and Plan of
Merger, dated June 30, 1994, by and among
First Financial Management Corporation,
Bluebird Acquisition Corporation, Gencan
Acquisition Corporation, GENEX Services,
Inc., GENEX Services of Canada, Ltd. The
Schedules to this Agreement, Plan of
Reorganization and Plan of Merger are
identified on a list of schedules contained
at the end of the Table of Contents to such
agreement, which list is incorporated herein
by reference. All schedules were omitted for
purposes of filing but will be furnished
supplementally to the Commission upon
request.
(b) Reports on Form 8-K
The Company did not file any current report on Form 8-K during
the quarter ended June 30, 1994.
11
<PAGE> 12
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: August 12, 1994 By /s/ M. Tarlton Pittard
--------------- -------------------------------
M. Tarlton Pittard
Senior Executive Vice President
and Chief Financial Officer
Date: August 12, 1994 By /s/ Richard Macchia
--------------- --------------------------------
Richard Macchia
Executive Vice President
and Principal Accounting Officer
12
<PAGE> 13
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibits Numbered Page
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<S> <C> <C>
4.1 Amendments 1 and 2 to the FFMC Savings Plus Plan, dated November 2, 14
1992 and April 1, 1993, respectively.
10.1 Amendment to the Registrant's 1988 Incentive Stock Plan, dated March 37
22, 1994.
10.2 Agreement, Plan of Reorganization and Plan of Merger, dated June 30, 38
1994, by and among First Financial Management Corporation, Bluebird
Acquisition Corporation, Gencan Acquisition Corporation, GENEX
Services, Inc., GENEX Services of Canada, Ltd. The Schedules to this
Agreement, Plan of Reorganization and Plan of Merger are identified
on a list of schedules contained at the end of the Table of Contents
to such agreement, which list is incorporated herein by reference.
All schedules were omitted for purposes of filing but will be
furnished supplementally to the Commission upon request.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
AMENDMENT NO. 1
TO THE
FFMC SAVINGS PLUS PLAN
1991 RESTATEMENT
THIS IS AN AMENDMENT to the FFMC SAVINGS PLUS PLAN 1991
RESTATEMENT (the "Plan") made this 2nd day of November, 1992 by and between
FIRST FINANCIAL MANAGEMENT CORPORATION (the "Company") and WACHOVIA BANK OF
GEORGIA, N.A. (the "Trustee").
BACKGROUND STATEMENT
The Company and the Trustee desire to amend the Plan to comply
with certain technical changes in the law regarding qualified employee benefit
plans under the Tax Reform Act of 1986 and subsequent legislation and
regulations and to reflect certain special rules applicable to benefits
transferred from other qualified retirement plans to the Plan pursuant to
certain corporate acquisitions by the Company. Therefore, the Plan is amended
in the following respects, such amendment to be effective as of January 1, 1988
unless otherwise specified below:
1.
Paragraph 3.1(e)(ii) is amended by deleting subparagraph [E]
thereof and by substituting the following:
"[E] The term "Highly Compensated Employee" or "HCE"
shall mean any Employee who performed services for an Employer or an
Affiliate during the determination year and who during the look-back
year (i) was at any time a 5-percent owner (as defined in
<PAGE> 2
section 416(i)(1)(B)(i) of the Code) of an Employer, (ii) received compensation
from an Employer or an Affiliate in excess of $75,000 (as adjusted pursuant to
section 415(d) of the Code), (iii) received compensation from an Employer or an
Affiliate in excess of $50,000 (as adjusted pursuant to section 415(d) of the
Code) and was a member of the top-paid group for such year, or (iv) was an
officer of an Employer or an Affiliate and received compensation during such
year greater than 50 percent of the dollar limitation in effect under section
415(b)(1)(A) of the Code. The term "Highly Compensated Employee" also includes
an Employee who is both described in items (ii), (iii) or (iv) of the preceding
sentence if the term "determination year" is substituted for the term "look-
back year" and the Employee is one of the 100 employees who received the most
compensation from an Employer and all Affiliates during the determination year.
Moreover, any Employee who separated from service (or was deemed to have
separated from service) before the determination year and who was a Highly
Compensated Employee for either the separation year or any determination year
ending on or after the Employee's 55th birthday shall also be considered a
Highly Compensated Employee.
-2-
<PAGE> 3
The determination year shall be the Plan Year, and the look-back year
shall be the 12-month period immediately preceding the determination year.
If an Employee is, during a determination year or look-back year, a
Family Member of either a 5-percent owner who is a former or active Employee or
of a Highly Compensated Employee who is one of the 10 Highly Compensated
Employees paid the greatest compensation by an Employer and all Affiliates
during the year, then the compensation and plan contributions or benefits of
such Family Member shall be aggregated with the compensation and plan
contributions or benefits of the 5-percent owner or top-ten Highly Compensated
Employee, and such individuals shall be treated as a single Employee. "Family
Member" shall mean the spouse, lineal ascendants or descendants of an Employee
or former Employee and the spouses of such lineal ascendants or descendants.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the top-paid
group, the top 100 Employees in terms of compensation, the number of employees
treated as officers and the compensation that is considered will be made in
accordance with section 414(q) of the Code and the regulations thereunder."
-3-
<PAGE> 4
2.
Subparagraph 3.1(g)(ii)[C] is amended by deleting the phrase
"described in section 414(q)(6)(B) of the Code" and by substituting the phrase
"as described in subparagraph 3.1(e)(ii)[E] above" and by capitalizing the term
"Family Member" wherever it appears therein.
3.
The Plan is amended effective January 1, 1991 by moving the
last sentence of section 3.4 to the end of the existing provisions of section
3.3.
4.
Subsections 4.1(c) and (d) are amended effective January 1,
1991 by deleting the last sentence of each such subsection.
5.
Subsection 4.1(e) is amended by deleting the present provision
and by substituting the following:
"(E) FORFEITURES.
(i) If a Participant who is not fully
vested in all of his or her Accounts receives a distribution
of the vested portion of his or her Accounts in a lump sum
before the last day of the Plan Year following the Plan Year
in which his or
-4-
<PAGE> 5
her termination of employment occurs, the portion of the
Participant's Profit Sharing, Matching and Special Accounts in
which he or she is not vested shall be forfeited immediately.
An individual who is not vested in any portion of such
Accounts shall be deemed for this purpose to have received an
immediate lump sum distribution of zero. If a Participant who
receives such a lump sum distribution is reemployed by an
Employer or an Affiliate before incurring five consecutive
Break in Service Years and repays to the Trust the entire
amount previously distributed within the earlier of [i]
incurring five consecutive Break in Service Years or [ii] five
years after being reemployed, then the forfeited portion of
such Participant's Profit Sharing, Matching and Special
Accounts (unadjusted by subsequent gains or losses of the
Trust Fund) shall be restored and shall be credited to such
Accounts as of the last day of the Plan Year in which such
Participant is reemployed. The amount of any such restoration
shall come first from Trust Gain or Loss for such Plan Year,
then from forfeitures as of the end of such Plan Year and, if
neither is sufficient, then from a contribution by the
Employer.
-5-
<PAGE> 6
(ii) If a Participant who is not fully vested in
all of his or her Accounts does not receive a distribution of
the vested portion of his or her Accounts before the last day
of the Plan Year following the Plan Year in which his or her
termination of employment occurs, then the Participant's
Profit Sharing, Matching and Special Accounts shall continue
to be maintained and the appropriate portion of Trust Gain or
Loss shall be allocated to such Accounts as provided in
Article 5. If such a Participant incurs five consecutive
Break in Service Years, the portion of each such Account in
which he or she is not vested shall be forfeited as of the
last day of the Plan Year in which the fifth consecutive Break
in Service Year occurs.
If a Participant who has not received a distribution
of the vested portion of his Accounts is rehired by an
Employer or an Affiliate before he or she incurs five
consecutive Break in Service Years, the Trustee shall continue
to maintain the separate Accounts for such Participant apart
from any other Accounts that may be opened for him or her as a
result of being rehired. If such Participant again terminates
employment before becoming 100% vested in his or her separate
-6-
<PAGE> 7
Accounts, then the amount of the Participant's vested interest
in such Accounts shall be determined under the vesting
schedules of subsections 4.1(c) and (d), as applicable.
If a Participant who is not fully vested in his or
her Accounts receives a distribution of the vested portion of
his Accounts after the last day of the Plan Year following the
Plan Year in which his or her termination of employment occurs
and is rehired by an Employer or an Affiliate before incurring
five consecutive Break in Service Years, the Participant's
vested interest in his or her Profit Sharing, Matching and
Special Accounts will be determined by solving for "X" in
accordance with the following formula in the event he again
terminates employment before becoming 100% vested:
X = P x (AB + D) - D
where:
X = The amount of the Participant's vested
interest in such Accounts.
P = The Participant's vested percentage as
determined under subsections 4.1(c) or (d) as
of the Valuation Date coincident with or
immediately preceding the distribution.
-7-
<PAGE> 8
AB = The balance of his or her Accounts as of the
Valuation Date coincident with or immediately
preceding the distribution.
D = The amount previously distributed from the
Profit Sharing, Matching or Special Accounts,
as appropriate, to the Participant.
The Trustee shall adopt such other rules concerning
Accounts and forfeitures as are necessary or appropriate for
the orderly administration of the Plan and Trust."
6.
Paragraph 4.3(b)(vi) is amended effective July 1, 1992 by
replacing the phrase "six-month period" with the phrase "twelve-month period"
where it appears therein.
7.
Section 4.3 is amended by adding the following as a new
subsection (c):
"(c) ROLLOVER ACCOUNT. A Participant may request
a withdrawal from his or her Rollover Account as of any
Valuation Date by filing with the Plan Administrator a written
withdrawal application, on a form approved by the Plan
Administrator. The withdrawal shall be paid
-8-
<PAGE> 9
in cash to the Participant as soon as practicable. The Plan
Administrator shall be authorized to promulgate any rules
necessary for the orderly administration of withdrawals under
this provision."
8.
Subsection 5.4(d) is amended effective January 1, 1992 by
deleting the period at the end of the first sentence of that subsection and by
adding the following:
"; provided, however, that no such Covered Participant shall
be entitled to receive an allocation of the Profit Sharing
Contribution for such Plan Year if the amount of such
allocation would not exceed five dollars."
9.
Subsection 5.6(f) is amended effective January 1, 1991 by
adding the following paragraph (iii) and is amended effective November 1, 1992
by adding the following paragraph (iv):
"(iii) Participants who invested all or a portion of
their accounts representing employer contributions made under
the First Family Profit Sharing Plan in the common stock of
Wachovia Bank of Georgia, N.A. or Fuqua Industries, Inc. may
continue to hold such stock as an investment with respect to
that portion of their Special Accounts but shall not have the
right to
-9-
<PAGE> 10
purchase additional shares of such stock as an investment
under the Plan. Notwithstanding the foregoing, as soon as
practicable after the Company's disposition of the stock of
First Family Financial Services ("First Family"), all common
stock of Wachovia Bank of Georgia, N.A. or Fuqua Industries,
Inc. shall be sold and no further right to hold such stock
under the Plan shall exist with respect to Special Accounts
maintained after the sale of the First Family stock.
(iv) Pursuant to the Company's disposition of the
stock of First Family, Participants who are employees of First
Family may elect a lump sum distribution or direct rollover of
the vested amounts in their Accounts under the Plan. Such
election must be made by the date specified by the Plan
Administrator in connection with the Company's disposition of
the stock of First Family. Any such Participants who have
invested a portion of their vested Accounts in Company stock,
Wachovia Bank of Georgia, N.A. stock or Fuqua Industries, Inc.
stock may elect to receive such shares of stock as part of
their lump sum distribution or direct rollover to an
individual retirement account or annuity (an "IRA") or may
direct that such shares be sold and the proceeds from such
sale be distributed or rolled over to an IRA. Participants
may directly roll over their Accounts to
-10-
<PAGE> 11
an IRA or to The Associates Retirement Savings and Profit
Sharing Plan except that such plan will not accept any stock
in such Accounts. Participants who fail to make an election
by the date specified by the Plan Administrator to receive a
lump sum distribution or make a direct rollover as described
above will receive distributions from the Plan at a later date
only in accordance with the other provisions of the Plan. For
purposes of subsection 4.2(a), the Participant's employment
with all Employers will not be considered to have terminated
so long as the Participant continues to be employed by First
Family or any successor."
10.
Subsection 5.6(g) is amended effective January 1, 1991 by
deleting the present provision and by substituting the following paragraphs (i)
and (ii) and is amended effective November 1, 1992 by adding the following
paragraph (iii):
"(g) RULES RELATING TO SPECIAL ACCOUNTS FROM THE
FIRST FAMILY THRIFT PLAN. These Special Accounts shall be
subject to the following:
-11-
<PAGE> 12
(i) Participants may elect distributions in the form
of installments over a period not exceeding the life
expectancy of the Participant and spouse.
(ii) Participants who invested all or a portion of
their accounts representing matching contributions under the
First Family Thrift Plan in the common stock of Wachovia Bank
of Georgia, N.A. or Fuqua Industries, Inc. may continue to
hold such stock as an investment with respect to that portion
of their Special Accounts but shall not have the right to
purchase additional shares of such stock as an investment
under the Plan. Notwithstanding the foregoing, as soon as
practicable after the Company's disposition of the stock of
First Family, all common stock of Wachovia Bank of Georgia,
N.A. or Fuqua Industries, Inc. shall be sold and no further
right to hold such stock under the Plan shall exist with
respect to Special Accounts maintained after the sale of the
First Family stock.
(iii) Pursuant to the Company's disposition of the
stock of First Family, Participants who are employees of First
Family may elect a lump sum distribution or direct rollover of
the vested amounts in their Accounts under the Plan. Such
-12-
<PAGE> 13
election must be made no later than the date specified by the
Plan Administrator in connection with such disposition. Any
such Participants who have invested a portion of their vested
Accounts in Company stock, Wachovia Bank of Georgia, N.A.
stock or Fuqua Industries, Inc. stock may elect to receive
such shares of stock as part of their lump sum distribution or
direct rollover to an IRA or may direct that such shares be
sold and the proceeds from such sale be distributed or rolled
over to an IRA. Participants may directly roll over their
Accounts to an IRA or to The Associates Retirement Savings and
Profit Sharing Plan except that such plan will not hold any
stock in such Accounts. Participants who fail to make an
election by the date specified by the Plan Administrator to
receive a lump sum distribution or make a direct rollover as
described above will receive distributions from the Plan at a
later date only in accordance with the other provisions of the
Plan. For purposes of subsection 4.2(a), the Participant's
employment with all Employers will not be considered to have
terminated so long as the Participant continues to be employed
by First Family or any successor."
-13-
<PAGE> 14
11.
Section 5.6 is amended effective October 1, 1990 by adding the
following as a new subsection (j) thereof:
"(J) RULES RELATING TO SPECIAL ACCOUNTS FROM THE
ZYTRON PLAN. These Special Accounts shall be fully vested and
nonforfeitable at all times."
12.
Section 5.6 is amended effective October 1, 1991 by adding the
following as a new subsection (k) thereof:
"(K) RULES RELATING TO SPECIAL ACCOUNTS FROM THE
MIDWEST BENEFITS PLAN. These Special Accounts shall be
subject to the following:
(i) The Annuity Amount rules.
(ii) Participants may also elect
distributions in the form of
[A] a joint and survivor annuity
with a contingent annuitant
other than their spouse, with
the contingent annuitant
receiving a monthly amount
equal to 50% or 100% of the
Participant's monthly
benefit,
[B] a single life annuity with
payments for a period certain
of 5, 10 or 15 years, or
[C] installments.
-14-
<PAGE> 15
(iii) Participants may elect to receive an
in-service distribution of the amount in such
Accounts on or after reaching age 65.
(iv) These Special Accounts are fully
vested and nonforfeitable."
13.
Section 5.6 is amended effective July 1, 1992 by adding the
following as a new subsection (l) thereof:
"(L) RULES RELATING TO SPECIAL ACCOUNTS FROM THE
ALTA PLAN. These Special Accounts shall be subject to the
following rules:
(i) The Participant may withdraw any
vested amounts representing employer matching
contributions to the Alta Plan upon reaching age
59-1/2. Such withdrawals may not be made more
frequently than every six months.
(ii) After 5 years of participation in
the Alta Plan and/or in the Plan, the Participant may
withdraw any vested amounts representing employer
matching contributions to the Alta Plan. Such
withdrawals may not be made more frequently than
every six months.
(iii) The Participant may elect
distribution of his Special Accounts in the form of
[A] a lump sum,
-15-
<PAGE> 16
[B] an annuity (life annuity,
joint and 50% or 100%
survivor annuity with the
Participant's spouse or
another contingent
annuitant), or
[C] a combination of methods [A]
and [B].
[B].
If the Participant elects distribution option [B] or
[C], the Annuity Amount rules shall be applicable to
the payment of his or her benefit or, in the case of
option [C], the portion of his or her benefit payable
as an annuity."
14.
Section 5.6 is amended effective October 1, 1992, by adding
the following as a new subsection (m):
"(m) RULES RELATING TO SPECIAL ACCOUNTS FROM THE
PAYMENTS SERVICES, INC. RETIREMENT SAVINGS PLAN. These Special
Accounts shall be subject to the following:
(i) These Special Accounts are fully
vested and nonforfeitable.
(ii) These Special Accounts shall be
subject to the Annuity Amount rules.
(iii) Participants may also elect
distributions in the form of
[A] a joint and 100% survivor
annuity with the surviving
spouse;
-16-
<PAGE> 17
[B] monthly, quarterly,
semi-annual or annual
installment payments over a
period certain; provided,
however, that such period
shall not extend beyond the
life expectancy of the
Participant (or the life
expectancy of the
Participant and his or her
designated Beneficiary):
[C] a single life annuity for the
life of the Participant; or
[D] a joint and 50% survivor
annuity or a joint and 100%
survivor annuity with a
contingent annuitant other
than the surviving spouse.
(iv) In the event of the Participant's
death before commencing distribution of benefits, the
Annuity Amount shall be used to purchase an annuity
for such Participant's spouse unless, before the
Participant's death, such spouse has consented in the
manner described in paragraph 5.6(b)(i) to the
designation of a Beneficiary other than the spouse
or, after the Participant's death, such spouse elects
to receive such Special
-17-
<PAGE> 18
Account in the form of a lump sum distribution or
monthly, quarterly, semi-annual or annual
installments payments over a period certain.
(v) Except in the case of a life
annuity, the Participant may irrevocably elect to
have his or her life expectancy and the life
expectancy of his or her spouse recalculated
annually. If no election is made by the time
distributions must commence, such life expectancy
shall not be recalculated.
(vi) With respect to hardship
distributions from these Special Accounts, the
limitation provided in paragraph 4.3(b)(i) regarding
minimum withdrawals shall not apply."
15.
Section 9.3 is amended effective November 1, 1992 by adding
the following at the end of the existing provision:
"Notwithstanding the foregoing, this section shall not be
applicable in the event that the discontinuance of
contributions by an Employer results from the Employer ceasing
to be an Affiliate if the Plan continues to be maintained by
the other Employers and contributions continue to be made
under it and such discontinuance by an Affiliate is not
otherwise deemed to be a partial termination of the Plan as a
whole."
-18-
<PAGE> 19
16.
Section 11.2 is amended by adding the following as a new
subsection (e) thereof:
"(E) OTHER RULES. In making the determinations of
the Aggregate Plan Values and Aggregate Key Employee Plan
Values, (i) the accrued benefit of an Employee other than a
Key Employee shall be determined under the method, if any,
that uniformly applies for accrual purposes under all plans
maintained by the Employer or, if there is no such method, as
if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rule of
section 411(b)(1)(C) of the Code and (ii) the accrued benefit
or account balance of any Employee who has not performed
services for the Employer at any time during the five-year
period ending on the Determination Date shall be disregarded."
IN WITNESS WHEREOF, the Company has caused this amendment to
be executed by its duly authorized corporate officer and its corporate seal to
be hereto affixed, and the Trustee has executed same under seal and thereby
accepted the Trust the day and year first written above.
-19-
<PAGE> 20
THE EMPLOYER: FIRST FINANCIAL
MANAGEMENT CORPORATION
(Corporate Seal) By: /s/Frank M. Malone
----------------------
Title: Sr. V.P. of Human
Resources
Attest: /s/Randolph L.M. Hutto
----------------------
THE TRUSTEE: WACHOVIA BANK OF GEORGIA,
N.A.
(Corporate Seal) By: /s/Barbara M. Chope
-------------------------
Title: Asst. Vice President
Attest: /s/Margaret DuVal
-----------------
-20-
<PAGE> 21
AMENDMENT NO. 2
TO THE
FFMC SAVINGS PLUS PLAN
1991 RESTATEMENT
THIS IS AN AMENDMENT to the FFMC SAVINGS PLUS PLAN 1991
RESTATEMENT (the "Plan") made this 1st day of April, 1993 by and between FIRST
FINANCIAL MANAGEMENT CORPORATION (the "Company") and WACHOVIA BANK OF GEORGIA,
N.A. (the "Trustee").
BACKGROUND STATEMENT
The Company and the Trustee desire to amend the Plan to
reflect certain special rules applicable to benefits transferred from the
Techpoint, Inc. 401(k) Plan to the Plan pursuant to the merger of the plans.
Therefore, the Plan is amended in the following respect, such amendment to be
effective as of April 1, 1993:
1.
Section 5.6 is amended effective April 1, 1993, by adding the
following as a new subsection (n):
"(n) RULES RELATING TO SPECIAL ACCOUNTS FROM THE
TECHPOINT, INC. 401(K) PLAN. These Special Accounts shall be
subject to the following:
(i) Participants may elect distributions
from their Special Accounts in the
form of
[A] a lump sum; or
<PAGE> 22
[B] monthly, quarterly,
semi-annual or annual
installment payments over a
period certain; provided,
however, that such period
shall not extend beyond the
life expectancy of the
Participant (or the life
expectancy of the
Participant and his or her
designated Beneficiary).
(ii) With respect to hardship
distributions from these Special
Accounts, the limitation provided in
paragraph 4.3(b)(i) regarding
minimum withdrawals shall not
apply."
IN WITNESS WHEREOF, the Company has caused this amendment to
be executed by its duly authorized corporate officer and its corporate seal to
be hereto affixed, and the Trustee has executed same under seal and thereby
accepted the Trust the day and year first written above.
THE EMPLOYER: FIRST FINANCIAL
MANAGEMENT CORPORATION
(Corporate Seal) By: /s/Frank M. Malone
--------------------------
Title: Senior Vice President
Attest: /s/Barry W. Burt
-------------------
Assistant Secretary
-2-
<PAGE> 23
THE TRUSTEE: WACHOVIA BANK OF GEORGIA,
N.A.
(Corporate Seal) By:/s/Raymond H. Sapp
--------------------
Title: Vice President
Attest:/s/Margaret DuVal
-----------------
-3-
<PAGE> 1
EXHIBIT 10.1
AMENDMENT TO
FIRST FINANCIAL MANAGEMENT CORPORATION
1988 INCENTIVE STOCK PLAN
THIS AMENDMENT TO 1988 INCENTIVE STOCK PLAN (the "Plan") is made as of
the 22nd day of March, 1994.
BACKGROUND STATEMENT
The Compensation Committee of the Board of Directors (the "Committee")
of First Financial Management Corporation (the "Corporation") has determined
that in order to comply with proposed federal income tax regulations with
respect to the deductibility by the Corporation of restricted stock awards it
was necessary to amend the Plan in order to allow a restricted stock award
agreement to provide that dividends on restricted stock awards may be withheld,
as determined by the Committee, until such time as the restrictions on the
award shares lapse. At a duly called meeting of the Committee on March 22,
1994, the Committee adopted the amendment set forth below. The Corporation
effected a three-for-two stock split on April 1, 1992. Under the express terms
of the Plan the stock split resulted in an adjustment to the number of shares
subject to the Plan and it is desirable to reflect such adjustment in the Plan.
Therefore the Plan is amended in the following respects, such amendment to be
effective as of March 22, 1994:
1) Paragraph 2 of the Plan is amended by deleting the figure
"3,000,000" from line 4 thereof and inserting in lieu thereof the figure
"4,500,000."
2) Paragraph 8(b) is amended by inserting "or any restricted
stock award agreement" in the second sentence thereof immediately after the
word "Plan."
3) In order to correct a typographical error in the Plan, the
word "acquired" in the seventh line of Paragraph 6(g) is deleted and replaced
by the word "acquires."
IN WITNESS WHEREOF, the Corporation has caused this amendment to be
executed by its duly authorized corporate officer.
FIRST FINANCIAL
MANAGEMENT CORPORATION
By: /S/ Randolph L.M. Hutto
-----------------------
Randolph L.M. Hutto
<PAGE> 1
EXHIBIT 10.2
AGREEMENT, PLAN OF REORGANIZATION AND PLAN OF MERGER
BY AND AMONG
FIRST FINANCIAL MANAGEMENT CORPORATION,
BLUEBIRD ACQUISITION CORPORATION,
GENCAN ACQUISITION CORPORATION,
GENEX SERVICES, INC.,
GENEX SERVICES OF CANADA, LTD.
AND
THE SHAREHOLDERS OF
EACH OF
GENEX SERVICES, INC.
AND
GENEX SERVICES OF CANADA, LTD.
June 30, 1994
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
- - ------- ----
<S> <C> <C>
1. The Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effect of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Conversion and Exchange of Shares; Additional Action . . . . . . . . . . . . . . . . . . . 2
2.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Reported Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Surrender and Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . 5
2.6 Dividends on FFMC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Articles of Incorporation, Bylaws, Board of Directors and Officers . . . . . . . . . . . . 6
3.1 Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Directors and Officers of the Surviving Corporation . . . . . . . . . . . . . . . . 6
4. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Representations and Warranties of the Shareholders . . . . . . . . . . . . . . . . . . . . 7
5.1 Ownership of Shares; Residence . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Absence of Violations or Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4 No Consents Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 No Claims Against the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Litigation Related to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . 8
5.7 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.8 Receipt of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Representations and Warranties of the Companies and the Shareholders . . . . . . . . . . . 9
6.1 Organization and Qualification of the Companies . . . . . . . . . . . . . . . . . . 9
6.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.5 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.7 No Consents Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
6.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.9 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.10 Governmental Authorization and Compliance with Laws . . . . . . . . . . . . . . . . 12
6.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.13 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.14 Adequacy; Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.17 Labor Controversies and Employees . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.18 Insider Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.21 Employee and Fringe Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.22 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.23 Customer Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.24 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.25 Pooling-of-Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.26 Major Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.27 Accuracy of Schedules, Certificates and Documents . . . . . . . . . . . . . . . . . 21
7. Representations and Warranties by FFMC, Bluebird and GENCAN . . . . . . . . . . . . . . . . 21
7.1 Existence, Power and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.6 No Past Action That Would Defeat Pooling . . . . . . . . . . . . . . . . . . . . . . 23
7.7 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.8 Accuracy of Schedules, Certificates and Documents . . . . . . . . . . . . . . . . . 23
8. Further Agreements of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Investigation; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Conduct of the Business Pending the Closing . . . . . . . . . . . . . . . . . . . . 24
8.3 HSR Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Consents, Authorizations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.5 Good Faith; Further Assurances; Cooperation . . . . . . . . . . . . . . . . . . . . 26
8.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.8 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.9 Additional Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.10 Shareholder Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.11 No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.12 Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.13 Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.14 Pooling Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.15 No Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.16 Registration of Shares Issued Pursuant to Stock Option Plan . . . . . . . . . . . . 28
8.17 Organization of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 Conditions Relating to FFMC, Bluebird and GENCAN . . . . . . . . . . . . . . . . . . 29
9.2 Conditions to Obligation of the Companies and the Shareholders . . . . . . . . . . . 32
9.3. Waiver and Estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10. Documents to be Delivered at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.1 Documents to be Delivered by the Companies and the Shareholders . . . . . . . . . . 35
10.2 Documents to be Delivered by FFMC . . . . . . . . . . . . . . . . . . . . . . . . . 35
11. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.1 Filing of Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.2 Access and Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.3 Certain Audit Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.1 Indemnification by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.2 Indemnification by FFMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.3 Certain Limitations and Related Matters . . . . . . . . . . . . . . . . . . . . . . . 38
12.4 Claims for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.5 Defense of Claim by Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.6 Third Party Claim Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.7 Determination of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.8 Manner of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.9 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.10 Remedies Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13. Shareholders' Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.1 Appointment; Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.3 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.4 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.6 Survival of Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.1 Finders, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.2 Specific Performance and Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 44
14.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.6 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
14.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.8 No Third Party Beneficiaries; Assignment . . . . . . . . . . . . . . . . . . . . . . 46
14.9 Time of the Essence; Computation of Time . . . . . . . . . . . . . . . . . . . . . . 47
14.10 Definitions Regarding Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
iv
<PAGE> 6
CERTAIN DEFINED TERMS
Term Section
- - ---- -------
Acquisition Proposal 8.11
Act 1.1
Affected Employees 8.8
Affiliate 6.9
Agreement Preamble
Applicable Plan Year-End 6.21(c)
Articles of Merger 1.2
Authorizations 6.10
Bluebird Preamble
Bluebird Common Stock 2.1(d)
Canada Common Stock Preamble
Canada Shareholders Preamble
Citations 6.22(c)
Closing 1.3
Closing Date 1.3
Code 6.12(d)
Companies Preamble
Company Preamble
Company Delivered Agreements 6.4
Costs 12.1
Deductible 12.3(c)
Determination Date 12.7
Effective Time 1.2
Employee Plans 6.21(a)
Environmental Laws 6.22(a)
ERISA 6.21(a)
ERISA Affiliate 6.21(a)
Escrow Shares 2.5(b)
Financial Statements 6.8(a)
FFMC Preamble
FFMC Common Stock Preamble
FFMC's Benefit Programs 8.8
FTC 5.4
GAAP 6.8(a)
GBCC 1.2
v
<PAGE> 7
GCR Preamble
GENCAN Preamble
GENCAN Common Stock 2.1(e)
GENEX Preamble
GENEX Canada Preamble
GENEX Common Stock Preamble
GENEX Shareholders Preamble
Governmental Authority 5.4
HSR Act 5.4
Indemnified Party 12.4
Indemnifying Party 12.4
Intellectual Property 6.19
Intellectual Property Agreements 6.19
IRS 6.21(a)
Justice 5.4
Laws 6.5
Liens 5.1
Material Contracts 6.15
Merger(s) Preamble
Merger Consideration 2.5
Multi-Employer Plan 6.21(a)
Notice of Claim 12.4
Orders 6.5
Outstanding Options 2.1(g)
PBGC 6.21(a)
Pension/Profit-Sharing Plan 6.21(a)
Pooling Letter 9.10
Post-Closing Period 11.1(a)
Pre-Closing Period 11.1(a)
Properties 6.14
Reported Market Price 2.3
SEC 5.7
SEC Filings 7.4
Shareholder(s) Preamble
Shareholder Delivered Agreements 5.2
Shareholders' Agent 13.1
Stock Option Plan 2.1(g)
Subsidiary 6.6
Superfund Notice 6.22(c)
Surviving Corporation(s) 1.1
Tax Return 6.12(i)
Taxes 6.12(i)
Welfare Plan 6.21(a)
1993 Act 2.1(f)
vi
<PAGE> 8
SCHEDULES TO AGREEMENT
<TABLE>
<CAPTION>
Schedule
No. Title
- - --- -----
<S> <C>
2.5 Escrowed Shares
5.1 Ownership
5.3 Violations or Conflicts
5.4 Consents
5.5 Shareholders' Claim against Company
6.1 Organization - Jurisdiction
6.2 Capital Stock
6.5 Noncontravention
6.8 Financial - Supplementary Information on Accounts Receivable
6.9 Absence of Certain Changes
6.10 Government Compliance
6.11 Undisclosed Liabilities
6.12 Taxes
6.13 Titles to Properties
6.14 Properties
6.15 Material Contracts, (Consents Guide)
6.16 Litigation
6.17 Labor Controversies and Employees
6.18 Insider Interests
6.19 Intellectual Properties
6.20 Insurance
6.21 Employee and Fringe Benefits
6.23 Customer Warranties
6.24 Bank Accounts
6.25 Pooling of Interest Lists
6.26 Major Customers
7.3 Noncontravention
7.5 Litigation
8.2 Conduct of Business
8.10 Shareholder Notes
11.1 Filing of Returns
</TABLE>
<PAGE> 9
AGREEMENT, PLAN OF REORGANIZATION AND PLAN OF MERGER
THIS IS AN AGREEMENT, PLAN OF REORGANIZATION AND PLAN OF MERGER (this
"Agreement"), dated as of June 30, 1994, by and among FIRST FINANCIAL
MANAGEMENT CORPORATION, a Georgia corporation ("FFMC"), BLUEBIRD ACQUISITION
CORPORATION, a Georgia corporation wholly owned by FFMC ("Bluebird"), GENCAN
ACQUISITION CORPORATION, a Georgia corporation wholly-owned by FFMC ("GENCAN"),
GENEX SERVICES, INC., a Pennsylvania corporation (formerly known as GENERAL
REHABILITATION SERVICES, INC.)("GENEX"), GENEX SERVICES OF CANADA, LTD., a
Pennsylvania corporation (formerly known as GENERAL REHABILITATION SERVICES OF
CANADA, LTD.)("GENEX Canada")(GENEX and GENEX Canada are sometimes referred to
herein individually as a "Company" and collectively as the "Companies") and the
undersigned shareholders of GENEX and of GENEX Canada (referred to herein
individually as a "Shareholder" and collectively as the "Shareholders"). As
the context requires, the term "Company" or "Companies" shall include GENEX, as
successor-in-interest to GENERAL CARE REVIEW, INC. ("GCR"), a Pennsylvania
corporation that was merged with and into GENEX on October 29, 1993, and the
terms "Shareholder" or "Shareholders" shall include the undersigned
shareholders in their capacity as shareholders of GCR.
BACKGROUND STATEMENT
Each of GENEX and GENEX Canada is primarily engaged in the business
of providing a line of services designed to reduce its customers' costs
associated with work related injuries, including disability management, medical
and vocational case management, bill review, early intervention and utilization
management (the "Business"). FFMC and GENEX desire to effect a business
combination of GENEX and Bluebird pursuant to which Bluebird will merge with
and into GENEX. FFMC and GENEX Canada desire to effect a business combination
of GENEX Canada and GENCAN pursuant to which GENCAN will merge with and into
GENEX Canada. Pursuant to such mergers (the "Mergers"), the holders (the
"GENEX Shareholders") of GENEX common stock, no par value ("GENEX Common
Stock"), will receive shares of FFMC common stock, par value $.10 per share
("FFMC Common Stock"), in exchange for their shares of GENEX Common Stock and
the holders (the "Canada Shareholders") of GENEX Canada common stock, par value
$.01 share ("Canada Common Stock"), will receive shares of FFMC Common Stock in
exchange for their shares of Canada Common Stock, each as provided in this
Agreement. The Mergers are intended to be reorganizations under Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code").
The Board of Directors of each of GENEX and GENEX Canada has approved the
Merger to which such Company is a party and directed that this Agreement be
submitted to the GENEX Shareholders, and the Canada Shareholders, respectively,
who have agreed herein to vote their respective shares of GENEX Common Stock
and Canada Common Stock in favor of the Mergers. The Mergers have been
approved by a duly authorized committee of the Board of Directors of FFMC, by
the Board of Directors of each of Bluebird and GENCAN and by FFMC as sole
shareholder of Bluebird and of GENCAN.
<PAGE> 10
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:
1. The Business Combinations.
1.1 The Mergers. At the Effective Time (as defined in
Section 1.2 hereof), Bluebird shall be merged with and into GENEX and GENCAN
shall be merged with and into GENEX Canada, each in accordance with the
provisions of this Agreement and the Pennsylvania Business Corporation Law of
1988, as amended (the "Act"), and the separate existence of each of Bluebird
and GENCAN shall thereupon cease, and GENEX and GENEX Canada, as the surviving
corporations in the Mergers (referred to herein as a "Surviving Corporation" or
the "Surviving Corporations"), shall continue their corporate existence under
the laws of the Commonwealth of Pennsylvania.
1.2 Effective Time of the Mergers. As soon as
practicable following fulfillment of the conditions set forth in Section 8, and
provided that this Agreement has not been terminated pursuant to Section 4,
GENEX and GENEX Canada shall each cause appropriate Articles of Merger and
appropriate Certificates of Merger (collectively "Articles of Merger") to be
duly prepared, executed, acknowledged and filed with the Secretaries of State
of the Commonwealth of Pennsylvania and the State of Georgia, respectively, in
accordance with the provisions of the Act and the Georgia Business Corporation
Code, as amended (the "GBCC"). The Mergers shall become effective at the time
of the filing of the Articles of Merger unless a different effective time is
specified in the applicable Articles of Merger (the "Effective Time").
1.3 Closing. The consummation of the transactions
contemplated in this Agreement (the "Closing") shall take place at the offices
of FFMC, 3 Corporate Square, Suite 700, Atlanta, Georgia 30329, on a date and
at a time agreed upon by FFMC and the Shareholders, but in no event later than
10:00 a.m. on the third business day after all conditions set forth in Section
8 have been satisfied or waived in writing (the "Closing Date"). At the
Closing, the parties shall execute and deliver the agreements and other
documents referred to in Section 9.
1.4 Effect of the Mergers. At the Effective Time: (i)
Bluebird shall merge with and into GENEX; (ii) GENCAN shall merge with and
into GENEX Canada; (iii) the separate existence of each of Bluebird and GENCAN
shall cease; (iv) the shares of GENEX and GENEX Canada shall each be converted
as provided in this Agreement; (v)the Shareholders shall be entitled only to
the rights provided in this Agreement; and (vi) the Mergers shall otherwise
have the effect provided under the applicable laws of the Commonwealth of
Pennsylvania (including the Act).
2. Conversion and Exchange of Shares; Additional Action.
2.1 Conversion of Shares. The aggregate merger
consideration payable to the Shareholders shall be One Million Two Hundred
Fifty-Eight Thousand One Hundred Ninety-Five
2
<PAGE> 11
(1,258,195) shares of FFMC Common Stock. Such merger consideration shall be
payable at the Effective Time as follows:
(a) GENEX Common Stock. Each issued and
outstanding share of GENEX Common Stock, excluding any such shares
held in the treasury of GENEX and excluding any such shares held by
FFMC or its subsidiaries (including Bluebird), shall automatically be
cancelled and extinguished and shall thereafter represent only the
right to receive 1.031712 shares of FFMC Common Stock, subject to the
provisions of Section 2.2 regarding fractional shares and to the
provisions of Section 2.5(b) regarding the Escrow Shares.
(b) Canada Common Stock. Each issued and
outstanding share of Canada Common Stock, excluding any such shares
held in the treasury of GENEX Canada and excluding any such shares
held by FFMC or its subsidiaries (including GENCAN), shall
automatically be cancelled and extinguished and shall thereafter
represent only the right to receive 264.7838 shares of FFMC Common
Stock, subject to the provisions of Section 2.2 regarding fractional
shares and to the provisions of Section 2.5(b) regarding the Escrow
Shares.
(c) Treasury Stock. Each share of GENEX Common
Stock and Canada Common Stock held in the treasury of GENEX and GENEX
Canada, respectively, shall be automatically cancelled and
extinguished, and no payment shall be made in respect thereof.
(d) Bluebird Common Stock. Each issued and
outstanding share of common stock of Bluebird ("Bluebird Common
Stock") shall be converted into and shall thereafter represent one
validly issued, fully paid and nonassessable share of GENEX Common
Stock.
(e) GENCAN Common Stock. Each issued and
outstanding share of GENCAN ("GENCAN Common Stock") shall be converted
into and shall thereafter represent one validly issued, fully paid and
nonassessable share of Canada Common Stock.
(f) FFMC Common Stock. The Shareholders
acknowledge and agree that the FFMC Common Stock received by them
pursuant to this Agreement will not be registered under the Securities
Act of 1933 (the "1993 Act") or any state securities laws on the
ground that this transaction is exempt from registration under the
1933 Act and applicable state securities laws as a transaction not
involving a public offering. The Shareholders acknowledge that they
may not sell the FFMC Common Stock received by them without
registration under the 1933 Act and applicable state securities laws
except upon compliance with an exemption from any such registration,
and that FFMC is under no obligation to register the FFMC Common Stock
issued to the Shareholders pursuant to this Agreement or to take any
action necessary in order to make compliance with an exemption from
registration available.
3
<PAGE> 12
(g) GENEX Options. At or prior to the Effective
Time, FFMC and GENEX shall take all action necessary to cause the
assumption by FFMC as of the Effective Time of the options to purchase
GENEX Common Stock granted under the GENEX Stock-Based Incentive
Compensation Plan, as amended (the "Stock Option Plan"), and
outstanding as of the Effective Time (the "Outstanding Options").
Each of the Outstanding Options shall be converted as of the
Effective Time without any action on the part of the holder thereof
into an option to purchase shares of FFMC Common Stock. The number of
shares of FFMC Common Stock that the holder of an assumed Outstanding
Option shall be entitled to receive upon the exercise of such option
shall be a number of whole and fractional shares determined by
multiplying the number of shares of GENEX Common Stock subject to such
option, determined immediately before the Effective Time, by 1.031712.
The exercise price of each share of FFMC Common Stock subject to an
Outstanding Option shall be the amount (rounded up to the nearest
whole cent) obtained by dividing the exercise price per share of GENEX
Common Stock at which such option is exercisable immediately before
the Effective Time by 1.031712. The assumption and substitution of
options as provided herein shall not give the holders of such options
additional benefits that they did not have immediately prior to the
Effective Time or relieve the holders of any obligations or
restrictions applicable to their options or the shares obtainable upon
exercise of the options. Only whole shares of FFMC Common Stock shall
be issued upon exercise of any Outstanding Option, and in lieu of
receiving any fractional share of FFMC Common Stock, the holder of
such option shall receive in cash the fair market value of the
fractional share, net of the applicable exercise price of the
fractional share and applicable withholding taxes. After the
Effective Time, the Stock Option Plan shall be continued in effect by
FFMC subject to amendment, modification, suspension, abandonment or
termination as provided therein, and the Stock Option Plan as so
continued (i) shall relate solely to Outstanding Options, (ii)
thereafter shall relate only to the issuance of FFMC Common Stock as
provided in this Section and (iii) shall continue to provide for
equitable adjustment in the terms of Outstanding Options in the event
of certain corporate events which alter the capital structure of FFMC.
2.2 No Fractional Shares. No fraction of a share of FFMC
Common Stock shall be issued upon conversion of GENEX Common Stock and Canada
Common Stock as provided in Section 2.1. Any holder of GENEX Common Stock or
Canada Common Stock who would otherwise have been entitled to receive a
fraction of a share of FFMC Common Stock upon conversion of all his GENEX
Common Stock or Canada Common Stock, as applicable, shall be entitled to
receive a cash payment in respect of such fractional share in an amount equal
to the product of such fractional share multiplied by the average of the
closing prices of FFMC Common Stock on the New York Stock Exchange for the ten
(10) trading days preceding the date of this Agreement.
2.3 Reported Market Price. As used in this Agreement,
the Reported Market Price for FFMC Common Stock shall be the closing price of
FFMC Common Stock on the New York Stock Exchange on the last trading day prior
to the Effective Time.
4
<PAGE> 13
2.4 Stock Transfer Books. From and after the Effective
Time, no transfer of shares of GENEX Common Stock or Canada Common Stock
outstanding prior to the Effective Time shall be registered on the stock
transfer books of the respective Surviving Corporation.
2.5 Surrender and Exchange of Stock Certificates.
(a) At the Effective Time the holders of
certificates representing shares of GENEX Common Stock and Canada
Common Stock shall cease to have any rights as shareholders of GENEX
or GENEX Canada, as the case may be, except such rights as they may
have pursuant to this Agreement. After the Effective Time, each
Shareholder shall be entitled to receive, upon surrender to FFMC of a
certificate or certificates representing such Shareholder's shares of
GENEX Common Stock or Canada Common Stock accompanied by a duly
completed and executed stock transfer power, the respective merger
consideration therefor specified in Section 2.1 (the "Merger
Consideration") for each share of GENEX Common Stock or Canada Common
Stock represented by such certificates; provided, however, that the
Escrow Shares (as defined in subsection (b) below) shall be delivered
to the Escrow Agent for the Escrow established pursuant to Section
12.9. If certificates for outstanding shares of GENEX Common Stock or
Canada Common Stock are not surrendered to FFMC within three years
after the Effective Time, the unclaimed Merger Consideration shall, to
the extent permitted by applicable law, become the property of the
applicable Surviving Corporation free and clear of all claims or
interest of any person previously entitled thereto. No interest shall
be paid or accrued on any portion of the Merger Consideration.
(b) At the Effective Time, FFMC shall deliver one
certificate in the name of each Shareholder evidencing the number of
shares of FFMC Common Stock set forth beside such Shareholder's name
on Schedule 2.5 for an aggregate of 125,817 shares of FFMC Common
Stock or may be adjusted in accordance with Schedule 2.5 (such shares
in the aggregate referred to as the "Escrow Shares") to the Escrow
Agent for the Escrow established pursuant to Section 12.9.
2.6 Dividends on FFMC Common Stock. No holder of a
certificate or certificates representing shares of GENEX Common Stock or Canada
Common Stock shall be entitled to receive any dividend or other distribution
from FFMC declared after the Effective Time until surrender of such holder's
certificate or certificates representing shares of GENEX Common Stock or Canada
Common Stock. Upon such surrender, there shall be paid to the holder the
amount of any dividends or other distributions (without interest) that
theretofore became payable by FFMC, but were not paid by reason of the
foregoing with respect to the number of whole shares of FFMC Common Stock
represented by the certificate or certificates issued upon such surrender.
From and after the Effective Time, FFMC shall, however, be entitled to treat
such certificate or certificates that have not yet been surrendered for
exchange as evidencing the ownership of the aggregate Merger Consideration into
which such shares of FFMC Common Stock represented by such certificate or
certificates shall have been converted, notwithstanding any failure to
surrender such certificate or certificates.
2.7 Adjustments. If, between the date of this Agreement
and the Effective Time, the outstanding shares of FFMC Common Stock shall be
changed into a different number of shares or
5
<PAGE> 14
a different class by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or a stock dividend
thereon shall be distributed as of a date prior to the Effective Time, or
declared with a record date prior to the Effective Time and a distribution date
after the Effective Time, the number of shares of FFMC Common Stock delivered
as Merger Consideration shall be appropriately adjusted.
3. Articles of Incorporation, Bylaws, Board of Directors and
Officers.
3.1 Certificate of Incorporation; Bylaws. At the
Effective Time, the Articles of Incorporation and Bylaws of GENEX and GENEX
Canada as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation and Bylaws of the respective Surviving Corporation.
3.2 Directors and Officers of the Surviving Corporations.
The persons who are directors and officers of Bluebird at the Effective Time
will become the directors and officers of the Surviving Corporation of the
Bluebird/GENEX merger until such timeas they may be replaced in accordance with
the Bylaws of such Surviving Corporation. The persons who are directors and
officers of GENCAN at the Effective Time will become the directors and officers
of the Surviving Corporation of the GENCAN/GENEX Canada merger until such time
as they may be replaced in accordance with the Bylaws of such Surviving
Corporation.
4. Termination.
4.1 Termination Events. This Agreement may be terminated
and abandoned at any time prior to the Effective Time:
(i) by mutual action in writing by the Companies,
the Shareholders' Agent and FFMC;
(ii) by FFMC if any condition set forth in Section
9.1 shall not have been complied with or performed in any material
respect and such noncompliance or nonperformance shall not have been
cured or eliminated (or by its nature cannot be cured or eliminated)
by the Companies and the Shareholders on or before August 15, 1994; or
(iii) by the joint action of the Companies and the
Shareholders' Agent if any condition set forth in Section 9.2 shall
not have been complied with or performed in any material respect and
such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by FFMC,
Bluebird and GENCAN on or before August 15, 1994;
provided, however, that neither FFMC nor the Companies and the Shareholders'
Agent shall unilaterally terminate this Agreement prior to August 15, 1994 if
the only condition not satisfied is that specified in Section 9.1(f) or 9.2(e),
as the case may be, unless the other party fails, after written notice, to use
its best efforts to cause such condition to be satisfied as promptly as
reasonably practicable.
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4.2 Effect of Termination. In the event of a termination
and abandonment of this Agreement pursuant to Section 4.1, this Agreement shall
forthwith become void and of no further effect, without any liability or
obligation on the part of any party hereto, other than the provisions of
Sections 8.1, 8.6, 8.7, 13 and 14, it being understood that the parties'
liabilities and obligations under Sections 8.1, 8.6, 8.7, 13 and 14 shall
survive the termination and abandonment of this Agreement, in the absence of a
written agreement between the parties after the date hereof expressly to the
contrary. Notwithstanding the foregoing, nothing contained in this Section 4.2
shall relieve any party from liability for any breach of any covenant or
agreement in this Agreement or for any intentional misrepresentation or
intentional breach of warranty, and any such termination and abandonment
shallbe without prejudice to the rights of any party hereto arising out of such
breach or intentional misrepresentation or breach.
5. Representations and Warranties of the Shareholders. Each of
the Shareholders, severally, and subject to the limitations set forth in
Section 12, represents and warrants to FFMC, Bluebird and GENCAN with respect
to himself and his ownership of shares of each Company as follows:
5.1 Ownership of Shares; Residence. Such Shareholder
owns of record and/or beneficially the number of shares of GENEX Common Stock
or Canada Common Stock set forth opposite the name of such Shareholder on
Schedule 5.1 to this Agreement. Such Shareholder owns of record and/or
beneficially all right, title and interest in and to such shares, free and
clear of all liens, claims, charges, pledges, security interests, adverse
claims or other encumbrances (collectively "Liens") options, rights of refusal
or similar rights or other transfer restrictions of any nature whatsoever
(including any arising from any existing or threatened litigation) other than
restrictions on transfers arising out of applicable federal and state
securities laws. Except as set forth on Schedule 5.1, no Shareholder owns any
other security of GENEX or GENEX Canada. Such Shareholder is a resident of the
jurisdiction set forth beside his name on Schedule 5.1.
5.2 Authorization. With respect to this Agreement and
any other agreements, instruments and documents executed and delivered by such
Shareholder pursuant to this Agreement, (this Agreement and such other
agreements, instruments and documents are collectively referred to as the
"Shareholder Delivered Agreements"): (i) such Shareholder has the right, power
and authority to enter into the Shareholder Delivered Agreements executed and
delivered by him and to consummate the transactions contemplated by, and
otherwise to comply with and perform his obligations under, them; and (ii) the
Shareholder Delivered Agreements will, when delivered, constitute valid and
binding obligations of such Shareholder enforceable against such Shareholder in
accordance with their terms.
5.3 Absence of Violations or Conflicts. Except as set
forth on Schedule 5.3, the execution and delivery of the Shareholder Delivered
Agreements and the consummation by such Shareholder of the transactions
contemplated by, or other compliance with the performance under, them do not
and will not with the passing of time or giving of notice or both: (i)
constitute a violation of, be in conflict with, constitute a default or require
any payment under, permit a termination of, or result in the creation or
imposition of any Lien upon any assets of either Company or shares of GENEX
Common Stock or Canada Common Stock under (A) any contract, agreement,
commitment,
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undertaking or understanding (including rights of refusal or similar rights or
other transfer restrictions) to which such Shareholder is a party or to which
he or his properties are subject or bound, (B) anyjudgment, decree or order of
any Governmental Authority (hereinafter defined) to which such Shareholder or
his properties are subject or bound, or (C) any applicable Laws; or (ii)
create, or cause the acceleration of the maturity of, any debt, obligation or
liability of such Shareholder that would result in any Lien or other claim upon
the assets of either Company or shares of GENEX Common Stock or Canada Common
Stock.
5.4 No Consents Required. Except as set forth on
Schedule 5.4 and except for filings with the Federal Trade Commission (the
"FTC") and the Department of Justice ("Justice") under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), no consent,
approval, order or authorization of, or registration, declaration or filing
with, any executive, judicial or other public authority, agency, department,
bureau, division, unit, court or other public body, person or entity
(collectively, a "Governmental Authority"), or any other consent, approval or
authorization from any other third party, on the part of such Shareholder or
the Shareholders' Agent is required in connection with his execution or
delivery of the Shareholder Delivered Agreements or the consummation of the
transactions contemplated by, or other compliance with the performance under,
such Shareholder Delivered Agreements by such Shareholder or the Shareholders'
Agent.
5.5 No Claims Against the Companies. Except as set forth
on Schedule 5.5, such Shareholder has no claim against either Company, except
for accrued compensation and benefits and expenses or similar obligations
incurred in the ordinary course of business (including reimbursement of medical
expenses pursuant to either Company's plans disclosed pursuant to this
Agreement) with respect to Shareholders who are employees of either Company,
and except as otherwise specifically provided in this Agreement.
5.6 Litigation Related to this Agreement. Such
Shareholder is not a party to, or subject to any judgment, decree or order
entered in, any lawsuit or proceeding brought by any Governmental Authority or
other third party seeking to prevent the execution of this Agreement or the
consummation of the transactions contemplated hereby.
5.7 Purchase for Investment. Such Shareholder is
acquiring the FFMC Common Stock to be issued to him pursuant to this Agreement
for his own account, to hold for investment, and with no present intention of
dividing his participation with others (except pursuant to existing or
presently anticipated divorce decrees) or of reselling or otherwise
participating, directly or indirectly, in a distribution of FFMC Common Stock
and shall not make any sale, transfer or other disposition (other than pursuant
to such divorce decrees) of such shares of FFMC Common Stock in violation of
the 1933 Act or the rules and regulations promulgated thereunder by the
Securities and Exchange Commission (the "SEC") or in violation of any
applicable state securities laws, including ineach instance any applicable
rules and regulations promulgated thereunder.
5.8 Receipt of Information. Such Shareholder has
received and had an opportunity to review copies of the periodic reports
referred to in Section 7.4 hereof.
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5.9 Taxes. Such Shareholder has reported on his personal
tax returns all income of GENEX or GENEX Canada, as applicable, reported or
properly reportable on the Companies' respective Forms 1120-S and analogous
state tax returns.
6. Representations and Warranties of the Companies and the
Shareholders. The Shareholders jointly and severally represent and warrant to
FFMC, Bluebird and GENCAN as follows, and as to matters regarding any Company,
such Company severally represents and warrants to FFMC, GENCAN and Bluebird as
follows:
6.1 Organization and Qualification of the Companies.
Each Company is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania, has the corporate
power and authority to own all of its properties and assets and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing as a foreign corporation in the jurisdictions shown on
Schedule 6.1, which are the only jurisdictions where the failure to so qualify
would have a material adverse effect on such Company. The copies of each
Company's Articles of Incorporation and Bylaws, as amended to date, which have
been delivered to FFMC, are complete and correct, and such instruments, as so
amended, are in full force and effect.
6.2 Capital Stock.
(a) The authorized capital stock of GENEX
consists of One Million Six Hundred Thousand (1,600,000) shares of no
par value Common Stock, of which One Million Five Hundred Thousand
(1,500,000) shares are voting stock and One Hundred Thousand (100,000)
shares are non-voting and of which 1,016,191 voting shares and 19,870
non-voting shares are validly issued and outstanding, fully paid and
non-assessable and are free of preemptive and similar rights. No
shares are held in the treasury of GENEX. Except as set forth
onSchedule 6.2: (i) the Shareholders are the only owners of GENEX's
capital stock or other securities of any kind or class; and (ii) no
options, warrants, subscriptions, puts, calls or other rights,
commitments, undertakings or understandings to acquire, or restrict
the transfer (other than those imposed by applicable federal and state
securities laws) of, any capital stock or other securities of any kind
or class of GENEX or rights, obligations or undertakings convertible
into securities of any kind or class of GENEX are authorized or
outstanding.
(b) The authorized capital stock of GENEX Canada
consists of One Hundred (100) shares of $.01 par value Common Stock,
of which One Hundred (100) shares are validly issued and outstanding,
fully paid and non-assessable and are free of preemptive and similar
rights. No shares are held in the treasury of GENEX Canada. Except
as set forth on Schedule 6.: (i) the Shareholders are the only owners
of GENEX Canada's capital stock or other securities of any kind or
class; and (ii) no options, warrants, subscriptions, puts, calls or
other rights, commitments, undertakings or understandings to acquire,
or restrict the transfer (other than those imposed by applicable
federal and state securities laws) of, any capital stock or other
securities of any kind or class of GENEX Canada or rights, obligations
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<PAGE> 18
or undertakings convertible into securities of any kind or class of
GENEX Canada are authorized or outstanding.
6.3 Corporate Records. The corporate record books
(including the share records) of each Company are complete, accurate and up to
date in all material respects with all necessary signatures and set forth all
meetings and actions taken by the stockholders and directors of such Company
and all transactions involving the shares of each Company (and contain all
cancelled share certificates).
6.4 Authority. Each Company has the corporate power and
authority to execute and deliver this Agreement and any other agreements,
instruments and documents executed and delivered by it pursuant to this
Agreement (this Agreement and such other agreements, instruments and documents
are collectively referred to as the "Company Delivered Agreements") and to
consummate the transactions contemplated on the part of it thereby. The
execution and delivery by each Company of the Company Delivered Agreements and
the consummation of the transactions contemplated on such Company's part
thereby have been duly authorized and approved by its board of directors and
its shareholders. No other corporate action on either Company's part is
necessary to authorize the execution and delivery of the Company Delivered
Agreements by such Company or the consummation by such Company of the
transactions contemplated hereby. Each of the Company Delivered Agreements has
been duly executed and delivered by the Company executing such documents and
constitutes the valid and binding agreement of such Company enforceable in
accordance with its terms.
6.5 Non-Contravention. Except for non-Material Contracts
and except as set forth on Schedule 6.5, the execution and delivery of the
Company Delivered Agreements by each Company do not, and the consummation by
each Company of the transactions contemplated thereby will not: (i) violate or
conflict with any provision of the Articles of Incorporation or Bylaws of
suchCompany, or any agreement to which such Company is a party or by which such
Company or any of its assets is bound; or (ii) violate, or result (with the
giving of notice or the lapse of time or both) in a violation of any provision
of, or result in the acceleration of or entitle any party to accelerate
(whether after the giving of notice or lapse of time or both), any obligation
under, or result in the creation or imposition of any Liens upon any property
of such Company pursuant to any provision of, any Lien, mortgage, lease,
agreement, license or instrument, or any statute, law, ordinance, code, rule,
regulation, policy or guideline of any federal, state, local or other
Governmental Authority (collectively "Laws"), or any order, arbitration award,
injunction, judgment or decree (collectively "Orders") to which such Company is
a party or by which it is bound, and the same does not and will not constitute
an event permitting termination of any Lien, mortgage, lease, agreement,
license or instrument to which such Company is a party. Except with respect to
agreements and leases that do not constitute "Material Contracts," as such term
is defined in Section 6.15, no such violation, acceleration, entitlement to
accelerate, creation or imposition of a Lien, conflict or event, regardless of
whether it is described on Schedule 6.5, shall cause any damage (which shall
not be deemed to include loss of revenue), additional cost or expense
(including any payments or expenses incurred to obtain consents or waivers) to
such Company or FFMC or otherwise alter the rights or impair the ability of
such Company to conduct its business as presently conducted.
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6.6 Subsidiaries. No Company has any Subsidiary or owns
any equity interest in any corporation, partnership, limited liability company,
joint venture, business trust or other business organization, whether
incorporated or unincorporated. As used in this Agreement, the term
"Subsidiary" means, with respect to any Company, any corporation or other
organization, whether incorporated or unincorporated, of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is at
that time directly or indirectly owned or controlled by such Company.
6.7 No Consents Required. Except for (i) filings with
the FTC and Justice under the HSR Act, and (ii) the filing of Articles of
Mergers with the Secretaries of State of the Commonwealth of Pennsylvania and
the State of Georgia with respect to the Mergers, no consent, approval, order
or authorization of, or registration, or declaration of filing with, any
Governmental Authority or any other consent, approval or authorization from any
other third party, is required in connection with its execution or delivery of
the Company Delivered Agreements or the consummation of the transactions
contemplated by, or other compliance with the performance under, the Company
Delivered Agreements by the Companies.
6.8 Financial Statements.
(a) The Companies have previously furnished FFMC
a true and complete copy of the audited combined balance sheets,
statements of income, statements of stockholder's equity, and
statements of cash flow of the Companies for the years ended December
31, 1993 and December 31, 1992 and an unaudited combined balance sheet
as of March 31, 1994, and the related statements of income, statements
of stockholders' equity and statements of cash flow for the three
months then ended, including the notes thereto (all of which, together
with the financial statements to be provided by the Companies pursuant
to Section 8.9, are referred to herein as the "the Financial
Statements"). Except as set forth onSchedule 6.8, the Financial
Statements are prepared from the books and records of the Companies,
are complete and accurate in all material respects, have been prepared
in conformity with generally accepted accounting principles ("GAAP")
consistently applied and present fairly the financial position of the
Companies as of their respective dates and their results of operations
for the periods then ended.
(b) Except as set forth on Schedule 6.8, the
accounts receivable of each Company reflected on the books of such
Company are valid and existing, represent invoices due for goods sold
or services rendered, and, net of the allowance for doubtful accounts,
are, to the extent uncollected, fully collectible and are subject to
no reunds or other adjustments, and to no defenses, rights of set-off,
assignments, restrictions, encumbrances or conditions enforceable by
third parties.
(c) From and after the delivery of the Financial
Statements as of, and for the six months ending, June 30, 1994,
provided for in Section 8.9(a), the representations, warranties,
covenants and agreements that relate to Financial Statements as of
March 31,
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1994 shall refer, notwithstanding any other provision of this
Agreement other than 9.1(q), to said June 30, 1994 Financial
Statements.
6.9 Absence of Certain Changes. Except as set forth on
Schedule 6.9, since December 31, 1993: (i) each of the Companies has operated
its business in the ordinary and usual course; (ii) there has not been any
material adverse change in the financial condition, results of operations,
business or prospects of either Company; (iii) there has not been any material
damage, destruction or loss (whether or not covered by insurance) to the real
or personal property of either Company; (iv) neither Company has made, declared
or paid any dividend or declared or made any distribution on, or directly or
indirectly combined, redeemed, purchased or otherwise acquired, any shares of
its outstanding common stock or incurred any debt to the Shareholders or to any
"affiliate," as that term is defined in Rule 405 of Regulation C promulgated
underthe Securities Act of 1933, as amended (an "Affiliate"), of the
Shareholders; (v) neither Company has amended or terminated any Material
Contract (as hereinafter defined); (vi) neither Company has made any payments
to any Affiliate or to any of the Shareholders, other than compensation,
expense reimbursement and similar payments in the ordinary course of business
consistent with past practices; (vii) neither Company has granted or agreed to
grant any bonus to any current employee, any general increase in the rates of
salaries or compensation of its employees or any specific increase to any
current employee, except in accordance with regularly scheduled periodic
bonuses and increases consistent with prior practices, and has not provided for
any new pension, retirement or other employee benefits to any of its current
employees or any increase in any existing benefits; (viii) neither Company has
sold, assigned, leased, transferred, encumbered, granted a security interest in
or license with respect to, or disposed of, any of its assets or properties,
tangible or intangible, other than in the ordinary course of business and has
not waived or released any rights of value, or cancelled, compromised, released
or assigned any indebtedness owed to it or any claims held by it; and (ix)
neither Company has made any capital expenditures except capital expenditures
made in the ordinary course of its business consistent with past practice and
not exceeding $25,000 individually or $150,000 in the aggregate.
6.10 Governmental Authorization and Compliance with Laws.
Except as set forth on Schedule 6.10: (i) each Company has operated the
Business in all material respects in compliance with all Laws, including
without limitation, all Environmental Laws (as hereinafter defined); (ii) each
Company has all permits, certificates, licenses, approvals and other
authorizations (collectively "Authorizations") required in connection with its
operation of the Business; (iii) no notice has been issued and, to the best of
the knowledge of the Companies and the Shareholders, no investigation or review
is pending or threatened by any Governmental Authority (A) with respect to any
alleged violation by any Company of any Laws, or (B) with respect to any
alleged failure to have all Authorizations required in connection with the
operation of the Business of any Company; and (iv) neither Company is in
violation of any Orders applicable to it or any of its Properties (as
hereinafter defined).
6.11 Absence of Undisclosed Liabilities. Except as set
forth in the unaudited balance sheets as of March 31, 1994 included in the
Financial Statements and except as otherwise disclosed on the Schedules to this
Agreement, no Company (i) had, as of March 31, 1994 debts, liabilities or
obligations of any kind, whether accrued, absolute, contingent or otherwise and
whether due or to become due and (ii) no Company has incurred since March 31,
1994 any such debts,
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liabilities or obligations (other than debts, liabilities or obligations
incurred in the ordinary and usual course of business after such date)
exceeding $100,000 in the aggregate.
6.12 Taxes.
(a) Except as set forth on Schedule 6.12, each of
the Companies has (i) filed with the appropriate federal, state ,
local and foreign taxing authorities all Tax Returns (as hereinafter
defined) required to be filed by or on behalf of such Company and (ii)
paid in full all Taxes (as hereinafter defined) owed (whether or not
shown to be due on such Tax Returns) by such Company.
(b) Each of the Companies has withheld and paid
to the proper Governmental Authorities all Taxes required to have been
withheld and paid by such Company in connection with amounts paid or
owing to any employee, creditor, independent contractor or other third
party.
(c) Except as set forth on Schedule 6.12: (i) no
audit of the Tax Returns of any Company is currently being conducted,
and no Company has received any notice that any federal, state, local
or foreign taxing authority intends to conduct such an audit; (ii) no
Company has received any notice of proposed adjustments, notice of
deficiency or assessment from any federal, state or local taxing
authority with respect to Taxes of such Company that has not
previously been resolved; and (iii) no Company has granted any waiver
or extension of a statute of limitations with respect to Taxes of such
Company or any other Company.
(d) No Company has filed a consent under Section
341(f) of Internal Revenue Code of 1986, as amended, (the "Code"),
concerning collapsible corporations. No Company has made, nor is
either Company obligated to make, any payments that will not be
deductible under Section 280G of the Code. No Company is a party to
any tax sharing or tax allocation agreement.
(e) Except as set forth on Schedule 6.12, the
amounts for current Taxes reflected on the March 31, 1994 balance
sheets included in the Financial Statements and on the books of the
Companies for periods since March 31, 1994 (which books reflect no
Taxes that are unusual in nature or amount) will be at least equal to
or in excess of the net amount of all Taxes payable thereafter with
respect to all periods up to and including the Closing Date.
(f) GENEX, GCR and GENEX Canada each elected to
be taxed as an S corporation as defined in Section 1361 of the Code ,
commencing with the tax years 1988, 1988 and 1990, respectively, and
each such election was valid when made and has not been terminated,
voluntarily or involuntarily, for any subsequent tax year.
(g) The merger of General Rehabilitation
Services, Inc. and GCR on October 29, 1993 qualified as a "tax-free
reorganization" under Section 368 of the Code.
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(h) GCR will convert from the cash to the
accrual method of accounting for income tax purposes effective as of
October 29, 1993, and all income of GCR related to the conversion
will be recorded in tax years ended prior to the Effective Time .
(i) For purposes of this Agreement: (i) the term
"Taxes" means all taxes, including, but not limited to, income, gross
receipts, sales, use, transfer, payroll, ad valorem, excise, or
franchise taxes, that are imposed by the United States, or any state,
county, local or foreign government or subdivision or agency thereof,
and any interest, penalties or additions to tax attributable to such
taxes; and (ii) the term "Tax Return" means any report, return,
statement or other written information required to be supplied to a
taxing authority in connection with Taxes.
6.13 Title to Properties. Except as set forth on Schedule
6.13, no Company holds legal or equitable title to any real property. Except
as set forth on Schedule 6.13, the Companies have good and marketable title to
all properties and assets reflected in the balance sheets dated March 31, 1994
included in the Financial Statements (or acquired after that date) or used by
any Company in its business, free and clear of any Liens. Except as set forth
on Schedule 6.13, no Company has leased any of the properties owned by it or
subleased any of the properties leased by it or granted any person the right to
possess any of its properties.
6.14 Adequacy; Condition.
(a) Except as set forth on Schedule 6.14, (i) the
real, personal and mixed properties owned or leased by each Company
(collectively the "Properties") are adequate in all material respects
for the conduct of its business as presently conducted; (ii) no
Company is in violation in any material respect of any Laws in respect
of the Properties; (iii) no Company has received notice and has any
knowledge of any pending or contemplated condemnation or eminent
domain proceeding affecting the Properties; and (iv) there are no
outstanding requirements or recommendations by the Companies'
insurance companies requiring or recommending any repairs or work to
be done with reference to any of the Properties or, to the knowledge
of the Shareholders, any basis for such. Consummation of the
transactions contemplated by this Agreement will not alter the rights
or impair the ability of the Companies to use the Properties in the
conduct of their business as presently conducted.
(b) The Properties, Material Contracts and
Intellectual Property (as hereinafter defined) of the Companies
(together with the properties and assets owned by the Companies not
required to be disclosed pursuant to this Agreement) constitute all of
the assets which the Companies use in connection with the operation of
their business as presently conducted.
6.15 Material Contracts. Schedule 6.15 sets forth a list
of all contracts and agreements of the following types to which either of the
Companies is a party or is bound: (i) all leases under which any Company
leases any (A) real property or (B) personal property to the extent any such
leases require rental payments in excess of $15,000 on an annualized basis;
(ii) all loan agreements or other agreements for the borrowing or lending of
money; (iii) all client consulting
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agreements or other agreements to provide services to third parties; (iv) all
employment or consulting agreements (other than oral employment contracts
terminable at will by Company); and (v) any other agreement to which any party
thereto is obligated to make aggregate payments after the date of this
Agreement of more than $15,000 (such agreements, together with the Intellectual
Property Agreements (as defined in Section 6.19), are collectively referred to
as "Material Contracts").
(a) As to the Material Contracts, except as set
forth on Schedule 6.15:
(i) all such Material Contracts are in full
force and effect and constitute valid and binding obligations
of all parties thereto;
(ii) there has not been and there currently
is no material default thereunder by GENEX or GENEX Canada, as
applicable, or, to the knowledge of the Shareholders, any
other party thereto;
(iii) no event has occurred and no situation
exists which (whether with or without notice, lapse of time or
the happening of any other event) would constitute a default
thereunder entitling any party thereto to terminate the
Material Contract; and
(iv) there is no outstanding notice of
cancellation or termination with respect to any Material
Contract.
Except as disclosed onSchedule 6.15, no consent of any party to any
Material Contract is required in connection with the consummation by the
Shareholders, GENEX or GENEX Canada of the transactions contemplated by this
Agreement.
6.16 Litigation. Except as disclosed on Schedule 6.16,
there is no claim, action, suit, proceeding or investigation pending or, to the
best of the knowledge of the Companies or the Shareholders, threatened against
either Company or any of the Properties: (i) which questions the validity or
legality of this Agreement or any action taken or to be taken by any Company in
connection with this Agreement; (ii) which, in the event of a final
determination adverse to any Company considered individually or in the
aggregate with all such other claims, actions, suits, proceedings or
investigations, could reasonably be expected to materially and adversely affect
the financial condition, results of operations, business or prospects of such
Company; or (iii) which seeks damages in connection with any of the
transactions contemplated by this Agreement or to prohibit, restrict or delay
the Closing or the Mergers or any of the conditions to consummation of the
transactions contemplated in this Agreement or to limit in any manner the right
of FFMC to control the Companies or any aspect of the business of the Companies
after the Closing Date, nor is there any Order of any Governmental Authority,
arbitrator or any other person outstanding against any Company having any such
effect. No Company is a party to or bound by any outstanding Order of any
Governmental Authority, arbitrator or any other person, which, when considered
individually or in the aggregate with all such other Orders, materially and
adversely affects or could reasonably be expected to materially and adversely
affect the financial condition, results of operations, business or prospects of
such Company.
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6.17 Labor Controversies and Employees. Each Company is
in material compliance with all Laws respecting employment, employment
practices, terms and conditions of employment and wages and hours, and unfair
labor practices. There is no collective bargaining agreement which is binding
on any Company. There is no unfair labor practice, complaint, charge or other
matter against or involving any Company pending before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
Governmental Authority. There is no (and since January 1, 1990 there has not
been any) labor strike, work stoppage, union organizing effort or work slow
down pending against, involving or, to the knowledge of the Shareholders,
threatened against, any Company. Except as set forth on Schedule 6.17, there
are no employment grievances pending between any Company and any of its
employees. Except as set forth on Schedule 6.17, no Company is a party to or
bound by any agreement, arrangement or understanding with any employee or
consultant that cannot be terminated on notice of ninety (90) or fewer days
without liability to the Company party thereto or that entitles the employee or
consultant to receive any salary continuation or severance payment or retain
any specified position with such Company. Set forth on Schedule 6.17 is a list
of all current employees of each Company whose annual rate of salary is in
excess of $50,000 and the amount of each such employee's compensation.
6.18 Insider Interests. Except as disclosed on Schedule
6.18, no Shareholder, Affiliate, officer or director, or former stockholder,
former officer or former director, of any Company: (i) has any agreement with
either Company or any interest in any property, real or personal, tangible or
intangible, including without limitation, Intellectual Property (as hereinafter
defined), used in or pertaining to the business of any Company; or (ii) has any
claim or cause of action against any Company in respect of acts or omissions
occurring prior to the Closing Date except for accrued compensation and
benefits, expenses and similar obligations incurred in the ordinary course of
business (including reimbursement of medical expenses pursuant to plans
disclosed in this Agreement) in respect of persons who are employees of any
Company.
6.19 Intellectual Property. Schedule 6.19 lists all
patents, trademarks, service marks, trade names, copyrights or applications for
the foregoing, and all computer programs, firmware and documentation relating
thereto and all other intellectual properties other than trade secrets (which
have been separately disclosed to FFMC) (including such trade secrets, the
"Intellectual Property") which are owned or are or were used in and are
necessary for the conduct of the business of the Companies. Each Company owns
or has the right to use pursuant to an Intellectual Property Agreement (as
hereinafter defined) all such Intellectual Property used by it. Except as
disclosed on Schedule 6.19, each Company has and has had the unrestricted
right to produce, market, license and sell all of the products and services
produced, marketed and licensed by it and the consummation of the transactions
contemplated by this Agreement will not alter or impair any such rights.
Schedule 6.19 lists all licenses or other agreements pursuant to which any
Company has any right to use or enjoy any Intellectual Property that is owned
by others or pursuant to which any Company is under a duty of confidentiality
with respect to any Intellectual Property owned by others (the "Intellectual
Property Agreements"). Each Company has all documentation with respect to the
Intellectual Property Agreements to which it is a party, including without
limitation, all computer software licenses. Except as disclosed on Schedule
6.19, all of the Intellectual Property is owned free and clear of all
assignments, licenses, sublicenses, and Liens, including claims of employees,
former employees or independent contractors of any Company, and no Company has
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received notice that the use of any of the Intellectual Property in its
business, or any of the products or services of such Company violates or
infringes upon the claimed rights of others. As to the Intellectual Property
Agreements, except as set forth on Schedule 6.19, (i) all are in full force and
effect; (ii) neither Company, nor to the best of the knowledge of the Company
party thereto or the Shareholders, any other party thereto, is in default under
any Intellectual Property Agreement; (c) no Company is and no Company will
become obligated to make any royalty, transfer or similar payments under any
Intellectual Property Agreement, (d) the rights of the Companies under all of
the Intellectual Property Agreements will not be affected by the consummation
of the transactions provided forherein, and (e) the exercise by any Company of
its respective rights under any Intellectual Property Agreement to which it is
a party will not infringe upon the claimed rights of others.
6.20 Insurance. Schedule 6.20 summarizes the amount and
kinds of insurance as to which the Companies have insurance policies or
contracts. All such insurance policies and contracts are in full force and
effect. No notice of cancellation or termination of any such insurance
policies or contracts has been given to any Company by the carrier of any such
policy. All premiums required to be paid by the date hereof in connection
therewith have been paid in full.
6.21 Employee and Fringe Benefit Plans.
(a) Schedule of Plans. Schedule 6.21 to this
Agreement lists each of the following that any Company or any ERISA
Affiliate (as defined below) either maintains, is required to
contribute to or otherwise participates in (or at any time during the
preceding seven years maintained, contributed to or otherwise
participated in) or as to which any Company or any ERISA Affiliate has
any unsatisfied liability or obligation, whether accrued, contingent
or otherwise:
(i) any employee pension benefit plan
("Pension/Profit-Sharing Plan") (as such term is defined in
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), including any pension, profit-sharing,
retirement, thrift or stock bonus plan;
(ii) any "multi-employer plan"
("Multi-Employer Plan") (as such term is defined in ERISA);
(iii) any employee welfare benefit plan
("Welfare Plan") as such term is defined in ERISA); or
(iv) any other compensation, stock
option, restricted stock, fringe benefit or retirement plan,
program, policy, understanding or arrangement of any kind
whatsoever, whether formal or informal, not included in the
foregoing and providing for benefits for, or the welfare of,
any or all of the current or former employees or agents of any
Company or any ERISA Affiliate or their beneficiaries or
dependents, including any group health, life insurance,
retiree medical, bonus, incentive or severance arrangement;
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(all of the foregoing in items (i), (ii), (iii) and (iv) being
referred to as "Employee Plans"). "ERISA Affiliate" means each trade
or business (whether or not incorporated) which together with any
Company is treated as a single employer pursuant to Code Section
414(b), (c), (m) or (o). Each Company, as applicable, has delivered
to FFMC (and Schedule 6.21 lists each item delivered) copies of the
following: (A) each written Employee Plan, as amended (including
either the original plan or the most recent restatement and all
subsequent amendments); (B) the most recent Internal Revenue Service
("IRS") determination letter issued with respect to each
Pension/Profit-Sharing Plan; (C) the latest actuarial valuation (if
any) for each Pension/Profit-Sharing Plan; (D) the three most recent
annual reports on the Form 5500 series; (E) each trust agreement,
insurance contract or document setting forth any other funding
arrangement, insurance contract or document setting forth any other
funding arrangement, if any, with respect to each Employee Plan; (F)
the most recent ERISA summary plan description or other summary of
plan provisions distributed to participants or beneficiaries for each
Employee Plan; (G) each option or ruling from the IRS, the Department
of Labor or the Pension Benefit Guaranty Corporation ("PBGC")
concerning any Employee Plan; and (H) each Registration Statement,
amendment thereto and prospectus relating thereto filed with the SEC
or furnished to participants in connection with any Employee Plan.
(b) Qualification. Except as set forth in
Schedule 6.21 each Pension/Profit-Sharing Plan: (i) has received a
favorable determination letter from the IRS to the effect that it is
qualified under Code Sections 401(a) and 501, both as to the original
plan and all restatements or material amendments; (ii) has never been
subject to any assertion by any governmental agency that it is not so
qualified; and (iii) has been operated so that it has always been so
qualified.
(c) Accruals; Funding.
(i) Pension/Profit Sharing Plans.
Schedule 6.21 fully and accurately discloses, as of the end of
each Plan's most recently ended fiscal year (or, each Plan's
second more recently ended fiscal year if the required
information is not yet available for such Plan's most recently
ended fiscal year) (such year end, as applicable, being
referred to as the "Applicable Plan Year-End"), the total
assets, the actuarially computed present value of the accrued
benefits or other liabilities or obligations, and the
actuarially computed present value of the vested benefits or
other liabilities or obligations, for each
Pension/Profit-Sharing Plan subject to ERISA Title IV
(including those for retired, terminated or other former
employees and agents) based on the actuarial assumptions set
forth in the plan valuations included as part of Schedule
6.21, unless otherwise indicated on such Schedule. None of
the Pension/Profit-Sharing Plans subject to ERISA Title IV has
incurred any "accumulated funding deficiency" (as such term is
defined in ERISA), there is no employer liability with respect
to any of such Plans as determined in accordance with ERISA
Section 4062, and the actuarially computed present value of
the benefits of each such Plan, accrued to the Applicable Plan
Year-End, does not exceed the value of the assets of such
Employee Plan. Schedule 6.21 further sets forth as of the
most recent date so completed, the actuarially computed
present value of the accrued benefit liabilities of each such
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<PAGE> 27
Pension/Profit-Sharing Plan subject to Title IV of ERISA,
determined on the basis of the assumptions prescribed by the
PBGC pursuant to ERISA Section 4044 for use in valuing accrued
benefit liabilities upon a plan termination, and the value of
such benefit liabilities does not exceed the value of the
assets of any such Plan. There have been no material changes
in the financial condition of any of the
Pension/Profit-Sharing Plans since the Applicable Plan
Year-End.
(ii) Other Plans. Schedule 6.21 fully
and accurately discloses any funding liability under each
Employee Plan not subject to ERISA Title IV, whether insured
or otherwise, specifically setting forth any liabilities under
any retiree medical arrangement and specifically designating
any insured plan which provides for retroactive premium or
other adjustments. The levels of insurance reserves and
accrued liabilities with regard to each such Employee Plan are
reasonable and are sufficient to provide for all incurred but
unreported claims and any retroactive premium adjustments.
(iii) Contributions. Except as fully and
accurately disclosed in Schedule 6.21: (A) each Company and
each ERISA Affiliate have made full and timely payment of all
amounts required to be contributed under the terms of each
Employee Plan and applicable law, or required to be paid as
expenses under such Employee Plan, including PBGC premiums and
amounts required to be contributed under Code Section 412; (B)
all contributions have been made in accordance with the
actuarial recommendations; and (C) no excise taxes are
assessable as a result of any nondeductible or other
contributions made or not made to an Employee Plan.
(d) Reporting and Disclosure. Summary plan
descriptions and all other returns, reports, registration statements,
prospectuses, documents, statements and communications which are
required to have been filed, published or disseminated under ERISA or
other federal law and the rules and regulations promulgated by the
Department of Labor under ERISA and the Treasury Department or by the
SEC with respect to the Employee Plans have been so filed, published
or disseminated.
(e) Prohibited Transactions; Terminations; Other
Reportable Events. Except as set forth in Section 6.2:
(i) Any Company, any ERISA Affiliate,
any Employee Plan, any trust or arrangement created under any
of them, nor any trustee, fiduciary, custodian, administrator
or any person or entity holding or controlling assets of any
of the Employee Plans has engaged in any "prohibited
transaction" (as such term is defined in ERISA or the Code)
which could subject any of the foregoing persons or entities,
or any person or entity dealing with them, to any tax, penalty
or other cost or liability of any kind;
(ii) no termination, whether partial or
complete, has occurred with respect to any Employee Plan; and
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<PAGE> 28
(iii) no "reportable event" (as such term is
defined in ERISA) (other than a reportable event for which the
statutory notice requirements have been waived by regulation)
has occurred with respect to any Employee Plan.
(f) Claims for Benefits. Other than claims for
benefits arising in the ordinary course of the administration and
operation of the Employee Plans, no claims, investigations or
arbitrations are pending or threatened against any Employee Plan or
against any Company, any ERISA Affiliate, any trust or arrangement
created under or as part of any Employee Plan, any trustee, fiduciary,
custodian, administrator or other person or entity holding or
controlling assets of any Employee Plan, and no basis to anticipate
any such claims or claims exists.
(g) Other. Each Company and all ERISA Affiliates
have fully complied with all of their obligations under each of the
Employee Plans and with all provisions of ERISA and any and all other
law applicable to the Employee Plans. No written notice has been
received by any Company of any claims by any participant in the
Employee Plans of any violations of such laws, and to the best
knowledge of the Shareholders, no such claims are pending or
threatened.
(h) Creation of Obligations By Reason of Sale of
Shares. Except as set forth in such Schedule 6.21, the execution or
performance of the transactions contemplated by this Agreement will
not create, accelerate or increase any obligations under any Employee
Plan, including any obligation to make a payment that would be
nondeductible under Code Section 280G or any other Code provision.
(i) No Multi-Employer Plans. Except as set forth
in Schedule 6.21, none of the Employee Plans are Multi-Employer Plans,
and neither any Company nor any ERISA Affiliate has any liability,
joint or otherwise, for any withdrawal liability (potential,
contingent or otherwise) under ERISA Title IV for a complete or
partial withdrawal from any Multi-Employer Plan.
6.22 Environmental Matters.(a) For purposes of this
Agreement, the term "Environmental Laws" shall mean all Laws relating to
pollution or protection of the environment and any Order related thereto.
(b) Each Company has obtained all Authorizations,
kept all records and made all filings required by applicable
Environmental Laws with respect to emissions or discharges into the
environment and the proper disposal of any hazardous wastes, hazardous
substances, or other hazardous or toxic materials as defined in the
Environmental Laws. None of the properties occupied or used by any
Company has been contaminated by such Company, or, to its knowledge,
any other party, with any such hazardous wastes, hazardous substances,
or other hazardous or toxic materials. Each Company has conducted its
operations and will consummate the transactions contemplated by this
Agreement in material compliance with all Environmental Laws and all
Authorizations obtained pursuant thereto.
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(c) No Company has received any notice from the
United States Environmental Protection Agency that it is a potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund Notice"), any citation from
any Governmental Authority for noncompliance with its requirements
with respect to air, water or environmental pollution, or the improper
storage, use or discharge of any hazardous waste, other waste or other
substance or material pertaining to its business ("Citations") or any
written notice from any private party alleging any such noncompliance;
and there are no pending or unresolved Superfund Notices, Citations or
written notices from private parties alleging any such noncompliance.
6.23 Customer Warranties. Except as implied by law or as
set forth on Schedule 6.23, there are no outstanding warranties or guarantees
upon any goods or services sold or provided by any Company. Except as set
forth on Schedule 6.23, there are no warranty claims or proceedings pending, or
to the best of the knowledge of the Shareholders, threatened, against any
Company.
6.24 Bank Accounts. Schedule 6.24 lists all bank, money
market, savings and similar accounts and safe deposit boxes of each Company,
specifying the account numbers and the authorized signatories or persons having
access to them.
6.25 Pooling-of-Interests. During the past 24 months, no
Company has (i) purchased or otherwise acquired any shares of its Common Stock
or any securities convertible into or rights to acquire its Common Stock; (ii)
issued any equity securities in contemplation of the transactions contemplated
by this Agreement; (iii) been a subsidiary or division of another corporation;
or (iv) taken any action set forth on Schedule 6.25 that would prevent the
transactions contemplated by this Agreement from being accounted for as a
pooling of interests. No Company owns any shares of FFMC Common Stock.
6.26 Major Customers. Schedule 6.26 sets forth each
customer of any Company that represents at least two percent (2%) of such
Company's revenue for the three months ended March 31, 1994 and who during the
five months ended May 31, 1994 has terminated, or given notice of termination
of, its contract or agreement with such Company. Schedule 6.26 also sets forth
each such customer as to which any Company or the Shareholders have a
reasonable basis to believe that such customer will terminate its contract or
agreement with such Company prior to January 1, 1995.
6.27 Accuracy of Schedules, Certificates and Documents.
No representation or warranty made by any Company or any Shareholder in this
Agreement, in any certificate furnished to FFMC pursuant hereto and in each
Schedule attached hereto relating to any Company or any Shareholder contains or
will contain any untrue statement of material fact or omits to state any
material fact necessary to make the representations and warranties contained
therein not misleading at and as of the time each is made or deemed to be made;
and all documents furnished to FFMC pursuant to this Agreement as being
documents described in this Agreement or in any Schedule attached hereto are
true and correct copies of the original documents which they purport to
represent.
7. Representations and Warranties by FFMC, Bluebird and GENCAN.
FFMC represents and warrants to the Shareholders as follows:
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7.1 Existence, Power and Authorization. Each of FFMC,
Bluebird and GENCAN is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. Each of FFMC, Bluebird
and GENCAN has the corporate power and authority to execute, deliver and
perform this Agreement and to own its properties and assets and to carry on its
business as it is now being conducted. The execution, delivery and performance
of this Agreement and the other documents and agreements contemplated hereby by
each of FFMC, Bluebird and GENCAN have been duly authorized by all necessary
corporate action of each of FFMC, Bluebird and GENCAN and this Agreement and
the other documents and agreements contemplated hereby to which each of FFMC,
Bluebird or GENCAN is a party each constitutes the valid and binding obligation
of FFMC, Bluebird and GENCAN , as appropriate, enforceable against it in
accordance with its terms.
7.2 Capitalization. The authorized capital stock of FFMC
consists of 150,000,000 shares of common stock, par value $.10 per share, and
5,000,000 shares of preferred stock $1.00 par value per share. As of June 1,
1994, 61,321,901 shares of common stock were validly issued and outstanding,
fully paid and non-assessable, and 20,000 shares of FFMC Common Stock were held
in the treasury of FFMC. No shares of preferred stock are issued or
outstanding or held in the treasury of FFMC. FFMC owns all of the outstanding
shares of each of Bluebird and GENCAN. The shares of FFMC Common Stock to be
received by the Shareholders pursuant to this Agreement shall be validly issued
and outstanding, fully paid and nonassessable, subject to no preemptive or
similar rights and free and clear of all liens, options, rights of first
refusal or similar rights or other transfer restrictions of any nature
whatsoever (including any arising from existing or threatened litigation) other
than restrictions on transfer arising out of applicable federal and state
securities laws.
7.3 Non-Contravention. Subject to the satisfaction of
the conditions specified in Sections 8.1(f) and 8.2(e), and except as set forth
on Schedule 7.3, the execution and delivery of this Agreement and the other
documents and agreements contemplated hereby by FFMC do not, and the
consummation by FFMC of the transactions contemplated hereby will not (i)
violate or conflict with any provision of the Articles of Incorporation or
Bylaws of FFMC, or (ii) violate, or result (with the giving of notice or the
lapse of time or both) in a violation of any provision of any Laws or any
Orders to which FFMC is a party or by which it is bound.
7.4 Periodic Reports. FFMC has made available to the
Shareholders true and complete copies of (i) its Annual Reports on Form 10-K,
as amended, for the years ended December 31, 1991, 1992 and 1993, as filed with
the SEC, (ii) its proxy statements relating to all of FFMC's meetings of
stockholders (whether annual or special) since January 1, 1992, as filed with
the SEC, and (iii) all other reports, statements and registration statements
(including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended) filed by FFMC with the SEC since January 31, 1992 (the reports and
statements set forth in clauses (i), (ii) and (iii) are referred to
collectively as the "SEC Filings"). Except as set forth on Schedule 7.4, as of
their respective dates, none of the SEC Filings (including all exhibits and
schedules thereto and documents incorporated by reference therein), contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the SEC Filings at the time of filing complied in all material respects with
the Exchange Act or the Securities Act, as the case may be, and the rules
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<PAGE> 31
and regulations thereunder. As of the date hereof there are no claims,
actions, proceedings or investigations pending or, to the best knowledge of
FFMC, threatened against FFMC or any of its Subsidiaries, or any properties or
rights of FFMC or any of its Subsidiaries, before anycourt, administrative,
governmental or regulatory authority or body which have or could have a
material adverse effect on the business, assets, condition (financial or
otherwise) or the results of operation of FFMC.
7.5 Litigation. Except as disclosed on Schedule 7.5,
there is no claim, action, suit, proceeding or, investigation pending, or, to
the best of the knowledge of FFMC, Bluebird or GENCAN, threatened, that
questions the validity or legality of this Agreement or any action taken or to
be taken by FFMC, Bluebird or GENCAN in connection with this Agreement. There
is no claim, action, suit, proceeding or investigation pending or, to the best
of the knowledge of FFMC, threatened, that, in the event of a final
determination adverse to FFMC, would have a material and adverse effect upon
FFMC's ability to perform its obligations under this Agreement.
7.6 No Past Action That Would Defeat Pooling. During the
past twenty-four months, FFMC has taken no action that would prevent the
transactions contemplated by this Agreement from being accounted for as a
pooling-of-interests.
7.7 Investment. FFMC is acquiring the GENEX Common Stock
and Canada Common Stock for investment for its own account, and not with a view
to, or for the offer or sale in connection with, any distribution thereof.
FFMC acknowledges that the shares of GENEX Common Stock and Canada Common Stock
to be acquired are not registered under the Securities Act, or any state
securities law, and that the GENEX Common Stock and Canada Common Stock may not
be transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and subject to
state securities laws and regulations.
7.8 Accuracy of Schedules, Certificates and Documents.
No representation or warranty made by FFMC, Bluebird or GENCAN in this
Agreement, in any certificate furnished to the Shareholders pursuant hereto
and in each Schedule attached hereto relating to FFMC, Bluebird or GENCAN
contains or will contain any untrue statement of a material fact or omits to
state any material fact necessary to make the representations and warranties
contained therein not misleading; and all documents furnished to the
Shareholders pursuant to this Agreement as being documents described in this
Agreement or in any such Schedule attached hereto are true and correct copies
of the original documents which they purport to represent.
8. Further Agreements of the Parties.
8.1 Investigation; Confidentiality. Prior to the
Closing, FFMC may make or cause to be made such investigation of the business
and properties of each Company and its financial and legal condition as FFMC
deems necessary or advisable to familiarizeitself therewith, provided that such
investigation shall not unreasonably interfere with normal operations of such
Company. FFMC and its authorized representatives shall have after the date
hereof and until the Closing Date, full access to the premises, books and
records of each Company during normal business hours, and the officers of each
Company will furnish FFMC with such financial and operating data and other
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<PAGE> 32
information with respect to such Company's financial condition, results of
operations, business, prospects and properties as FFMC shall from time to time
request. No investigation by FFMC heretofore or hereafter made shall affect
the representations and warranties of any Company or the Shareholders, and each
such representation and warranty shall survive any such investigation, subject
to Section 12. Except as otherwise required in filings made by either FFMC or
the Shareholders with any Governmental Authority, each of the Companies, the
Shareholders and FFMC each shall hold all the information received by him or it
in connection with this Agreement or the transactions contemplated hereby on a
confidential basis and shall use its best efforts to keep all such information
furnished to its authorized agents or representatives held confidential by
them, and, should this Agreement be terminated or abandoned for any reason, not
to use or voluntary disclose to others any such information, to promptly return
every document furnished by another party hereto in connection herewith and any
copies thereof it may have made, and to destroy any summaries, compilations, or
similar documents it may have made or derived from such material, and will use
its best efforts to have its agents and representatives do the same. The
immediately preceding sentence shall not apply to information that (i) is
generally available to the public or becomes available to the public other than
as a result of a disclosure in violation of the preceding sentence, (ii) was
known to the party prior to its disclosure pursuant to this Agreement, or (iii)
becomes available to the party from a source other than another party to this
Agreement, its agents or representatives, provided that such source is not, to
the knowledge of such receiving party, bound by a confidentiality agreement or
other confidential obligation with respect to such information.
8.2 Conduct of the Business Pending the Closing. From
the date of this Agreement to the Closing, each Company shall, and the
respective Shareholders shall cause each Company to, comply with the following
provisions (unless such noncompliance shall be consented to in writing by FFMC
prior to the taking of such action):
(a) Each Company shall operate its business in the
ordinary course in accordance with sound business principles
consistent with past practices and in material compliance with all
Laws.
(b) Each Company shall promptly notify FFMC of, and
furnish FFMC any information FFMC may reasonably request with respect
to, the occurrence of any event or the existence of any facts that
would result in such Company's or the Shareholders' representations
and warranties not being true in all material respects if those
representations and warranties were made any time prior to or as of
the Closing Date. The officers of each Company shall confer with and
advise representatives of FFMC with respect to operational matters of
a material nature relating to such Company.
(c) Except as described in Schedule 8.2, no Company
shall grant any bonus to any employee or any increase in the rates of
salaries or compensation of its employees, except in accordance with
regularly scheduled periodic increases and bonuses consistent with
prior practices, or provide for any new employment benefits to any of
its existing employees or any increase in any existing benefits.
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(d) Except as set forth onSchedule 8.2, no Company
shall declare, set aside or pay any dividends or other distributions
(whether in cash, capital stock or property) in respect of its capital
stock, or redeem, purchase or otherwise acquire any of its capital
stock or issue, sell or encumber any shares of its capital stock, nor
shall any Company issue or sell 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.
(e) No Company shall amend its Articles of
Incorporation or Bylaws or enter into any merger, consolidation or
share exchange agreement.
(f) Each Company shall use commercially reasonable
efforts to maintain and preserve its business intact, to retain its
present employees and to maintain its relationships with customers,
suppliers and others.
(g) Except for transactions in the ordinary course
of its business or as specifically contemplated by this Agreement, no
Company shall sell, assign, lease, transfer, mortgage, encumber, grant
a security interest in or license with respect to, or dispose of, any
of its assets or properties, tangible or intangible, waive or release
any rights of value, or cancel, compromise, release or assign any
indebtedness owed to it or any claims held by it, or incur any
liabilities or pay any debt, liability or obligation of any kind, and
none of the Companies shall assume, guarantee, endorse or otherwise
become responsible for the obligations of any other individual, firm
or corporation, or make any loans or advances to any individual, firm
or corporation.
(h) Except as set forth on Schedule 8.2, no
Company shall undertake the obligation to or make capital
expenditures, except capital expenditures not exceeding $25,000
individually or $100,000 in the aggregate.
(i) Other than in the ordinary course of
business, no Company shall enter into, amend or terminate any
contract, agreement, license, plan or lease, or make any change in the
form of any of its contracts, agreements, licenses, plans or leases.
No Company shall amend any contract, agreement, license, plan or
lease, the effect of which amendment is to render the terms of such
contract, agreement, license, plan or lease less favorable to such
Company. Each of the Companies shall consult with representatives of
FFMC prior to the execution of any non-standard contract or license,
any amendment or renewal of a non-standard contract or license or any
amendment of an existing contract or license, the result of which is
to convert such contract into a non-standard contract or license. As
used in this Section 8.2(i) the term "nonstandard-contract" shall mean
any contract for the sale of products or services at prices or on
terms and conditions other than in accordance with the applicable
Company's past practice.
(j) Except as specifically provided for in this
Agreement, no Company shall permit any insurance policy naming it as a
beneficiary or a loss payable payee to be cancelled or terminated or
any of the coverage thereunder to lapse, unless, simultaneously with
such cancellation, termination, or lapse, a replacement policy
providing substantially the same coverage is in full force and effect.
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(k) No Company will make any payments to any
Shareholder or Affiliate other than in the ordinary course of business
consistent with past practice, except as otherwise contemplated
herein.
(l) No Company shall enter into any agreement to
do any of the things prohibited by Sections 8.2(a) through 8.2(k).
8.3 HSR Act Filings. As promptly as practicable after
the execution of this Agreement and, in any event, not later than the seventh
(7th) day following the date of this Agreement, FFMC on the one hand, and the
Shareholders on the other, shall, in cooperation with each other, make the
required filings in connection with the transactions contemplated by this
Agreement under the HSR Act with the FTC and Justice, and, as promptly as
reasonably practicable from time to time thereafter, shall make all such
further filings and submissions, and take such further action, as may be
required in connection therewith. Each party shall furnish the other all
information in his or its possession necessary for compliance by the other with
the provisions of this Section 8.3. Neither FFMC on the one hand nor the
Shareholders on the other, shall withdraw any such filing or submission prior
to the termination of this Agreement without the written consent of the other
party.
8.4 Consents, Authorizations, etc. Each party hereto
will use its reasonable best efforts to obtain all consents, authorizations,
orders and approvals of and make all filings and registrations with, any
Governmental Authority or non-governmental third party required for, or in
connection with, the performance by it of this Agreement and the consummation
by it of the transactions contemplated hereby.
8.5 Good Faith; Further Assurances; Cooperation. The
parties to this Agreement shall in good faith perform their obligations under
this Agreement and use their reasonable efforts to cause the transactions
contemplated by this Agreement to be carried out promptly in accordance with
the terms of this Agreement. Upon the execution of this Agreement and
thereafter, each party shall take such actions and execute and deliver such
documents as may be reasonably requested by the other parties hereto in order
more effectively to consummate the transactions contemplated by this Agreement.
The parties shall cooperate fully with each other and their respective counsel
and accountants or designees in connection with any actions required to be
taken as part of their respective obligations under this Agreement.
8.6 Expenses. Except as otherwise specifically provided
in this Agreement, each party shall bear his or its own expenses in connection
with this Agreement and in connection with all obligations required to be
performed by him or it under this Agreement; provided, however, that the
Companies shall pay investment banking (including the fees to Robertson
Stephens and Company provided for in Section 14.1), legal, accounting and other
fees and expenses in connection with this Agreement and the transactions
contemplated hereby up to $1.2 million in the aggregate and the Shareholders
shall pay, or reimburse the Companies for, all such fees and expenses in excess
of $1.2 million.
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8.7 Publicity. FFMC shall plan and coordinate jointly
with the Companies any press release or other public announcement or
communication regarding the transactions contemplated by this Agreement,
unless, in the reasonable judgment of FFMC, any such release is required to
discharge its legal obligations (in which case it shall use reasonable efforts
to consult with the Companies before issuing the release). Neither the
Companies nor any Shareholder shall issue any press release or other public
announcement or communication regarding the transactions contemplated by this
Agreement.
8.8 Employee Matters. FFMC will take all actions
necessary or appropriate to permit the employees of each Company employed at
the Effective Time (the "Affected Employees") to participate on and after the
Effective Time in all FFMC's employee benefit programs ("FFMC's Benefit
Programs") listed on Schedule 8.8, and to cause the Surviving Corporations to
take all actions necessary or appropriate to adopt FFMC's Benefit Programs
effective as of the Effective Time or as soon thereafter as practicable. FFMC
shall cause the Surviving Corporations to continue to employ each of its
Affected Employees on an at-will basis if permitted by applicable law;
provided, however, except for Peter D. Madeja and Gary W. Billiard who shall
enter into employment agreements, in the form attached hereto as Exhibit 8.8
(the "Employment Agreements"), that nothing in this Agreement shall be deemed
to require FFMC or the Surviving Corporations to cause to be continued any
Affected Employee's employment for any specific period.
8.9 Additional Financial Statements.
(a) As soon as practicable, but not later than
July 15, 1994, the Companies shall deliver to FFMC unaudited combined
balance sheets as of June 30, 1994 and related unaudited combined
statements of income, stockholders' equity and cash flows for the six
month period then ended, as reviewed by the Companies' independent
auditors KPMG Peat Marwick's, together with KPMG Peat Marwick's
review report thereon. Subject to the right of FFMC to terminate this
Agreement for a material adverse deviation (except with respect to
deviations resulting from or nonconforming with GAAP as described on
Schedule 6.8) pursuant to Section 9.1 if the June 30, 1994 Financial
Statements contain a material deviation, the June 30, 1994 Financial
Statements shall be deemed to have amended the representations and
warranties contained herein as of the date hereof, as well as at
Closing.
(b) Each Company shall prepare and shall deliver
to FFMC as soon as practicable after they have been prepared (but in
no event later than 20 days after the end of each month) unaudited
monthly financial statements of such Company (including a balance
sheet and statements of income, stockholders' equity and cash flows)
for periods after May 31, 1994 until the Closing Date, each certified
by an officer of GENEX or GENEX Canada, as appropriate, as meeting the
standards for financial statements set forth in Section 6.8.
8.10 Shareholder Notes. Within five (5) business days
after the Effective Time, FFMC shall, or shall cause GENEX to, prepay the notes
to Shareholders in the outstanding principal amounts as set forth on Schedule
8.10.
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8.11 No Solicitation of Transactions. Prior to the
termination and abandonment of this Agreement, neither any Company nor any
Shareholder will, or will direct its Affiliates, officers, directors, and
representatives to: (i) solicit, initiate or encourage submission of proposals
or offers from any person other than FFMC relating to any acquisition or
purchase of all or a material part of the stock or assets of, or any merger,
consolidation, share exchange or business combination with, or any
recapitalization, restructuring or issuance or offering of debt or equity
securities of, any Company (an "Acquisition Proposal"); or (ii) participate in
any discussions or negotiations regarding, orfurnish to any person other than
FFMC and its representatives, any information with respect to, or otherwise
cooperate in any way or assist, facilitate or encourage, any Acquisition
Proposal by any person other than FFMC. The Companies and the Shareholders
will immediately cease and cause to be terminated any existing activity,
discussions or negotiations with any person other than FFMC and its
representatives conducted prior to the execution and delivery of this Agreement
with respect to any Acquisition Proposal. If, notwithstanding the foregoing,
any Company, any Shareholder or any of its Affiliates or representatives
should receive any Acquisition Proposal or any inquiry regarding any such
proposal from a third party, the Shareholders shall promptly inform FFMC.
8.12 Affiliate Letters. Each Shareholder shall deliver at
the Closing a written undertaking by him in substantially the form of Schedule
8.12 to this Agreement.
8.13 Exchange Listing. FFMC shall cause any shares of
FFMC Common Stock to be issued to the Shareholders pursuant to this Agreement
to be authorized for listing on the New York Stock Exchange, upon official
notice of issuance, prior to the Closing Date, or as soon as possible
thereafter as is practicable, but in no event later than 30 days after the
Effective Time.
8.14 Pooling Covenant. Neither FFMC on the one hand nor
the Shareholders or the Companies on the other shall knowingly take any action
that would prevent the transactions contemplated by this Agreement from being
accounted for as a pooling-of-interests.
8.15 No Transfers. Except pursuant to this Agreement, no
Shareholder shall transfer any or all of his shares of GENEX Common Stock or
Canada Common Stock after the date of this Agreement.
8.16 Registration of Shares Issued Pursuant to Stock
Option Plan. On or prior to the second anniversary of the date on which the
Effective Time occurs, FFMC shall file a registration statement on Form S-8
registering shares of FFMC Common Stock issuable upon the exercise of
Outstanding Options, or shall take such other action as may be necessary and
appropriate to cause the shares of FFMC Common Stock issuable upon the exercise
of Outstanding Options to be freely tradeable by the holder upon exercise of
Outstanding Options.
8.17 Organization of Subsidiaries. At the Closing, the
Shareholders and the Companies shall take all action necessary to complete the
organization of PrimeCorp., a Pennsylvania corporation, and General
Rehabilitation Services, Inc., a Delaware corporation, including, without
limitation, the issuance of capital stock in the name of GENEX, so that as of
the Effective Time, both of such corporations shall be duly organized and
validly existing, wholly-owned subsidiaries of GENEX.
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9. Conditions to the Closing.
9.1 Conditions Relating to FFMC, Bluebird and GENCAN.
The consummation of the transactions contemplated by this Agreement is subject
to the fulfillment to the reasonable satisfaction of FFMC, prior to or at the
Closing, of each of the following conditions (any or all of which, other than
subsection 9.1(f), may be waived by FFMC):
(a) All material consents, Authorizations, Orders
and approvals of, and filings and registrations with any Governmental
Authority which are required for or in connection with the execution
and delivery by the Companies and the Shareholders of this Agreement
and the other documents and agreements contemplated hereby and the
consummation by the Companies and the Shareholders of the other
transactions contemplated hereby shall have been obtained or made by
the Shareholders or any of the Companies, as applicable.
(b) All consents, authorizations and approvals of
non-governmental third parties which are required for the Companies to
continue to use all of their respective material assets of the
Companies following the Closing in the same manner in which such
assets were used prior to the Closing by such Company shall have been
obtained by such Company, unless the failure to obtain any such
consent, authorization or approval shall not have a material adverse
effect upon the continued right of such Company to use such asset.
(c) The representations and warranties of the
Companies and the Shareholders to FFMC, Bluebird and GENCAN contained
in this Agreement or in any certificate, schedule, exhibit or other
agreement pursuant to one or more provisions of this Agreement were
true and correct in all material respects on the date of this
Agreement and shall be true and correct in all material respects at
and as of the Closing Date (except as set forth in the certificate
delivered pursuant to Section 9.1(e) which certificate shall be deemed
to amend such representations and warranties on and as of the date of
the Agreement as well as at and as of the Closing Date) with the same
effect as though made again at and as of that time.
(d) The covenants and agreements required by this
Agreement to be performed or complied with by any Company and the
Shareholders prior to or at the Closing shall have been performed and
complied with in all material respects by such Company and the
Shareholders.
(e) FFMC shall have been furnished certificates
(dated the Closing Date) executed by an officer of GENEX, by an
officer of GENEX Canada and by each of the Shareholders to the effect
that (i) he or she is familiar with the provisions of this Agreement
and (ii) to the best of his or her knowledge the conditions specified
in this Section 9.1 have been satisfied (except as set forth therein
with respect to Sections 9.1(c)).
(f) The waiting period under the HSR Act shall have
expired or been terminated.
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(g) There shall not be in effect any injunction or
restraining order issued by a court of competent jurisdiction in any
action or proceeding against the consummation of the transactions
contemplated by this Agreement.
(h) FFMC shall have received an opinion, dated as of
the Closing Date, of LaBrum & Doak, counsel to the Companies and the
Shareholders, in form and substance and with such exceptions and
limitations as shall be reasonably satisfactory to FFMC, substantially
to the effect that:
(i) Each of GENEX and GENEX Canada is a
corporation duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania.
Each Company has the corporate power and authority to own its
properties and assets and to carry on its business as it is
presently conducted.
(ii) Each Company has the corporate power
and authority to enter into and perform this Agreement and the
other documents and agreements contemplated hereby. The
execution, delivery and performance of this Agreement and the
other documents and agreements contemplated hereby by each
Company and the Shareholders have been duly authorized,
executed and delivered by each Company and the Shareholders,
and this Agreement and the other documents and agreements
contemplated hereby constitute the valid and binding
obligations of each Company and the Shareholders enforceable
against each of them party thereto in accordance with their
terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in
general and subject to general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law).
(iii) GENEX's authorized capital stock is
comprised of 1,600,000 shares of common stock, no par value
per share, of which 978,144 shares (of which 958,274 are
voting and 19,870 are non-voting) are issued and outstanding.
GENEX Canada's authorized capital stock is comprised of 100
shares of Common Stock, $.01 par value per share, of which 100
shares are issued and outstanding. No Company has outstanding
any options, warrants, calls or other commitments of any kind
to issue or sell any of its capital stock except as disclosed
on Schedule 6.2. The outstanding shares of each Company were
duly authorized for issuance and are validly issued, fully
paid and nonassessable, and are free of preemptive rights.
(iv) Immediately prior to the
consummation of the Merger, the Shareholders were the sole
registered and beneficial owners of the shares of GENEX Common
Stock and Canada Common Stock.
(v) The execution and delivery of this
Agreement and the other documents and agreements contemplated
hereby by each Company and the Shareholders and the
consummation by each Company and the Shareholders of the
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transactions contemplated by this Agreement do not and will
not, (i) violate or conflict with any provision of the
articles of incorporation or bylaws of either Company or (ii)
so far as is known to such counsel, violate or conflict with
or result in a default under any contract or agreement to
which any Shareholder or any Company is a party or by which it
is subject or bound, except as set forth in the Schedules to
this Agreement or the certificate delivered under Section
9.1(e).
(vi) Except for the filing of the Articles
of Merger with the Secretaries of State of the Commonwealth
of Pennsylvania and the State of Georgia, each consent,
Authorization, Order and approval of, and filing and
registration with, any Governmental Authority required to be
made or obtained by any Company and the Shareholders for the
execution and delivery of this Agreement and the other
documents and agreements contemplated hereby and the
consummation of the transactions contemplated by this
Agreement have been made or obtained, except as set forth in
the certificate delivered under Section 9.1(e).
(vii) Upon the filing of the respective
Articles of Merger with the Secretaries of State of the
Commonwealth of Pennsylvania and the State of Georgia in
accordance with Section 1.2 of this Agreement, the Mergers
shall become effective in accordance with the terms hereof
under the laws of Pennsylvania at the Effective Time.
Such opinion may be limited to the law of the State of Georgia and the
Commonwealth of Pennsylvania and the federal law of the United States
and may exclude the applicability and effect of (i) any city or county
Laws, (ii) except as set forth in Section 9.1(h)(vi), antitrust and
unfair competition laws, and (iii) federal and state securities laws.
In rendering such opinion, such counsel may rely upon opinions of
other counsel reasonably acceptable to FFMC as to matters of Georgia
law and may rely upon certificates of public officials and officers of
GENEX, GENEX Canada, as appropriate as to factual matters and shall be
under no obligation to make any independent investigation as to
factual matters.
(i) Except as disclosed on Schedule 6.2, there
shall be no outstanding options, warrants and other rights to purchase
the capital stock of any Company.
(j) FFMC shall have received the documents and
agreements described in Section 10.1.
(k) FFMC shall have received letters (the
"Pooling Letters"), dated as of the Closing Date, from Deloitte &
Touche and KPMG Peat Marwick to the effect that the transactions
contemplated by this Agreement will qualify for pooling-of-interests
accounting treatment if such transactions are closed and consummated
in accordance with this Agreement.
(l) None of the Shareholders shall have asserted
his right to dissent to either Merger.
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(m) Peter D. Madeja and Gary W. Billiard shall
have entered into the Employment Agreements referred to in Section
8.8.
(n) All split-dollar life insurance policies
covering any of the Shareholders on the books of any Company shall
have been purchased by such Shareholder for their then book value on
the financial statements of the Companies relieved of any obligation
to pay future premiums.
(o) All advances to any Shareholder, affiliated
entity or any Affiliates by any Company shall have been repaid.
(p) GENEX's option plan shall have been amended
to the reasonable satisfaction of FFMC.
(q) Such of the Shareholders as shall have been
requested to do so by FFMC shall have entered into a Non-competition
Agreement in form and substance satisfactory to FFMC.
(r) The Voting Trust Agreement, dated October 29,
1993, the Shareholders Agreement dated, October 29, 1993 among the
Shareholders, and any other agreement or understanding between or
among Shareholders with respect to shares of GENEX Common Stock,
Canada Common Stock or any rights to obtain such stock (other than
pursuant to Outstanding Options) shall have been terminated.
(s) The Financial Statements as of June 30, 1994
delivered pursuant to Section 8.9(a) shall not reveal a material
adverse deviation from the Financial Statements as of March 31, 1994.
(t) The exceptions set forth in the certificate
delivered pursuant to Section 9.1(e) shall reveal no material adverse
deviation from the representations and warranties in this Agreement.
9.2 Conditions to Obligation of the Companies and the
Shareholders. The consummation of the transactions contemplated by this
Agreement is subject to the fulfillment to the reasonable satisfaction of the
Shareholders' Agent, prior to or at the Closing, of each of the following
conditions (any or all of which, other than subsection 9.2(e), may be waived by
the Shareholders' Agent):
(a) All consents, Authorizations, Orders and
approvals of, and filings and registrations with any Governmental
Authority or any non-governmental third party which are required for
or in connection with the execution and delivery by FFMC, Bluebird
and GENCAN of this Agreement and other documents and agreements
contemplated hereby and the consummation by FFMC, Bluebird and GENCAN
of the transactions contemplated hereby shall have been obtained or
made.
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(b) The representations and warranties of FFMC,
Bluebird and GENCAN to the Companies and Shareholders contained in
this Agreement or in any certificate, schedule, exhibit or other
agreement delivered pursuant to one or more provisions of this
Agreement were true and correct on the date of this Agreement and
shall be true and correct in all material respects at and as of the
Effective Time with the same effect as though made again at and as of
that time.
(c) The covenants and agreements required by this
Agreement to be performed or complied with by FFMC, Bluebird and
GENCAN prior to or at the Closing shall have been performed and
complied with in all material respects by FFMC, Bluebird and GENCAN.
(d) The Shareholders shall have been furnished a
certificate (dated the Closing Date) executed by an officer of FFMC to
the effect that (i) he or she is familiar with the provisions of this
Agreement and (ii) to the best of his or her knowledge the conditions
specified in this Section 9.2 have been satisfied.
(e) The waiting period under the HSR Act shall have
expired or been terminated.
(f) There shall not be in effect any injunction or
restraining order issued by a court of competent jurisdiction in an
action or proceeding against the consummation of the transactions
contemplated by this Agreement.
(g) The Shareholders shall have received an opinion,
dated as of the Closing Date, of Randolph L.M. Hutto, General Counsel
to FFMC, in form and substance and with such exceptions and
limitations as shall be reasonably satisfactory to the Shareholders
substantially to the effect that:
(i) Each of FFMC, Bluebird and GENCAN is
a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Georgia and has the
corporate power and authority to enter into and perform this
Agreement and to own its properties and assets and to carry on
its business as presently conducted.
(ii) The execution, delivery and performance
of this Agreement and the other documents and agreements
contemplated hereby by FFMC, Bluebird and GENCAN have been
duly authorized by all necessary corporate action of FFMC,
Bluebird and GENCAN and this Agreement and the other documents
and agreements contemplated hereby constitute the valid and
binding obligations of FFMC, Bluebird and GENCAN enforceable
against each of them party thereto in accordance with their
terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in
general and subject to general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law).
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(iii) FFMC's authorized capital stock is
comprised of 150,000,000 shares of common stock, par value
$.10 per share, of which 61,321,901 shares were issued and
outstanding as of June 1, 1994, and 20,000 shares were held
in FFMC's treasury, and 5,000,000 shares of preferred stock,
par value $1.00 per share, of which no shares are outstanding
and no shares are held in FFMC's treasury.
(iv) The execution and delivery of this
Agreement and the other documents and agreements contemplated
hereby by FFMC , Bluebird and GENCAN and the consummation by
FFMC, Bluebird and GENCAN of the transactions contemplated
hereby do not and will not violate or conflict with any
provision of the Articles of Incorporation or Bylaws of FFMC,
Bluebird or GENCAN.
(v) The FFMC Common Stock issued to the
Shareholders shall, upon consummation of the transactions
contemplated by this Agreement, be validly authorized and
issued, fully paid and non-assessable and not subject to any
preemptive or similar rights.
(vi) Except for the filing of the
Articles of Merger with the Secretaries of State of the
Commonwealth of Pennsylvania and the State of Georgia, each
consent, authorization, order and approval of, and filing and
registration with, any Governmental Authority required to be
made or obtained by FFMC, Bluebird and GENCAN for the
execution and delivery of this Agreement and the other
documents and agreements contemplated hereby and the
consummation by FFMC, Bluebird and GENCAN of the transactions
contemplated hereby has been made or obtained.
Such opinion may be limited to the laws of the State of Georgia and
the federal law of the United States and may exclude the applicability
and effect of (i) any city or county Laws, (ii) except as set forth in
Section 9.2(g)(vi), antitrust and unfair competition laws, and (iii)
federal and state securities laws. In rendering such opinion, such
counsel may rely upon certificates of public officials and officers of
FFMC or any of its subsidiaries (including Bluebird and GENCAN), as
appropriate, as to factual matters and shall be under no obligation to
make any independent investigation as to factual matters.
(h) The Shareholders shall have received the
documents and agreements described in Section 10.2.
(i) The Shareholders shall have received an
opinion, dated as of the closing Date, of KPMG Peat Marwick or of
legal counsel for Shareholders, in form and substance and with such
exceptions and limitations as shall be reasonably satisfactory to the
Shareholders, substantially to the effect that the Mergers will
qualify as "tax-free reorganizations" under Section 368 of the Code.
9.3. Waiver and Estoppel. Neither FFMC on the one hand, nor the
Shareholders on the other, shall be entitled to assert after the Closing any
claim based upon a breach of any representation
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or warranty under this Agreement, to the extent such representation or warranty
otherwise would survive the Closing if, and only if, it is shown by the other
party that (a) at or prior to the Closing an executive officer of FFMC, if FFMC
is the party asserting such claim, or a Shareholder, if the Shareholders are
asserting such claim, possessed knowledge of the facts constituting such
breach, (b) the executive officer or Shareholder, as applicable, knew or should
have known that such facts constituted a breach of this Agreement. and (c) the
facts were unknown to the party defendingsuch claim and were not disclosed by
FFMC to the Shareholders or by the Shareholders to FFMC, as appropriate. If,
and only if, (a), and (b) and (c) occur, FFMC on the one hand, and the
Shareholders on the other, shall be deemed to have waived, and shall be
estopped to assert at or after the Closing, any claim or remedy based upon such
breach by the other; provided, however, that notwithstanding the foregoing, a
party may not invoke the benefit of this Section 9.3 if such party could not
have remedied the breach prior to the Closing if the facts known by the other
party had been disclosed.
10. Documents to be Delivered at the Closing.
10.1 Documents to be Delivered by the Companies and the
Shareholders. At the Closing, the Companies and the Shareholders shall
deliver, or cause to be delivered, to FFMC the following:
(a) Stock certificates representing the
outstanding shares of GENEX and GENEX Canada with separate stock
transfer powers duly endorsed in blank by the Shareholders;
(b) The certificates referred to in Section
9.1(e).
(c) The opinions referred to in Sections 9.1(h).
(d) To the extent requested by FFMC, the written
resignations of the directors and officers of GENEX and GENEX Canada.
(e) The Shareholder letters referred to in
Section 8.12.
(f) The corporate books and records of GENEX and
GENEX Canada.
10.2 Documents to be Delivered by FFMC. At the Closing,
FFMC shall deliver to the Shareholders the following:
(a) Stock certificates evidencing the shares of
FFMC Common Stock to be delivered pursuant to Section 2 to the
Shareholders.
(b) The certificates referred to in Section
9.2(d).
(c) The opinion referred to in Section 9.2(g).
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11. Tax Matters.
11.1 Filing of Returns.
(a) The Companies shall prepare for timely
filing by each Company, all Tax Returns of or that include such
Company (including any amendments thereto) with respect to any Taxable
Period of such Company ending on or prior to the Effective Time (a
"Pre-Closing Period") provided that the Companies shall not amend any
Pre-Closing Period Tax Return without the prior written consent of the
Shareholders' Agent unless required to do so by the applicable taxing
authority. The Shareholders shall pay all income Taxes with respect
to such Company or as to which such Company is otherwise liable for
any Pre-Closing Period (in excess of any amounts of accrued therefor
on the books of the Company). Such Returns shall be prepared on a
basis consistent with such Company's 1992 Tax Returns and shall
include methods which are different than those used to prepare the
Companies' Financial Statements as outlined inSchedule 11.1. The
Companies shall deliver such Pre-Closing Period Tax Returns to the
Shareholders' Agent for review no later than 30 days prior to filing.
The Companies shall prepare for timely filing by each Company all Tax
Returns with respect to any Taxable Periods of such Company ending
after the Effective Time (a "Post-Closing Period") and shall pay all
Taxes with respect to such Company or as to which such Company is
otherwise liable for any Post-Closing Period.
(b) For purposes of this Agreement, if, for any
federal, state, local and foreign tax purpose, a Taxable Period of
any Company does not terminate on the Effective Time, the parties
shall, to the extent permitted by applicable law, elect with the
relevant taxing authority to treat such Taxable Period for such
Company for all purposes as a short Taxable Period ending as of the
close of business on the Closing Date, and such short Taxable Period
shall be treated as a Pre-Closing Period for purposes of this
Agreement. In any case where applicable law does not permit such an
election to be made, then, for purposes of this Agreement, the taxable
income of such Company for the entire Taxable Period shall be
allocated between the Pre-Closing Period and the remainder of the
Taxable Period using an interim-closing-of-the- book's method,
assuming that such taxable period ended at the close of business on
the Closing Date and treating such period as a Pre-Closing Period for
purposes of this Agreement, except that exemptions, allowances and
deductions calculated on an annual basis (such as the deduction for
depreciation) shall be apportioned on a per diem basis and in no event
shall taxable income arising from events following the Effective Time
be allocated to the period preceding the Effective Time.
(c) FFMC on the one hand, and the Shareholders on
the other hand, shall have the right, at its or their own expense, to
control any audit or determination by any authority, initiate any
claim for refund or amended return and contest, resolve and defend
against any assessment, notice of deficiency or other adjustment or
proposed adjustment of taxes for any Taxable Period for which that
party (or any of its Affiliates) is charged with responsibility for
payment of Taxes or filing a Tax Return under this Agreement.
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11.2 Access and Assistance. After the Effective Time,
FFMC and the Surviving Corporations on the one hand and the Shareholders on the
other hand shall provide each other with such assistance as may be reasonably
requested in connection with the preparation of any return of Taxes, any audit
or other examination of any taxing authority, or any judicial or administrative
proceedings relating to liability for Taxes of such Company. The party
requesting assistance hereunder shall reimburse the other for reasonable
out-of-pocket expenses incurred in providing such assistance.
11.3 Certain Audit Adjustments.
(a) If any audit adjustment or other adjustment resulting
from any judicial or administrative proceeding, claim for refund or amended
return ("Adjustment") after the date hereof, both:
(i) increases any Tax for a Pre-Closing Period
which is allocated to the Shareholders under Section 11.1(a) (or
reduces a loss, credit or other Tax benefit otherwise available to the
Shareholders) and
(ii) decreases any Tax for a Post-Closing Period
which is allocated to FFMC under Section 11.1(a) (or increases a loss,
credit or other Tax benefit otherwise available to FFMC),
then when and to the extent that FFMC, as a result of such Adjustment, receives
a greater refund of Tax paid, benefits from a greater credit for Tax applied or
benefits from a reduction in Tax otherwise due, (considering all periods ending
after the Effective Time in the aggregate), FFMC shall pay to the Shareholders
an amount equal to the amount of such refund, credit or reduction in Tax
(unless the Shareholders have previously received the benefit of such refund,
credit or reduction in Tax directly from a Taxing Authority). In any event,
the amount payable by FFMC pursuant to this Section 11.3(a) shall be limited to
the lesser absolute amount determined under Section 11.3(a)(i) or (ii) above.
(b) Similarly if an Adjustment both:
(i) decreases any Tax for a Pre-Closing Period
which is allocated to Shareholders under Section 11.1(a) (or increases
a loss, credit or other Tax benefit otherwise available to the
Shareholders) and
(ii) increases any Tax for a Post-Closing Period
which is allocated to FFMC under Section 11.1(a) (or reduces a loss,
credit or other Tax benefit otherwise available to FFMC),
then when and to the extent that the Shareholders, as a result of such
Adjustment, receive a greater refund of Tax paid, benefit from a greater credit
for Tax applied or benefit from a reduction in Tax otherwise due (considering
all periods ending with the Effective Time in the aggregate), the Shareholders
shall pay to FFMC an amount equal to the amount of such refund, credit or
reduction in
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Tax (unless FFMC has previously received the benefit of such refund, credit or
reduction in Taxes directly from a Taxing Authority). In any event, the amount
payable by the Shareholders pursuant to this Section 11.3(b) shall be limited
to the lesser absolute amount determined under Section 11.3(b)(i) or (ii)
above.
Any payment by FFMC or the Shareholders pursuant to
this Section 11.3 shall be made pursuant to and governed by the provisions of
Section 12 of this Agreement.
12. Indemnification.
12.1 Indemnification by the Shareholders. The
Shareholders shall jointly and severally, except as to the covenants,
representations and warranties in Section 5 and Section 8.10 as to which
Shareholders shall severally, indemnify and hold harmless FFMC and the
Surviving Corporations in respect of any and all claims, losses, damages,
liabilities, demands, assessments, judgments, costs and expenses, in each case
as adjusted for any insurance benefits or proceeds realized or to be realized
with respect thereto by the Indemnified Party, (as hereinafter defined), net of
any retroactive insurance premium which becomes due as a result of such claim,
(collectively, the "Costs") (including, without limitation, settlement costs
and any legal or other expenses for investigating, bringing or defending any
actions or threatened actions) reasonably incurred by FFMC or any Surviving
Corporation resulting from (i) any misrepresentation or breach of any warranty,
covenant, agreement or obligation made by the Shareholders under this Agreement
or in any schedule, exhibit, certificate or other instrument pursuant thereto
provided, however, that the Shareholders shall not be liable for any breach of
the representations and warranties contained in Section 6.8(b) or Section
6.12(e) except, and to the extent that, the aggregate Costs as a result of such
breach or breaches exceeds the sum of (a) amounts for current Taxes referred to
in Section 6.12(e), net of all Taxes payable after March 31, 1994, and
attributable to any Pre-Closing Period (b) the net of the allowance for
doubtfulaccounts referred to in Section 6.8(b), and (ii) except as otherwise
specifically provided in this Agreement, all liabilities of the Shareholders
arising before or after the Closing Date.
12.2 Indemnification by FFMC. FFMC agrees to indemnify
and hold harmless the Shareholders in respect of any and all Costs reasonably
incurred by the Shareholders in connection with any misrepresentation or breach
of any warranty, covenant or agreement made by FFMC under this Agreement, or in
any schedule, exhibit, certificate or other instrument pursuant thereto.
12.3 Certain Limitations and Related Matters.
(a) Credit for Taxes. In calculating any amounts
payable under this Section 12, the Indemnifying Party (as hereinafter
defined) shall receive credit for any net reduction in the Indemnified
Party's (as hereinafter defined) tax liability as a result of the
facts giving rise to the claim for indemnification.
(b) Certificates. Any claim based, in whole or
in part, upon any untrue or incorrect statement set forth in the
certificate delivered pursuant to Section 9.1(e) or Section
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<PAGE> 47
9.2(d) shall be deemed to be a claim for misrepresentation or breach
of warranty, covenant or agreement under this Agreement.
(c) Deductible. No claim shall be made against
the Shareholders for indemnification for any breach of a
representation or warranty contained in this Agreement (or in any
Schedule, certificate or other document delivered pursuant hereto)
unless and until the aggregate Costs exceed $250,000 (the
"Deductible") in which event FFMC may claim indemnification for the
amount of such Costs in excess of the Deductible;provided, however,
that the Deductible shall not apply to the extent that such
indemnification relates to any misrepresentation or breach of warranty
contained in Sections 5.1 and 6.12.
(d) Limitation of Liability. Except with respect
to any misrepresentation or breach of warranty contained in Section
5.1 or 6.12, in no event shall the aggregate liability of the
Shareholders to FFMC and the Companies for indemnification pursuant to
Section 12.1 exceed an amount equal to $7,500,000.
12.4 Claims for Indemnification. The representations,
warranties, covenants and agreements in this Agreement shall survive the
Closing subject to the limitations set forth herein. The party seeking
indemnification (the "Indemnified Party") shall give the party from whom
indemnification is sought (the "Indemnifying Party") a written notice ("Notice
of Claim") withinsixty (60) days of the discovery of any loss, liability, claim
or expense in respect of which the right to indemnification contained in this
Section 12 may be claimed; provided, however, that the failure to give such
notice within such sixty (60) day period shall not obviate any right to bring
such claim hereunder after such period except to the extent that, the other
party is actually prejudiced by such failure. A party shall have no liability
under this Section 12 for breach of warranty or misrepresentation, unless a
Notice of Claim therefore is delivered by the Indemnified Party prior to the
earlier of (i) the date of the audit report for FFMC's calendar year ending
December 31, 1994 and (ii) the first anniversary of the Effective Time;
provided, however, that as to any liability arising pursuant to Section 6.12 or
Section 11, any Notice of Claim must be delivered by the Indemnified Party not
later than ninety (90) business days after the expiration of the applicable
statute of limitations or any extensions thereof. Any Notice of Claim shall
set forth the representations, warranties, covenants and agreements with
respect to which the claim is made, the specific facts giving rise to an
alleged basis for the claim and the amount of liability asserted or anticipated
to be asserted by reason of the claim. All notices to the Shareholders shall
be delivered to the Shareholders' Agent.
12.5 Defense of Claim by Third Parties. If any claim is
made by a third party against a party to this Agreement that, if sustained,
would give rise to a liability of another party under this Agreement, the party
against whom the claim is made shall promptly cause notice of the claim to be
delivered to the other party and shall afford the other party and its counsel,
at the other party's sole expense, the opportunity to defend or settle the
claim. The failure to provide such notice will not relieve the Indemnifying
Party of liability under this Agreement unless, and only to the extent that,
the other party is actually prejudiced by such failure. If any such claim is
compromised or settled without the consent of the Indemnifying Party, no
liability shall be imposed upon the Indemnifying Party by reason of the claim.
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<PAGE> 48
12.6 Third Party Claim Assistance. From time to time
after the Closing, FFMC and the Shareholders shall provide or cause their
appropriate personnel to provide the other party with information or data in
connection with the handling and defense of any third party claim or litigation
(including counterclaims filed by the parties) in respect to which a party may
be required to indemnify another party under this Agreement. The party
receiving such information or data shall reimburse the other party for all of
its costs and expenses in providing these services, including, without
limitation, (i) all out of pocket, travel and similar expenses incurred by its
personnel in rendering these services; and (ii) all fees and expenses for
services performed by third parties engaged by or at the request of such other
party.
12.7 Determination of Loss. Indemnification under Section
12.1 or 12.2 shall be payable with respect to any claimconcerning a Loss upon
the happening of the earliest to occur of any of the following (a
"Determination Date"):
(a) Resolution of such claim by mutual agreement
between the Indemnified Party and the Indemnifying Party; or
(b) The issuance of a final (not subject to
appeal) judgment, award or other ruling by a court, arbitrator or any
other tribunal or organization or person having legal jurisdiction
over the parties and the subject matter of such claim or to whom such
claim was submitted for resolution by joint agreement between the
Indemnified Party and the Indemnifying Party; or
(c) Final settlement of such claim by a third
party pursuant to mutual authorization by the Indemnified Party and
the Indemnified Party.
12.8 Manner of Indemnification.
(a) By the Shareholders. If FFMC or any
Surviving Corporation is entitled to indemnification from any or all
of the Shareholders, the Shareholders shall satisfy their respective
indemnification obligations to FFMC or any Surviving Corporation,
first from the escrow shares and thereafter by delivery of shares of
FFMC Common Stock for cancellation. The Shareholders shall satisfy
their indemnification obligations to FFMC or any Surviving Corporation
no later than five (5) days following the Determination Date. The
value of shares of FFMC Common Stock surrendered in satisfaction of
the Shareholders' indemnification obligation shall be the Reported
Market Price.
(b) By FFMC. All indemnification by FFMC under
this Section 12 shall be made by payment of FFMC Common Stock in the
amount of the indemnification liability no later than five (5) days
following the Determination Date. The value of shares of FFMC Common
Stock issued in satisfaction of the FFMC's indemnification obligation
shall be the Reported Market Price.
12.9 Escrow.
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<PAGE> 49
(a) Creation. The Escrow Shares together with
stock powers executed in blank by each of the Shareholders shall be
delivered by FFMC to NationsBank of Georgia, N.A. or such other
financial institution as may be agreed upon by the Shareholders Agent
and FFMC (the "Escrow Agent"). The fees payable to the Escrow Agent
for maintaining the Escrow (as hereinafter defined) shall be paid by
FFMC. The Escrow Shares shall be maintained by the Escrow Agent for a
period beginning at the Effective Time and ending on the earlier of
the date of the audit report for FFMC's calendar year ending December
31, 1994 and the first anniversary of the Effective Time, as an escrow
(the "Escrow") available to satisfy the indemnification rights of FFMC
and the Companies set forth in Section 12.1, pursuant to the terms of
an escrow agreement in form and substance reasonably satisfactory to
FFMC and the Shareholders.
(b) Disbursement for Claims. If FFMC gives the
Shareholders' Agent a Notice of Claim pursuant to Section 12.4,
asserting a claim for indemnification pursuant to Section 12.1, the
Shareholders' Agent, within thirty (30) days following receipt of such
Notice of Claim, shall either (i) give FFMC and the Escrow Agent a
counternotice with respect to such notice of claim disputing such
claim, or (ii) instruct the Escrow Agent to deliver to FFMC Escrow
Shares equal in value to the amount of such claim (based upon the
Reported Market Price) from the Escrow Shares;provided, howeve, that
if a counternotice given by the Shareholders' Agent alleges that a
Notice of Claim is only partially invalid, the Shareholders' Agent,
within thirty (30) days of receipt of such Notice of Claim, shall
instruct the Escrow Agent to deliver to FFMC Escrow Shares equal in
value to an amount equal to that portion of the amount specified in
the Notice of Claim as to which no objection is made. If the
Shareholders' Agent gives a counternotice with respect to all or a
portion of a Notice of Claim described in this Section 12.9, the
Escrow Agent shall only be required to deliver Escrow Shares in
accordance with the mutual instructions of FFMC and the Shareholders'
Agent or an order of a court of competent jurisdiction with respect to
the disputed portion of such Notice of Claim.
(c) Dividends on Escrow. All cash dividends
declared with respect to the Escrow Shares shall be deposited by FFMC
into a separate account with the Escrow Agent. Such dividends and any
interest accrued with respect to such dividends shall be paid pro rata
to a Shareholder in accordance with his interest to the extent and at
such time as the underlying Escrow Shares are distributed to such
Shareholder, and to FFMC to the extent and at such time as such
underlying Escrow Shares are distributed to FFMC. All dividends other
than cash dividends declared and paid with respect to the Escrow
Shares shall be retained by the Escrow Agent subject to the terms of
the Escrow Agreement, and shall also be distributed pro rata to any
party receiving the underlying Escrow Shares in accordance with its or
his interest at the time of such distribution.
(d) Termination. The Escrow established pursuant
to this Section 12.9 shall terminate on the earlier of the date of the
audit report for FFMC's calendar year ending December 31, 1994 and the
first anniversary of the Effective Time; provided, however, that the
Escrow shall continue beyond such period to the extent that FFMC or
either of the Companies has given the Shareholders' Agent a Notice of
Claim prior to such time and the
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<PAGE> 50
indemnification claims asserted therein remain unsatisfied or
unresolved. Upon termination of the Escrow, the remaining Escrow
Shares (along with any dividends and interest thereon) shall be
delivered by the Escrow Agent to the Shareholders' Agent for
disbursement to the Shareholders in accordance with their interests.
12.10 Remedies Exclusive. The parties hereto agree that
except as otherwise provided in Section 14.2 the sole and exclusive remedy for
unintentional misrepresentations contained in this Agreement or non-willful
breaches of the covenants and agreements contained in this Agreement, shall be
the indemnification obligations of the parties as set forth in this Section 12.
Notwithstanding the foregoing, nothing in this Section 12.10 shall be
interpreted or construed to limit or waive any party's rights or remedies with
respect to any intentional misrepresentation contained in this Agreement or
willful breach of any covenant or agreement contained in this Agreement.
13. Shareholders' Agent.
13.1 Appointment; Acceptance. By executing this
Agreement, each of the Shareholders hereby irrevocably constitutes and appoints
Lawrence J. Kent and his successors, acting as hereinafter provided, as his
attorney-in-fact and agent in his name, place and stead in connection with the
transactions and agreements contemplated by this Agreement (the "Shareholders'
Agent"), and acknowledges that such appointment is coupled with an interest.
By executing and delivering this Agreement under the heading "Shareholders'
Agent," the individual who is appointed as the Shareholders' Agent hereby (i)
accepts his appointment and authorization to act as the Shareholders' Agent as
attorney-in-fact and agent on behalf of the Shareholders in accordance with the
terms of this Agreement and (ii) agrees to perform his obligations hereunder,
and otherwise comply with this Section 13.
13.2 Authority. Each Shareholder by this Agreement fully
and completely, without restriction:
(a) authorizes the Shareholders' Agent (i) to
prepare, finalize, approve and authorize all exhibits, schedules and
other attachments to the Shareholder Delivered Agreements and such
approval and authorization may be conclusively evidenced by the
Shareholders' Agent, (ii) to deliver on his behalf to FFMC as provided
in this Agreement his Share certificates representing all of his
Shares and the separate stock transfer powers, if any, relating to all
such Shares duly endorsed by him and otherwise as provided in this
Agreement and all materials to be delivered in connection with such
Share certificates, (iii) to execute, deliver and accept on his behalf
Shareholder Delivered Agreements, (iv) to execute and deliver, and to
accept delivery, on his behalf of such amendments as may be deemed by
the Shareholders' Agent in his sole discretion to be appropriate under
the Shareholder Delivered Agreements, and (v) to execute and deliver
and to accept delivery, on his behalf of such agreements, instruments
and other documents as may be deemed by the Shareholders' Agent in his
sole discretion to be appropriate under the Shareholder Delivered
Agreements.
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<PAGE> 51
(b) Agrees to be bound by all notices received
and agreements and determinations made by and documents executed and
delivered by the Shareholders' Agent under the Shareholder Delivered
Agreements.
(c) Authorizes the Shareholders' Agent (i) to
dispute or to refrain from disputing any claim made by FFMC under the
Shareholder Delivered Agreements, (ii) to negotiate and compromise any
dispute which may arise under, and exercise or refrain from exercising
remedies available under the Shareholder Delivered Agreements, to sign
any releases or other documents with respect to such dispute or
remedy, (iii) to waive any condition contained in the Shareholder
Delivered Agreements, (iv) to give any and all consents under the
Shareholder Delivered Agreements, and (v) to give such instructions
and do such other things and refrain from doing such things as the
Shareholders' Agent shall deem appropriate to carry out the provisions
of the Shareholder Delivered Agreements; and
(d) Authorizes and directs the Shareholders'
Agent to receive any payments made to the Shareholders' Agent under
this Agreement, to invest such funds pending their disbursement in
such matter as the Shareholders' Agent in his sole discretion deems
appropriate; and to disburse pro rata any payments due the
Shareholders under this Agreement in accordance with their interest,
after (i) subject to Section 8.6 of this Agreement, payment of any
attorneys' and accountants' and other fees and expenses incurred on
behalf of the Shareholders in connection with the consummation of the
transactions contemplated by this Agreement and (ii) withholding such
amounts to pay costs and expenses relating to potential disputes
arising with respect to indemnification or other obligations of the
Shareholders under this Agreement. Notwithstanding the foregoing or
anything else in this Agreement, the Shareholders' Agent shall have no
authority involving a breach by a Shareholder of a representation or
warranty in Section 5 of this Agreement, as to which such Shareholder
shall have the sole authority to exercise rights or remedies.
13.3 Actions. Each of the Shareholders hereby expressly
acknowledges and agrees that the Shareholders' Agent is authorized to act on
his behalf, notwithstanding any dispute or disagreementamong the Shareholders
and that FFMC and any other person or entity shall be entitled to rely on any
and all actions taken by the Shareholders' Agent under this Agreement and the
Shareholder Delivered Agreements without any liability to, or obligation to
inquire of, any of the Shareholders. All notices, counternotices or other
instruments or designations delivered by the Shareholders' Agent shall not be
effective unless, but shall be effective if, signed by the Shareholders' Agent,
and if not, such document shall have no force and effect whatsoever hereunder
and FFMC and any other person or entity may proceed without regard to any such
document. FFMC and any other person or entity are hereby expressly authorized
to rely on the genuineness of the signature of the Shareholders' Agent, and
upon receipt of any writing which reasonably appears to have been signed by the
Shareholders' Agent, FFMC and any other person or entity may act upon the same
without any further duty of inquiry as to the genuineness of the writing.
13.4 Effectiveness. The authorizations of the
Shareholders' Agent shall be irrevocable and effective until his rights and
obligations under this Agreement terminate by virtue of the termination of any
and all of the obligations of the Shareholders to FFMC under this Agreement.
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<PAGE> 52
13.5 Indemnification. The Shareholders hereby jointly and
severally agree to indemnify and hold the Shareholders' Agent harmless from any
and all liability, loss, cost, damage or expense, including attorneys fees
(reasonably incurred or suffered as a result of the performance of his duties
under this Agreement), except for gross negligence or willful misconduct.
13.6 Survival of Authorizations. EACH SHAREHOLDER INTENDS
FOR THE AUTHORIZATIONS AND AGREEMENTS IN THE FOREGOING SECTIONS OF THIS SECTION
13 TO REMAIN IN FORCE AND NOT BE AFFECTED IF SUCH SHAREHOLDER SUBSEQUENTLY
BECOMES MENTALLY OR PHYSICALLY DISABLED OR INCOMPETENT, DOES HEREBY AUTHORIZE
SUCH RECORDINGS AND FILINGS HEREOF AS A HOLDER MAY DEEM APPROPRIATE, AND DOES
HEREBY DIRECT THAT NO FILING OF ACCOUNTS OR INVENTORIES OR POSTING OF A SURETY
BOND SHALL BE REQUIRED.
14. Miscellaneous.
14.1 Finders, Etc. Aside from any amounts payable by
GENEX to Robertson, Stephens & Company, which has been retained by GENEX, no
broker's or finder's fee or commission is due or payable from or by any of the
parties hereto, nor has any such fee or commission been earned by any other
third party on behalf of any of the foregoing in connection with the
negotiation and execution of this Agreement or in any other manner affecting or
involving the Business or in connection with the negotiation or execution of
this Agreement, or the consummation of any transaction contemplated hereby.
The Shareholders agree to indemnify and save FFMC and the Companies harmless
from and against any and all claims or demands for broker's or finder's fees or
commissions by or from Robertson,Stephens & Company (but only to the extent any
such claim or demand exceeds the fee agreed to by GENEX) or any other person or
persons whatsoever, based on any arrangement made by the Shareholders. FFMC
agrees to indemnify and save the Shareholders harmless from and against any and
all claims or demands for broker's or finder's fees or commissions from any
person or persons whatsoever (other than Robertson, Stephens & Company) based
on any arrangement made by FFMC.
14.2 Specific Performance and Other Remedies. Each party
acknowledges that the rights of the other parties to consummate the
transactions contemplated by this Agreement are special, unique and of
extraordinary character, and that, in the event that any party violates or
fails or refuses to perform any covenant or agreement made by him or it in this
Agreement, then the other parties may be without an adequate remedy at law.
Each party agrees, therefore, that in the event that he or it violates or fails
or refuses to perform any covenant or agreement by him or it in this Agreement,
any other party may, in addition to any remedies at law for damages, or other
relief, institute and prosecute an action in any court of competent
jurisdiction to enforce specific performance of such covenant or agreement or
seek any other equitable relief. In the event that such party institutes such
proceedings prior to the termination or abandonment of this Agreement pursuant
to Section 4.1, notwithstanding any provision of Section 4.2, this Agreement
shall be terminated and abandoned thereafter only if a final judgment or order
is entered in such action and in any appeal therefrom denying specific
performance to such party in such action or dismissing or discontinuing such
action without the granting of such relief (and such judgment or order is not
then subject to
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<PAGE> 53
appeal) or such action or appeal therefrom is dismissed or discontinued
voluntarily by such party in such action or by agreement of the parties thereto
without the granting of such relief.
14.3 Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of Georgia, without
giving effect to the conflicts of law principles thereof.
14.4 Headings. The headings of this Agreement and titles
given to Schedules to this Agreement are for reference purposes only and are to
be given no effect in the construction or interpretation of this Agreement.
14.5 Notices. All notices and other communications under
this Agreement shall be in writing and may be given by any of the following
methods: (i) personal delivery; (ii) facsimile transmission; (iii) registered
or certified mail, postage prepaid, return receipt requested; or (iv) overnight
delivery service requiring acknowledgment of receipt. Notices shall be sent to
the appropriate party at its address or facsimile number given below (or at
such other address or facsimile number for such party as shall be specified by
notice given hereunder):
If to FFMC, Bluebird, GENCAN and the Companies after
the Effective Time with respect to the Companies, to:
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Fax No. (404) 634-6352
Attention: Stephen D. Kane
Senior Executive Vice President
with a copy to:
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Fax No. (404) 636-7632
Attn: Randolph L.M. Hutto
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<PAGE> 54
If to the Shareholders, or GENEX GENEX Canada prior
to the Effective Time, to:
GENEX Services, Inc.
735 Chesterbrook Boulevard
Suite 200
Wayne, Pennsylvania 19087
Attention: Lawrence J. Kent
with a copy to:
LaBrum & Doak
Suite 2900
1818 Market Street
Philadelphia, Pennsylvania 19103-3629
Fax Number: (215)587-5350
Attention: Zachary R. Estrin
All such notices and communications shall be deemed received upon (i) actual
receipt thereof by the addressee, (ii) actual delivery thereof to the
appropriate address as evidenced by an acknowledged receipt, or (iii) in the
case of a facsimile transmission, upon transmission thereof by the sender and
confirmation of receipt. In the case of notices sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice to
the addressee at the address provided for above. However, such mailing shall
in no way alter the time at which the facsimile notice is deemed received.
14.6 Separability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
14.7 Waiver. The failure of any party hereto at any time
or times to require performance of any provisions hereof shall in no manner
affect the right to enforce the same. No waiver by any party of any condition,
or the breach of any term, provision, warranty, representation, agreement or
covenant contained in this Agreement or the other agreements contemplated
hereby, whether by conduct or otherwise, in any one or more instances shall be
deemed or construed as a further or continuing waiver of any such condition or
breach or a waiver of any other condition or of the breach of any other term,
provision, warranty, representation, agreement or covenant herein or therein
contained.
14.8 No Third Party Beneficiaries; Assignment. This
Agreement shall inure to the benefit of the parties and their respective
successors and permitted assignees. Nothing in this Agreement shall create or
be deemed to create any third party beneficiary rights in any person or entity,
including, without limitation, employees not a party to this Agreement. Except
for assignments to wholly-owned subsidiaries (direct or indirect) or Affiliates
of FFMC, in which event
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<PAGE> 55
FFMC shall remain liable for the performance of this Agreement, no assignment
of this Agreement or of any rights or obligations under this Agreement may be
made by either party without the prior written consent of the other parties and
any attempted assignment without that required consent shall be void. No
assignment by a party of its rights under this Agreement shall relieve it of
any of its obligations to the other parties under this Agreement.
14.9 Time of the Essence; Computation of Time. Time is of
the essence of each and every provision of this Agreement. Whenever the last
day for the exercise of any privilege or the discharge of any duty under this
Agreement shall fall upon Saturday, Sunday or a public or legal holiday, the
party having such privilege or duty shall have until 5:00 p.m. Atlanta, Georgia
time on the next succeeding regular business day to exercise such privilege or
to discharge such duty.
14.10 Definitions Regarding Knowledge. As used in this
Agreement, the term "to the best of the knowledge of the Shareholders" or
derivations thereof means the actual knowledge of the Shareholders after due
inquiry of appropriate management personnel. The term "to the best of the
knowledge of FFMC" or derivations thereof means the actual knowledge of an
executive officer of such company. The term "to the best knowledge of any
Company" or derivations thereof means the actual knowledge of an executive
officer of such Company.
14.11 Counterparts. This Agreement may be executed by each
party upon a separate copy, and in such case one counterpart of this Agreement
shall consist of enough of such copies to reflect the signatures of all of the
parties. This Agreement may be executed in two or more counterparts, each of
which shall be an original, and each of which shall constitute one and the same
agreement. Any party may deliver an executed copy of this Agreement and of any
documents contemplated hereby by facsimile transmission to another party and
such delivery shall have the same force and effect as any other delivery of a
manually signed copy of this Agreement or of such other documents.
14.12 Entire Agreement. This Agreement (with its
Schedules) together with the Confidentiality Agreement dated May 20, 1994,
between FFMC and GENEX contain, and is intended as, a complete statement of all
the terms of the arrangements between the parties with respect to the matters
provided for, supersedes any previous agreements and understandings between the
parties with respect to those matters and cannot be changed or terminated
orally.
***********
(Signatures appear on following pages)
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<PAGE> 56
Executed and delivered this 30th day of June, 1994.
FIRST FINANCIAL MANAGEMENT
CORPORATION
By: /s/ Stephen D. Kane
-------------------------------------
Name: Stephen D. Kane
Title: Senior Executive Vice President
BLUEBIRD ACQUISITION CORPORATION
By: /s/ Randolph L.M. Hutto
-------------------------------------
Name: Randolph L.M. Hutto
Title: Executive Vice President
GENCAN ACQUISITION CORPORATION
By: /s/ Randolph L.M. Hutto
-------------------------------------
Name: Randolph L.M. Hutto
Title: Executive Vice President
GENEX SERVICES, INC.
By: /s/ Peter C. Madeja (SEAL)
-------------------------------------
Name: Peter C. Madeja
Title: President
GENEX SHAREHOLDERS:
/s/ Lawrence J. Kent (SEAL)
- - ----------------------------------------------
/s/ Mary A. Kent (SEAL)
- - ----------------------------------------------
Lawrence J. Kent and Mary A. Kent, as Tenants
by the Entireties
/s/ Maurice D. Kent (SEAL)
- - ----------------------------------------------
Maurice D. Kent
SHAREHOLDERS' AGENT
/s/ Lawrence J. Kent (SEAL)
- - ----------------------------------------------
Lawrence J. Kent
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<PAGE> 57
/s/ Lawrence J. Kent (SEAL)
- - ----------------------------------------------
Lawrence J. Kent, as Voting Trustee under
Agreement dated as of October 29, 1993.
/s/ Maurice D. Kent (SEAL)
- - ----------------------------------------------
Maurice D. Kent, as Voting Trustee under
Agreement dated as of October 29, 1993.
/s/ Mary A. Kent (SEAL)
- - ----------------------------------------------
Mary A. Kent, Trustee FBO Peter J. Kent
/s/ Mary A. Kent (SEAL)
- - ----------------------------------------------
Mary A. Kent, Trustee FBO Brendan D. Kent
/s/ Mary A. Kent (SEAL)
- - ----------------------------------------------
Mary A. Kent, Trustee FBO Caroline I. Kent
/s/ Mary A. Kent (SEAL)
- - ----------------------------------------------
Mary A. Kent, Trustee FBO Katherine M. Kent
/s/ Peter C. Madeja (SEAL)
- - ----------------------------------------------
Peter D. Madeja
/s/ Gary W. Billiard (SEAL)
- - ----------------------------------------------
Gary W. Billiard
GENEX SERVICES OF CANADA, LTD.
By: /s/ Peter C. Madeja
-------------------------------------
Name: Peter C. Madeja
Title: President
GENEX CANADA SHAREHOLDERS:
/s/ Lawrence J. Kent (SEAL)
- - ----------------------------------------------
Lawrence J. Kent
/s/ Maurice D. Kent (SEAL)
- - ----------------------------------------------
Maurice D. Kent
49
