Exhibit 2.1
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ASSET PURCHASE AGREEMENT
Dated as of May 5, 1998
Among
ANACOMP, INC.,
FIRST FINANCIAL MANAGEMENT CORPORATION
and
FIRST DATA CORPORATION
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE
2.1. Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3. Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 11
2.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2. Adjustment to Purchase Price . . . . . . . . . . . . . . . . . . . 13
3.3. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
CLOSING
4.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2. Payment of Initial Amount on the Closing Date. . . . . . . . . . . 16
4.3. Buyer's Additional Closing Date Deliveries . . . . . . . . . . . . 16
4.4. Sellers' Closing Date Deliveries . . . . . . . . . . . . . . . . . 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
5.1. Organization of Sellers. . . . . . . . . . . . . . . . . . . . . . 19
5.2. Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . 19
5.3. Authority of Sellers . . . . . . . . . . . . . . . . . . . . . . . 20
5.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 21
5.5. Operations Since Balance Sheet Date. . . . . . . . . . . . . . . . 22
5.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7. Availability of Assets and Legality of Use . . . . . . . . . . . . 24
5.8. Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . 24
5.9. Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10. Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . 25
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5.11. Condition of Property . . . . . . . . . . . . . . . . . . . . . . 25
5.12. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.13. Personal Property . . . . . . . . . . . . . . . . . . . . . . . . 26
5.14. Personal Property Leases. . . . . . . . . . . . . . . . . . . . . 26
5.15. Patents and Trademarks. . . . . . . . . . . . . . . . . . . . . . 26
5.16. Receivables; Inventories. . . . . . . . . . . . . . . . . . . . . 28
5.17. Title to Property . . . . . . . . . . . . . . . . . . . . . . . . 29
5.18. Employees and Related Agreements; ERISA.. . . . . . . . . . . . . 29
5.19. Employee Relations. . . . . . . . . . . . . . . . . . . . . . . . 30
5.20. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.21. Status of Contracts . . . . . . . . . . . . . . . . . . . . . . . 31
5.22. No Violation, Litigation or Regulatory Action . . . . . . . . . . 31
5.23. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 32
5.24. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.25. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.26. Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . 34
5.27. Form Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.28. Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . 34
5.29. Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.30. Book and Records of Subsidiaries. . . . . . . . . . . . . . . . . 35
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Organization of Buyer. . . . . . . . . . . . . . . . . . . . . . . 35
6.2. Authority of Buyer . . . . . . . . . . . . . . . . . . . . . . . . 35
6.3. No Violation, Litigation or Regulatory Action. . . . . . . . . . . 36
6.4. No Finder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.5. Financial Ability. . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
7.1. Investigation of Purchased Assets by Buyer . . . . . . . . . . . . 37
7.2. Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.3. Consents of Third Parties; Governmental Approvals; Closing . . . . 38
7.4. Operations Prior to the Closing Date . . . . . . . . . . . . . . . 38
7.5. Formation of LLC; Data Preparation, Inc. . . . . . . . . . . . . . 41
7.6. Antitrust Law Compliance . . . . . . . . . . . . . . . . . . . . . 41
7.7. Audited Financial Statements . . . . . . . . . . . . . . . . . . . 41
7.8. Acquisition Proposals. . . . . . . . . . . . . . . . . . . . . . . 42
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ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. Use of Names . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2. Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.3. Employees and Employee Benefit Plans . . . . . . . . . . . . . . . 47
8.4. Post-Closing Remittances . . . . . . . . . . . . . . . . . . . . . 49
8.5. Intercompany Obligations . . . . . . . . . . . . . . . . . . . . . 49
8.6. Covenant Not to Compete. . . . . . . . . . . . . . . . . . . . . . 50
8.7. Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.8. FDC Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
9.1. No Misrepresentation or Breach of Covenants and Warranties . . . . 52
9.2. No Material Adverse Effect.. . . . . . . . . . . . . . . . . . . . 52
9.3. No Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.4. Environmental Property Transfer Acts . . . . . . . . . . . . . . . 52
9.5. Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.6. Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
10.1. No Misrepresentation or Breach of Covenants and Warranties. . . . 53
10.2. No Restraint. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.3. Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification by Sellers. . . . . . . . . . . . . . . . . . . . 54
11.2. Indemnification by Buyer. . . . . . . . . . . . . . . . . . . . . 55
11.3. Notice of Claims. . . . . . . . . . . . . . . . . . . . . . . . . 56
11.4. Third Person Claims . . . . . . . . . . . . . . . . . . . . . . . 57
11.5. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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ARTICLE XII
TERMINATION
12.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
12.2. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . 61
12.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XIII
GENERAL PROVISIONS
13.1. Survival of Representations and Warranties. . . . . . . . . . . . 61
13.2. Confidential Nature of Information. . . . . . . . . . . . . . . . 62
13.3. No Public Announcement. . . . . . . . . . . . . . . . . . . . . . 62
13.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
13.5. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 64
13.6. Access to Records after Closing . . . . . . . . . . . . . . . . . 65
13.7. Entire Agreement; Amendments. . . . . . . . . . . . . . . . . . . 65
13.8. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.9. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.11. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . 66
13.12. Execution in Counterparts. . . . . . . . . . . . . . . . . . . . 66
13.13. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 67
13.14. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 67
13.15. Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . 67
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of May 5, 1998, among Anacomp,
Inc., an Indiana corporation ("Buyer"), First Financial Management
Corporation, a Georgia corporation ("FFMC"), and First Data Corporation, a
Delaware corporation ("FDC" and, together with FFMC, the "Sellers").
RECITALS
WHEREAS, FFMC is, among other things, engaged through First Image
Management Company and the Subsidiaries (collectively, the "Division") in the
business of document management services; and
WHEREAS, FFMC desires to sell to Buyer, and Buyer desires to
purchase from FFMC, on a going concern basis, substantially all of the
assets, properties and business of the Division, and to assume substantially
all of the liabilities of the Division, all on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among FDC, FFMC and
Buyer as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from
time to time to the extent permitted by the applicable provisions thereof and
by this Agreement.
"ACS" means Appalachian Computer Services, Inc., a Kentucky
corporation, or a successor limited liability company which will be formed by
FFMC pursuant to Section 7.5.
"Affiliate" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
"Agreed Accounting Principles" means GAAP applied in a manner
consistent with the accounting principles applied in the preparation of the
Audited Balance Sheet as modified by the principles set forth in Schedule 1.1
hereto.
"Agreed Net Working Capital" has the meaning specified in Section
3.2(a).
"Agreed Rate" means the prime rate published in the "Money Rates"
section of the Wall Street Journal, as that rate may vary from time to time.
"Allocation Schedule" has the meaning specified in Section 3.3.
"Assumed Liabilities" has the meaning specified in Section 2.3.
"Assumption Agreement" means an Assumption Agreement in a form
reasonably satisfactory to the parties.
"Audited Balance Sheet" means the audited balance sheet of the
Division as of December 31, 1997 included in Schedule 5.4.
"Balance Sheet Date" means December 31, 1997.
"Business" has the meaning specified in Section 2.1.
"Buyer" has the meaning specified in the first paragraph of this
Agreement.
"Buyer Ancillary Agreements" means the Assumption Agreement and the
Transition Services Agreement.
"Buyer Group Member" means (i) Buyer and its Affiliates, (ii)
directors, officers, employees, agents, attorneys and consultants of Buyer
and its Affiliates and (iii) the successors and assigns of the foregoing.
"Buyer's Plans" has the meaning specified in Section 8.3(b).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., any
amendments thereto, any successor statutes, and any regulations promulgated
thereunder.
"Claim Notice" has the meaning specified in Section 11.3(a).
"Closing" means the closing of the transfer of the Purchased Assets
from FFMC to Buyer.
"Closing Balance Sheet" has the meaning specified in Section
3.2(c)(i).
"Closing Date" has the meaning specified in Section 4.1.
"Closing Net Working Capital" means the Net Working Capital of the
Division as of the close of business on the business day immediately
preceding the Closing Date, as determined in accordance with Section 3.2.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means that certain Confidentiality
Agreement dated January 8, 1998, as amended, between Buyer and FDC, a copy of
which is attached hereto as Exhibit A.
"Contaminant" means any waste, pollutant, hazardous or toxic
substance or waste, petroleum, petroleum-based substance or waste to the
extent regulated by any Environmental Law.
"Court Order" means any judgment, order, award, writ, injunction or
decree of any foreign, federal, state, local or other court or tribunal and
any award in any arbitration proceeding.
"Dispute Notice" has the meaning specified in Section 3.2(c)(ii).
"Division" has the meaning specified in the first recital to this
Agreement.
"Division Real Property" means any real or personal property,
plant, building, facility, structure, equipment or unit, or other asset
owned, leased or operated by FFMC or any Subsidiary and used in the Business.
"Encumbrance" means any lien, claim, charge, option, security
interest, mortgage, pledge, easement, right of way, conditional sale or other
title retention agreement, defect in title, right of first refusal in favor
of any third party, preemptive right or other similar restrictions of any
kind.
"Environmental Encumbrance" means an Encumbrance in favor of any
Governmental Body for (i) any liability under any Environmental Law or (ii)
damages arising from, or costs incurred by such Governmental Body in response
to, a Release or threatened Release of a Contaminant into the environment.
"Environmental Expense" means any Expense incurred in connection
with investigating, defending or remediating any Environmental Loss.
"Environmental Law" means all Requirements of Law derived from or
relating to all federal, state and local laws or regulations and all common
law theories relating to or addressing the environment, health or safety, or
the use, treatment, storage, disposal or transportation of Contaminants,
including but not limited to CERCLA, OSHA and RCRA and any state equivalent
thereof.
"Environmental Loss" means all Loss resulting from an Environmental
Matter.
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"Environmental Matters" means any matter relating to (i) the
Release or threatened Release of a Contaminant on, in, at, to, from or
beneath a facility or (ii) liabilities arising under applicable Environmental
Law.
"Environmental Property Transfer Acts" means any applicable
Requirements or Laws that for environmental reasons conditions, restricts,
prohibits or requires any notification or disclosure with respect to the
direct or indirect transfer, sale, lease or closure of any property.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Estimated Closing Net Working Capital" means the estimate of
Closing Net Working Capital contemplated by Section 3.2(b).
"Excluded Assets" has the meaning specified in Section 2.2.
"Excluded Taxes" has the meaning set forth in Section 8.2.1.
"Expenses" means any and all reasonable expenses incurred in
connection with investigating, defending or asserting any claim, action, suit
or proceeding incident to any matter indemnified against hereunder (including
court filing fees, court costs, arbitration fees or costs, witness fees, and
reasonable fees and disbursements of legal counsel, investigators, expert
witnesses, accountants and other professionals).
"FDC" has the meaning specified in the first paragraph of this
Agreement.
"FFMC" has the meaning specified in the first paragraph of this
Agreement.
"FIMC L.L.C." means FIMC L.L.C., a Delaware limited liability
company.
"GAAP" means United States generally accepted accounting
principles, consistently applied, in effect at the date of the financial
statement to which it refers.
"Governmental Body" means any domestic or foreign, federal, state,
local or other governmental authority or regulatory body.
"Governmental Permits" has the meaning specified in Section 5.8.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended. "Independent Accountants" means the Atlanta
office of Price Waterhouse LLP.
"Initial Amount" has the meaning specified in Section 3.1.
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"Instrument of Assignment" means an Instrument of Assignment in a
form reasonably satisfactory to the parties.
"Intellectual Property Rights" shall mean all of the following used
primarily in the Business: (i) patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade
names, corporate names, and Internet domain names, together with all goodwill
associated with each of the foregoing; (iii) copyrights and copyrightable
works; (iv) registrations, applications and renewals for any of the
foregoing; (v) trade secrets, confidential information and know-how
(including but not limited to ideas, formulae, compositions, manufacturing
and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, financial and accounting data, business and marketing plans, and
customer and supplier lists, and related information; and (vi) computer
software.
"Intercompany Trade Payables and Receivables" means the trade
payables and receivables between the Division and Affiliates of Sellers
arising in the ordinary course of business at market rates to the extent
reflected in the calculation of Closing Net Working Capital.
"Interim Balance Sheet" means the unaudited balance sheet of the
Division as of March 31, 1998 included in Schedule 5.4.
"IRS" means the Internal Revenue Service.
"knowledge of Sellers" means the actual knowledge, after reasonable
inquiry, of Xxxxxx X. Xxxxx, Xxxxxxx Xxxxx, Xxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxxx and Xxxx X. Xxxxxxx. For purposes of
Section 5.23 only, "knowledge of Sellers" also means the actual knowledge of
Xxxxxx Xxxxxxx.
"LLCs" means FIMC L.L.C. and the successor limited liability
company of Appalachian Computer Services, Inc. contemplated by Section 7.5.
"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"Material Adverse Effect" means a material adverse effect on the
business, assets, results of operations or financial condition of the
Division, other than changes (a) relating to generally applicable economic
conditions or the Division's industry in general, (b) resulting from the
announcement by Sellers of their intention to sell the Division or (c)
resulting from the execution of this Agreement or the consummation of the
transactions contemplated hereby.
"Net Working Capital" means the difference between "Current Assets"
and "Current Liabilities" of the Division, with Current Assets consisting of
those categories reflected as such on the Working Capital Model (excluding
cash, bank deposits and cash equivalents), and
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with Current Liabilities consisting of those categories reflected as such on
the Working Capital Model, prepared in accordance with the Agreed Accounting
Principles and otherwise on a basis consistent with the Working Capital
Model.
"ordinary course" or "ordinary course of business" means, for any
Person, the ordinary course of business of such Person consistent with past
practices (including with respect to quantity and frequency).
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, any successor statute, and any
regulations promulgated thereunder.
"Owned Real Property" has the meaning specified in Section 5.9.
"Permitted Encumbrances" means (i) liens for current Taxes and
other governmental charges and assessments which are not yet due and payable,
(ii) liens of landlords and liens of carriers, workmen, mechanics and
materialmen and other like liens arising in the ordinary course of business
for sums not yet due and payable and (iii) other liens or imperfections on
property reflected on the title commitments contained in Schedule 5.9 (except
as otherwise set forth in Schedule 5.9).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"Post-Closing Tax Periods" means (i) with respect to Taxes other
than Taxes imposed on the Subsidiaries or for which the Subsidiaries may
otherwise be liable, the period beginning immediately after the Closing Date
and (ii) with respect to Taxes imposed on the Subsidiaries or for which the
Subsidiaries may otherwise be liable, taxable years or periods beginning
after the Closing Date and, with respect to any Straddle Period, the portion
of such Straddle Period beginning immediately after the Closing Date (in all
cases determined in accordance with Section 8.2.1(c)).
"Pre-Closing Tax Periods" means (i) with respect to Taxes other
than Taxes imposed on the Subsidiaries or for which the Subsidiaries may
otherwise be liable, the period through and including the Closing Date and
(ii) with respect to Taxes imposed on the Subsidiaries or for which the
Subsidiaries may otherwise be liable, taxable years or periods ending on or
before the Closing Date and, with respect to any Straddle Period, the portion
of such Straddle Period ending on and including the Closing Date (in all
cases determined in accordance with Section 8.2.1(c)).
"Purchase Price" has the meaning specified in Section 3.1.
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"Purchased Assets" has the meaning specified in Section 2.1. For
purposes of the representations and warranties contained in Article V,
"Purchased Assets" shall include the assets of the Subsidiaries.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq., and any successor statute, and any regulations
promulgated thereunder.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of
a Contaminant into the indoor or outdoor environment or into or out of any
Division Real Property.
"Remedial Action" means actions required under Environmental Laws
to (i) clean up, remove, treat or in any other way address Contaminants in
the indoor or outdoor environment, (ii) prevent the Release or threatened
Release or minimize the further Release of Contaminants or (iii) investigate
and determine if a remedial response is needed and to design such a response
and post-remedial investigation, monitoring, operation and maintenance and
care.
"Requirements of Law" means any domestic or foreign, federal, state
and local laws, statutes, regulations, rules, codes or ordinances enacted,
adopted, issued or promulgated by any Governmental Body.
"Restricted Activities" means: (i) the business of transforming
structured or unstructured electronic data or digital image onto microfiche
or microfilm, 5 1/4 inch, 12 inch or 14 inch optical disk or paper, (ii) the
preprocessing, printing, inserting, sorting, finishing and/or mailing of
written communications, via USPS or courier, on a customized or
project-by-project basis; (iii) the conversion of data stored on paper to an
electronic format by means of manually entering such data in a computer
system or by the scanning of such paper image and converting the scanned
image into electronic data for output to microfiche, microfilm or 5 1/4 inch,
12 inch or 14 inch optical disk; (iv) the scanning and/or indexing of paper
documents to microfiche or microfilm and the duplication thereof; (v) the
duplication of microfiche, microfilm or 5 1/4 inch, 12 inch or 14 inch
optical disk; (vi) the microfilming of paper documents and duplication
thereof; or (vii) the photographic film processing of exposed microfilm and
the duplication thereof.
"Sellers" has the meaning specified in the first paragraph of this
Agreement.
"Seller Agreements" has the meaning specified in Section 5.21.
"Seller Ancillary Agreements" means the Instrument of Assignment
and the Transition Services Agreement.
"Seller Group Member" means (i) FDC, FFMC and their respective
Affiliates, (ii) directors, officers, employees, agents, attorneys and
consultants of FDC, FFMC and their respective Affiliates and (iii) the
successors and assigns of the foregoing.
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"Seller Tax Group" means any "affiliated group" (as defined in
Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(b) of the Code) or any analogous combined, consolidated or
unitary group defined under state, local or foreign income Tax law, in each
case that includes FDC and FFMC.
"Seller's Savings Plan" has the meaning specified in Section
8.3(d).
"Straddle Period" means any taxable year or period beginning before
and ending after the Closing Date.
"Subsidiaries" means ACS, Employee Benefit Plans, Inc. and FIMC
L.L.C.
"Tax" (and, with correlative meaning, "Taxes") means any federal,
state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, value added, estimated, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed
by any Governmental Body, whether disputed or not.
"Tax Return" means any return, report or similar statement required
to be filed with respect to any Taxes (including any attached schedules) and
any amendment thereto, including, without limitation, any information return,
claim for refund, amended return and declaration of estimated Tax.
"Tax Sharing Arrangement" shall mean any written agreement
providing for the allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return which
Tax Return includes FFMC or any Subsidiary.
"Termination Date" has the meaning specified in Section 12.1(f).
"Third-Party Buyer" has the meaning specified in Section 13.5(a).
"Transferred Employees" has the meaning specified in Section
8.3(a).
"Transition Services Agreement" means a Transition Services
Agreement in a form reasonably satisfactory to the parties containing the
terms set forth in Exhibit B hereto.
"Vacation Schedule" has the meaning specified in Section 8.3(f).
"Warn Act" means the Worker Adjustment and Retraining Notification
Act of 1988.
"Working Capital Model" means the model used to determine the
Agreed Net Working Capital set forth in Schedule 1.1 hereto.
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ARTICLE II
PURCHASE AND SALE
2.1. Purchased Assets. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, FFMC shall sell, transfer,
assign, convey and deliver to Buyer, and Buyer shall purchase from FFMC, on a
going concern basis, free and clear of all Encumbrances (except for Permitted
Encumbrances), all of the business and operations of FFMC conducted by the
Division (such business and operations being herein called the "Business")
and all of the assets, properties and rights of FFMC of every kind and
description, wherever located, real, personal or mixed, tangible or
intangible, and, in each case, currently used or held for use to conduct the
Business as the same shall exist on the Closing Date (herein collectively
called the "Purchased Assets"), including, without limitation, all right,
title and interest of FFMC in, to and under:
(a) All of the assets reflected on the Interim Balance Sheet,
except for cash and for those assets disposed of or converted into
cash after the Interim Balance Sheet Date in the ordinary course of
business and in accordance with this Agreement;
(b) All notes and accounts receivable generated for the benefit
of the Division, together with all prepayments, prepaid expenses and
deposits relating to the Division to the extent reflected in Closing
Net Working Capital;
(c) All raw materials, supplies, samples, work-in-process,
finished goods, goods on consignment and other materials included in
the inventory of the Division;
(d) The Governmental Permits listed in Schedule 5.8;
(e) The Owned Real Property and options to acquire real property
listed in Schedule 5.9, together with all buildings, fixtures and
improvements, including construction-in-progress, located thereon,
together with all waterlines, rights of way, uses, license, easements,
hereditaments, tenements, and appurtenances located on such property
and owned by FFMC;
(f) The real estate leases listed or described in Schedule 5.10,
together with all right, title and interest of FFMC, if any, in the
buildings, office, warehouse or plant space, fixtures and improvements
thereon, including construction-in-progress, and appurtenances
thereto, located on such real property;
(g) The machinery, equipment, vehicles, furniture and other
personal property listed or referred to in Schedule 5.13;
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(h) The personal property leases listed in Schedule 5.14;
(i) The copyrights, trademarks, trade names and service marks
(and all goodwill associated therewith), registered or unregistered,
and the applications for registration thereof and the patents and
applications therefor and any of the foregoing listed in Schedule
5.15;
(j) The agreements listed in Schedule 5.18(A);
(k) The contracts, agreements or understandings listed or
described in Schedule 5.20 and all unfulfilled purchase and sale
orders of the Division;
(l) All of the issued and outstanding capital stock (or, in the
case of the LLCs, membership interests) of each of the Subsidiaries;
(m) All goodwill associated with the Business and the Purchased
Assets;
(n) All mailing lists, customer lists, subscriber lists,
processes, computer software, manuals or business procedures, trade
secrets, know how, drawings and other proprietary or confidential
information of FFMC primarily used in or primarily relating to the
Business, including related procedures, files and manuals and all
source and object codes and documentation related thereto;
(o) All rights, claims or causes of action against third parties
arising under warranties or defects of workmanship, manufacturing or
design from vendors and others in connection with the Purchased Assets
(other than those related to Excluded Assets or Excluded Liabilities);
and
(p) All books and records (including all data and other
information stored on discs, tapes or other media) of FFMC relating
primarily to the assets, properties, business and operations of the
Business and all books and records of the Subsidiaries.
2.2. Excluded Assets. Notwithstanding the provisions of Section 2.1,
the Purchased Assets shall not include the following (herein referred to as the
"Excluded Assets"):
(a) All cash, bank deposits and cash equivalents;
(b) The names "First Data Corporation," "FDC" or any related or
similar trade names, trademarks, service marks or logos to the extent
the same incorporate the name "First Data Corporation," "FDC" or any
variation thereof;
(c) The account receivable on the Interim Balance Sheet which is
collectible from ComTec;
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(d) All contracts of insurance;
(e) All corporate minute books and stock transfer books and the
corporate seal of Sellers other than those of the Subsidiaries;
(f) All refunds of any Tax for which Sellers are liable pursuant
to Section 8.2, except to the extent that Buyer is entitled to such
refund pursuant to Section 8.2;
(g) Sellers' employment and employee benefit plans or
arrangements listed in Schedule 5.18(A) or 5.18(B) or otherwise
maintained by Sellers on behalf of persons employed by FFMC;
(h) The capital stock of First Image Management Corporation;
(i) The right to the earn-out payment pursuant to the Asset
Purchase Agreement between FFMC and Xxxx & Xxxxxx Publications Systems
Co. dated December 15, 1997; and
(j) All assets, contracts and other arrangements listed on
Schedule 2.2(J).
2.3. Assumed Liabilities. On the Closing Date, Buyer shall deliver
to FFMC the Assumption Agreement, pursuant to which Buyer shall assume and agree
to discharge the following obligations and liabilities of FFMC in accordance
with their respective terms and subject to the respective conditions thereof:
(a) All liabilities reflected in the calculation of Closing Net
Working Capital;
(b) The long-term liabilities of FFMC reflected on the Interim
Balance Sheet as a dollar amount (including any interest thereon);
(c) Except as disclosed on Schedule 2.2(J), all liabilities and
obligations of FFMC to be paid or performed after the Closing Date
under (i) the Seller Agreements, (ii) the leases, contracts and other
agreements not required by the terms of Section 5.20 to be listed in a
Schedule to this Agreement and relating to the Business (but in each
case, only to the extent relating to the Business), (iii) the leases,
contracts and other agreements entered into by FFMC with respect to
the Business after the date hereof consistent with the terms of this
Agreement and (iv) unfulfilled purchase and sale orders of the
Division;
(d) Except for the lawsuits, arbitrations, claims, suits,
proceedings or investigations described in Schedule 5.22 (including
any update of such Schedule
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but excluding item 5 on such Schedule), all lawsuits, arbitrations, claims,
suits, proceedings or investigations arising out of or relating to the
Business;
(e) Except as provided in Section 11.1(a), all liabilities and
obligations related to, associated with or arising out of (i) the
occupancy, operation, use or control of any of the Division Real
Property on or prior to the Closing Date or (ii) the operation of the
Business on or prior to the Closing Date, in each case incurred under
or imposed by any Environmental Law, including without limitation any
Release or threatened Release of any Contaminant on, in, at, to,
beneath or from (A) the Division Real Property (including, without
limitation, all facilities, improvements, structures and equipment
thereon, surface water thereon or adjacent thereto and soil or
groundwater thereunder) or (B) any real property or facility owned by
a third Person to which Contaminants generated by the Business were
sent prior to the Closing Date;
(f) All liabilities in respect of Taxes for which Buyer is
liable pursuant to Section 8.2;
(g) The liabilities for which Buyer is liable pursuant to
Section 8.3; and
(h) Any liabilities or obligations with respect to any products
or services that were marketed or sold prior to the Closing.
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities."
2.4. Excluded Liabilities. Buyer shall not assume or be obligated to
pay, perform or otherwise discharge any liability or obligation of Sellers,
direct or indirect, known or unknown, absolute or contingent, not expressly
assumed by Buyer pursuant to the Assumption Agreement (all such liabilities and
obligations not being assumed being herein called the "Excluded Liabilities")
and all Excluded Liabilities shall remain the obligations of Sellers.
Notwithstanding anything to the contrary in Section 2.3, Excluded Liabilities
shall include the following:
(i) any liabilities in respect of Taxes for which Sellers are
liable pursuant to Section 8.2;
(ii) any intercompany payables and other liabilities or
obligations of Sellers to any of their respective Affiliates (except
to the extent taken into account in the calculation of Closing Net
Working Capital);
(iii) any costs and expenses incurred by Sellers incident to
their negotiation and preparation of this Agreement and their
performance and compliance with the agreements and conditions
contained herein;
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(iv) any liabilities or obligations in respect of any Excluded
Assets;
(v) the liabilities for which Sellers are liable pursuant to
Section 8.3;
(vi) the lawsuits, arbitrations, claims, suits, proceedings or
investigations described in Schedule 5.22 (including any update of
such Schedule but excluding item 5 in such Schedule);
(vii) all liabilities or obligations of EBPLife Insurance
Company and EBP Re, Ltd. and all liabilities or obligations of
Employee Benefit Plans, Inc. that are not directly related to the
Business;
(viii) all liabilities and obligations of Data Preparation,
Inc. other than those specifically identified in a schedule to this
Agreement or taken into account in the calculation of Closing Net
Working Capital;
(ix) the earn-out or other contingent payment obligations of the
Division pursuant to the acquisition agreements identified in Schedule
5.5(B); and
(x) any indebtedness for borrowed money of FFMC or any
Subsidiary except to the extent reflected on the Interim Balance Sheet
(including any interest thereon).
ARTICLE III
PURCHASE PRICE
3.1. Purchase Price. The purchase price for the Purchased Assets
(the "Purchase Price") shall be equal to $150,000,000 (the "Initial Amount") in
cash, subject to adjustment as provided in Section 3.2. The Initial Amount
shall be paid or caused to be paid by Buyer pursuant to Section 4.2 hereof.
3.2. Adjustment to Purchase Price.
(a) Adjustment Amount. The Purchase Price shall be adjusted upwards
or downwards in an amount equal to the difference between the Closing Net
Working Capital and the Agreed Net Working Capital. For the purposes of this
Agreement, the Agreed Net Working Capital is deemed to be $39,457,000 and is
determined pursuant to the Working Capital Model.
(b) Determination of Estimated Closing Net Working Capital. Within
ten calendar days after the Closing Date, Sellers shall deliver to Buyer a
certificate executed on behalf of Sellers by the President or any Vice President
of FFMC, dated the date of its delivery, setting forth Sellers' best good faith
estimate of the Estimated Closing Net Working Capital based upon the most recent
available financial statements and prepared in accordance with the Agreed
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Accounting Principles and otherwise on a basis consistent with the Working
Capital Model. If the Estimated Closing Net Working Capital is less than the
Agreed Net Working Capital, FFMC shall promptly pay such deficiency to Buyer by
wire transfer to one or more accounts designated by Buyer. If the Estimated
Closing Net Working Capital exceeds the Agreed Net Working Capital, Buyer shall
promptly pay such excess to FFMC by wire transfer to one or more bank accounts
designated by FFMC.
(c) Adjustment Procedure.
(i) Within sixty (60) calendar days after the Closing Date,
Sellers shall cause the Atlanta office of Ernst & Young LLP, on their
behalf, to prepare and deliver to Buyer an unaudited consolidated
balance sheet of the Division, dated as of the close of business on
the business day immediately preceding the Closing Date (the "Closing
Balance Sheet"), which shall include a calculation of the Closing Net
Working Capital and shall certify that the Closing Balance Sheet has
been prepared in accordance with the Agreed Accounting Principles and
otherwise on a basis consistent with the Working Capital Model.
(ii) If Buyer wishes to dispute the Closing Balance Sheet or the
calculation of the Closing Net Working Capital, Buyer shall deliver to
Sellers, within thirty (30) calendar days of receipt thereof, a notice
specifying in reasonable detail those items or amounts as to which
Buyer disagrees, the reason for such disagreement and the resulting
adjustments proposed by Buyer (the "Dispute Notice").
(d) Expert Determination. If a Dispute Notice is delivered pursuant
to Section 3.2(c)(ii), the parties shall use their commercially reasonable
efforts to reach agreement on the disputed items or amounts in order to
determine the Closing Net Working Capital. If the Buyer and Sellers cannot
reach agreement within ten (10) business days from the date of delivery of the
Dispute Notice, the disputed items and amounts shall be submitted to the
Independent Accountants in accordance with this Section 3.2(d). Upon a request
to refer a matter to the Independent Accountants, Buyer and Sellers shall use
their commercially reasonable efforts to agree on the procedures to be followed
by the Independent Accountants (including procedures with regard to presentation
of evidence) within ten days following such request. If Buyer and Sellers are
unable to agree upon procedures at the end of such ten-day period, the
Independent Accountants shall establish such procedures giving due regard to the
intention of Buyer and Sellers to resolve disputes as quickly, efficiently and
inexpensively as possible, which procedures may be, but need not be, those
proposed by either Buyer or Sellers. Each of Buyer and Sellers shall then
submit evidence in support of its position on each item in dispute as well as
the procedures to be followed by the Independent Accountants, and the
Independent Accountants shall decide the dispute in accordance therewith. In
reaching a decision on each item in dispute, the Independent Accountants shall
not be limited to the selection of either Buyer's or Sellers' position on each
such disputed item. The Independent Accountants shall deliver to Sellers and
Buyer, as promptly as practicable (but no later than thirty (30) days after
receipt of the disputed items), a written report
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setting forth their determination of the Closing Net Working Capital, which
determination shall be final, conclusive and binding upon the parties, and
shall not be subject to appeal to any court or tribunal. Each party will
bear its own expenses in connection with the Closing Balance Sheet, the
Dispute Notice, if any, and the submission to the Independent Accountants,
except that the Independent Accountants' fees and expenses will be allocated
to Buyer and Sellers proportionately based upon a comparison of the magnitude
of the average differential between any determinations made by the
Independent Accountants and the amounts submitted to the Independent
Accountants by each of Buyer and Sellers.
(e) Final Payment. Promptly (but not later than five days) after
the determination of the Closing Net Working Capital pursuant to this Section
3.2 that is final and binding as set forth herein:
(i) If the Closing Net Working Capital exceeds the Estimated
Closing Net Working Capital, Buyer shall pay to FFMC, by wire transfer
of immediately available funds to such bank account of FFMC as FFMC
shall designate in writing to Buyer, an amount equal to the excess of
the Closing Net Working Capital over the Estimated Closing Net Working
Capital, plus interest on such excess from the date of the payment of
Estimated Closing Net Working Capital to the date of payment pursuant
to this clause (e) at the Agreed Rate; or
(ii) If the Estimated Closing Net Working Capital exceeds the
Closing Net Working Capital, FFMC shall pay to Buyer, by wire transfer
of immediately available funds to such bank account of Buyer as Buyer
shall designate in writing to FFMC, an amount equal to the excess of
the Estimated Closing Net Working Capital over the Closing Net Working
Capital, plus interest on such excess from the date of the payment of
Estimated Closing Net Working Capital to the date of payment pursuant
to this clause (e) at the Agreed Rate.
(f) Access. Sellers, Ernst & Young LLP, the Independent Accountants
and their respective representatives will have reasonable access to the
personnel, books, records and accounts of the Division for any purposes related
to their preparation or review, as the case may be, of the Closing Balance Sheet
and the determination of the Closing Net Working Capital. In addition, each
party agrees to cause its representatives to make their workpapers and
supporting documentation available to the other.
3.3. Allocation of Purchase Price. Prior to March 15, 1999, Buyer
and FFMC shall agree upon a schedule (the "Allocation Schedule") allocating the
Purchase Price (including, for the purpose of this Section 3.3, any other
consideration paid to FFMC, including the Assumed Liabilities) among the
Purchased Assets (with any amount allocated to the membership interests of an
LLC further allocated among the assets of such LLC). Buyer and FFMC hereby
agree that, on the Allocation Schedule, $981,000 shall be allocated to the
purchase of all of the shares of Employee Benefit Plans, Inc. and $25 million
shall be allocated to the purchase of all the equity interests of ACS and, to
the extent not held in ACS, any contracts held for the benefit of ACS in
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the name of FFMC (such equity interests and such contracts, collectively the
"ACS Business"); provided, however, that if the ACS Business is sold by Buyer
prior to March 15, 1999 in a sale comparable to the sale of the ACS Business
set forth herein, the amount allocated to the purchase of the ACS Business
shall be the sale price in such subsequent sale by Buyer, subject to a
maximum allocation of $40 million and a minimum allocation of $20 million.
The Allocation Schedule shall be reasonable and shall be prepared in
accordance with Section 1060 of the Code, the regulations thereunder and the
preceding sentence. Promptly after agreeing to the Allocation Schedule, FFMC
and Buyer shall sign the Allocation Schedule and return an executed copy
thereof to Buyer and FFMC, respectively. Buyer and FFMC each agrees to file
IRS Form 8594, and all federal, state, local and foreign Tax Returns, in
accordance with the Allocation Schedule. Buyer and FFMC each agrees promptly
to provide the other with any other information required to complete IRS Form
8594.
ARTICLE IV
CLOSING
4.1. Closing Date. The Closing shall be consummated at 10:00
A.M., local time, on the third business day after satisfaction or waiver of
all of the conditions set forth in Articles IX and X have been satisfied or
waived (to the extent permitted), or such later date as may be agreed upon by
Buyer and FFMC at the offices of Sidley & Austin, One First National Plaza,
Chicago, Illinois or at such other place or at such other time as shall be
agreed upon by Buyer and FFMC. The "Closing Date" shall mean 12:01 a.m. on
the date on which the Closing is actually held.
4.2. Payment of Initial Amount on the Closing Date. Subject to
fulfillment or waiver of the conditions set forth in Article IX, at Closing
Buyer shall pay to or cause to be paid to FFMC the Initial Amount by wire
transfer of immediately available funds to the account specified in Schedule
4.2.
4.3. Buyer's Additional Closing Date Deliveries. Subject to
fulfillment or waiver of the conditions set forth in Article IX, at Closing
Buyer shall deliver to FFMC all of the following:
(a) A copy of Buyer's Certificate of Incorporation certified as
of a recent date by the Secretary of State of the State of Indiana;
(b) Certificate of existence of Buyer issued as of a recent date
by the Secretary of State of the State of Indiana;
(c) Certificate of the secretary or an assistant secretary of
Buyer, dated the Closing Date, in form and substance reasonably
satisfactory to FFMC, as to (i) no amendments to the Certificate of
Incorporation of Buyer since a specified date, (ii) the by-laws of
Buyer, (iii) the resolutions of the Board of Directors of Buyer
authorizing the execution and performance of this Agreement and the
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contemplated transactions and (iv) incumbency and signatures of the
officers of Buyer executing this Agreement and any Buyer Ancillary
Agreement;
(d) The Assumption Agreement duly executed by Buyer;
(e) The certificate contemplated by Section 10.1, duly executed
by the President or any Vice President of Buyer; and
(f) The Transition Services Agreement duly executed by Buyer.
4.4. Sellers' Closing Date Deliveries. Subject to fulfillment or
waiver of the conditions set forth in Article X, at Closing Seller shall deliver
to Buyer all of the following:
(a) A copy of the Restated Certificate of Incorporation of FDC
certified as of a recent date by the Secretary of State of the State
of Delaware;
(b) A copy of the Articles of Incorporation of FFMC certified as
of a recent date by the Secretary of State of the State of Georgia;
(c) A copy of the organizational document of each of the
Subsidiaries certified as of a recent date by the Secretary of State
of the jurisdiction in which the Subsidiary is organized;
(d) Certificates of good standing of FDC and FFMC issued as of a
recent date by the Secretary of State of the State of Delaware and the
Secretary of State of the State of Georgia, respectively;
(e) Certificate of good standing of each Subsidiary issued as of
a recent date by the jurisdiction in which the Subsidiary is
organized;
(f) Certificate of the secretary or an assistant secretary of
FDC, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, as to (i) no amendments to the Restated
Certificate of Incorporation of FDC since the date of the certificate
specified in clause (a) above, (ii) the by-laws of FDC, (iii) the
resolutions of the Board of Directors of FDC authorizing the execution
and performance of this Agreement, any Seller Ancillary Agreement to
which FDC is a party and the transactions contemplated hereby and
thereby and (iv) incumbency and signatures of the officers of FDC
executing this Agreement and any Seller Ancillary Agreement to which
FDC is a party;
(g) Certificate of the secretary or an assistant secretary of
FFMC, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, as to (i) no amendments to the Articles of
Incorporation of FFMC since the date of the certificate specified in
clause (b) above, (ii) the by-laws of FFMC, (iii) the
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resolutions of the Board of Directors of FFMC authorizing the execution and
performance of this Agreement, any Seller Ancillary Agreement to which FFMC
is a party and the transactions contemplated hereby and thereby and (iv)
incumbency and signatures of the officers of FFMC executing this Agreement
and any Seller Ancillary Agreement to which FFMC is a party;
(h) The Instrument of Assignment duly executed by FFMC;
(i) Certificates of title or origin (or like documents) with
respect to any vehicles or other equipment included in the Purchased
Assets for which a certificate of title or origin is required in order
to transfer title;
(j) All consents, waivers or approvals obtained by FFMC with
respect to the Purchased Assets or the consummation of the
transactions contemplated by this Agreement;
(k) The Transition Services Agreement duly executed by FDC;
(l) The certificates representing all of the shares of each of
the Subsidiaries (other than the LLCs), duly endorsed to in blank or
accompanied by duly executed in blank and witnessed stock powers;
(m) An instrument of assignment conveying all of the membership
interests in the LLCs to Buyer, duly executed by FFMC;
(n) The certificates contemplated by Sections 9.1 and 9.2, duly
executed by the President or any Vice President of FDC;
(o) A special warranty deed with respect to each of the parcels
of Owned Real Property which is owned by FFMC and which is being
transferred, duly executed by FFMC and in form and substance
reasonably satisfactory to Buyer;
(p) An assignment with respect to each of the leases of real
estate described in Schedule 5.11 which is being transferred, duly
executed by FFMC and in form and substance reasonably satisfactory to
Buyer;
(q) An assignment with respect to the trademarks being
transferred suitable for recording, duly executed by FFMC and in form
and substance reasonably satisfactory to Buyer;
(r) Title insurance policies insuring Buyer's interest in the
Owned Real Property consistent with the requirements of Schedule 5.9
and otherwise reasonably acceptable to Buyer; and
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(s) Such other bills of sale, assignments and other instruments
of transfer or conveyance as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment,
transfer, conveyance and delivery of the Purchased Assets to Buyer.
In addition to the above deliveries, FFMC shall take all steps and actions as
Buyer may reasonably request or as may otherwise be necessary to put Buyer in
actual possession or control of the Purchased Assets to the extent FFMC is in
possession or control thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Sellers jointly and severally
represent and warrant to Buyer and agree as follows:
5.1. Organization of Sellers. FDC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
FFMC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia. Each Seller is duly qualified to
transact business as a foreign corporation and is in good standing in each
jurisdiction where the nature of the business conducted by it or the properties
owned or leased by it requires qualification, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect. FFMC
has the corporate power and authority to own or lease and to operate and use the
Purchased Assets and to carry on the Business as now conducted.
5.2. Subsidiaries and Investments. Except for the Subsidiaries and
except as set forth in Schedule 5.2, Sellers do not, directly or indirectly,
own, of record or beneficially, any outstanding voting securities or other
equity interests in any corporation, partnership, limited liability company,
joint venture or other entity which is involved directly or indirectly in or
relates to the Business. Each of the Subsidiaries (other than the LLCs) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation as set forth on
Schedule 5.2, with full corporate power to conduct its business as it is
presently being conducted and to own, lease and use its properties and assets.
FIMC L.L.C. is, and the limited liability company to be formed pursuant to
Section 7.5(a) will be, a limited liability company duly organized, validly
existing and in good standing under the laws of the state of Delaware with full
company power to conduct its business as it is presently being conducted and to
own, lease and use its properties and assets. Each of the Subsidiaries is duly
qualified to transact business and is in good standing in each jurisdiction
where the nature of the business conducted by it or the properties owned or
leased by it requires qualification, except where the failure to be so qualified
or in good standing would not have a Material Adverse Effect. Except as set
forth on Schedule 5.2, FFMC owns, directly or indirectly, all the outstanding
capital stock (or, in the case of the LLCs, membership interests) of each of the
Subsidiaries, free and clear of all Encumbrances, including, without limitation,
any agreement, understanding or restriction
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affecting the voting rights or other incidents of record or beneficial ownership
to such stock. All such capital stock (or, in the case of the LLCs, membership
interests) is duly authorized, validly issued and outstanding, fully paid and
nonassessable, and free of preemptive rights. Schedule 5.2 sets forth the
number of authorized, issued and outstanding shares of capital stock with
respect to each corporate Subsidiary and all membership interests in each
limited liability company Subsidiary. None of the Subsidiaries has any
commitment to issue or sell any shares of its capital stock (or, in the case of
the LLCs, membership interests) or any securities or obligations convertible
into or exchangeable for, or giving any Person any right to acquire from such
Subsidiary, any shares of its capital stock (or, in the case of the LLCs,
membership interests), and no such securities or obligations are outstanding.
No Subsidiary has outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote with the holders of capital stock on any
matter. Except as set forth in Schedule 5.2, Employee Benefit Plans, Inc. does
not own and, since November 1, 1995, has not owned more than 50% of the equity
interests in any Person. Except as set forth in Schedule 5.2, ACS does not own
and, since November 1, 1995, has not owned more than 50% of the equity interests
in any Person.
5.3. Authority of Sellers. Each of Sellers has the corporate power
and authority to execute, deliver and perform this Agreement and all of the
Seller Ancillary Agreements to which it is a party. The execution, delivery and
performance of this Agreement and the Seller Ancillary Agreements by Sellers
have been duly authorized and approved by each Seller's board of directors and
do not require any further authorization or consent of Sellers or their
respective stockholders. This Agreement has been duly authorized, executed and
delivered by Sellers and (assuming the valid authorization, execution and
delivery of this Agreement by Buyer) is the legal, valid and binding obligation
of Sellers enforceable in accordance with its terms, and each of the Seller
Ancillary Agreements has been duly authorized by FDC or FFMC, as the case may
be, and (assuming the valid authorization, execution and delivery thereof by
Buyer, where Buyer is a party, or the other party or parties thereto) upon
execution and delivery by FDC or FFMC, as the case may be, will be a legal,
valid and binding obligation of FDC or FFMC, as the case may be, enforceable in
accordance with its terms, in each case subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general equity principles.
Except as set forth in Schedule 5.3, neither the execution and
delivery of this Agreement or any of the Seller Ancillary Agreements or the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, violate, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, or result in the creation or
imposition of any Encumbrance upon any of the Purchased Assets or the
Subsidiaries, under (1) the charter or By-laws of Sellers or similar
organizational documents of any Subsidiary, (2) any Seller Agreement,
(3) any other note, indenture, instrument, agreement, binding
commitment or undertaking,
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mortgage, lease, license, franchise, permit (including Governmental
Permits) or other authorization, right, restriction or obligation to which
Sellers or any Subsidiary is a party or any of the Purchased Assets is
subject or by which Sellers or any Subsidiary is bound, (4) any Court Order
to which Sellers or any Subsidiary is a party or any of the Purchased
Assets is subject or by which Sellers or any Subsidiary is bound or (5) any
Requirements of Laws affecting Sellers, any Subsidiary or the Purchased
Assets, other than, in the case of clauses (2) and (3), any such conflicts,
violations, breaches, defaults, rights, loss of rights or Encumbrances
that, individually or in the aggregate, would not have a Material Adverse
Effect or would not prevent the consummation of any of the transactions
contemplated hereby;
(ii) require the approval, consent, authorization or act of, or
the making or giving by Sellers or any Subsidiary of any declaration,
notice, filing or registration with or to, any Governmental Body,
except for (A) in connection, or in compliance, with the provisions of
the HSR Act and (B) such approvals, consents, authorizations,
declarations, notices, filings or registrations the failure of which
to be obtained or made would not prevent the consummation of any of
the transactions contemplated hereby; or
(iii) require the approval, consent, authorization or act of,
or the making or giving by Sellers or any Subsidiary of any
declaration, notice, filing or registration with or to, any Person
other than a Governmental Body, except for such approvals, consents,
authorizations, declarations, notices, filings or registrations the
failure of which to be obtained or made would not have a Material
Adverse Effect or would not prevent the consummation of any of the
transactions contemplated hereby.
5.4. Financial Statements. Schedule 5.4 contains the unaudited
consolidated balance sheets of the Division as of March 31, 1998, December
31, 1996 and December 31, 1995, the related consolidated and consolidating
statements of income for the periods ended December 31, 1996 and December 31,
1995 and the related consolidated statement of income for the period ended
March 31, 1998. Schedule 5.4 also contains the audited consolidated balance
sheet of the Division as of December 31, 1997 and the related consolidated
statements of income and cash flows for the period then ended. The financial
statements contained in Schedule 5.4 have been prepared from, and are in
accordance with, the books and records of the Division. Except as set forth
in the financial statements or in Schedule 5.4, such balance sheets and
statements of income have been prepared in conformity with GAAP consistently
applied (except that the unaudited financial statements set forth in Schedule
5.4 do not contain footnotes required by GAAP), and such balance sheets and
related statements of income present fairly in all material respects the
financial position and results of operations of the Division as of their
respective dates and for the periods covered thereby (except that the Interim
Balance Sheet and the related statement of income for the period then ended
are subject to normal year-end adjustments).
21
5.5. Operations Since Balance Sheet Date. (a) Except as set
forth in Schedule 5.5(A), since the Balance Sheet Date, there have been no
changes in the Purchased Assets or the Business which have had a Material
Adverse Effect.
(b) Except as set forth in Schedule 5.5(B), since the Balance
Sheet Date, each of FFMC and the Subsidiaries has conducted the Business only
in the ordinary course. Without limiting the generality of the foregoing,
since the Balance Sheet Date, except as set forth in such Schedule, each of
FFMC and the Subsidiaries has not, in respect of the Business:
(i) made any material change in the Business or its operations,
except such changes as may be required to comply with any applicable
Requirements of Law;
(ii) made any capital expenditure or entered into any contract or
commitment therefor involving the payment by FFMC or any Subsidiary of
an amount in excess of $100,000 (except for the purchase of three
Kodak CD-ROM systems previously disclosed to Buyer);
(iii) entered into any contract for the purchase of real
property or for the sale of any Owned Real Property listed in
Schedule 5.10;
(iv) sold, leased (as lessor), transferred, assigned or otherwise
disposed of (including any transfers to any of Sellers' Affiliates),
or mortgaged or pledged, or imposed or suffered to be imposed any
Encumbrance on, the Purchased Assets or any of the assets reflected on
the Audited Balance Sheet or any assets acquired by FFMC or any
Subsidiary after the Balance Sheet Date, except for inventory and
minor amounts of personal property sold or otherwise disposed of in
the ordinary course of the Business and except for Permitted
Encumbrances;
(v) cancelled any debts owed to or claims held by it (including
the settlement of any claims or litigation) other than in the ordinary
course of the Business;
(vi) created, incurred, assumed, guaranteed or endorsed, or
agreed to create, incur, assume, guarantee or endorse, any
indebtedness for borrowed money (other than money borrowed or advances
from any of its Affiliates in the ordinary course of the Business) or
entered into, as lessee, any capitalized lease obligations (as defined
in Statement of Financial Accounting Standards No. 13);
(vii) accelerated or delayed collection of notes or accounts
receivable generated by the Business in advance of or beyond their
regular due dates or the dates when the same would have been collected
in the ordinary course of the Business;
22
(viii) delayed or accelerated payment of any account payable
or other liability of the Business beyond or in advance of its due
date or the date when such liability would have been paid in the
ordinary course of the Business;
(ix) made, or agreed to make, any distribution of assets to any
of its Affiliates (other than cash realized upon collection of
receivables in the ordinary course of the Business);
(x) instituted any material increase in any compensation payable
to any employee of FFMC or any Subsidiary with respect to the Business
(whose annual compensation at the Balance Sheet Date was in excess of
$50,000) or in any profit-sharing, bonus, incentive, deferred
compensation, insurance, pension, retirement, medical, hospital,
disability, welfare or other benefits made available to current or
former employees of FFMC or any Subsidiary with respect to the
Business;
(xi) made or authorized any change in the organizational
documents of FFMC or any Subsidiary;
(xii) merged any Subsidiary with or into or consolidated any
Subsidiary with any other Person or in any way reclassified any shares
of the capital stock of any Subsidiary;
(xiii) made any material change in the amount or scope of
coverage of insurance currently carried;
(xiv) made any change in the accounting policies applied in
the preparation of the financial statements contained in Schedule 5.4;
(xv) hired any employee whose salary is in excess of $50,000 or
entered into a contract with any consultant which requires an annual
payment by the Division in excess of $50,000;
(xvi) delayed or postponed inventory purchases, repair and
maintenance of real or personal properties, other than delays or
postponements in the ordinary course of business that do not adversely
impair the services provided to customers; or
(xvii) agreed or committed to do any of the foregoing.
5.6. Taxes. Except as set forth in Schedule 5.6, in respect of the
Business and Purchased Assets (i) each of the Subsidiaries and FFMC has filed
or been included in all material Tax Returns required to be filed by it or on
its behalf on or before the date hereof; (ii) all Taxes shown to be due on
the Tax Returns referred to in clause (i), and all other material Taxes due
in respect of periods to which such Tax Returns relate, have been paid or
reflected (in accordance
23
with GAAP) as a liability or reserve on the Balance Sheet; (iii) neither the
Subsidiaries nor FFMC has waived in writing any statute of limitations in
respect of Taxes which waiver is currently in effect; (iv) the Tax Returns
referred to in clause (i) with respect to federal Taxes have been examined by
the IRS or the period for assessment of the Taxes in respect of which such
Tax Returns were required to be filed has expired; (v) all deficiencies
asserted or assessments made as a result of any examination of the Tax
Returns referred to in clause (i) have been paid in full; (vi) all Taxes
which the Subsidiaries or FFMC is required by law to withhold or to collect
for payment have been duly withheld or collected, and either (x) timely paid
to the appropriate taxing authorities to the extent such Taxes are due and
payable, or (y) set aside in accounts for such purpose, or accrued, reserved
against and entered upon the books of the Business to the extent such Taxes
are not yet due and payable; (vii) all Tax Sharing Arrangements to which the
Subsidiaries are a party (other than this Agreement) will terminate prior to
the Closing Date and no Subsidiary will have any liability thereunder on or
after the Closing Date; (viii) none of the corporate Subsidiaries has been a
member of an Affiliated Group (as defined in Section 1504(a) of the Code) for
which consolidated Tax returns were filed or were required to be filed other
than the Affiliate Group of which FDC is the common parent; and (ix) no power
of attorney that is currently in force has been granted with respect to any
matter relating to Taxes that could affect the Business, the Purchased Assets
or the Subsidiaries. Notwithstanding anything to the contrary in this
Agreement, nothing in this Section 5.6 shall cause Sellers to be liable for
any Taxes for which Sellers are not expressly liable pursuant to Section 8.2
(relating to Tax matters).
5.7. Availability of Assets and Legality of Use. Except as set
forth in Schedule 5.7 and except as contemplated by the Transition Services
Agreement, the Purchased Assets constitute all the assets, properties and
rights used or held for use in the Business as conducted by FFMC or any
Subsidiary prior to the date hereof (including, but not limited to, all
books, records, computers and computer programs). Each material item of
tangible personal property included in the Purchased Assets from the DPDS and
DAS business units of the Division is in good condition (subject to normal
wear and tear) and serviceable condition. The tangible personal property
included in the Purchased Assets from the IAS business unit of the Division
is, in the aggregate, in good condition (subject to normal wear and tear) and
serviceable condition. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
SPECIFICALLY PROVIDED FOR HEREIN, ALL OF THE TANGIBLE PERSONAL PROPERTY
INCLUDED IN THE PURCHASED ASSETS ARE SOLD TO BUYER "AS IS" WITHOUT IMPLIED
WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR OTHERWISE (EXCEPT
FOR MANUFACTURER'S WARRANTIES). Schedule 5.7 also sets forth a description
of all services provided by either Seller or any Affiliate of Sellers with
respect to the Business over the last two years utilizing assets not included
in the Purchased Assets and the manner in which the costs of providing such
services have been allocated to the Business.
5.8. Governmental Permits. Each of FFMC and the Subsidiaries
owns, holds or possesses all material licenses, franchises, permits,
privileges, immunities, approvals and other authorizations from a
Governmental Body which are necessary to entitle it to own or lease, operate
and use the Purchased Assets and to carry on and conduct the Business as
currently conducted (herein collectively called "Governmental Permits").
Schedule 5.8 sets forth such Governmental
24
Permits. Except as set forth in Schedule 5.8, all such Governmental Permits
are in full force and effect and are fully transferrable to Buyer. Complete
and correct copies of all of the Governmental Permits listed in Schedule 5.8
have heretofore been delivered to Buyer by FFMC.
Except as set forth in Schedule 5.8, to the knowledge of Sellers,
(i) each of FFMC and the Subsidiaries has fulfilled and performed in all
material respects its obligations under each of the Governmental Permits, and
no event has occurred or condition or state of facts exists which constitutes
or, after notice or lapse of time or both, would constitute a material breach
or default under any such Governmental Permit or which permits or, after
notice or lapse of time or both, would permit revocation or termination of
any such Governmental Permit and (ii) no notice of cancellation, of default
or of any material dispute concerning any Governmental Permit, or of any
event, condition or state of facts described in the preceding clause, has
been received by FFMC or any Subsidiary.
5.9. Real Property. Schedule 5.9 contains a brief description of
(i) each parcel of real property owned by FFMC and used in or relating to the
Business and each parcel of real property owned by any Subsidiary (the "Owned
Real Property") and (ii) any parcel of real property which is subject to an
option held by FFMC to acquire such real property for use in the Business or
an option held by any Subsidiary. Schedule 5.9 also contains a copy of a
policy or a commitment for a policy of title insurance for each of the
parcels so described. To the knowledge of Sellers, the Owned Real Property
has access to public roads and to all utilities, including electricity,
sanitary and storm sewers, potable water, natural gas and other utilities
necessary for the operation of the Business. The Owned Real Property is
properly zoned for its current use and occupation. To the knowledge of
Sellers, there are no encroachments or Encumbrances (other than the Permitted
Encumbrances) upon any of the parcels comprising the Owned Real Property and
no portion of any improvement thereon encroaches upon any property not
included within the Owned Real Property or upon the area of any easement
affecting the Owned Real Property. The current use or occupancy of the Owned
Real Property does not violate in any material respect any instrument or
agreement of record affecting such Owned Real Property or any order of any
governmental authority having jurisdiction over any of the Owned Real
Property.
5.10. Real Property Leases. Schedule 5.10 sets forth a list and
brief description of each lease or similar agreement (showing the location of
the real property covered by such lease or other agreement) under which (i)
FFMC is lessee of, or holds or operates, any real property owned by any third
Person and used in or relating to the Business, (ii) any Subsidiary is lessee
of, or holds or operates, any real property owned by any third Person
(together with the real property referred to in clause (i), the "Leased Real
Property")or (iii) FFMC or any Subsidiary is the lessor of any of the Owned
Real Property.
5.11. Condition of Property. As of the date hereof, except as set
forth in Schedule 5.11, no portion of the real estate owned or leased by the
Division and none of the tangible personal property included in the Purchased
Assets have suffered any material damage by fire or other casualty, in each
case which has not heretofore been repaired and restored to its
25
operating condition prior to such damage. FFMC does not owe any money to any
architect, contractor, subcontractor or materialman for labor or materials
performed, rendered or supplied to, or in connection with, any Owned Real
Property or leased real estate relating to the Business within the past
twelve (12) months except as set forth in Schedule 5.11. There is no work
being done at, or materials being supplied to, any parcel of Owned Real
Property at the date hereof other than routine maintenance projects having
aggregate costs through completion of not more than $75,000.
5.12. Condemnation. As of the date of this Agreement, neither the
whole nor any part of any of the Owned Real Property or any real property
leased, used or occupied by FFMC in connection with the Business or by any
Subsidiary is subject to any pending suit for condemnation or other taking by
any Governmental Body, and, to the knowledge of Sellers, no such condemnation
or other taking is threatened or contemplated.
5.13. Personal Property. Schedule 5.13 contains a list as of
March 31, 1998 of all machinery, equipment, vehicles, furniture and other
personal property owned by FFMC or any Subsidiary having an original cost of
$10,000 or more (which, in the case of FFMC, is used in or relates to the
Business).
5.14. Personal Property Leases. Schedule 5.14 contains as of the
date of this Agreement a brief description of each lease or other agreement
or right, whether written or oral, (including in each case the annual rental,
the expiration date thereof and a brief description of the property covered)
under which FFMC or any Subsidiary is lessee of, or holds or operates, any
machinery, equipment, vehicle or other tangible personal property owned by a
third Person and, in the case of FFMC, is used in or relates to the Business,
except those which are terminable by FFMC or any Subsidiary without penalty
on 60 days' or less notice or which provide for annual rentals of less than
$125,000.
5.15. Patents and Trademarks. (a) Schedule 5.15 contains a list
and description of:
(i) all United States and foreign patents and patent
applications and patent disclosures, all United States and foreign
copyright registrations and applications, all material computer
software (excluding "shrink-wrap" or similar licenses), all United
States, state and foreign trademarks, service marks and trade names
for which registrations have been issued or applied for, all other
United States, state and foreign trademarks, service marks and trade
names, and all Internet domain names owned by FFMC or any Subsidiary
or in which FFMC or any Subsidiary holds any right, license or
interest and, in each case with respect to FFMC, are primarily used in
or primarily relate to the Business (other than such patents,
trademarks, service marks and trade names that have not been used by
FFMC or any Subsidiary since January 1, 1996), showing in each case
the registered or other owner, expiration date and number, if any;
26
(ii) all agreements and licenses (excluding "shrink-wrap" or
similar licenses for computer software) relating or pertaining to any
asset, property or right of the character described in the preceding
clause to which FFMC or any Subsidiary is a party, showing in each
case the parties thereto;
(iii) all licenses or agreements pertaining to mailing lists,
know-how, trade secrets, inventions, disclosures or uses of ideas
primarily used in or primarily relating to the Business to which FFMC
is a party or to which any Subsidiary is a party, showing in each case
the parties thereto; and
(iv) all registered assumed or fictitious names under which FFMC
or any Subsidiary is conducting the Business or has within the
previous three years conducted the Business.
(b) Except as set forth in Schedule 5.15: (i) with the exception
of claims contained in unissued patent applications (if any), FFMC or a
Subsidiary owns all right, title and interest in and to, or has a valid and
enforceable license to use as currently used by FFMC or any Subsidiary in
connection with the Business, free and clear of all Encumbrances except
Permitted Encumbrances and subject to the limitations imposed by each
applicable licensor, all of the Intellectual Property Rights; (ii) FFMC or a
Subsidiary has taken reasonable steps to maintain and protect all of the
Intellectual Property Rights FFMC or any Subsidiary owns and will continue to
maintain and protect the same prior to the Closing so as not to materially
adversely affect the validity or enforceability thereof; (iii) neither FFMC
nor any Subsidiary has agreed to indemnify any Person for or against any
interference, infringement or misappropriation with respect to any
Intellectual Property Rights FFMC or any Subsidiary owns; (iv) immediately
subsequent to the Closing, the Intellectual Property Rights will be owned by
or be available for use by Buyer on terms and conditions substantially
identical to those under which FFMC and its Subsidiaries owned or used the
Intellectual Property Rights immediately prior to the Closing (assuming the
payment by Buyer of any software transfer costs), except for Intellectual
Property Rights which the failure to so own or to so use would not reasonably
be expected to have a Material Adverse Effect; (v) no proceedings are pending
or, to the knowledge of Sellers, threatened against FFMC or any Subsidiary
that challenge (A) the validity, enforceability or ownership by FFMC or any
Subsidiary of any Intellectual Property Rights that are owned by FFMC or any
Subsidiary or (B) the ownership by FFMC or any Subsidiary of any other right
or property described in Schedule 5.15; and (vi) to the knowledge of Sellers,
there is no infringement or misappropriation by any other Person of any
Intellectual Property Rights that are owned by FFMC or any Subsidiary.
(c) To the knowledge of Sellers, the operations, activities,
products, equipment, machinery or processes of the Business do not infringe,
misappropriate or violate the patents, patent rights, trade secrets,
trademarks, service marks, trade names, Internet domain names, copyrights or
other property rights of any other Person. Since January 1, 1996, neither
FFMC nor any Subsidiary has received any notice from any other Person
pertaining to or challenging the right of FFMC or any Subsidiary to use any
of the Intellectual Property Rights.
27
(d) Each of FFMC and the Subsidiaries has ownership and possession
of the source code and user and system documentation for all computer
software owned by FFMC or any Subsidiary and set forth in Schedule 5.15.
(e) (i) FFMC has provided to the Buyer true and complete copies of
the plans relating to the Sellers' year 2000 compliance efforts being
undertaken by the Sellers in connection with the Business (the "Y2K Plans"),
together with true and complete copies of the most recent status reports
relating to the Y2K Plans (the "Y2K Reports"). Expenditures related to the
Y2K Plans have been included in the Company's budget.
(ii) Buyer agrees that in connection with the implementation of the
DAS Y2K Plan set forth in Schedule 5.15(E) (the "DAS Y2K Plan"), it will
provide to Xxxxxxx Xxxxxx or to a replacement identified by Sellers, approved
by Buyer, such approval not to be unreasonably withheld (Xxxxxx or his
replacement, the "Seller Y2K Executive") access to all Buyer employees and
records relating to such implementation, as may be necessary in the judgment
of the Seller Y2K Executive to allow the Seller Y2K Executive to evaluate the
implementation of the DAS Y2K Plan, including without limitation copies of
all status or progress reports prepared by Buyer or any third party and all
financial records relating to expenditures for the DAS Y2K Plan and the right
to attend, in person or telephonically, all internal Buyer meetings,
briefings or conference calls regarding the status of the implementation of
the DAS Y2K Plan. The Seller Y2K Executive may provide written requests for
access to specific Buyer records and to specific Buyer employees in
connection with the monitoring function and Buyer will promptly respond to
such requests. The Seller Y2K Executive will evaluate the status of the DAS
Y2K Plan and provide written recommendations to Buyer regarding steps
required to be taken by Buyer to complete the steps outlined in the DAS Y2K
Plan. Provided that Buyer has provided access to all the information
required and implemented all written recommendations of the Seller Y2K
Executive and the costs of implementation of the DAS Y2K Plan, including the
written recommendations of the Seller Y2K Executive, exceed $1.2 million,
Sellers will reimburse Buyer for 100% of such costs incurred by Buyer between
$1.2 million and $3.0 million. Sellers will be responsible for no costs
incurred by Buyer in connection with implementation of the DAS Y2K Plan in
excess of $3 million. Sellers agree that Buyer may assign its rights under
this Section 5.15(e)(ii) to a purchaser of the DAS business subject to the
terms and conditions contained in this Section 5.15(e)(ii) and to the
assumption by such purchaser of Buyer's obligations.
5.16. Receivables; Inventories. All accounts receivable of the
Division have arisen from bona fide transactions by the Division in the
ordinary course of business. Sellers are not aware of any facts or
circumstances which would be reasonably likely to result in any material
increase in the uncollectability of such receivables as a class in excess of
the reserve therefor set forth on the Interim Balance Sheet. The inventories
of the Division (including raw materials, supplies, work-in-process, finished
goods and other materials but excluding equipment and spare parts) are in
good and merchantable condition and fit for the purposes for which they were
procured, processed or prepared.
28
5.17. Title to Property. Except as set forth in Schedule 5.17,
FFMC or one of the Subsidiaries possesses good and marketable title to all of
the Owned Real Property and all buildings, structures and other improvements
thereon, in each case free and clear of all Encumbrances, except for
Permitted Encumbrances. FFMC or one of the Subsidiaries has good and
marketable title to all of the other tangible Purchased Assets purported to
be owned by it, free and clear of all Encumbrances, except for Permitted
Encumbrances. Upon delivery to Buyer on the Closing Date of the instruments
of transfer contemplated by Section 4.4, FFMC will thereby transfer to Buyer
good and marketable title to all of the tangible Purchased Assets purported
to be owned by it or any of the Subsidiaries, subject to no Encumbrances,
except for Permitted Encumbrances. FFMC or one of the Subsidiaries has valid
and subsisting leasehold interests in the Leased Real Property, all free and
clear of any Encumbrances other than Permitted Encumbrances and the matters
disclosed in Schedule 5.10.
5.18. Employees and Related Agreements; ERISA. (a) Except as
described in Schedule 5.18(A), neither FFMC nor any Subsidiary is, with
respect to the Business, a party to or bound by any oral or written:
(i) employee collective bargaining agreement, employment
agreement, consulting, advisory or service agreement, deferred
compensation agreement or confidentiality agreement with employees or
other agreement regarding rates of pay or working conditions of any
employees engaged in the Business;
(ii) contract or agreement with any present or former officer,
director or employee, agent, or attorney-in-fact of FFMC or any
Subsidiary; or
(iii) stock option, stock purchase, bonus, commission sales
or other incentive plan or agreement.
FFMC has made any commission sales plans available to Buyer.
(b) Except as described in Schedule 5.18(B), neither FFMC nor any
Subsidiary maintains, or is required to contribute to, any "employee pension
benefit plan" (as such term is defined in Section 3(2) of ERISA) or "welfare
benefit plan" (as such term is defined in Section (1) of ERISA), on behalf of
any employees of the Business. FFMC has delivered to Buyer, with respect to
each of the plans described in such Schedule, correct and complete copies of
(i) all plan documents and amendments, trust agreements and insurance
contracts, (ii) the three most recent Annual Report (Form 5500 Series) and
accompanying schedules, as filed and (iii) the current summary plan
description.
(c) Neither FFMC nor any of the Subsidiaries contributes, or is
obligated or has ever been obligated to contribute, to any multiemployer plan
(within the meaning of section 4001 of ERISA) with respect to employees of
the Business.
29
(d) Schedule 5.18(D) contains: (i) a list of all employees or
commission salespersons, consultants, agents or other representatives
employed in connection with the Business as of Xxxxx 00, 0000, (xx) the then
current annual compensation of, and a description of the fringe benefits
(other than those generally available to employees of the Business) provided
by FFMC or any Subsidiary to, any such persons and (iii) a list of any
payments or commitments of FFMC or any Subsidiary to pay any severance or
termination pay to such persons or former employees of the Division.
(e) Except as set forth in Schedule 5.18(E), to the knowledge of
Sellers, neither FFMC nor any Subsidiary is involved in any material
transaction or other situation with any employee, officer, director or
Affiliate of FFMC which may be generally characterized as a "conflict of
interest", including, but not limited to, direct or indirect interests in the
business of competitors, suppliers or customers of FFMC or any Subsidiary.
(f) Except as described in Schedule 5.18(F), no event has
occurred, and there exists no condition or set of circumstances, with respect
to any "employee benefit plan" (within the meaning of Section 3(3) of ERISA)
in connection with which any Subsidiary has any liability to the IRS, the
U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any
other Person under ERISA, the Code or any other applicable law.
5.19. Employee Relations. Except as set forth in Schedule 5.19,
each of FFMC and the Subsidiaries has complied and is in compliance with in
respect of the Business in all material respects with all applicable laws,
rules and regulations which relate to prices, wages, hours, discrimination in
employment and collective bargaining. During the past five years, except as
set forth in Schedule 5.19, neither the Division nor the Subsidiaries has
experienced any strikes, grievances, unfair labor practice claims or other
material employee disputes.
5.20. Contracts. As of the date of this Agreement, except as set
forth in Schedule 5.20 or any other Schedule hereto, FFMC is not, with
respect to the Business, and the Subsidiaries are not a party to or bound by:
(i) any contract for the purchase or sale of real property;
(ii) any contract for the purchase of raw materials, supplies,
services or equipment which FFMC reasonably anticipates will involve
the annual payment of more than $250,000 after the date hereof;
(iii) any contract for the sale of products or services of
the Business which FFMC reasonably anticipates will involve the annual
payment of more than $500,000 after the date hereof;
(iv) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or
advertising or public relations contract
30
which FFMC reasonably anticipates will involve the annual payment by the
Division of more than $50,000 after the date hereof;
(v) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, Affiliates or others;
(vi) any agreement which provides for the incurrence by FFMC or
any Subsidiary of debt for borrowed money including capitalized
leases;
(vii) any agreement containing competitive restraints on the
ability of the Division to purchase supplies or to sell any products
or services;
(viii) any contracts which contain restrictions with respect
to the payment of dividends or any other distribution in respect of
the capital stock of any Subsidiary;
(ix) any agreement relating to the acquisition or divestiture of
the capital stock or equity securities, assets or business of any
Subsidiary;
(x) any warranty, guaranty or other similar undertaking with
respect to a contractual performance extended by either FFMC or any
Subsidiary, other than in the ordinary course of business or pursuant
to agreements in effect on the date hereof; or
(xi) any other contract, agreement, commitment, understanding or
instrument which is material to the Business.
5.21. Status of Contracts. Except as set forth in Schedule 5.21
or in any other Schedule hereto, each of the leases, contracts and other
agreements listed in Schedules 5.10, 5.14, 5.15, 5.18 and 5.20 (collectively,
the "Seller Agreements") constitutes a valid and binding obligation of FFMC
or the Subsidiaries, as the case may be, enforceable in accordance with its
terms (subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors'
rights and to general equity principles). Except as set forth in Schedule
5.21, (i) neither FFMC nor any Subsidiary is in material breach or material
default under any of the Seller Agreements, (ii) no event has occurred which,
with notice, or lapse of time or both, would constitute a material breach or
material default thereof by FFMC or any Subsidiary or, to the knowledge of
Sellers, constitute a material breach or material default thereof by any
other party thereto and (iii) neither FFMC nor any Subsidiary has repudiated,
and, to the knowledge of Sellers, no other party thereto has repudiated, any
material provision thereof. Complete and correct copies of each of the
Seller Agreements have heretofore been made available to Buyer by FFMC.
5.22. No Violation, Litigation or Regulatory Action. Except as
set forth in Schedule 5.22:
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(i) to the knowledge of Sellers, each of FFMC and the
Subsidiaries has complied and is in compliance in all material
respects with all Requirements of Laws and Court Orders which are
applicable to the Purchased Assets or the Business or which would be
reasonably expected to materially impair the ability of Sellers to
perform its obligations hereunder;
(ii) as of the date hereof, there are no lawsuits, arbitrations,
claims, suits, proceedings or investigations pending or, to the
knowledge of Sellers, threatened against FDC, FFMC or any Subsidiary
in respect of the Purchased Assets or the Business; and
(iii) as of the date hereof, there is no action, suit, claim,
arbitration, investigation or proceeding pending or, to the knowledge
of Sellers, threatened relating to the transactions contemplated by
this Agreement.
5.23. Environmental Matters. Except as set forth in Schedule 5.23:
(i) the operations of the Business comply and have complied in
all material respects with all applicable Environmental Laws;
(ii) each of FFMC and its Subsidiaries owns, holds, possesses or
has applied for all Governmental Permits which are necessary under
Environmental Laws to entitle it to own or lease, operate and use the
Purchased Assets and to carry on and conduct the Business
substantially as currently conducted;
(iii) neither FFMC, with respect to the Business, nor any of
the Division Real Property nor any Subsidiary is the subject of any
investigation by, order from or written agreement with any Person
(including without limitation any prior owner or operator of the
Division Real Property) respecting (x) any Environmental Law, (y) any
Remedial Action or (z) any claim of Environmental Losses and
Environmental Expenses arising from the Release or threatened Release
of a Contaminant into the environment;
(iv) neither FFMC (with respect to the Business) nor any
Subsidiary is subject to any judicial or administrative proceeding,
order, judgment, decree or settlement alleging or addressing a
material violation of or material liability under any Environmental
Law;
(v) since January 1, 1994, neither FFMC (with respect to the
Business) nor any Subsidiary has (in each case, for which there is any
ongoing liability or continuing obligations):
(x) reported a Release of a hazardous substance
pursuant to Section 103(a) of CERCLA, or any state
equivalent; or
32
(y) filed a notice pursuant to Section 103(c) of
CERCLA;
(vi) since January 1, 1994, neither FFMC nor any Subsidiary has
received any written notice or claim to the effect that it is or may
be liable to any Person as a result of the Release of a Contaminant
into the environment from or on the Division or is the Division Real
Property or, to the knowledge of Sellers, any property in the
immediate vicinity of the Division Real Property, listed or formally
proposed for listing on the National Priority List promulgated
pursuant to CERCLA or on any other Federal or state list of
Contaminant sites requiring investigation or cleanup;
(vii) to the knowledge of Sellers, no Environmental Encumbrance has
attached to the Division Real Property;
(viii) contaminants have not been used, generated, transported
to or from, treated, stored, Released or disposed of in, onto, under
or from the Division Real Property by FFMC or any Subsidiary in
violation of any Environmental Law or, to the knowledge of Sellers, by
any predecessor-in-title or agent of Sellers or any other person or
entity at any time;
(ix) any PCBs or PCB-containing equipment owned by FFMC or any
Subsidiary or any asbestos-containing materials known to Sellers at
the Division Real Property conform in all material respects with
applicable Environmental Laws;
(x) to the knowledge of Sellers, there are no underground tanks
or any other underground storage facilities (other than stormwater
drainage basins) located on the Owned Real Property; and
(xi) to the knowledge of Sellers, the Division has no liabilities
related to, associated with or arising out of (i) the occupancy, operation,
use or control of any of the Division Real Property on or prior to the
Closing Date or (ii) the operation of the Business on or prior to the Closing
Date, in each case resulting from the violation of any Environmental Law,
including without limitation any Release or threatened Release of any
Contaminant on, in, at, to, beneath or from (A) the Division Real Property
(including, without limitation, all facilities, improvements, structures and
equipment thereon, surface water thereon or adjacent thereto and soil or
groundwater thereunder) or (B) any real property or facility owned by a third
Person to which Contaminants generated by the Business were sent prior to the
Closing Date.
5.24. Insurance. FFMC or its Affiliates maintain, with respect to
the Business and the Purchased Assets, policies of fire and extended coverage
and casualty, liability worker's compensation and other forms of insurance in
such amount and against such risks and losses as are in its judgment prudent
and shall use reasonable efforts to keep such insurance or comparable
33
insurance in full force and effect through the Closing Date. Schedule 5.24
sets forth the claim history of the Division for the past three years under
all such policies.
5.25. No Finder. Neither of Sellers, any Subsidiary nor any
Person acting on their behalf has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement other than to Xxxxxx Xxxxxxx &
Co. Incorporated, whose fees and expenses, to the extent payable, shall be
paid by Sellers. Sellers are solely responsible for any payment, fee or
commission that may be due to Xxxxxx Xxxxxxx & Co. Incorporated in connection
with the transactions contemplated hereby.
5.26. Certain Agreements. Except as set forth in Schedule 5.26,
neither FFMC, any of the Subsidiaries nor any of their Affiliates is a party
to any agreement with any officer, director or employee of the Division (i)
the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction or relating to a transaction
involving the Business or the Division of the nature of the transaction
contemplated by this Agreement or (ii) the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement, other than, in each case,
agreements as to which Sellers will assume sole responsibility.
5.27. Form Agreements. Schedule 5.27 contains copies of a
representative sample of the standard form of contracts used in the Business.
To the knowledge of Sellers, as of the date hereof, there are no service
problems resulting in a service re-run that are outside of the ordinary
course of business and in excess of $25,000.
5.28. Customers and Suppliers.
(i) Schedule 5.28 lists the fifty largest customers (based on
revenues) of the Division for each of the two most recent fiscal
years.
(ii) Since December 31, 1997 through the date hereof, no material
supplier of the Division has indicated in writing or, to the knowledge
of Sellers, otherwise that it shall stop supplying materials, products
or services to the Division, and no customer listed on Schedule 5.28
has indicated in writing or, to the knowledge of Sellers, otherwise
that it shall stop buying materials, products or services from the
Division.
(iii) Since December 31, 1997, except as indicated on Schedule 5.28,
the Division has not changed its pricing structure with respect to any
customer listed on Schedule 5.28, other than non-material price increases
or decreases to meet competition in the ordinary course of business and
has not experienced any price increases by any of its material suppliers,
other than non-material price increases
34
which FFMC believes are similar to price increases that such suppliers have
imposed on similarly situated companies.
5.29. Liabilities. Other than those reflected on the audited
December 31, 1997 balance sheet and the notes thereto or disclosed in
Schedule 5.29 or any other schedule hereto, to the knowledge of Sellers,
there are no liabilities or obligations relating to the Business of any kind,
absolute, accrued, contingent, known or unknown, or otherwise, whether due or
to become due, that would constitute a liability which by its nature or
character would be required to be recorded or disclosed in accordance with
GAAP other than liabilities incurred in the ordinary course of business since
December 31, 1997 or taken into account in the calculation of Closing Net
Working Capital.
5.30. Book and Records of Subsidiaries. The respective minute
books of the Subsidiaries, as previously made available to Buyer and its
representatives, contain accurate records of all meetings of, and corporate
action taken by (including action taken by written consent), the respective
stockholders and Boards of Directors of each Subsidiary. No Subsidiary has
any of its records, systems, controls, data or information recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by
any means (including any electronic, mechanical or photographic process,
whether computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of
Sellers or a Subsidiary.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Sellers and agrees as follows:
6.1. Organization of Buyer. Buyer is a corporation duly organized
and validly existing under the laws of the State of Indiana and has full
corporate power and authority to own or lease and to operate and use its
properties and assets and to carry on its business as now conducted.
6.2. Authority of Buyer. Buyer has full power and authority to
execute, deliver and perform this Agreement and all of the Buyer Ancillary
Agreements. The execution, delivery and performance of this Agreement and
the Buyer Ancillary Agreements by Buyer have been duly authorized and
approved by Buyer's board of directors and do not require any further
authorization or consent of Buyer or its stockholders. This Agreement has
been duly authorized, executed and delivered by Buyer and (assuming the valid
authorization, execution and delivery of this Agreement by Sellers) is the
legal, valid and binding agreement of Buyer enforceable in accordance with
its terms, and each of the Buyer Ancillary Agreements has been duly
authorized by Buyer and (assuming the valid authorization, execution and
delivery thereof by FDC or FFMC,
35
as the case may be) upon execution and delivery by Buyer will be a legal,
valid and binding obligation of Buyer enforceable in accordance with its
terms, in each case subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general equity principles.
Neither the execution and delivery of this Agreement or any of the
Buyer Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the
terms, conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or
a loss of rights under (1) the Certificate of Incorporation or By-laws
of Buyer, (2) any material note, instrument, agreement, mortgage,
lease, license, franchise, permit or other authorization, right,
restriction or obligation to which Buyer is a party or any of its
properties is subject or by which Buyer is bound, (3) any Court Order
to which Buyer is a party or by which it is bound or (4) any
Requirements of Laws affecting Buyer, other than, in the case of
clause (2), any such conflicts, breaches, defaults, rights or loss of
rights that, individually or in the aggregate, would not materially
impair the ability of Buyer to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated
hereby; or
(ii) require the approval, consent, authorization or act of, or
the making by Buyer of any declaration, notice, filing or registration
with, any Person, except for (A) in connection, or in compliance, with
the provisions of the HSR Act and (B) such approvals, consents,
authorizations, declarations, filings or registrations the failure of
which to be obtained or made would not materially impair the ability
of Buyer to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
6.3. No Violation, Litigation or Regulatory Action. Except as set
forth in Schedule 6.3:
(i) as of the date hereof, there are no lawsuits, claims, suits,
proceedings or investigations pending or, to the knowledge of Buyer,
threatened against Buyer or its subsidiaries which are reasonably
expected to materially impair the ability of Buyer to perform its
obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby; and
(ii) as of the date hereof, there is no action, suit, claim,
arbitration, investigation or proceeding pending or, to the knowledge
of Buyer, threatened relating to the transactions contemplated by this
Agreement or any of the Buyer Ancillary Agreements.
36
6.4. No Finder. Neither Buyer nor any Person acting on its behalf
has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement other than to Gleacher NatWest, Inc., whose fees and expenses,
to the extent payable, shall be paid by Buyer. Buyer is solely responsible
for any payment, fee or commission that may be due to Gleacher NatWest, Inc.
in connection with the transactions contemplated hereby.
6.5. Financial Ability. Buyer has the financial ability to
consummate the transactions contemplated by this Agreement and has furnished
FFMC with evidence thereof.
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
7.1. Investigation of Purchased Assets by Buyer. FFMC, the
Subsidiaries and their respective officers, employees, agents, accountants
and attorneys shall afford to the officers, employees and authorized
representatives of Buyer (including, without limitation, independent public
accountants, attorneys and lenders) reasonable access during normal business
hours, upon reasonable advance notice, to the offices, properties, employees
and business and financial records (including computer files, retrieval
programs and similar documentation) of FFMC and the Subsidiaries to the
extent Buyer shall reasonably deem necessary or desirable and shall furnish
to Buyer or its authorized representatives such additional information
concerning the Purchased Assets and the Business as shall be reasonably
requested. Buyer and Sellers agree that, pursuant to the Confidentiality
Agreement, Buyer has and may continue to provide potential acquirors of the
DPDS and DAS units of the Division with the information obtained by Buyer
pursuant to this Section 7.1, it being agreed by Buyer that such potential
acquirors shall not have direct access to the offices, properties, employees
and business and financial records of the Division. In addition to the
foregoing, Buyer and its officers, employees, agents and authorized
representatives may, upon reasonable advance notice and with the
participation of FFMC or its representatives, contact customers and suppliers
of the Division. Buyer agrees that the investigation contemplated by this
Section 7.1 shall be conducted in such a manner as not to interfere
unreasonably with the operations of FFMC or the Subsidiaries.
7.2. Notification. Each of Buyer and Sellers shall promptly
notify the other of any action, suit or proceeding that shall be instituted
or threatened against such party to restrain, prohibit or otherwise challenge
the legality of any transaction contemplated by this Agreement. Each of
Buyer and Sellers shall promptly notify the other of any lawsuit, claim,
proceeding or investigation that may be threatened, brought, asserted or
commenced which would have been listed in Schedule 5.22 or Schedule 6.3, as
the case may be, if such lawsuit, claim, proceeding or investigation had
arisen prior to the date hereof. Sellers shall update Schedule 5.22 for any
37
such lawsuit, claim, proceeding or investigation and shall update Schedules
5.20 and 5.28(ii) for any item which, if existing prior to the date of this
Agreement, would have been required to be set forth on such schedule. Each
of Buyer and Sellers shall promptly notify the other if any of them discovers
a breach of the representations, warranties or covenants contained in this
Agreement.
7.3. Consents of Third Parties; Governmental Approvals; Closing.
(a) FFMC and Buyer will act diligently and reasonably to secure, before the
Closing Date, the consent, approval or waiver, in form and substance
reasonably satisfactory to Buyer, from any party to any Seller Agreement
required to be obtained to assign or transfer any such Agreements to Buyer
(or, in the case of the DAS unit of the Division, to transfer such Agreements
to ACS) and to obtain the release of FFMC from liability in respect thereof;
provided, however, that neither FFMC nor Buyer shall have any obligation to
offer or pay any consideration in order to obtain any such consents or
approvals; and provided, further, that FFMC shall not make any agreement or
understanding affecting the Purchased Assets or the Business as a condition
for obtaining any such consents or waivers except with the prior written
consent of Buyer (which consent shall not be unreasonably withheld).
(b) During the period prior to the Closing Date, and after the
Closing Date, as necessary, FFMC and Buyer shall act diligently and
reasonably, and shall cooperate with each other, to secure any consents and
approvals of any Governmental Body required to be obtained by them in order
to assign or transfer any Governmental Permits to Buyer, to permit the
consummation of the transactions contemplated by this Agreement; provided,
however, that FFMC shall not make any agreement or understanding affecting
the Purchased Assets or the Business as a condition for obtaining any such
consents or approvals except with the prior written consent of Buyer (which
consent shall not be unreasonably withheld).
(c) Subject to the terms and conditions contained herein, each of
Sellers and Buyer agrees to use its commercially reasonable efforts to
effectuate the transactions contemplated hereby as expeditiously as
reasonably practicable, to fulfill and cause to be fulfilled the conditions
to Closing (including consummating the financing contemplated by Section 9.5)
and to release any liens that are not Permitted Encumbrances.
7.4. Operations Prior to the Closing Date. (a) FFMC shall, and
shall cause each of the Subsidiaries to, operate and carry on the Business
only in the ordinary course. Consistent with the foregoing, FFMC shall, and
shall cause each of the Subsidiaries to, keep and maintain the Purchased
Assets in good operating condition and repair and shall use its reasonable
efforts consistent with good business practice to preserve the goodwill of
the suppliers, contractors, licensors, employees, customers, distributors and
others having business relations with the Business.
(b) Notwithstanding Section 7.4(a), except as expressly
contemplated by this Agreement, except as set forth in Schedule 7.4(B) or
except with the express written approval of
38
Buyer (which Buyer agrees shall not be unreasonably withheld or delayed),
Sellers shall not with respect to the Business (and shall cause each of the
Subsidiaries not to):
(i) make any material change in the Business or its operations,
except such changes as may be required to comply with any applicable
Requirements of Law;
(ii) make any capital expenditure or enter into any contract or
commitment therefor involving the payment by FFMC or any Subsidiary of
an amount in excess of $100,000 (except for the purchase of three
Kodak CD-ROM systems previously disclosed to Buyer);
(iii) enter into any contract for the purchase of real property or
for the sale of any Owned Real Property listed in Schedule 5.10;
(iv) sell, lease (as lessor), transfer, assign or otherwise
dispose of (including any transfers to any of its Affiliates), or
mortgage or pledge, or impose or suffer to be imposed any Encumbrance
on, any of the Purchased Assets, other than inventory sold or
otherwise disposed of in the ordinary course of the Business,
Permitted Encumbrances and personal property no longer useful in the
ordinary course of the Business and not having a fair market value in
excess of $100,000 in the aggregate;
(v) cancel any debts owed to or claims held by it (including the
settlement of any claims or litigation) other than in the ordinary
course of the Business;
(vi) create, incur, assume, guarantee or endorse or agree to
create, incur, assume, guarantee or endorse any indebtedness for
borrowed money (other than money borrowed or advances from any of its
Affiliates in the ordinary course of the Business) or enter into, as
lessee, any capitalized lease obligations (as defined in Statement of
Financial Accounting Standards No. 13);
(vii) accelerate or delay collection of any notes or accounts
receivable generated by the Business in advance of or beyond their
regular due dates or the dates when the same would have been collected
in the ordinary course of the Business;
(viii) delay or accelerate payment of any account payable or
other liability of the Business beyond or in advance of its due date
or the date when such liability would have been paid in the ordinary
course of the Business;
39
(ix) make, or agree to make, any payment of cash or distribution
of assets to any of its Affiliates (other than cash realized upon
collection of receivables generated in the ordinary course of the
Business);
(x) institute any increase in any profit-sharing, bonus,
incentive, deferred compensation, insurance, pension, retirement,
medical, hospital, disability, welfare or other employee benefit plan
with respect to its current or former employees, except as may be
required to comply with applicable Requirements of Law or contracts in
effect on the date hereof; provided, however, that FFMC and the
Subsidiaries, as the case may be, shall notify Buyer of any such
permitted increase not later than the 10th day following the
effectuation of such increase;
(xi) make any change in the compensation of its employees whose
salary and bonus exceeds $50,000, other than changes made in
accordance with normal compensation practices and consistent with past
compensation practices or pursuant to contracts in effect on the date
hereof, provided, however, that FFMC and the Subsidiaries, as the case
may be, shall notify Buyer of any such permitted increase not later
than the 10th day following the effectuation of such increase;
(xii) make or authorize any change in the organizational documents
of any Subsidiary;
(xiii) merge any Subsidiary with or into or consolidate any Subsidiary
with any other Person or in any way reclassify any shares of the capital
stock of any Subsidiary;
(xiv) make any material change in the amount or scope of insurance
coverage currently carried;
(xv) make any change in the accounting policies applied in the
preparation of the financial statements contained in Schedule 5.4;
(xvi) hire any employee whose salary is in excess of $50,000 or
enter into a contract with any consultant which requires an annual
payment by the Division in excess of $50,000;
(xvii) delay or postpone inventory purchases, repair and maintenance
of real or personal properties, other than delays or postponements in the
ordinary course of business that do not adversely impair the services
provided to customers;
40
(xviii) enter into any lease or license agreement (or series of
related leases or licenses) which FFMC reasonably anticipates will
involve the annual payment of more than $125,000;
(xix) enter into any contract for the purchase of raw materials,
supplies, services or equipment which FFMC reasonably anticipates will
involve the annual payment of more than $250,000; or
(xx) agree or commit to do any of the foregoing.
7.5. Formation of LLC; Data Preparation, Inc.. (a) On or prior to
the Closing Date, FFMC shall cause Appalachian Computer Services, Inc. to be
merged with and into a newly formed limited liability company. In such case,
FFMC agrees that, as of the Closing, such limited liability company will be
directly and wholly owned by FFMC and will have not engaged in any business
activities or conducted any operations or incurred or assumed any liability
(other than as a result of the merger with Appalachian Computer Services,
Inc.). FFMC will treat such limited liability company as a division for
federal (and state and local to the extent possible) income tax purposes and
will not elect (or allow such limited liability company to elect) to treat
such limited liability company as a corporation for federal, state and local
income tax purposes.
(b) On or prior to the Closing Date, Sellers will cause ACS to
distribute the capital stock of Data Preparation, Inc. to FFMC and will
thereafter liquidate Data Preparation, Inc.
7.6. Antitrust Law Compliance. As promptly as practicable after
the date hereof (but in no event later than five business days after the date
hereof), Buyer and Sellers shall file with the Federal Trade Commission and
the Antitrust Division of the Department of Justice the notifications and
other information required to be filed under the HSR Act, or any rules and
regulations promulgated thereunder, with respect to the transactions
contemplated hereby. Each party warrants that all such filings by it will be,
as of the date filed, true and accurate and in accordance with the
requirements of the HSR Act and any such rules and regulations. Each of
Buyer and Sellers agrees to make available to the other such information as
each of them may reasonably request relative to its business, assets and
property (including, in the case of Sellers, the Business) as may be required
of each of them to file any additional information requested by such agencies
under the HSR Act and any such rules and regulations.
7.7. Audited Financial Statements. As promptly as reasonably
practicable, Sellers shall, at the expense of Buyer, cause the balance sheets
of the Division as of December 31, 1996 and December 31, 1995, respectively,
contained in Schedule 5.4 and the related statements of income contained in
Schedule 5.4, together with the statements of cash flows for the years then
ended, to be audited by Ernst & Young LLP. Sellers shall cause Ernst & Young
LLP to deliver its report concerning such financial statements as promptly as
reasonably practicable (but in no event later than 45 days after the Closing
Date).
41
7.8. Acquisition Proposals. Each Seller agrees that it, and its
Affiliates, officers and directors, and the officers and directors of its
Affiliates, shall not, and each of them shall direct and use its commercially
reasonable efforts to cause its employees, agents and representatives
(including, without limitation, any investment banker, attorney or
accountant) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its shareholders or
stockholders, as the case may be) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of, the Division or the Purchased Assets (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal")
or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to
an Acquisition Proposal, or otherwise facilitate any effort or attempt to
make or implement an Acquisition Proposal. Sellers shall immediately cease
and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Sellers shall notify Buyer promptly if any Acquisition Proposal
is received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with,
Sellers, and shall promptly request each person which has heretofore executed
a confidentiality agreement to return to Sellers or destroy all confidential
information heretofore furnished to such person by or on behalf of Sellers.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. Use of Names. Sellers are not conveying ownership rights or
granting Buyer a license to use any of the tradenames or trademarks of FDC or
any Affiliate of FDC (other than the trademarks identified on Schedule 5.15)
and, after the Closing, Buyer shall not use in any manner the names or marks
of FDC or any Affiliate of FDC (other than the trademarks identified on
Schedule 5.15) or any word that is similar in sound or appearance to such
names or marks. In the event Buyer or any Affiliate of Buyer violates any of
its obligations under this Section 8.1, FDC and its Affiliates may proceed
against it in law or in equity for such damages or other relief as a court
may deem appropriate. Buyer acknowledges that a violation of this Section
8.1 may cause FDC and its Affiliates irreparable harm which may not be
adequately compensated for by money damages. Buyer therefore agrees that in
the event of any actual or threatened violation of this Section 8.1, FDC and
any of its Affiliates shall be entitled, in addition to other remedies that
they may have, to a temporary restraining order and to preliminary and final
injunctive relief against Buyer or such Affiliate of Buyer to prevent any
violations of this Section 8.1.
8.2. Tax Matters.
8.2.1. Liability for Taxes. (a) Sellers shall be liable for and
pay, and pursuant to Article XI (and subject to the limitations thereof)
shall indemnify and hold harmless each Buyer Group Member from and against:
(A) all Taxes (whether assessed or unassessed) applicable to the
42
Business, the Purchased Assets or the Assumed Liabilities (other than Taxes
imposed on the Subsidiaries, or for which the Subsidiaries may otherwise be
liable), in each case attributable to Pre-Closing Tax Periods, (B) all Taxes
imposed on any Subsidiary pursuant to Treas. Reg. Section 1.1502-6 or similar
provision of state or local law as a result of the Subsidiary having been a
member of Seller Tax Group, and (C) all Taxes imposed on the Subsidiaries, or
for which the Subsidiaries may otherwise be liable, for Pre-Closing Tax
Periods; provided, however, that Sellers shall not be liable for or pay, and
shall not indemnify or hold harmless any Buyer Group Member from or against:
(I) any Tax liability or reserve taken into account in the calculation of the
Closing Net Working Capital as provided for in Section 3.2, (II) any Taxes
that result from any actual or deemed election under Section 338 of the Code
or any similar provisions of state, local or foreign law as a result of the
purchase of the issued and outstanding capital stock of Employee Benefits
Plans, Inc. or that result from any Buyer Group Member engaging in any
activity or transaction that would cause the transactions contemplated by
this Agreement to be treated as a purchase or sale of assets of Employee
Benefits Plans, Inc. for federal, state or local Tax purposes, and (III) any
Taxes imposed on the Purchased Assets, the Business or any of the
Subsidiaries as a result of transactions engaged in by any Buyer Group Member
occurring on the Closing Date that are properly allocable (based on, among
other relevant factors, factors set forth in Treas. Reg. Section
1.1502-76(b)(1)(ii)(B)) to the portion of the Closing Date after 12:01 a.m.
on the Closing Date (Taxes described in this proviso hereinafter "Excluded
Taxes"). Buyer and Sellers agree that, with respect to any transaction
described in clause (III) of the preceding sentence, the Subsidiaries
(excluding in this case the LLCs) and all persons related to such
Subsidiaries under Section 267(b) of the Code immediately after the Closing
Date shall treat the transaction for all federal income Tax purposes (in
accordance with Treas. Reg. Section 1.1502-76(b)(1)(ii)(B), and (to the
extent permitted) in accordance with other income Tax purposes) as occurring
at the beginning of the day following the Closing Date. Sellers shall be
entitled to any refund of (or credit for) Taxes attributable to Pre-Closing
Tax Periods.
(b) Buyer shall be liable for and pay, and pursuant to Article XI
(and subject to the limitations thereof) shall indemnify and hold harmless
each Seller Group Member against: (A) all Taxes (whether assessed or
unassessed) applicable to the Business, the Purchased Assets or the Assumed
Liabilities (other than Taxes imposed on the Subsidiaries, or for which the
Subsidiaries may otherwise be liable), in each case attributable to
Post-Closing Tax Periods; (B) all Taxes imposed on the Subsidiaries, or for
which the Subsidiaries may otherwise be liable, for Post-Closing Tax Periods;
and (C) Excluded Taxes. Except as otherwise provided herein, Buyer shall be
entitled to any refund of (or credit for) Taxes attributable to Post-Closing
Tax Periods.
(c) For purposes of Sections 8.2.1(a) and (b), whenever it is
necessary to determine the liability for Taxes attributable to Pre-Closing
Tax Periods, on one hand, and Post-Closing Tax Periods, on the other hand,
such determination shall be made on a "closing of the books basis" by
assuming that the relevant books were closed at the close of the Closing
Date; provided, however, that (I) transactions occurring on the Closing Date
that are properly allocable (based on, among other relevant factors, factors
set forth in Treas. Reg. Section 1.1502-76(b)(1)(ii)(B))
43
to the portion of the Closing Date after 12:01 a.m. on the Closing Date shall
be allocated to Post-Closing Tax Periods, and (II) exemptions, allowances or
deductions that are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned between Pre-Closing Tax Periods and
Post-Closing Tax Periods on a daily basis and Taxes that are computed on a
periodic basis, such as property Taxes, shall also be so apportioned on a
daily basis. Notwithstanding the foregoing provisions of this paragraph (c),
if the transactions contemplated by this Agreement result in the reassessment
of the value of any property owned by the Division or any Subsidiary for
property Tax purposes, or the imposition of any property Taxes at a rate
which is different than the rate that would have been imposed if such
transactions had not occurred, then (y) the portion of such property Taxes
for the Pre-Closing Tax Period shall be determined on a daily basis, using
the assessed value and Tax rate that would have applied had such transactions
not occurred, and (z) the portion of such property Taxes for the Post-Closing
Tax Period shall be the total property Taxes for the relevant taxable year or
period minus the amount described in clause (y) of this sentence.
(d) Notwithstanding paragraphs (a), (b), and (c) of this Section
8.2.1, any sales Tax, use Tax, real property transfer or gains Tax,
documentary stamp Tax or similar Tax attributable to the sale or transfer of
the Business or the Purchased Assets shall be paid 50% by Buyer and 50% by
Sellers.
(e) Sellers or the Buyer, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this
Section 8.2.1. Within a reasonable time prior to the payment of any said
Tax, the party paying such Tax shall give written notice to the other party
of the Tax payable and the portion which is the liability of each party,
although failure to do so will not relieve the other party from its liability
hereunder.
8.2.2. Tax Returns. (a) Subsidiaries (other than LLCs). Sellers
shall timely file or cause to be timely filed when due (taking into account
all extensions properly obtained) all Tax Returns that are required to be filed
by or with respect to each Subsidiary (other than any LLC) for taxable years or
periods ending on or before the Closing Date (in the case of Tax Returns
required to be filed by or with respect to any such Subsidiary on a combined,
consolidated or unitary basis with either Seller or any Affiliate thereof other
than solely any Subsidiary) or due on or before the Closing Date (with respect
to other Tax Returns), and in each case Sellers shall remit or cause to be
remitted any Taxes due in respect of such Tax Returns. With respect to Tax
Returns to be filed by Sellers pursuant to the preceding sentence, such Tax
Returns shall be prepared by Sellers in a manner consistent with past practice
and no position shall be taken, election made or method adopted that is
inconsistent with positions taken, elections made or methods used in prior
periods in filing such Tax Returns unless Sellers are advised in writing by
their tax advisor that there is no reasonable basis under relevant Tax law to
take such position, election or method. Buyer shall prepare and, except as
provided below, timely file or cause to be timely filed when due (taking into
account all extensions properly obtained) all other Tax Returns that are
required to be filed by or with respect to each Subsidiary (other than any LLC)
44
and, except as provided below, Buyer shall remit or cause to be remitted any
Taxes due in respect of such Tax Returns. With respect to Tax Returns to be
filed by Buyer pursuant to the preceding sentence that relate to taxable
years or periods ending on or before the Closing Date (w) such Tax Returns
shall be prepared by Buyer in a manner consistent with past practice and no
position shall be taken, election made or method adopted that is inconsistent
with positions taken, elections made or methods used in prior periods in
filing such Tax Returns (including, without limitation, positions which would
have the effect of accelerating income to periods for which Sellers are
liable or deferring deductions to periods for which Buyer is liable) unless
Buyer is advised in writing by its tax advisor that there is no reasonable
basis under relevant Tax law to take such position, election or method, (x)
such Tax Returns shall be submitted to Sellers not later than 30 days prior
to the due date for filing such Tax Returns (or, if such due date is within
45 days following the Closing Date, as promptly as practicable following the
Closing Date) for review and approval by Sellers, (y) Buyer shall make any
changes to such Tax Returns as Sellers shall request in its sole discretion
and (z) upon final approval by Sellers, Sellers shall file such Tax Returns
and shall remit or cause to be remitted any Taxes due in respect of such Tax
Returns.
(b) Purchased Assets (other than non-LLC Subsidiaries). Except as
provided in Section 8.2.2(a), Sellers and Buyer will each prepare and timely
file when due (taking into account all extensions properly obtained) all Tax
Returns that are required under applicable law with respect to the Business,
the Purchased Assets and the Assumed Liabilities (or with respect to any LLC)
and will each remit (or cause to be remitted) any Taxes due in respect of
such Tax Returns.
(c) Reimbursement. Sellers or Buyer shall pay the other party for
the Taxes for which Sellers or Buyer, respectively, is liable pursuant to
this Section 8.2. but which are payable with any Tax Return to be filed by
the other party pursuant to this Section 8.2.2 upon the written request of
the party entitled to payment, setting forth in detail the computation of the
amount owed by Sellers or Buyer, as the case may be, but in no event earlier
than 10 days (nor later than 5 days) prior to the due date for paying such
Taxes.
8.2.3. Contest Provisions. (a) Buyer or Sellers, as the case may be,
shall promptly notify the other party in writing upon receipt by them, any of
their Affiliates, or any Subsidiary of notice of any pending or threatened
federal, state, local or foreign Tax audits, examinations or assessments which
might affect the Tax liabilities for which the other party might be liable
pursuant Section 8.2.1.
(b) Sellers (x) shall, with respect to Taxes imposed on a
Subsidiary, have the sole right to represent each Subsidiary's interests in
any Tax audit or administrative or court proceeding relating to Pre-Closing
Tax Periods or otherwise relating to Taxes for which Sellers may be liable
pursuant to this Section 8.2, and to employ counsel of its choice at its
expense, and (y) shall, with respect to Taxes imposed on the Business,
Purchased Assets, and Assumed Liabilities (other than Taxes imposed on a
Subsidiary), have the sole right to control any Tax audit or administrative
or court proceeding relating to Pre-Closing Tax Periods, and to employ
counsel
45
of its choice at its own expense; provided, however, that Buyer shall have
the right to participate in the Tax audits or administrative or court
proceedings described above at its own expense. Sellers shall not be
entitled to settle a Tax claim under the preceding sentence without Buyer's
consent (which consent shall not be unreasonably withheld) if such settlement
would result in Buyer or any of the Subsidiaries being bound legally (in a
way in which a closing agreement under Section 7121 of the Code entered into
by a taxpayer with respect to a proposed adjustment may legally bind the
taxpayer for future years with respect to such adjustment) for Tax periods
(or portions thereof) beginning after the Closing Date and in all cases would
result in a Material Adverse Effect; provided, however, that Sellers shall
not be so restricted if and to the extent Sellers provide indemnification for
such Material Adverse Effect. In the case of a Straddle Period with respect
to Taxes imposed on a Subsidiary, Sellers shall be entitled to participate at
its expense in any Tax audit or administrative or court proceeding relating
(in whole or in part) to Taxes attributable to the portion of such Straddle
Period ending on and including the Closing Date and, with the written consent
of Buyer, and at Seller's sole expense, may assume the entire control of such
audit or proceeding. None of Buyer, any of its Affiliates, or any Subsidiary
may settle any Tax claim for any Taxes for which Seller may be liable
pursuant to this Section 8.2, without the prior written consent of Seller,
which consent may not be unreasonably withheld.
8.2.4. Assistance and Cooperation. After the Closing Date, each
of Sellers and Buyer shall (and cause their respective Affiliates to):
(i) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in accordance
with Section 8.2.2;
(ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns;
(iii) make available to the other and to any taxing authority
as reasonably requested all information, records, and documents
relating to Taxes;
(iv) provide timely notice to the other in writing of any pending
or threatened Tax audits or assessments of each Subsidiary for taxable
periods for which the other may have a liability under Section 8.2.1;
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any Tax audit or
information request with respect to any such taxable period;
(vi) timely sign and deliver such certificates or forms as may be
necessary or appropriate to establish an exemption from (or otherwise
reduce), or file Tax Returns or other reports with respect to, Taxes
described in paragraph (d) of Section 8.2.1 (relating to sales,
transfer and similar Taxes); and
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(vii) timely provide to the other powers of attorney or
similar authorizations necessary to carry out the purposes of this
Section 8.2.
8.2.5. Defined Terms. For purposes of this Section 8.2, and any
relevant defined terms used herein, Closing Date means the date on which the
Closing occurs.
8.3. Employees and Employee Benefit Plans. (a) Effective upon
Closing but as of 11:59 p.m., Chicago time, on the day immediately preceding
the Closing Date, the employment by FFMC and the employment by any Subsidiary
of employees (other than Xxxxxxx Xxxxxx who shall remain an employee of
Sellers) engaged in the Business (collectively, the "Transferred Employees")
shall terminate and such employees shall cease to participate in any employee
benefit plans maintained by or for the benefit of FFMC or any Subsidiary.
Notwithstanding the preceding sentence, Sellers will, as an accommodation to
Buyer, allow the Transferred Employees to remain on Sellers' medical plan for
a transition period ending no later than July 1, 1998 and Buyer agrees to
promptly reimburse Sellers for all associated costs and liabilities. Buyer
shall offer employment to all persons whose employment was so terminated
effective at 12:00 a.m., Chicago time, on the Closing Date (provided, that
Buyer may elect not to offer employment to the persons listed on Schedule
8.3(A)). Buyer shall be solely responsible for the payment of any severance
pay to any Transferred Employees, except as provided in the following two
sentences. Sellers shall be responsible for the payment of any severance pay
to the persons listed on Schedule 8.3(A) if such persons are not offered
employment by Buyer or are terminated by Buyer within six months after the
Closing Date so long as Buyer does not increase the amount of such severance
payments in excess of the amounts payable under Sellers' severance plan. In
addition, Sellers shall reimburse Buyer for up to $300,000 of severance pay
which becomes payable to Transferred Employees within six months after the
Closing Date. If Buyer does not offer employment to the persons listed on
Schedule 8.3(A), such persons shall not be considered Transferred Employees
for purposes of this Section 8.3. Buyer shall assume responsibility and
liability for any penalties or liabilities arising under the Warn Act with
respect to the termination of any Transferred Employees on or after the
Closing Date. FFMC shall assume responsibility and liability for any
penalties or liabilities arising under the Warn Act with respect to the
termination of any Transferred Employees prior to the Closing Date. Buyer
acknowledges that it has not informed FFMC of any planned or contemplated
decisions or actions by Buyer that would require the service of notice under
the Warn Act.
(b) Buyer agrees that, effective as of the day after the Closing
Date, Buyer shall permit Transferred Employees to participate in employee
benefit plans, vacation, holiday and other fringe benefit plans ("Buyer's
Plans") providing benefits which are competitive in the industry.
(c) As soon as is practicable after the Closing Date, but
effective as of the Closing Date and for a period of one year thereafter,
Buyer shall provide a severance pay program which is comparable to the
Division's severance pay program or shall permit Transferred Employees to
participate in Buyer's severance plan. For purposes of computing severance
47
benefits, employment of Transferred Employees by FFMC or any Subsidiary prior
to the Closing Date shall be treated as if it were employment by Buyer after
the Closing Date.
(d) Buyer's Plans which are employee pension benefit plans (as
defined in Section 3(2) of ERISA) shall be amended to provide that employment
of Transferred Employees by FFMC or any Subsidiary prior to the Closing Date
should be treated as employment by Buyer after the Closing Date for purposes
of determining when Transferred Employees become eligible to participate in
and the vested interest of any Transferred Employee in benefits under, such
Buyer's Plans. Sellers and Buyer shall take such action as may be necessary
to effectuate a trust-to-trust transfer of the First Data Incentive Savings
Plan ("Seller's Savings Plan") 401(k) account balances of Transferred
Employees to a comparable Buyer's Plan as follows. As soon as practicable
after Closing, Sellers shall cause the account of each Transferred Employee
who participates in Seller's Savings Plan to be valued. As of such valuation
date, assets equal in value to the vested amount credited to each such
Transferred Employee's account under Seller's Savings Plan will be
transferred to the trust maintained under Buyer's Plan. Such transfer shall
be in cash or, to the extent mutually agreed upon by Sellers and Buyer, in
kind, and shall also include any promissory notes evidencing outstanding loan
balances of the Transferred Employees. Prior to, and as a condition of, any
transfer of assets from Seller's Savings Plan to Buyer's Plan, each party
shall provide the other with a copy of a current IRS determination letter
evidencing the tax qualified status of its savings plan and the tax exempt
status of the plan's trust. As of the transfer date, Buyer's Plan will be
liable for the payment of benefits accrued by and transferred in respect of
the Transferred Employees under Seller's Savings Plan; provided, however,
that Buyer assumes no liability for the valuation of the accounts of the
Transferred Employees under Seller's Savings Plan.
(e) Buyer's Plans which are welfare plans (as defined in Section
3(1) of ERISA) shall (A) provide that employment by FFMC or any Subsidiary
prior to the Closing Date shall be treated as employment by the Buyer after
the Closing Date for purposes of determining eligibility for participation,
and (B) provide that any expenses incurred by Transferred Employees during
1998 on or before the Closing Date shall be taken into account during the
first plan year of such welfare plans for the purposes of satisfying
deductible or coinsurance requirements or satisfaction of maximum
out-of-pocket provisions to the same extent as if such expenses had been
incurred by such employees after the Closing Date. Within twenty (20) days
after the Closing Date, FFMC agrees to deliver to Buyer a schedule showing,
with respect to each of the Transferred Employees, the amounts set forth in
clause (B) above as of the Closing Date.
(f) FFMC has heretofore delivered to Buyer a schedule showing,
with respect to each Transferred Employee as of a recent date, the number of
days of vacation to which such employee is entitled as of such date. FFMC
agrees that within 10 days after the Closing it shall deliver to Buyer a
schedule showing, with respect to each of the Transferred Employees, the
number of days of vacation to which such employee was entitled as of the
Closing Date (the "Vacation Schedule"). Buyer agrees that Buyer shall take
responsibility for and cause to be paid in the normal course of business the
vacation pay of all Transferred Employees as reflected on the
48
Vacation Schedule. For purposes of computing eligibility for and the amount
of vacation or holiday pay of a Transferred Employee to be accrued after the
Closing, employment of a Transferred Employee by FFMC or any Subsidiary shall
be taken into account to the same extent as if it were employment by Buyer.
(g) Buyer shall be responsible and liable for any claim arising
under any state worker's compensation or similar law which is based upon any
occurrence after the Closing Date.
(h) FFMC shall be responsible for providing continuation coverage
under each of its applicable health plans to employees (and their covered
dependents) who do not become Transferred Employees with respect to all
qualifying events under Part 6 of Title I of ERISA and comparable state law.
Buyer shall be responsible for providing continuation coverage under each of
its applicable health plans to Transferred Employees (and their covered
dependents) with respect to all post-Closing Date qualifying events under
Part 6 of Title I of ERISA and comparable state law.
(i) Nothing in this Section 8.3 constitutes a guarantee of
employment for any Transferred Employee, and each Transferred Employee
accepting employment with Buyer will be an employee at will unless Buyer
specifically contracts otherwise in writing. Buyer is free to amend the
terms of employment of any Transferred Employee accepting employment with
Buyer (including the terms of any benefit or compensation plan or scheme) as
the terms of such employment, plan or scheme permit. Buyer assumes no
obligations with respect to any employee of the Division except as
specifically provided pursuant to this Section 8.3. Further, this Section
8.3 is intended solely for the benefit of Sellers and does not give rise to
any rights or claim on the part of any Transferred Employee. Buyer shall not
assume any liabilities or obligations of Sellers under Sellers' benefit
plans, including without limitation, pursuant to this Agreement or the
Assumption Agreement.
8.4. Post-Closing Remittances. If, after the Closing Date, FFMC
shall receive any remittance from any account debtors with respect to any
accounts or notes receivables included in the Purchased Assets, FFMC shall
endorse such remittance to the order of Buyer and forward it to Buyer
promptly following receipt thereof. Conversely, if, after the Closing Date,
Buyer or its Affiliates shall receive any remittance in respect of sales
Taxes for which Sellers are liable pursuant to Section 8.2 or from any
account debtors not in payment of any accounts or notes receivables included
in the Purchased Assets, or not otherwise payable to Buyer or its Affiliates,
then Buyer or its Affiliates, as applicable, shall endorse such remittance to
the order of FFMC and forward it to FFMC promptly following receipt thereof.
8.5. Intercompany Obligations. Effective immediately prior to the
Closing, Sellers shall cause all intercompany payables and receivables (other
than Intercompany Trade Payables and Receivables) to be voided, canceled and
terminated without any payment therefor and shall take such action as may be
necessary so that, as of the Closing Date, there shall be no
49
intercompany obligations between the Division and Affiliates of Sellers other
than Intercompany Trade Payables and Receivables, together with agreements
relating thereto.
8.6. Covenant Not to Compete. (a) Except as provided in (b) and
(c) below, Sellers covenant and agree that, beginning on the Closing Date and
for a period ending thirty-six (36) months after the Closing Date, Sellers
and their Affiliates will not own, operate, control or otherwise carry on
Restricted Activities in the United States.
(b) Nothing in this Agreement, including without limitation
Section 8.6(a), shall prevent Sellers or any of their Affiliates from:
(i) owning less than 5% of the voting or common stock of a
publicly traded company engaged in Restricted Activities;
(ii) printing, inserting and mailing written communications, via
first class mail, or providing other messaging services through the
Western Union Commercial Services business unit of FDC;
(iii) acquiring, and following such acquisition, actively
engaging in any business that has a subsidiary, division, group,
franchise or segment that is engaged in Restricted Activities, so long
as on the date of such purchase not more than 15% of the consolidated
revenues of such business are derived from Restricted Activities;
(iv) offering to a customer Restricted Activities that FDC or any
of its Affiliates would otherwise be prohibited by Section 8.6(a) from
offering provided that FDC or any of its Affiliates will perform or
provide any other material services or products to such customer in
addition to the Restricted Activities;
(v) performing or providing Restricted Activities in connection
with any other material services or products (A) in connection with
checks, credits, debits, drafts, ATM transactions or electronic funds
transfers; (B) to any current customer of FDC or an Affiliate; (C) in
connection with xxxx payment or presentation including, but not
limited to, MSFDC; (D) in connection with diversified financial
services, including xxxx payment, tax payment, money transfer, payment
instrument services and cash management services; (E) in connection
with consumer business database information services (including market
segmentation services, consumer profiling and demographic information
services); or (F) to the bank card, credit card, payment card, debit
card, smart card, stored card and mutual funds industries;
(vi) engaging in the business of sending written communications
via facsimile; or
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(vii) subject to Section 8.8, performing or providing Restricted
Activities directly to FDC or an Affiliate.
(c) Nothing in this Agreement, including without limitation
Section 8.6(a), shall prevent any Affiliate of FDC from engaging in any
activity or business which is now being provided by such Affiliate, including
Restricted Activities, or engaging in Restricted Activities after such
Affiliate ceases to be an Affiliate of FDC; provided, that if any Affiliate
of FDC is currently engaging in any Restricted Activity that would not be
permitted by Section 8.6(b), such Affiliate may continue to do so only
through the end of the current term of any existing agreement to provide such
Restricted Activity (which agreements shall not be extended or renewed).
8.7. Non-Solicitation. (a) Sellers and their Affiliates covenant
and agree that, beginning on the Closing Date and for a period ending
thirty-six (36) months after the Closing Date, Sellers and their Affiliates
will not, directly or indirectly, solicit the customers of the Division as of
the date hereof or customers of Buyer receiving the services in clauses (i),
(ii) or (iii) below as of the date hereof, in each case solely for the
purpose of providing to any such customer any of the following services on a
stand-alone basis and independent of the provision of any other material
services or products by Sellers or any Affiliates to such customer: (i)
transforming structured or unstructured electronic data or digital images
onto CD-ROM, CD-R or CD-RW; (ii) scanning paper images and converting the
scanned image into electronic data for output to CD-ROM, CD-R or CD-RW; or
(iii) the duplication of CD-ROM, CD-R or CD-RW.
(b) Except for the persons identified in Schedule 8.7(B), Sellers
agree that they shall not, and shall not permit their respective Affiliates
to, prior to eighteen (18) months after the Closing Date, solicit any
Transferred Employee (other than any person listed on Schedule 8.3(A)) whose
base salary is in excess of $50,000 to leave such employment or to accept any
other position or employment or assist any other entity in hiring such
employee; provided, however, that nothing in this Section 8.7(b) shall
preclude or be deemed to be breached by (i) the solicitation of any
individual who has been discharged by Buyer or has initiated conversations
with Seller after having resigned his or her employment with Buyer or (ii)
any public advertisement by Sellers or their respective Affiliates soliciting
applicants for employment.
8.8. FDC Affiliates. Sellers shall cause each of First Data
Merchant Services Corporation (except with respect to business with the DAS
unit of the Division which is scheduled to terminate in September 1998),
First Data Investor Services Group, Inc. and Western Union Commercial
Services to enter into (or extend) service agreements with the Division until
at least May 31, 2000 on pricing terms that are substantially comparable to
terms in effect on the date hereof.
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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall be subject to the
satisfaction or, at the option of Buyer, waiver (to the extent permissible under
applicable law), on or prior to the Closing Date, of the following conditions:
9.1. No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Sellers in the performance of any of
their covenants and agreements herein which shall not have been remedied or
cured; the representations and warranties of Sellers contained in this Agreement
which are not qualified as to materiality shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date and the
representations and warranties of Sellers contained in this Agreement which are
qualified as to materiality shall be true and correct on the Closing Date as
though made on the Closing Date (except, in each case, to the extent that the
representations and warranties expressly relate to an earlier date), except, in
each case, for changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Buyer or any
transaction permitted by Section 7.4; and there shall have been delivered to
Buyer a certificate to such effect, dated the Closing Date, signed on behalf of
FDC by the President or Vice President of FDC.
9.2. No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no change resulting in a Material Adverse
Effect; and there shall have been delivered to Buyer a certificate to such
effect, dated the Closing Date, signed on behalf of FDC by the President or Vice
President of FDC.
9.3. No Restraint. The waiting period under the HSR Act shall have
expired or been terminated, and there shall not have been issued and be in
effect (whether temporary, preliminary or permanent) any order, decree, judgment
or injunction (collectively, an "Order") of any court or tribunal of competent
jurisdiction which prohibits the consummation of any material transactions
contemplated by this Agreement.
9.4. Environmental Property Transfer Acts. Buyer shall have received
documentation reasonably satisfactory to Buyer demonstrating compliance with any
applicable Environmental Property Transfer Act.
9.5. Financing. Buyer shall have obtained the proceeds of a debt
financing, (which may be a bridge loan or a Rule 144A offering) in the amount
set forth in the debt financing letter delivered to FFMC and on other terms
reasonably satisfactory to Buyer.
9.6. Closing Deliveries. Sellers shall have delivered to Buyer the
documents required by Section 4.4.
52
Notwithstanding the failure of any one or more of the foregoing
conditions, Buyer may proceed with the Closing without satisfaction, in whole or
in part, of any one or more of such conditions and without written waiver. To
the extent that at the Closing Sellers deliver to Buyer a written notice
specifying in reasonable detail the failure of any of such conditions or the
breach by Sellers of any of the representations or warranties of Sellers herein,
and nevertheless Buyer proceeds with the Closing, Buyer shall be deemed to have
waived for all purposes any rights or remedies it may have against Sellers by
reason of the failure of any such conditions or the breach of any such
representations or warranties to the extent described in such notice.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers under this Agreement shall be subject to
the satisfaction or, at the option of Sellers, waiver (to the extent
permissible under applicable law), on or prior to the Closing Date, of the
following conditions:
10.1. No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Buyer in the performance of any of
its covenants and agreements herein which shall not have been remedied or cured;
the representations and warranties of Buyer contained in this Agreement which
are not qualified as to materiality shall be true and correct in all material
respects on the Closing Date as though made on the Closing Date and the
representations and warranties of Buyer contained in this Agreement which are
qualified as to materiality shall be true and correct on the Closing Date as
though made on the Closing Date, except, in each case, to the extent the
representations and warranties expressly relate to an earlier date or for
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Sellers or any transaction
contemplated by this Agreement; and there shall have been delivered to Sellers a
certificate to such effect, dated the Closing Date and signed on behalf of Buyer
by the President or any Vice President of Buyer.
10.2. No Restraint. The waiting period under the HSR Act shall have
expired or been terminated, and there shall not have been issued and be in
effect (whether temporary, preliminary or permanent) an Order of any court or
tribunal of competent jurisdiction which prohibits the consummation of any
material transactions contemplated by this Agreement.
10.3. Closing Deliveries. Buyer shall have delivered to Sellers the
documents required by Section 4.3.
Notwithstanding the failure of any one or more of the foregoing
conditions, Sellers may proceed with the Closing without satisfaction, in whole
or in part, of any one or more of such conditions and without written waiver.
To the extent that at the Closing Buyer delivers to Sellers a written notice
specifying in reasonable detail the failure of any of such conditions or the
breach by Buyer of any of the representations or warranties of Buyer herein, and
nevertheless Sellers
53
proceed with the Closing, Sellers shall be deemed to have waived for all
purposes any rights or remedies it may have against Buyer by reason of the
failure of any such conditions or the breach of any such representations or
warranties to the extent described in such notice.
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification by Sellers. (a) Sellers jointly and severally
agree to indemnify and hold harmless each Buyer Group Member from and against
any and all Losses and Expenses incurred by such Buyer Group Member in
connection with or arising from:
(i) any breach by any Seller of any of its covenants in this
Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of any Seller contained or referred to in this
Agreement (without regard to any "Material Adverse Effect" or other
materiality exceptions or qualifications contained in any such
representation or warranty) or any certificate delivered by or on
behalf of Sellers pursuant hereto; or
(iii) any Excluded Liability.
(b) Notwithstanding anything contained in this Agreement to the
contrary, Sellers shall be required to indemnify and hold harmless under clauses
(i) and (ii) of Section 11.1(a) with respect to Losses and Expenses incurred by
Buyer Group Members only to the extent the aggregate amount of such Losses and
Expenses exceeds $2,000,000 (with such first $2,000,000 of Losses and Expenses
not being subject to indemnification) and, provided, further, that with respect
to any Losses and Expenses incurred by Buyer Group Members under clauses (i) and
(ii) of Section 11.1(a) in excess of $2,000,000, only if any individual claim
involves $25,000 or more of Losses and Expenses. In addition, in no event shall
the aggregate amount required to be paid by Sellers pursuant to Section 11.1(a)
(other than with respect to clause (iii) thereof or pursuant to a breach of
Section 5.23) exceed 20% of the Purchase Price (as adjusted pursuant to
Section 3.2). Notwithstanding the foregoing, the limitations set forth in this
Section 11.1(b) shall not apply to an intentional misrepresentation by Sellers
or to Section 2.1, Section 3.2, Section 3.3, Section 5.1, Section 5.2, the first
paragraph of Section 5.3, Section 5.6, Section 5.15(e)(ii), Section 5.25,
Section 7.3, Section 7.4, Section 7.5, Section 7.7, Section 7.8, Article VIII,
Section 13.2, Section 13.3, Section 13.5, Section 13.6, Section 13.10 and
Section 13.13.
(c) The indemnification provided for in this Section 11.1 shall
terminate eighteen months after the Closing Date (and no claims shall be made by
any Buyer Group Member under this Section 11.1 thereafter), except that the
indemnification by Sellers shall continue as to:
54
(i) the obligations and representations of Sellers under the
Instrument of Assignment, as to which no time limitation shall apply;
(ii) the representations and warranties of Sellers set forth in
Sections 5.6 and 5.18 and the covenants of Sellers set forth in
Article II, Sections 3.2, 3.3, 8.1, 8.2, 8.3, 8.4, 8.5 and 8.8, which
shall survive for the applicable statute of limitations;
(iii) the covenants of Sellers set forth in Sections 8.6, 8.7
and 13.2(b), which shall survive for the period set forth therein;
(iv) the covenants of Sellers set forth in Sections 13.2(a),
13.3, 13.5, 13.6, 13.10 and 13.13 and the matter set forth in
Section 11.1(a)(iii), as to all of which no time limitation shall
apply;
(v) the representations and warranties set forth in
Sections 5.1, 5.2, the first paragraph of Section 5.3,
Sections 5.15(e) and 5.25, which shall survive for three years after
the Closing Date;
(vi) the representations and warranties of Sellers set forth in
Sections 5.23, which shall survive for five years after the Closing
Date; and
(vii) any Loss or Expense of which any Buyer Group Member has
notified Sellers in accordance with the requirements of Section 11.3
on or prior to the date such indemnification would otherwise terminate
in accordance with this Section 11.1, as to which the obligation of
Sellers shall continue until the liability of Sellers shall have been
determined pursuant to this Article XI, and Sellers shall have
reimbursed all Buyer Group Members for the full amount of such Loss
and Expense in accordance with this Article XI.
11.2. Indemnification by Buyer. (a) Buyer agrees to indemnify and
hold harmless each Seller Group Member from and against any and all Losses and
Expenses incurred by such Seller Group Member in connection with or arising
from:
(i) any breach by Buyer of any of its covenants in this
Agreement;
(ii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or
in any certificate delivered by or on behalf of Buyer pursuant hereto;
(iii) any Assumed Liability; or
55
(iv) any third-party claims relating to the operation of the
Business following the Closing Date for which Buyer is not entitled to
indemnification from Sellers.
(b) The indemnification provided for in this Section 11.2 shall
terminate eighteen months after the Closing Date (and no claims shall be made by
any Seller Group Member under this Section 11.2 thereafter), except that the
indemnification by Buyer shall continue as to:
(i) the obligations and representations of Buyer under the
Assumption Agreement, as to which no time limitation shall apply;
(ii) the covenants of Buyer set forth in Article II,
Sections 3.1, 3.2, 3.3, 8.2 8.3, 8.4 and 8.5, which shall survive for
the applicable statute of limitations;
(iii) the covenants of Buyer set forth in Sections 13.2,
13.3, 13.5, 13.6, 13.10 and 13.13 and the matters set forth in
Sections 11.2(a)(iii) and (iv), as to all of which no time limitation
shall apply; and
(iv) any Loss or Expense of which any Seller Group Member has
notified Buyer in accordance with the requirements of Section 11.3 on
or prior to the date such indemnification would otherwise terminate in
accordance with this Section 11.2, as to which the obligation of Buyer
shall continue until the liability of Buyer shall have been determined
pursuant to this Article XI, and Buyer shall have reimbursed all
Seller Group Members for the full amount of such Loss and Expense in
accordance with this Article XI.
11.3. Notice of Claims. (a) Any Buyer Group Member or Seller Group
Member (the "Indemnified Party") seeking indemnification hereunder shall give to
the party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Claim Notice") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; provided, however, that a Claim Notice
in respect of any action at law or suit in equity by or against a third Person
as to which indemnification will be sought shall be given promptly after the
action or suit is commenced.
(b) In calculating any Loss or Expense there shall be deducted any
insurance recovery in respect thereof (and no right of subrogation shall accrue
hereunder to any insurer). Any indemnity payment hereunder with respect to any
Loss or Expense shall be calculated on an "After-Tax Basis," which shall mean an
amount which is sufficient to compensate the indemnified party for the event
giving rise to such Loss or Expense (the "Indemnified Event"), determined after
taking into account (1) all increases in federal, state, local or other Taxes
(including
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estimated Taxes) payable by the indemnified party as a result of the receipt of
the indemnity payment (as a result of the indemnity payment being included in
income, resulting in a reduction of tax basis, or otherwise); provided, however,
that Buyer and Sellers agree to report each payment made in respect of a Loss or
Expense as an adjustment to the Purchase Price for federal income Tax purposes,
(2) all increases in federal, state, local and other Taxes (including estimated
Taxes) payable by the indemnified party for all affected taxable years as a
result of the Indemnified Event, and (3) all reductions in federal, state, local
and foreign Taxes (including estimated Taxes) payable by the indemnified party
as a result of the Indemnified Event. All calculations shall be made using
reasonable assumptions agreed upon by Buyer and Sellers at the time
indemnification is sought, taking into account the Tax benefits that have been
obtained (or that would be obtained if the Indemnified Party took all steps to
obtain such Tax benefits, determined by multiplying the maximum possible Tax
benefit by the percentage likelihood of success, as determined by the parties).
(c) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification to which an Indemnified Party shall be entitled under this
Article XI shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Loss and Expense suffered by it.
11.4. Third Person Claims. (a) In order for a party to be entitled
to any indemnification provided for under this Agreement in respect of, arising
out of or involving a claim or demand made by any third Person against the
Indemnified Party, such Indemnified Party must notify the Indemnitor in writing,
and in reasonable detail, of the third Person claim promptly after receipt by
such Indemnified Party of written notice of the third Person claim; provided
however, no delay by the Indemnified Party to notify the Indemnitor shall
relieve the Indemnitor from any liability or obligation hereunder unless (and
then solely to the extent that) the Indemnitor can demonstrate that it was
damaged by such delay). Thereafter, the Indemnified Party shall deliver to the
Indemnitor, promptly after the Indemnified Party's receipt thereof, copies of
all notices and documents (including court papers) received by the Indemnitor
relating to the third Person claim. Notwithstanding the foregoing, should a
party be physically served with a complaint with regard to a third Person claim,
the Indemnified Party must notify the Indemnitor with a copy of the complaint
promptly after receipt thereof and shall deliver to the Indemnitor promptly
after the receipt of such complaint copies of notices and documents (including
court papers) received by the Indemnified Party relating to the third Person
claim.
(b) Any notice of a claim by reason of any of the representations,
warranties or covenants contained in this Agreement shall contain a reference to
the provision of this Agreement or any other agreement, document or instrument
executed hereunder or in connection herewith upon which such claim is based, the
facts giving rise to an alleged basis for the claim and the
57
amount of the liability asserted against the Indemnitor by reason of the claim.
Subject to clause (c) below, in the event of the initiation of any legal
proceeding, claim or demand against the Indemnified Party by a third Person, the
Indemnitor shall have the sole and absolute right after the receipt of notice,
at its option and at its own expense, to be represented by counsel of its choice
reasonably acceptable to the Indemnified Party and to control, defend against,
negotiate, settle or otherwise deal with any proceeding, claim, or demand which
relates to any loss, liability or damage indemnified against hereunder;
provided, however, that the Indemnified Party may participate in any such
proceeding with counsel of its choice and at its expense unless the Indemnified
Party shall be a party to any such action and shall have received a written
opinion of counsel that there exists an actual conflict of interest between the
Indemnified Party and the Indemnitor with respect to the proceeding, claim or
demand, in which case the Indemnified Party shall be entitled to participate in
the defense of such proceeding, claim or demand with the Indemnitor paying for
50% of such expenses. The parties hereto agree to cooperate fully with each
other in connection with the defense, negotiation or settlement of any such
legal proceeding, claim or demand. To the extent the Indemnitor elects not to
defend or abandons such proceeding, claim or demand, and the Indemnified Party
defends against or otherwise deals with any such proceeding, claim or demand,
the Indemnified Party may retain counsel, at the expense of the Indemnitor, and
control the defense and settlement of such proceeding. Neither the Indemnitor
nor the Indemnified Party may consent to entry of any judgment or settle any
such proceeding which judgment or settlement obligates the other party to pay
money, to perform obligations or to admit liability without the consent of the
other party, such consent not to be unreasonably withheld. In the event the
Indemnified Party shall refuse to consent to the settlement of any legal
proceeding, claim or demand, so long as only money damages are involved, the
liability of the Indemnitor for indemnification in respect of such legal
proceeding, claim or demand shall not exceed the amount for which the legal
proceeding, claim or demand could have been settled plus the amount of Expense
incurred by the Indemnified Party prior to the time of the proposed settlement
to which it is entitled to indemnification. After any final judgment or award
shall have been rendered by a court, arbitration board or administrative agency
of competent jurisdiction and the time in which to appeal therefrom has expired,
or a settlement shall have been consummated, or the Indemnified Party and the
Indemnitor shall arrive at a mutually binding agreement with respect to each
separate matter alleged to be indemnified by the Indemnitor hereunder, the
Indemnified Party shall forward to the Indemnitor notice of any sums due and
owing by it with respect to such matter and the Indemnitor shall pay all of the
sums so owing to the Indemnified Party by wire transfer, certified or bank
cashier's check within 30 days after the date of such notice.
(c) If any third Person claim, action or suit against any Indemnified
Party is solely for injunctive relief or is reasonably likely to have a material
adverse impact on the continuing operation of the Business (and, in each case,
Buyer is the Indemnified Party), then the Indemnified Party shall have the right
to conduct and control, through counsel of its choosing and at the Indemnitor's
expense, the defense, compromise or settlement of any such third Person claim,
action or suit against such Indemnified Party as to which indemnification will
be sought by any Indemnified Party from any Indemnitor hereunder and in any such
case the Indemnitor
58
shall cooperate in connection therewith and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the Indemnified
Party in connection therewith; provided, that the Indemnitor may participate,
through counsel chosen by it and at its own expense, in the defense of any such
claim, action or suit as to which the Indemnified Party has so elected to
conduct and control the defense thereof; and provided, further, that the
Indemnified Party shall not, without the written consent of the Indemnitor
(which written consent shall not be unreasonably withheld), pay, compromise or
settle any such claim, action or suit, except that no such consent shall be
required if, following a written request from the Indemnified Party, the
Indemnitor shall fail, within 14 days after the making of such request, to
acknowledge and agree in writing that, if such claim, action or suit shall be
adversely determined, such Indemnitor has an obligation to provide
indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit, provided that in such event the
Indemnified Party shall waive any right to indemnity therefor hereunder.
(d) Notwithstanding anything contained herein to the contrary,
Sellers shall have the exclusive right to assume the defense of, or otherwise
contest or settle any claim, action, suit or proceeding described in
Schedule 5.22 (which is an Excluded Liability). Buyer agrees to cooperate and
assist Sellers with all reasonable requests (including, without limitation,
making employees available for interviews, depositions and trials) and to afford
Sellers access to any records, reports or other documents reasonably requested
by Sellers in connection with such claims, actions, suits or proceedings.
(e) If there shall be any conflict between the provisions of this
Section 11.4 relating to contests of third-party claims, and Section 8.2.3
relating to Tax contests, the provisions of Section 8.2.3 shall control with
respect to Tax contests.
11.5. Limitations. (a) In any case where an Indemnified Party
recovers from third Persons any amount in respect of a matter with respect to
which an Indemnitor has indemnified it pursuant to this Agreement, such
Indemnified Party shall promptly pay over to the Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses incurred by
it in procuring such recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnitor to or on behalf of the Indemnified Party in
respect of such matter and (ii) any amount expended by the Indemnitor in
pursuing or defending any claim arising out of such matter.
(b) No party shall have any liability for any inaccuracy in or breach
of any representation or warranty by such party if the other party or any of its
officers, employees, counsel or other representatives had actual knowledge on or
before the Closing Date of the facts as a result of which such representation or
warranty was inaccurate or breached.
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(c) The obligations of an Indemnitor in respect of a claim for
indemnification under this Agreement shall be limited to the taking of such
reasonable actions as are necessary under the circumstances giving rise to such
claim, and an Indemnitor (i) shall in no event be required to take more
extensive actions than would be required under Requirements of Law then in
effect, applicable and enforceable and (ii) shall not be liable for special,
exemplary or consequential damages, including without limitation loss of profit
or revenue, interference with operations, or loss of tenants, lenders, investors
or buyers or inability to use any of the Purchased Assets (except, in the case
of any of the foregoing in this clause (ii), with respect to a claim made by a
third party). Sellers and Buyer agree that their respective rights and
obligations in respect of matters as provided in this Agreement shall supersede
any such rights and obligations either may have under any existing or future
law.
(d) Buyer agrees that Buyer's rights to indemnification pursuant to
Section 11.1(a) is the sole and exclusive remedy of Buyer against Sellers with
respect to any Environmental Losses or Environmental Expenses suffered by Buyer
Group Members and arising from or in connection with the Business or the
Purchased Assets. Buyer agrees that it will not seek contribution or other
redress against Sellers under CERCLA or under any similar state or federal law
with respect to any such Environmental Losses or Environmental Expenses. Buyer
agrees that Sellers are required to indemnify and hold harmless the Buyer Group
Members for any Environmental Losses and Expenses only in respect of any claim,
action or suit by any third Person or any proceeding, investigation or order by
any Governmental Body.
(e) Except for remedies that cannot be waived as a matter of law and
except for injunctive and provisional relief, if the Closing occurs, this
Article XI shall be the exclusive remedy for breaches of this Agreement
(including any covenant, obligation, representation or warranty contained in
this Agreement or in any certificate delivered pursuant to this Agreement) or
otherwise in respect of the sale of the Purchased Assets contemplated hereby.
ARTICLE XII
TERMINATION
12.1. Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of Buyer and FFMC;
(b) by Buyer or FFMC if the Closing shall not have occurred on
or before July 31, 1998 (or such later date as may be mutually agreed
to by Buyer and FFMC in writing) (the "Termination Date"); provided,
however, that the Termination Date may be extended by written notice
of either Buyer or FFMC to the other to a date no later than August
31, 1998 if, as of July 31,1998, the conditions set forth in
Section 9.3 and 10.2 have not been satisfied;
60
(c) by Buyer in the event of any material breach by Sellers of
any of their agreements, representations or warranties contained
herein and the failure of Sellers to cure such breach within fourteen
days after receipt of notice from Buyer requesting such breach to be
cured;
(d) by FFMC in the event of any material breach by Buyer of any
of Buyer's agreements, representations or warranties contained herein
and the failure of Buyer to cure such breach within fourteen days
after receipt of notice from FFMC requesting such breach to be cured;
(e) by Buyer or FFMC if any court of competent jurisdiction in
the United States or other United States Governmental Body shall have
issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby; or
(f) by FFMC at any time (i) 10 business days after the waiting
period under the HSR Act shall have expired or (ii) 15 business days
after the waiting period under the HSR Act shall have been terminated,
in either case provided that FFMC can reasonably demonstrate its
ability to satisfy all of the conditions in Article IX (other than
Section 9.5).
12.2. Notice of Termination. Any party desiring to terminate this
Agreement pursuant to Section 12.1 shall give written notice of such termination
to the other party to this Agreement.
12.3. Effect of Termination. In the event that this Agreement
shall be terminated pursuant to this Article XIII, all further obligations of
the parties under this Agreement (other than Sections 13.2(a), 13.10 and
13.14) shall be terminated without further liability of any party to the
other parties. Nothing herein shall relieve any party from liability for any
willful breach of any of its representations, warranties, covenants or
agreements contained in this Agreement prior to termination of this Agreement
or any obligations hereunder.
ARTICLE XIII
GENERAL PROVISIONS
13.1. Survival of Representations and Warranties. Each
representation and warranty contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement through the
period during which claims for indemnification may be made pursuant to
Article XI (at which time such representation and warranty shall terminate).
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13.2. Confidential Nature of Information. (a) Each party hereto
agrees that all documents, materials and other information which it shall have
obtained regarding the other party during the course of the negotiations leading
to the consummation of the transactions contemplated hereby (whether obtained
before or after the date of this Agreement), the investigation provided for
herein and the preparation of this Agreement and other related documents shall
be held in confidence pursuant to the Confidentiality Agreement. The
obligations of the parties set forth in the Confidentiality Agreement shall
survive the termination of this Agreement.
(b) Sellers will not, and will cause their Affiliates not to, for a
period beginning on the Closing Date and ending eighteen (18) months after the
Closing Date, disclose to any Person other than Buyer any "Proprietary
Information" (as hereinafter defined) relating to the conduct of the business by
the Division. For purposes of this Agreement, the phrase "Proprietary
Information" means trade secrets and any other information not publicly
available which relates to specific matters concerning the business conducted by
the Division, such as pricing policies; sales procedures or methods; strategic
plans; internal financial information; and research and development plans and
activities. Nothing in the preceding sentence shall preclude Sellers or their
Affiliates from disclosing Proprietary Information if such Proprietary
Information (i) becomes publicly available through no fault of Sellers or their
Affiliates, (ii) is required to be disclosed by any law, regulation or order of
any Governmental Body, (iii) is independently known or developed by other
business units of FDC or (iv) is or becomes available to Sellers or their
Affiliates on a nonconfidential basis from a source which, to the knowledge of
Sellers, is not prohibited from disclosing such information to Sellers or their
Affiliates by a legal, contractual or fiduciary obligation to Buyer.
13.3. No Public Announcement. Neither Buyer nor Sellers shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by law or stock
exchange or similar regulation, in which case the other party shall be advised
and the parties shall use their commercially reasonable efforts to cause a
mutually agreeable release or announcement to be issued; provided, however, that
the foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with the accounting and
Securities and Exchange Commission disclosure obligations.
13.4. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or by confirmed facsimile or when sent by registered
or certified mail or by private courier addressed as follows:
62
If to Buyer, to:
Anacomp, Inc.
00000 Xxxxxxxxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: 000-000-0000
with a copy to:
Anacomp, Inc.
00000 Xxxxxxxxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: 000-000-0000
and to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Facsimile: 000-000-0000
If to Sellers, to:
First Data Corporation
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
with a copy to:
First Data Corporation
0000 Xxx Xxxxxxxxx Xx. XX, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
63
and to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Facsimile: 312-853-7036
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
13.5. Successors and Assigns. (a) This Agreement and the rights of
any party under this Agreement shall not be assignable by any party without the
written consent of the other parties, except for Section 5.15(e)(ii) which may
be assigned as provided therein and as provided in this Section 13.5(a).
Notwithstanding the foregoing, Sellers acknowledge that Buyer may, without the
consent of Sellers, sell or otherwise dispose of certain assets and liabilities
of the Division to third parties (each, a "Third-Party Buyer"). If Buyer sells
or otherwise disposes of certain assets and liabilities of the Division, the
parties agree that in connection with such sales or dispositions, at Buyer's
option, either (i) Buyer shall have the right to assert claims under Article XI
on behalf of any Third-Party Buyer and to recover Losses and Expenses incurred
by the Third-Party Buyer under the terms of this Agreement (it being understood
that no such Third-Party Buyer shall be entitled to make any claim directly
against Sellers under this Agreement) or (ii) Buyer may assign this Agreement
and Buyer's rights and obligations hereunder to a Third-Party Buyer to the
extent that this Agreement and Buyer's rights and obligations hereunder relate
to the assets and liabilities acquired by the Third-Party Buyer, provided that,
prior to the effectiveness of any assignment pursuant to this clause (ii) the
Third-Party Buyer agrees in writing in a letter addressed to Sellers that (x)
there will be a new $2,000,000 deductible with respect to indemnification claims
made by the Third-Party Buyer against Sellers, (y) the existing cap on liability
of 20% of the Purchase Price (to the extent applicable to any claim) represents
an aggregate amount applicable to all claims made by any Person against Sellers
under this Agreement and (z) the Third-Party Buyer will be bound by the other
limitations on indemnification (to the extent applicable to any claim) set forth
in this Agreement. No assignment by Buyer pursuant to clause (ii) of the
preceding sentence shall in any way limit or reduce the indemnification
obligation of Sellers to Buyer under this Agreement with respect to any assets
and liabilities of the Division acquired by a Third-Party Buyer from Buyer or
the Purchased Assets and Assumed Liabilities retained by Buyer, it being agreed
that any claim against Sellers under this Agreement may only be asserted by one
claimant.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any Person other than the parties and successors and assigns permitted by
this Section 13.5 any right, remedy or claim under or by reason of this
Agreement.
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13.6. Access to Records after Closing. For a period of six years
after the Closing Date, FFMC and its representatives shall have reasonable
access to and may make copies of all of the books and records of FFMC or any
Subsidiary transferred to Buyer hereunder to the extent that such access may
reasonably be required by FFMC in connection with Excluded Assets, Excluded
Liabilities or matters relating to or affected by the operations of the Business
prior to the Closing Date. Such access shall be afforded by Buyer upon receipt
of reasonable advance notice and during normal business hours. FFMC shall be
solely responsible for any costs or expenses incurred by it pursuant to this
Section 13.6. If Buyer shall desire to dispose of any of such books and records
prior to the expiration of such six-year period, Buyer shall, prior to such
disposition, give FFMC a reasonable opportunity, at FFMC's expense, to segregate
and remove such books and records as FFMC may select. Without limiting the
foregoing, Sellers shall also have reasonable access to any books, records,
personnel and business and financial records (and shall receive reasonable
cooperation from Buyer) as may be required by FFMC in connection with the items
identified in Sections 2.2(i) and 2.4(ix).
For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to and may make copies of all of
the books and records relating to the Business which FFMC or any of its
affiliates may retain after the Closing Date. Such access shall be afforded by
FFMC and its affiliates upon receipt of reasonable advance notice and during
normal business hours. Buyer shall be solely responsible for any costs and
expenses incurred by it pursuant to this Section 13.6. If FFMC or any of its
affiliates shall desire to dispose of any of such books and records prior to the
expiration of such six-year period, FFMC shall, prior to such disposition, give
Buyer a reasonable opportunity, at Buyer's expense, to segregate and remove such
books and records as Buyer may select.
13.7. Entire Agreement; Amendments. This Agreement and the Exhibits
and Schedules referred to herein and the documents delivered pursuant hereto and
the Confidentiality Agreement contain the entire understanding of the parties
hereto with regard to the subject matter contained herein or therein, and
supersede all prior agreements, understandings or letters of intent between or
among any of the parties hereto (written or oral). This Agreement shall not be
amended, modified or supplemented except by a written instrument signed by an
authorized representative of each of the parties hereto.
13.8. Interpretation. Article titles and headings to sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. The Schedules
and Exhibits referred to herein shall be construed with and as an integral part
of this Agreement to the same extent as if they were set forth verbatim herein.
Disclosure of any fact or item in any Schedule hereto referenced by a particular
section in this Agreement shall be deemed to have been disclosed with respect to
every other section in this Agreement only if such disclosure would permit a
reasonable person to find such disclosure relevant to such other sections. The
specification of any dollar amount in the representations or warranties
contained in this Agreement or the inclusion of any specific item in any
Schedules hereto is not intended to imply that such amounts, or higher or lower
amounts, or the items so
65
included or other items, are or are not material, and neither party shall use
the fact of the setting of such amounts or the inclusion of any such item in any
dispute or controversy between the parties as to whether any obligation, item or
matter not described herein or included in a Schedule is or is not material for
purposes of this Agreement. Sellers may, from time to time prior to or at the
Closing, by notice in accordance with the terms of this Agreement, supplement,
amend or create any Schedule, in order to add information or correct previously
supplied information. No such amendment shall be evidence, in and of itself,
that the representations and warranties in the corresponding section are no
longer true and correct. It is specifically agreed that such Schedules may be
amended to add immaterial, as well as material, items thereto. No such
supplemental, amended or additional Schedule shall be deemed to cure any breach
for purposes of Section 9.1. If, however, the Closing occurs, any such
supplement, amendment or addition will be effective to cure and correct for all
other purposes any breach of any representation, warranty or covenant which
would have existed if Sellers had not made such supplement, amendment or
addition, and all references to any Schedule hereto which is supplemented or
amended as provided in this Section 13.8 shall for all purposes after the
Closing be deemed to be a reference to such Schedule as so supplemented or
amended.
13.9. Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
13.10. Expenses. Whether or not the Closing occurs, each party
hereto will pay all costs and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel and
accountants.
13.11. Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
13.12. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall
66
be considered one and the same agreement, and shall become binding when one or
more counterparts have been signed by each of the parties hereto and delivered
to each of Sellers and Buyer.
13.13. Further Assurances. On the Closing Date FFMC shall (i)
deliver to Buyer such other bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Buyer and its counsel, as Buyer may reasonably
request or as may be otherwise reasonably necessary to vest in Buyer all the
right, title and interest of FFMC in, to or under any or all of the Purchased
Assets, and (ii) take all steps as may be reasonably necessary to put Buyer in
actual possession and control of all the Purchased Assets. From time to time
following the Closing, FFMC shall execute and deliver, or cause to be executed
and delivered, to Buyer such other instruments of conveyance and transfer as
Buyer may reasonably request or as may be otherwise necessary to more
effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets, and, in the case of licenses,
certificates, approvals, authorizations, agreements, contracts, leases,
easements and other commitments included in the Purchased Assets which cannot be
transferred or assigned effectively without the consent of third parties which
consent has not been obtained prior to the Closing, to cooperate with Buyer at
its request in endeavoring to obtain such consent promptly and allowing Buyer to
retain the benefit thereof. Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any
license, certificate, approval, authorization, agreement, contract, lease,
easement or other commitment included in the Purchased Assets if an attempted
assignment thereof without the consent of a third party thereto would constitute
a breach thereof giving the third party a right of termination. If any such
consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Buyer's rights under the Purchased Asset in question
so that Buyer would not in effect acquire the benefit of all such rights,
Sellers, to the maximum extent permitted by law and the Purchased Asset (but
excluding any obligation of Sellers to offer or pay any consideration therefor),
shall act after the Closing Date as Buyer's agent in order to obtain for it the
benefits thereunder. Buyer and Sellers shall cooperate, to the maximum extent
permitted by law and the Purchased Asset (but excluding any obligation of
Sellers to offer or pay any consideration therefor), with each other in any
legal and reasonable arrangement designed to provide such benefits to Buyer and
to relieve Sellers from any burden associated therewith.
13.14. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of New York.
13.15. Disclaimer of Warranties. Sellers make no representations or
warranties with respect to any projections, forecasts or forward-looking
information provided to Buyer. There is no assurance that any projected or
forecasted results will be achieved. EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT AND THE
CERTIFICATE DELIVERED BY SELLERS PURSUANT TO SECTION 4.4(N), FFMC IS SELLING THE
PURCHASED
67
ASSETS ON AN "AS IS, WHERE IS" BASIS AND SELLERS DISCLAIM ALL OTHER WARRANTIES,
REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR IMPLIED. SELLERS MAKE NO
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. Buyer acknowledges that neither
of Sellers nor any of their representatives nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any memoranda, charts, summaries or schedules heretofore made
available by Sellers or their representatives to Buyer or any other information
which is not included in this Agreement or the Schedules hereto, and neither of
Sellers nor any of their representatives nor any other Person will have or be
subject to any liability to Buyer, any Affiliate of Buyer or any other Person
resulting from the distribution of any such information to, or use of any such
information by, Buyer, any Affiliate of Buyer or any of their agents,
consultants, accountants, counsel or other representatives.
68
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.
ANACOMP, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx
FIRST FINANCIAL MANAGEMENT
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
FIRST DATA CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
69
EXHIBITS
Exhibit A -- Confidentiality Agreement
Exhibit B -- Terms of Transition Services Agreement
SCHEDULES
Schedule 1.1 -- Working Capital Model
Schedule 2.2(J) -- Excluded Assets
Schedule 4.2 -- Payment on the Closing Date
Schedule 5.2 -- Subsidiaries and Investments
Schedule 5.3 -- Authority of Sellers
Schedule 5.4 -- Financial Statements
Schedule 5.5(A) -- Operations Since Balance Sheet Date
Schedule 5.5(B) -- Operations Since Balance Sheet Date
Schedule 5.6 -- Taxes
Schedule 5.7 -- Availability of Assets and Legality of Use
Schedule 5.8 -- Governmental Permits
Schedule 5.9 -- Real Property
Schedule 5.10 -- Real Property Leases
Schedule 5.11 -- Condition of Property
Schedule 5.13 -- Personal Property
Schedule 5.14 -- Personal Property Leases
Schedule 5.15 -- Patents and Trademarks
Schedule 5.15(E) -- DAS Year 2000 Plan
Schedule 5.17 -- Title to Property
Schedule 5.18(A) -- Employees and Related Agreements; ERISA
Schedule 5.18(B) -- Employees and Related Agreements; ERISA
Schedule 5.18(D) -- Employees and Related Agreements; ERISA
Schedule 5.18(E) -- Employees and Related Agreements; ERISA
Schedule 5.18(F) -- Employees and Related Agreements; ERISA
Schedule 5.19 -- Employee Relations
Schedule 5.20 -- Contracts
Schedule 5.21 -- Status of Contracts
Schedule 5.22 -- No Violation, Litigation or Regulatory Action
Schedule 5.23 -- Environmental Matters
Schedule 5.24 -- Insurance
Schedule 5.26 -- Certain Agreements
Schedule 5.27 -- Form Agreements
Schedule 5.28 -- Customers and Suppliers
Schedule 5.29 -- Liabilities
Schedule 6.3 -- No Violation, Litigation or Regulatory Action
Schedule 7.4(B) -- Operations Prior to the Closing Date
Schedule 8.3(A) -- Employees and Employee Benefits Plans
Schedule 8.7(B) -- Non-Solicitation
EXHIBIT A
[Letterhead]
January 8, 1998
Anacomp, Inc.
00000 Xxxxxxxxxxx Xxxxxx
Xxxxx, XX 00000
CONFIDENTIALITY AGREEMENT
-------------------------
Dear Sirs:
In connection with your possible interest in the acquisition of First Image
Management Company ("First Image" or the "Company") ("the
Transaction"), a wholly-owned subsidiary of First Data Corporation
("FDC"), you have requested that we or our representatives furnish you or
your representatives with certain information relating to the Company or the
Transaction. All such information (whether written, oral or electronically
transmitted) furnished (whether before or after the date hereof) by us or our
directors, officers, employees, affiliates, representatives (including,
without limitation, financial advisors, attorneys and accountants) or agents
(collectively, "our Representatives") to you or your directors, officers,
employees, affiliates, representatives (including, without limitation,
financial advisors, attorneys and accountants) or agents or your potential
sources of financing for the Transaction (collectively, "your
Representatives") and all analyses, compilations, forecasts, studies or
other documents prepared by you or your Representatives in connection with your
or their review of, or your interest in, the Transaction which contain or
reflect any such information is hereinafter referred to as the
"Information". The term Information will not, however, include information
which (i) is or becomes publicly available other than as a result of a
disclosure by you or your Representatives or (ii) is or becomes available to
you on a nonconfidential basis from a source (other than us or our
Representatives) which, to the best of your knowledge after due inquiry, is
not prohibited from disclosing such information to you by legal, contractual
or fiduciary obligation to us or (iii) is independently known or developed by
you without the use, directly or indirectly, of Information received from us.
With respect to oral Information that we disclose to you or your
Representatives, we agree to identify any such oral presentation or
communication as Information immediately before, during or after such oral
presentation or communication.
Accordingly, you hereby agree that:
1. You and your Representatives (1) will keep the Information confidential
and will not (except as required by applicable law, regulation or legal
process, and only after compliance with paragraph 3 below), without our
prior written consent, disclose any Information in any
manner whatsoever, and (ii) will not use any Information other than in
connection with the Transaction; provided, however, that you may reveal the
Information to you Representatives (a) who need to know the Information for
the purpose of evaluating the Transaction, (b) who are informed by you of
the confidential nature of the Information and (c) who agree to act in
accordance with the terms of this letter agreement. You will cause your
Representatives to observe the terms of this letter agreement, and you will
be responsible for any breach of this letter agreement by any of your
Representatives.
2. You and your Representatives will not (except as required by applicable
law, regulation or legal process, and only after compliance with paragraph 3
below), without our prior written consent, disclose to any person the fact
that the Information exists or has been made available, that you are
considering the Transaction or any other transaction involving the Company
or FDC, or that discussions or negotiations are taking or have taken place
concerning the Transaction or involving the Company or FDC or any term,
condition or other fact relating to the Transaction or such discussions or
negotiations, including, without limitation, the status thereof.
3. In the event that you or any of your Representatives are requested
pursuant to, or required by, applicable law, regulation or legal process
to disclose any of the Information, you will notify us promptly so that we
may seek a protective order or other appropriate remedy or, in our sole
discretion, waive compliance with the terms of this letter agreement. In the
event that no such protective order or other remedy is obtained, or that
FDC waives compliance with the terms of this letter agreement, you will
furnish only that portion of the Information which you are advised by
counsel is legally required and will exercise all reasonable efforts to
obtain reliable assurance that confidential treatment will be accorded the
Information.
4. If you determine not to proceed with the Transaction, you will promptly
inform our Representative, Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx"), of that decision and, in that case, and at any time upon the
request of the Company or FDC or any of our Representatives, you will
either (i) promptly destroy all copies of the written Information in your or
your Representatives' possession and confirm such destruction to us in
writing, or (ii) promptly deliver to the Company at your own expense all
copies of written Information in your or your Representatives' possession.
Subject to the first paragraph of this letter agreement, any oral
Information will continue to be subject to the terms of this letter
agreement.
5. You acknowledge that neither we, nor Xxxxxx Xxxxxxx or its affiliates, nor
our other Representatives, nor any of our or their respective officers,
directors, employees, agents or controlling persons within the meaning of
Section 20 of the Securities Exchange Act of 1934, as amended, makes any
express or implied representation or warranty as to the accuracy or
completeness of the Information, and you agree that no such person will
have any liability relating to the Information or for any errors therein
or omissions therefrom. You further agree that you are not entitled to
rely on the accuracy or completeness of the Information and that you will
be entitled to rely solely on such representations and warranties as may be
included in any definitive agreement with respect to the Transaction,
subject to such limitations and restrictions as may be contained therein.
6. Assuming that the Transaction is not consummated by the parties
hereto, you agree that, for a period of eighteen (18) months from
the date of this letter agreement, you will not, directly or
indirectly, solicit for employment or hire any employee of the
Company or FDC with whom you have had contact or who became known to
you in connection with your consideration of the Transaction;
provided, however, that the foregoing provision will not prevent you
from employing any such person who contacts you on his or her own
initiative without any direct or indirect solicitation by or
encouragement from you.
7. You agree that all (i) communications regarding the Transaction,
(ii) requests for additional information, facility tours or
management meetings, and (iii) discussions or questions regarding
procedures with respect to the Transaction, will be first submitted
or directed to Xxxxxx Xxxxxxx and not to the Company or to FDC. You
acknowledge and agree that (a) we and our Representatives are free
to conduct the process leading up to a possible Transaction as we
and our Representatives, in our sole discretion, determine
(including, without limitation, by negotiating with any prospective
buyer and entering into a preliminary or definitive agreement
without prior notice to you or any other person), (b) we reserve the
right, in our sole discretion, to change the procedures relating to
our consideration of the Transaction at any time without prior
notice to you or any other person, to reject any and all proposals
made by you or any of your Representatives with regard to the
Transaction, and to terminate discussions and negotiations with you
at any time and for any reason, and (c) unless and until a written
definitive agreement concerning the Transaction has been executed,
neither we nor any of our Representatives will have any liability to
you with respect to the Transaction, whether by virtue of this
letter agreement, any other written or oral expression with respect
to the Transaction or otherwise.
8. You acknowledge that remedies at law may be inadequate to protect us
against any actual or threatened breach of this letter agreement by
you or by your Representatives, and, without prejudice to any other
rights and remedies otherwise available to us, you agree to the
granting of injunctive relief in our favor without proof of actual
damages. In the event of litigation relating to this letter
agreement, if a court of competent jurisdiction determines in a
final, nonappealable order that this letter agreement has been
breached by you or by your Representatives, then you will reimburse
FDC and/or the Company for its costs and expenses (including,
without limitation, legal fees and expenses) incurred in connection
with all such Litigation.
9. You agree that no failure or delay by us in exercising any right,
power or privilege hereunder will operate as a waiver thereof, nor
will any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or
privilege hereunder.
10. This letter agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts
between residents of that State and executed in and to be performed in
that State.
11. This letter agreement contains the entire agreement between you and
us concerning the confidentiality of the Information, and no
modifications of this letter agreement or waiver of
the terms and conditions hereof will be binding upon you or us. unless
approved in writing by each of you and us.
Please confirm your agreement with the foregoing by signing and returning to
the undersigned the duplicate copy of this letter enclosed herewith.
Very truly yours,
FIRST DATA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: GC -
-------------------------------
Title: Xxxxxxx X. Xxxxxx
-------------------------------
Accepted and Agreed as of the date
first written below:
-----------------------------------
ANACOMP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------
Title:Senior Vice President and General Counsel
-----------------------------
January 8, 1998
-----------------------------
ADDENDUM TO CONFIDENTIALITY AGREEMENT
THIS ADDENDUM (this "Addendum") to Confidentiality Agreement dated
January 8, 1998 (the "Confidentiality Agreement") is entered into as of the
30th day of April, 1998 between Anacomp, Inc. ("Anacomp") and First Data
Corporation ("FDC").
This parties agree as follows:
1. Capitalized terms not otherwise defined herein shall have the
meanings specified in the Confidentiality Agreement.
2. FDC acknowledges that Anacomp has provided and will continue
to provide information to potential acquirors of the DFDS and DAS units of
First Image. The parties agree that the Foregoing is a permissible extension
of the Confidentiality Agreement; provided that [i] the Information is
otherwise provided in accordance with and subject to the terms of the
Confidentiality Agreement and [ii] the potential acquirors shall not have
direct access to the offices, properties, employees and businesses and
financial records of First Image until the closing of the Transaction.
3. This Addendum will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts between
residents of that State and executed in and to be performed in that State.
IN WITNESS WHEREOF, the parties have caused this Addendum to be
executed by a duly authorized representative.
FIRST DATA CORPORATION
By: Xxxxxxx X. Wheaty
-----------------
Name: Xxxxxxx X. Wheaty
Title: Executive Vice President & General Counsel
ANACOMP, INC.
By: Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior VP and General Counsel
EXHIBIT B
Transition Services Agreement will include the following terms:
* Sellers will use commercially reasonable efforts to provide or make
available to Buyer the services and/or software identified in Items 2 and
4 of Schedule 5.7 for a period of time to be agreed upon by the parties.
With respect to the services in Item 2 of Schedule 5.7, Buyer will pay
Sellers on the same basis as the Division pays FDC as of the date hereof.
With respect to Item 4 of Schedule 5.7, Buyer will reimburse Sellers for
their actual out-of-pocket costs incurred in connection with the
foregoing.
* Between signing and Closing, Buyer and Sellers will review Items 2 and 4
of Schedule 5.7 to determine which services and/or software are
reasonably necessary for Buyer.
* Sellers shall have no obligation to provide the services or make
available the software to the extent that to do so would violate their
obligations under any license or other agreement to which they are bound.
