Exhibit 2.1
CONTRIBUTION AGREEMENT
DATED AS OF ___________ , 1996
AMONG
FIRST DATA CORPORATION
INTEGRATED PAYMENT SYSTEMS INC.
AND
MONEYGRAM PAYMENT SYSTEMS, INC.
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS.............................................................. 1
Section 1.1. Definitions..................................................... 1
ARTICLE II
CONTRIBUTION............................................................. 7
Section 2.1. Contributed Assets.............................................. 7
Section 2.2. Excluded Assets.................................................10
Section 2.3. Assumed Liabilities.............................................10
Section 2.4. Excluded Liabilities............................................11
Section 2.5. Transfer of Title to Agent Contracts............................11
Section 2.6. Representation and Warranty Regarding Contributed Assets........12
ARTICLE III
ISSUANCE OF SHARES.......................................................12
Section 3.1. Issuance of Shares..............................................12
ARTICLE IV
CLOSING..................................................................13
Section 4.1. Closing Date....................................................13
Section 4.2. Amendment of Schedules..........................................13
Section 4.3. The Company's Closing Date Deliveries...........................13
Section 4.4. IPS' Closing Date Deliveries....................................13
ARTICLE V
ADDITIONAL AGREEMENTS....................................................14
Section 5.1. Use of Names....................................................14
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Section 5.2. Collection of Accounts..........................................15
Section 5.3. Taxes...........................................................15
Section 5.4. Allocation of Consideration.....................................17
Section 5.5 Tax Contests....................................................17
Section 5.6. Right to Use MoneyGram Agent Assets.............................19
Section 5.7. Employees.......................................................19
Section 5.8. Pending Service and Trademarks..................................20
Section 5.9. Lakewood Lease..................................................20
Section 5.10. Financial Systems...............................................21
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF IPS..............................21
Section 6.1. FTC Approval....................................................21
Section 6.2. No Restraint....................................................21
Section 6.3. Underwriting Agreement..........................................21
ARTICLE VII
INDEMNIFICATION.........................................................21
Section 7.1. Indemnification by IPS..........................................21
Section 7.2. Indemnification by the Company..................................23
Section 7.3. Notice of Claims................................................24
Section 7.4. Third Person Claims.............................................25
Section 7.5. Limitations.....................................................27
ARTICLE VIII
TERMINATION.............................................................27
Section 8.1. Termination.....................................................27
ARTICLE IX
GENERAL PROVISIONS......................................................28
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Section 9.1. Survival of Obligations.........................................28
Section 9.2. Notices.........................................................28
Section 9.3. Successors and Assigns..........................................28
Section 9.4. Access to Records after Closing.................................29
Section 9.5. Entire Agreement; Amendments....................................30
Section 9.6. Partial Invalidity..............................................30
Section 9.7. Execution in Counterparts.......................................30
Section 9.8. Further Assurances..............................................31
Section 9.9. Governing Law...................................................31
EXHIBITS
Exhibit 1 Facility
Exhibit 2 Human Resources Agreement
Exhibit 3 Instrument of Assumption
Exhibit 4 Instrument of Contribution
Exhibit 5 Operations Agreement
Exhibit 6 Registration Rights Agreement
Exhibit 7 Service Xxxx License Agreement
Exhibit 8 Software License Agreement
Exhibit 9 Telecommunications Services Sharing Agreement
Exhibit 10 Instrument of Assignment (Western Union)
Exhibit 11 Covenant Not to Xxx
SCHEDULES
Schedule 1.1A Assignable Pending Applications
Schedule 1.1B Lakewood Lease
Schedule 1.1C MoneyGram Application Software
Schedule 1.1D Nonassignable Pending Applications
Schedule 1.1E PC MoneyGram Application Software
Schedule 2.1B Lakewood Assets
Schedule 2.1C MoneyGram Agent Assets
Schedule 2.1D MoneyGram Marks
Schedule 2.1E Agent Contracts
Schedule 2.1F Help Desk Assets
Schedule 2.1G Express Payment Assets
Schedule 2.1H Cash Advance Assets
Schedule 5.1 Restricted FDC Tradenames and Trademarks
Schedule 5.7A MoneyGram Business Employees
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CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT, dated as of ____________, 1996, among First Data
Corporation, a Delaware corporation ("FDC"), Integrated Payment Systems Inc., a
Delaware corporation and a wholly owned subsidiary of FDC ("IPS"), and MoneyGram
Payment Systems, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
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WHEREAS, IPS is, among other things, engaged in the Business (as defined in
Section 1.1) and historically has operated the Business in the name of American
Express Travel Related Services Company, Inc., a New York corporation ("Travel
Related Services"), in order to comply with State Licensing Requirements (as
defined in Section 1.1);
WHEREAS, prior to, or simultaneous with, the Closing (as defined in Section
1.1), IPS will have obtained all licenses necessary under State Licensing
Requirements and begun operating the Business (as defined in Section 1.1)
substantially in its own name; and
WHEREAS, FDC and IPS desire to contribute to the Company, and the Company
desires to acquire, on a going concern basis, the Contributed Assets (as defined
in Section 2.1), 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, IPS and the Company as
follows:
ARTICLE I
DEFINITIONS
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SECTION 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.
"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; provided, however, that under no circumstances shall FDC and
its Affiliates be deemed Affiliates of the Company or the Company and its
Affiliates be deemed Affiliates of FDC.
"AGENT CONTRACT" means an agreement pursuant to which a MoneyGram Agent
provides Consumer Money Wire Transfer Services on behalf of the Business,
together with any license agreement with such MoneyGram Agent related to the PC
MoneyGram Application Software.
"ASSIGNABLE PENDING APPLICATIONS" means the pending trademark applications
set forth in Schedule 1.1A.
"BUSINESS" means the Consumer Money Wire Transfer Services marketed under
the name "MoneyGram/SM/," it being acknowledged and agreed to by the parties
hereto that the Business shall not include the Consumer Money Wire Transfer
Services marketed under the name "Western Union."
"CLOSING" means the closing of the transfer of the Contributed Assets to
the Company in exchange for the Contribution Amount.
"CLOSING DATE" has the meaning specified in Section 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY GROUP MEMBER" means the Company and its Affiliates, and their
respective directors, officers, employees, agents, attorneys and consultants and
their respective successors and assigns.
"CONSENT DECREE" means the Consent Decree dated January 19, 1996 (Docket
No. C-3635) between FDC and the FTC, including all appendices and attachments
thereto, as it may be amended or supplemented from time to time.
"CONSUMER MONEY WIRE TRANSFER SERVICES" means the service of transferring
the right to money using computer or telephone lines from one person through the
location of a MoneyGram Agent to a different person physically present at the
location of a different MoneyGram Agent and the services marketed under the
phrase "Express Payment" or "Cash Advance."
"COVENANT NOT TO XXX" means the Covenant Not to Xxx in the form of Exhibit
11.
"ENCUMBRANCE" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect in
title or other restrictions of a similar kind.
"EXPENSES" means any and all reasonable expenses incurred in connection
with investigating, defending or asserting
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any claim, action, suit or proceeding incident to any matter indemnified against
hereunder (including, without limitation, 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).
"FACILITY" means the Short-Term Working Capital Facility in the form of
Exhibit 1.
"FIDUCIARY ASSETS" means, as of any date, the amount of assets that would
be reflected in respect of the caption "Assets restricted to settlement of
MoneyGram transactions" on a balance sheet of the Company prepared as of such
date in accordance with the policies applied in the preparation of the audited
balance sheet of the Company dated as of December 31, 1995 contained in the
Registration Statement.
"FIDUCIARY LIABILITIES" means, as of any date, the amount of liabilities
that would be reflected in respect of the caption "Liabilities relating to
unsettled MoneyGram transactions" on a balance sheet of the Company prepared as
of such date in accordance with the policies applied in the preparation of the
audited balance sheet of the Company dated as of December 31, 1995 contained in
the Registration Statement.
"FTC" means the Federal Trade Commission of the United States of America.
"FTC APPROVAL" means the approval by the FTC pursuant to the Consent Decree
of the offering contemplated by the Registration Statement, including the
transactions contemplated or described therein.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or other
governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" means all licenses, franchises, permits, privileges,
immunities, approvals and other authorizations from a Governmental Body, whether
through a contractual arrangement with a third Person or otherwise, that are
necessary to entitle IPS to carry on and conduct the Business substantially as
currently conducted.
"HUMAN RESOURCES AGREEMENT" means the Human Resources Agreement in the form
of Exhibit 2.
"INSTRUMENT OF ASSUMPTION" means the Instrument of Assumption in the form
of Exhibit 3.
"INSTRUMENT OF CONTRIBUTION" means the Instrument of Contribution in the
form of Exhibit 4.
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"IPS GROUP MEMBER" means IPS, FDC and Affiliates of FDC, and their
respective directors, officers, employees, agents, attorneys and consultants and
their respective successors and assigns.
"LAKEWOOD LEASE" means the real estate lease and leasehold improvements
described in Schedule 1.1B.
"LOSSES" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"MONEYGRAM AGENT" means a Person that has contracted with Travel Related
Services, IPS or the Company, as the case may be, to provide the Consumer Money
Wire Transfer Services provided by the Business.
"MONEYGRAM MARKS" means all of the trademarks in Schedule 2.1D (as such
Schedule may be amended in accordance with Section 4.2) and any common law
rights IPS may have in any such trademarks.
"MONEYGRAM APPLICATION SOFTWARE" means all source and object code versions
of the computer software commonly known as the MoneyGram Application Software
and all enhancements and modifications thereto, including, without limitation,
all components, modules, tools, utilities and related materials, together with
all related documentation, on whatever medium such materials and related
documentation may be maintained, as described in Schedule 1.1C.
"NONASSIGNABLE PENDING APPLICATIONS" means the pending trademark
applications set forth in Schedule 1.1D.
"OPERATIONS AGREEMENT" means the Operations Agreement in the form of
Exhibit 5.
"PC MONEYGRAM APPLICATION SOFTWARE" means all source and object code
versions of the computer software commonly known as the PC MoneyGram Application
Software and all enhancements and modifications thereto, including, without
limitation, all components, modules, tools, utilities and related materials,
together with all related documentation, on whatever medium such materials and
related documentation may be maintained, as described in Schedule 1.1E.
"PERMITTED ENCUMBRANCES" means (a) liens for Taxes and other governmental
charges and assessments that are not yet due and payable, (b) liens of landlords
and liens of carriers, warehousemen, mechanics and materialmen and other like
liens arising in the ordinary course of business for sums not yet due and
payable and (c) other liens or imperfections on property that are not material
in amount or do not materially detract from the
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value of or materially impair the existing use of the property affected by such
lien or imperfection.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement in the form of Exhibit 6.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-1
of the Company (Reg. No. 333-228) filed on January 10, 1996 with the United
States Securities and Exchange Commission under the Securities Act of 1933, as
amended, including all exhibits and amendments thereto.
"REQUIREMENTS OF LAW" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued
or promulgated by any Governmental Body.
"SERVICE XXXX LICENSE AGREEMENT" means the Service Xxxx License
Agreement in the form of Exhibit 7.
"SOFTWARE LICENSE AGREEMENT" means the Software License Agreement in
the form of Exhibit 8.
"STATE LICENSING REQUIREMENTS" means Requirements of Law related to
the licensing of a Person offering money transfer services.
"STRADDLE PERIOD" means any taxable year or period beginning before
and ending after the Closing Date.
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means any
federal, state, local or foreign income, gross receipts, windfall profits,
severance, property, production, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad valorem,
value added, 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.
"TAX AUTHORITY" means the Internal Revenue Service or any other
comparable state, local or foreign government authority.
"TAXABLE PERIOD" means any Taxable year or period (or portion thereof)
for federal, state or local income or franchise Tax purposes, in each case
ending after the Closing.
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"TAX RETURN" means any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.
"TELECOMMUNICATIONS SERVICES SHARING AGREEMENT" means the
Telecommunications Services Sharing Agreement in the form of Exhibit 9.
ARTICLE II
CONTRIBUTION
------------
SECTION 2.1. CONTRIBUTED ASSETS. Subject to Section 2.5, upon the
terms and subject to the conditions of this Agreement, on the Closing Date, IPS
shall pay to the Company $12 million in cash, and FDC shall cause IPS or its
Affiliates to contribute, transfer, assign, convey and deliver to the Company,
and the Company shall acquire from IPS or its Affiliates, free and clear of all
Encumbrances (except for Permitted Encumbrances), all right, title and interest
of IPS or its Affiliate, as the case may be, in, to and under:
(a) the Lakewood Lease;
(b) the items contained in Schedule 2.1B (as such Schedule may be
amended in accordance with Section 4.2), which includes (A) all items of
machinery, equipment, vehicles, furniture and other personal property owned
or leased by IPS or its Affiliate and which are used or have been used in
connection with providing the voice center functions for the Business at
the facilities that are the subject of the Lakewood Lease and (B) all
contracts between IPS or its Affiliates and a third Person pursuant to
which such third Person provides services in respect of such personal
property or the facilities that are the subject of the Lakewood Lease
(collectively, the "Lakewood Assets");
(c) the items contained in Schedule 2.1C (as such Schedule may be
amended in accordance with Section 4.2), which includes (A) all items of
machinery, equipment, signage and other personal property, including,
without limitation, computers and computer printers, that are owned or
leased by IPS or its Affiliates and provided to MoneyGram Agents for the
use by MoneyGram Agents in providing the Consumer Money Wire Transfer
Services on behalf of IPS and (B) all contracts between IPS or its
Affiliates and a third Person pursuant to which such third Person provides
services in respect of such personal property (collectively the "MoneyGram
Agent Assets");
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(d) the MoneyGram Marks described or set forth in Schedule 2.1D (as
such Schedule may be amended in accordance with Section 4.2);
(e) the economic benefits under the Agent Contracts listed or
described in Schedule 2.1E (as such Schedule may be amended in accordance
with Section 4.2);
(f) the items contained in Schedule 2.1F (as such Schedule may be
amended in accordance with Section 4.2), which constitute certain items of
machinery, equipment, furniture and other personal property owned or leased
by IPS or its Affiliates and which are used or have been used in connection
with providing the help desk functions for the Business and (B) all
contracts between IPS or its Affiliates and a third Person pursuant to
which such third Person provides services in respect of such personal
property (collectively, the "Help Desk Assets");
(g) the items contained in Schedule 2.1G (as such Schedule may be
amended in accordance with Section 4.2), which includes (A) all items of
machinery, equipment, furniture and other personal property owned or leased
by IPS or its Affiliates and which are used or have been used in connection
with providing the "Express Payment" service offered by the Business and
(B) all contracts between IPS or its Affiliates and a third Person relating
to the "Express Payment" service offered by the Business (collectively, the
"Express Payment Assets");
(h) the items contained in Schedule 2.1H (as such Schedule may be
amended in accordance with Section 4.2), which includes (A) all items of
machinery, equipment, furniture and other personal property owned or leased
by IPS or its Affiliates and which are used or have been used in connection
with providing the "Cash Advance" service offered by the Business and (B)
all contracts between IPS or its Affiliates and a third Person relating to
the "Cash Advance" service offered by the Business (collectively, the "Cash
Advance Assets");
(i) the trademarks and service marks that are the subject of the
Nonassignable Pending Applications, upon assignment thereof as contemplated
by Section 5.8; and
(j) the MoneyGram Application Software and the PC MoneyGram
Application Software, and, in each case, (x) all copyright interests owned
or claimed by IPS or its Affiliates pertaining to such Software, including,
without limitation, all copyright interests accruing by reason of the
Copyright Act of 1976, as amended, 17 U.S.C. (S) 101 et. seq., and
international copyright conventions; and (y) all
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inventions, discoveries, improvements, ideas, trade secrets, know-how,
confidential information, and all other intellectual property owned or
claimed by IPS or its Affiliates relating to such software.
All of the foregoing assets to be acquired by the Company hereunder
(excluding any Excluded Assets (as defined in Section 2.2) but supplemented from
time to time pursuant to Section 2.5) are referred to herein as the "Contributed
Assets."
SECTION 2.2. EXCLUDED ASSETS. Notwithstanding the provisions of
Section 2.1, the Contributed Assets shall not include any assets, properties,
business or goodwill, tangible or intangible, of IPS or any of its Affiliates
that are not expressly contributed, assigned, transferred, conveyed and
delivered to the Company pursuant to the Instrument of Contribution (the
"Excluded Assets"), including, without limitation, the following:
(a) all Fiduciary Assets as of the Closing Date;
(b) the rights, claims or causes of action of IPS or its Affiliates
against third parties that may arise in connection with the discharge by
IPS or its Affiliates of the Excluded Liabilities;
(c) all Governmental Permits of IPS in respect of the Business; and
(d) the Licensed Marks (as defined in the Service Xxxx License
Agreement).
SECTION 2.3. ASSUMED LIABILITIES. Subject to Section 2.5, on the
Closing Date, the Company shall deliver to IPS the Instrument of Assumption
pursuant to which the Company shall assume and agree to discharge the following
obligations and liabilities in accordance with their respective terms and
subject to the respective conditions thereof: all liabilities and obligations
of IPS or its Affiliates to be paid or performed on and after the Closing Date
in respect of the Contributed Assets, including, without limitation, under (i)
the Lakewood Lease; (ii) the contracts included in the Lakewood Assets; (iii)
the economic liabilities under the Agent Contracts listed or described in
Schedule 2.1E (as such Schedule may be amended in accordance with Section 4.2);
(iv) the contracts included in the MoneyGram Agent Assets; (v) the contracts
included in the Help Desk Assets; (vi) the contracts included in the Express
Payment Assets; (vii) the contracts included in the Cash Advance Assets; (viii)
Assignable Pending Applications; and (ix) all aspects of the conduct of the
Business on and after the Closing Date not delegated to Affiliates of FDC under
the Operations Agreement, including the performance of all activities
contemplated by Section 5.1 of the Operations Agreement; except, in each case,
to
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the extent such liabilities and obligations, but for a breach or default by IPS
or its Affiliates, would have been paid, performed or otherwise discharged prior
to the Closing Date or to the extent any such liabilities and obligations arise
out of any such breach or default.
All of the foregoing liabilities and obligations to be assumed by the
Company hereunder (excluding any Excluded Liabilities but supplemented from time
to time pursuant to Section 2.5) are referred to herein as the "Assumed
Liabilities."
SECTION 2.4. EXCLUDED LIABILITIES. The Company shall not assume or
be obligated to pay, perform or otherwise discharge any liability or obligation
of IPS or its Affiliates, direct or indirect, known or unknown, absolute or
contingent, not expressly assumed by the Company pursuant to the Instrument of
Assumption, including, without limitation, (i) any of the Fiduciary Liabilities
as of the Closing Date and (ii) any liabilities existing as of the Closing Date
related to personal computers that, prior to the Closing Date, the Company has
requested IPS purchase on its behalf, the costs of which (not to exceed
$1,350,000) the parties hereto have agreed will be paid by IPS (all such
liabilities and obligations not being assumed being herein called the "Excluded
Liabilities").
SECTION 2.5. TRANSFER OF TITLE TO AGENT CONTRACTS. (a)
Notwithstanding anything in this Agreement to the contrary, in order to comply
with State Licensing Requirements, this Agreement shall not constitute an
agreement to assign to the Company any Agent Contract or an assumption by the
Company of any Agent Contract. In furtherance of the foregoing sentence, at the
Closing the Company shall receive assignment of all economic benefits under
Agent Contracts included in the Contributed Assets pursuant to the Instrument of
Contribution and assume all economic liabilities under the Agent Contracts
included in the Contributed Assets pursuant to the Instrument of Assumption.
Upon satisfaction of the conditions to the Company's offering of Consumer Money
Wire Transfer Services and operation of the Business in its own name as
contemplated by the Operations Agreement, including compliance by the Company
with all State Licensing Requirements, IPS shall assign such Agent Contracts to
the Company and the Company shall assume all liabilities and obligations related
thereto pursuant to instruments reasonably acceptable to the Company and IPS and
in accordance with the terms of the Operations Agreement. Upon the assignment
and assumption of the Agent Contracts as contemplated in this Section 2.5(a),
such Agent Contracts shall constitute Contributed Assets and all liabilities
associated therewith shall constitute Assumed Liabilities for purposes of this
Agreement.
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(b) If after the Closing Date and prior to the two-year anniversary of
the date hereof any Agent Contract the economic benefits of which are included
in the Contributed Assets is terminated by a MoneyGram Agent in accordance with
the terms of such Agent Contract, then FDC and IPS each agrees not to, and to
cause their Affiliates not to, for a period of 60 days after the date of such
termination, enter into any agreement with such MoneyGram Agent to provide
consumer money wire transfer services on behalf of IPS or any of its Affiliates.
(c) If any Agent Contract, which on the day of Closing is not
assignable in accordance with its terms to IPS or the Company, is terminated in
connection with the transactions contemplated hereby, then FDC and IPS each
agrees not to, and to cause their Affiliates not to, enter into any agreement
with such terminated MoneyGram Agent to provide consumer money wire transfer
services on behalf of IPS or any of its Affiliates for a period of 60 days after
the time such Agent Contract would have expired in accordance with its terms,
determined without regard to any automatic extension or renewal provisions.
SECTION 2.6. REPRESENTATION AND WARRANTY REGARDING CONTRIBUTED
ASSETS. Except for those assets that IPS must retain in order for the Business
to be operated in compliance with State Licensing Requirements, the Contributed
Assets, together with the services provided by IPS and its Affiliates to the
Company under the Operations Agreement, the services made available to the
Company under the Telecommunications Services Sharing Agreement, the rights of
the Company under the Covenant Not to Xxx and the licenses to the Software (as
defined in the Software License Agreement) and the Licensed Marks (as defined in
the Service Xxxx License Agreement), constitute all services and assets
necessary to conduct the Business as currently conducted by IPS. THE
CONTRIBUTED ASSETS ARE BEING TRANSFERRED ON AN "AS IS, WHERE IS" BASIS AND IPS,
FDC AND THEIR AFFILIATES DISCLAIM ALL WARRANTIES, REPRESENTATIONS AND GUARANTIES
WHETHER EXPRESS OR IMPLIED (EXCEPT AS SET FORTH IN THIS SECTION 2.6). NEITHER
IPS, FDC NOR ANY OF THEIR AFFILIATES MAKES ANY REPRESENTATION OR WARRANTY AS TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR ANY IMPLIED WARRANTIES
WHATSOEVER.
ARTICLE III
ISSUANCE OF SHARES
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SECTION 3.1. ISSUANCE OF SHARES AND OTHER CONSIDERATION. In
consideration for the Contributed Assets, on the Closing Date the Company shall
assume the Assumed Liabilities and issue to IPS such number of validly issued,
fully paid and nonassessable shares (the "Contribution Amount") of the Company's
Common Stock, par value $.01 per share (the "Common Stock") as
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the parties shall agree (but in no event more than that number of shares of
Common Stock registered under the Registration Statement). IPS and the Company
agree that the assumption of the Assumed Liabilities and the issuance of the
Contribution Amount of Common Stock shall be allocated among the Contributed
Assets as set forth in the Allocation Schedule (as defined in Section 5.4).
ARTICLE IV
CLOSING
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SECTION 4.1. CLOSING DATE. The Closing shall be consummated as soon
as practicable after the fulfillment or (if permissible) waiver of the
conditions set forth in Article VI on a date agreed upon by the Company and IPS,
at such place and at such time as shall be agreed upon by the Company and IPS.
The time and date on which the Closing is actually held is referred to herein as
the "Closing Date."
SECTION 4.2. AMENDMENT OF SCHEDULES. IPS may, from time to time on
or prior to the Closing, by notice in accordance with the terms of this
Agreement, supplement, amend or create any Schedule to reflect the status of the
Business as of such time.
SECTION 4.3. THE COMPANY'S CLOSING DATE DELIVERIES. At the Closing
the Company shall deliver to IPS all of the following:
(a) The Instrument of Assumption, the Operations Agreement, the
Facility, the Software License Agreement, the Service Xxxx License
Agreement, the Human Resources Agreement, the Telecommunications Services
Sharing Agreement, the Covenant Not to Xxx and the Registration Rights
Agreement, each duly executed by the Company; and
(b) The Contribution Amount of Common Stock.
SECTION 4.4. IPS' CLOSING DATE DELIVERIES. Subject to fulfillment or
(if permissible) waiver of the conditions set forth in Article VI, at the
Closing IPS shall deliver, or cause to be delivered, to the Company all of the
following:
(a) The Instrument of Contribution duly executed by IPS and each
Affiliate of IPS contributing any Contributed Assets;
(b) The Operations Agreement, the Facility, the Software License
Agreement, the Service Xxxx License Agreement, the Human Resources
Agreement, the Telecommunications Services Sharing Agreement, the Covenant
Not to Xxx and the Registration Rights
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Agreement, each duly executed by FDC, IPS or an Affiliate of FDC, as the
case may be; and
(c) An instrument of assignment in the form of Exhibit 10
transferring certain rights Western Union Financial Services, Inc., an
indirect, wholly owned subsidiary of FDC, may own in the MoneyGram Marks.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.1. USE OF NAMES. IPS is not granting the Company a license to
use any of the trade names or trademarks of IPS or any Affiliate of IPS (other
than those granted pursuant to Sections 2.1 or 5.8 or the Service Xxxx License
Agreement), including, without limitation, those listed on Schedule 5.1, or of
American Express Company or any Affiliate of American Express Company and, after
the Closing, except as provided in Sections 2.1 or 5.8, the Operations Agreement
or the Service Xxxx License Agreement, the Company shall not use in any manner
the names or marks of IPS or any Affiliate of IPS or of American Express Company
or any Affiliate of American Express Company or any word that is similar in
sound or appearance that infringes on such names or marks. In the event the
Company or any Affiliate of the Company violates any of its obligations under
this Section 5.1, IPS and its Affiliates may proceed against it in law or in
equity for such damages or other relief as a court may deem appropriate. The
Company acknowledges that a violation of this Section 5.1 may cause IPS and its
Affiliates irreparable harm which may not be adequately compensated for by money
damages. The Company therefore agrees that in the event of any actual or
threatened violation of this Section 5.1, IPS 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 the
Company or an Affiliate of the Company to prevent any violations of this Section
5.1, without the necessity of posting a bond.
SECTION 5.2. COLLECTION OF ACCOUNTS. (a) If, after the Closing Date, the
Company shall receive any remittance from any MoneyGram Agent with respect to
any Fiduciary Asset as of the Closing Date, the Company shall, immediately upon
receipt thereof, credit a bank account specified by IPS through an automated
clearing house or wire transfer.
(b) After the Closing Date, IPS and its Affiliates shall handle any
remittance from any MoneyGram Agent with respect to any Contributed Asset in
accordance with the terms of the Operations Agreement.
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SECTION 5.3. TAXES. (a) IPS shall be liable for and shall pay all Taxes
(whether assessed or unassessed) applicable to the Business or the Contributed
Assets, in each case attributable to taxable years or periods ending at the time
of or prior to the Closing and, with respect to any Straddle Period, the portion
of such Straddle Period ending at the time of the Closing. The Company shall be
liable for and shall pay all Taxes (whether assessed or unassessed) applicable
to the Business or the Contributed Assets, in each case attributable to taxable
years or periods beginning after the Closing and, with respect to any Straddle
Period, the portion of such Straddle Period beginning immediately after the
Closing. IPS and the Company shall each be entitled to any refunds of Taxes for
which it is liable under this Section 5.3(a). For purposes of this Section 5.3,
any Straddle Period shall be treated on a "closing of the books" basis as two
partial periods, one ending at the time of the Closing and the other beginning
immediately after the Closing, provided, however, that Taxes (such as property
Taxes) imposed on a periodic basis shall be allocated on a daily basis.
Notwithstanding the preceding sentence, if the transactions contemplated by this
Agreement result in the reassessment of the value of any of the Contributed
Assets or any of the assets of the Business for property Tax purposes, or the
imposition of any property Taxes on such Contributed Assets or assets of the
Business 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 portion of the Straddle Period ending at the time of the Closing
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 portion of such Straddle Period beginning
immediately after the Closing shall be the total property Taxes for the Straddle
Period minus the amount described in clause (y) of this sentence.
(b) Notwithstanding paragraph (a), 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 Contributed Assets shall be paid by 50
percent by the Company and 50 percent by IPS. The Company and IPS agree to
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 with respect to, such Taxes.
(c) IPS or the Company, as the case may be, shall promptly 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
5.3. Within a reasonable time prior to the payment of any said Tax, the party
paying such Tax shall give notice to the other party of the Tax payable and the
portion which is the liability of each party,
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although failure to do so will not relieve the other party from its liability
hereunder.
(d) After the Closing, each of IPS and the Company shall (and cause their
respective Affiliates to):
(i) assist the other party in preparing any Tax Returns which such
other party or its Affiliates is responsible for preparing and filing;
(ii) cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns relating to the Business or
the Contributed Assets;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to
Taxes relating to the Business or the Contributed Assets;
(iv) provide timely notice to the other in writing of any pending or
threatened Tax audits or assessments relating to the Business or the
Contributed Assets for taxable periods for which the other may have a
liability under Section 7.1(b)(ii) as it relates to this Section 5.3; and
(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.
(e) Any indemnity payments made pursuant to Section 7.1(a)(i) as it
relates to this Section 5.3 shall be treated by the Company and IPS as an
adjustment to the amount of Contributed Assets (except to the extent the payment
is the liability under controlling law of the party making such indemnity
payment).
SECTION 5.4. ALLOCATION OF CONSIDERATION.
---------------------------
Within 90 days following the Closing Date, IPS shall deliver to the Company
a schedule (the "Allocation Schedule") allocating the consideration described in
Section 3.1 among each category of assets included in the Contributed Assets.
The Allocation Schedule shall be reasonable and shall be prepared in accordance
with Section 1060 of the Code and the regulations thereunder. The Company and
IPS each agrees that promptly after receiving said Allocation Schedule it shall
return an executed copy thereof to IPS. The Company and IPS each agrees to file
(or cause to be filed) Internal Revenue Service Form 8594, and all federal,
state, local and foreign Tax Returns, in accordance with the Allocation
Schedule. The Company and IPS each agrees to provide the other promptly with any
other information required to complete Form 8594.
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SECTION 5.5 TAX CONTESTS.
------------
(a) The Company shall promptly notify IPS in writing upon receipt by the
Company or any Affiliate thereof of notice of any pending or threatened federal,
state, local or foreign Tax audits, examinations or assessments that will or
might affect the Tax liabilities for which IPS would be required to indemnify
the Company pursuant Section 7.1(a)(i) as it relates to Section 5.3. Such notice
shall include a summary of all action taken or proposed to be taken by the
Internal Revenue Service or a state or local Tax Authority in respect of such
matter. The Company shall forbear (and shall cause each Affiliate to forbear),
for at least 30 days after the giving of such notice, payment of any amounts
related to such matter (if such forbearance is permitted by law).
(b) In the case of any pending or threatened federal, state, local or
foreign Tax audits examinations or assessments that will or might affect the Tax
liabilities for which IPS would be required to indemnify the Company pursuant to
Section 7.2(a)(i) as it relates to Section 5.3(a), the Company shall contest, or
cause to be contested, such matter on audit, through Internal Revenue Service or
state, local or foreign administrative proceedings and through judicial
proceedings, unless notified to the contrary in writing by IPS or unless, and to
the extent, IPS does not exercise its right to participate in and control such
contest pursuant to this paragraph (b). IPS shall have the sole right to
participate in and control, at the expense of IPS, any such Tax audit or
administrative or judicial proceeding, and such participation and control shall
be reflected by the grant of appropriate powers of attorney or other appropriate
or necessary authorizations. Decisions regarding the conduct of any such audit
or administrative or judicial proceeding shall be made by IPS, FDC or their
representatives after consultation with the Company and its representatives,
provided, however, that ultimate control over any such audit or administrative
or judicial proceedings, including procedural matters that necessarily relate to
all issues being contested in connection therewith (including, without
limitation, choice of forum) shall be exercised in good faith solely by IPS, FDC
and their representatives. The Company shall take any action as is necessary to
effectuate the decisions of IPS and FDC made in conformity with the requirements
of the preceding sentence. Decisions regarding the settlement of proceedings or
litigation related in whole or in part to such matter shall be made solely by
IPS, FDC and their representatives. Fees and expenses paid to third-party
service providers (including, without limitation, legal and accounting expenses)
relating to the resolution of any such matter shall be borne by IPS.
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SECTION 5.6. RIGHT TO USE MONEYGRAM AGENT ASSETS.
(a) The Company hereby acknowledges that certain computers included in the
MoneyGram Agent Assets are used by MoneyGram Agents to provide products and
services marketed by IPS, including, without limitation, the money order and
utility xxxx remittance services marketed by IPS (the "IPS Products"). The
Company hereby grants IPS and its Affiliates a license for such MoneyGram Agents
to use such computers and related equipment included in the MoneyGram Agent
Assets, and any upgraded or new computers and related equipment provided to such
MoneyGram Agents by the Company for use in the Business, to process transactions
for any IPS Products. So long as the MoneyGram Agents offer any IPS Products,
the Company shall not remove, or terminate the right to use, such computers and
related equipment used by a MoneyGram Agent to process transactions for any IPS
Product without having given IPS or such assignee 30 days' prior written notice
thereof.
(b) IPS agrees to pay to the Company on or prior to the 30th day after
Closing the amount of $52,000, which amount equals the estimated maintenance
fees that will be incurred by the Company for the two-year period following
Closing with respect to the computers currently used by "Big B" and certain
other MoneyGram Agents to be agreed to by IPS and the Company prior to Closing.
In consideration for such payment, the Company agrees, notwithstanding the
provisions of paragraph (a) above, not to remove, or terminate the right to use,
such computers and related equipment used by such MoneyGram Agents to process
transactions for any IPS Product for a period of two years after Closing and
thereafter only upon 30 days' prior written notice thereof.
SECTION 5.7. EMPLOYEES. Schedule 5.7A sets forth a list of each
individual employed by FDC or any of its Affiliates who the parties hereto agree
will be employed by the Company on and after the Closing Date (each, a
"MoneyGram Business Employee"). FDC agrees, and agrees to cause its Affiliates,
effective at the Closing Date, to terminate the employment of each of the
MoneyGram Business Employees, and the Company agrees, effective upon such
termination, to offer employment to each of the MoneyGram Business Employees at
total compensation levels agreed to between FDC and the Company.
SECTION 5.8. PENDING SERVICE AND TRADEMARKS. On behalf of IPS and
its Affiliates, the Company shall prosecute, in the name of IPS or any such
Affiliate, the Nonassignable Pending Applications. IPS agrees, and agrees to
cause its Affiliates, to execute all papers reasonably requested by the Company
to prosecute such applications. IPS hereby grants to the Company an assignable,
exclusive, royalty-free license to use each of the marks that are the subject of
the Nonassignable Pending Applications in the territories and languages
applicable to such
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applications during the period of time during which the Company prosecutes the
related application until such time as the application or certificate of
registration can be assigned to the Company in accordance with applicable
Requirements of Law. IPS hereby agrees that at such time as the application or
certificate of registration can be assigned to the Company in accordance with
applicable Requirements of Law for any of the marks that are the subject of the
Nonassignable Pending Applications, IPS shall, and shall cause its Affiliates
to, assign to the Company all right, title and interest in such xxxx, together
with the goodwill of the business symbolized thereby. The parties hereto hereby
agree that upon the occurrence of any such assignment such xxxx shall constitute
Contributed Assets for purposes of this Agreement.
SECTION 5.9. LAKEWOOD LEASE. (a) On or before Closing, IPS and the
Company agree to negotiate in good faith the terms and conditions upon which the
Company shall sublease to IPS a portion of the premises located on the first
floor of the facilities that are the subject of the Lakewood Lease, including,
without limitation, the space subject to such sublease, the term of such
sublease and other provisions thereof (including rentals, which shall be no
greater than current market rates).
(b) Within 30 days after the Closing, IPS and the Company agree to
negotiate in good faith the terms and conditions upon which IPS shall, or shall
cause, the fourth floor of the facilities that are the subject of the Lakewood
Lease to be built-out to the specifications agreed to by IPS and the Company.
IPS shall pay all costs and expenses with respect to such build-out.
SECTION 5.10. FINANCIAL SYSTEMS. IPS shall provide, or cause to be
provided, to the Company at IPS's expense either the "Platinum" software or the
"Xxxxxx" software. IPS shall give the Company notice of the software IPS has
selected to provide (the "Offered Software") and IPS's cost and expense of
providing such software (the "Software Expense"). The Company may, at its
option, elect not to accept the Offered Software and instead acquire its own
software for general ledger and related accounting functions (which may be the
"Xxxxxx" software if the "Xxxxxx" software is not the Offered Software). In
such event, IPS shall reimburse the Company for the cost of such software in an
amount not to exceed the Software Expense.
SECTION 5.11. ADDITIONAL SERVICES. At the request of the Company,
First Data shall cause Call Interactive, an affiliate of First Data, to enter
into an agreement with the Company to provide to the Company any service then
offered by Call Interactive upon such terms and conditions to be agreed to by
First Data and the Company and at prices equal to (i) during the period
commencing on the Closing Date and ending on the fifth anniversary of the
Closing Date, Call Interactive's costs of
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providing such service plus 15 percent and (ii) thereafter, Call Interactive's
costs of providing such service plus 20 percent.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF IPS
------------------------------------------
The obligations of IPS and FDC under this Agreement shall, at the
option of IPS (to the extent permissible under applicable law), be subject to
the satisfaction, on or prior to the Closing Date, of the following conditions:
SECTION 6.1. FTC APPROVAL. FDC shall have obtained the FTC
Approval.
SECTION 6.2. NO RESTRAINT. No legal action, suit, investigation or
proceeding shall have been instituted to restrain or prohibit or otherwise
challenge the legality or validity of the transactions contemplated hereby.
SECTION 6.3. UNDERWRITING AGREEMENT. IPS shall have entered into a
legally enforceable and binding agreement with the representatives of the
underwriters named in the Registration Statement to sell, on a firm commitment
basis, more than 80% of the shares of Common Stock of the Company outstanding
following the issuance of the Common Stock pursuant to Section 3.1, pursuant to
the offering contemplated by such Registration Statement.
ARTICLE VII
INDEMNIFICATION
---------------
SECTION 7.1. INDEMNIFICATION BY IPS. (a) IPS agrees to indemnify and
hold harmless each Company Group Member from and against any and all Losses and
Expenses incurred by such Company Group Member in connection with or arising
from:
(i) any breach or failure to perform by IPS or any Affiliate of IPS of
any of their respective covenants or obligations in this Agreement;
(ii) any Excluded Liability; or
(iii) any claim that the MoneyGram Application Software or the PC
MoneyGram Application Software infringes or violates the Intellectual
Property of any third Person;
provided, however, that IPS's maximum aggregate obligation to indemnify and hold
harmless pursuant to this Section 7.1(a) shall be limited to the payment by IPS
of cash in an aggregate amount not to exceed $200 million (except to the extent
related to the
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obligations of IPS and its Affiliates pursuant to Section 5.3, 5.4 or 5.5, as to
which no limitation shall apply); and provided, further, that IPS shall have no
obligation to indemnify and hold harmless under Section 7.1(a)(iii) if any
infringement is based upon the Company's use of the MoneyGram Application
Software or the PC MoneyGram Application Software, as the case may be, in
combination with any other software or the MoneyGram Application Software or the
PC MoneyGram Application Software, as the case may be, is used in a manner for
which it is not designed or the infringement is based upon modifications of the
MoneyGram Application Software or the PC MoneyGram Application Software, as the
case may be, made by or for the Company.
(b) The indemnification provided for in Section 7.1(a)(i) and (ii)
shall terminate two years after the Closing Date and the indemnification
provided for in Section 7.1(a)(iii) shall terminate ten years after the Closing
Date (and no claims shall be made by any Company Group Member under this Section
7.1 thereafter), except that the indemnification by IPS shall con tinue as to:
(i) the covenants of IPS and FDC set forth in Section 9.4, which shall
survive for the period of time set forth therein;
(ii) the covenants of IPS set forth in Sections 5.3, 5.4 and 5.5
which shall survive until the expiration of the relevant statutory period
of limitations applicable to the underlying claim, giving effect to any
waiver, mitigation or extension thereof;
(iii) the covenants of IPS set forth in Section 5.8, as to which no
time limitation shall apply; and
(iv) any Loss or Expense of which any Company Group Member has
notified IPS in accordance with the requirements of Section 7.3 on or prior
to the date such indemnification would otherwise terminate in accordance
with this Section 7.1, as to which the obligation of IPS shall continue
until the liability of IPS shall have been determined pursuant to this
Article VII, and IPS shall have reimbursed all Company Group Members for
the full amount of such Loss and Expense in accordance with this Article
VII.
SECTION 7.2. INDEMNIFICATION BY THE COMPANY. (a) The Company agrees
to indemnify and hold harmless each IPS Group Member from and against any and
all Loss and Expense incurred by such IPS Group Member in connection with or
arising from:
(i) any breach or failure to perform by the Company or any Affiliate
of the Company of any of their respective covenants or obligations in this
Agreement;
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(ii) any Assumed Liability; or
(iii) any Agent Contract included in the Contributed Assets or the
economic benefits of which are assigned to the Company, except to the
extent such Loss and Expense directly resulted from any IPS Group Member's
gross negligence or willful misconduct or the failure of any IPS Group
Member to perform its material obligations under the Operations Agreement;
provided, however, that the Company's maximum aggregate obligation to indemnify
and hold harmless pursuant to this Section 7.2(a) shall be limited to the
payment by the Company of cash in an aggregate amount not to exceed $200 million
(except to the extent related to the obligations of the Company pursuant to
Section 5.3, 5.4 or 5.5, as to which no limitation shall apply).
(b) The indemnification provided for in Section 7.2(a) shall
terminate two years after the Closing Date (and no claims shall be made by any
IPS Group Member under this Section 7.2 thereafter), except that the
indemnification by the Company shall continue as to:
(i) the covenants of the Company set forth in Section 9.4, which shall
survive for the period of time set forth therein;
(ii) covenants of the Company set forth in Sections 5.3, 5.4 and 5.5,
which shall survive until the expiration of the relevant statutory period
of limitations applicable to the underlying claim, giving effect to any
waiver, mitigation or extension thereof;
(iii) the covenants of the Company set forth in Sections 5.6 and 5.8,
as to which no time limitation shall apply; and
(iv) any Loss or Expense of which IPS has notified the Company in
accordance with the requirements of Section 7.3 on or prior to the date
such indemnification would otherwise terminate in accordance with this
Section 7.2, as to which the obligation of the Company shall continue until
the liability of the Company shall have been determined pursuant to this
Article VII, and the Company shall have reimbursed all IPS Group Members
for the full amount of such Loss and Expense in accordance with this
Article VII.
SECTION 7.3. NOTICE OF CLAIMS. (a) Any Company Group Member or IPS
Group Member (the "Indemnified Party") seeking indemnification hereunder shall
give promptly 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 the claim for
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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 and in
accordance with Section 7.4.
(b) In calculating any Loss or Expense there shall be deducted (i)
any insurance recovery in respect thereof (and no right of subrogation shall
accrue hereunder to any insurer) and (ii) the amount of any Tax benefit to the
Indemnified Party (or any of its Affiliates) with respect to such Loss or
Expense (and increased to take into account any Taxes payable by the recipient
of any indemnity payment hereunder as a result of the receipt of such payment).
(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 VII 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 Losses and Expenses suffered by it.
SECTION 7.4. THIRD PERSON CLAIMS. (a) In order for an Indemnified
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 (a "Third Person Claim"), such Indemnified
Party must notify the Indemnitor in writing of the Third Person Claim within 10
days after receipt by such Indemnified Party of written notice thereof. Any
notice of a Third Person Claim 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 (if then known) the amount of the
liability asserted against the Indemnitor by reason of the claim. Following
such notice of a Third Person Claim, the Indemnified Party shall deliver to the
Indemnitor, within five business days after the Indemnified Party's receipt
thereof, copies of all notices and documents (including court papers) received
by the Indemnified Party relating thereto. Notwithstanding the foregoing, should
a party be physically served with a complaint with regard to a Third Person
Claim, the
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Indemnified Party must notify the Indemnitor with a copy of the complaint within
five business days after receipt thereof and shall deliver to the Indemnitor
within seven business days 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) In the event any legal proceeding shall be threatened or
instituted or any claim or demand shall be asserted in respect of a Third Party
Claim, the Indemnitor shall have the sole and absolute right after the receipt
of the notice required by Section 7.4(a), at its option and at its own expense,
to be represented by counsel of its choice and to control, defend against,
negotiate, settle or otherwise deal with any such proceeding, claim or demand;
provided, however, that the Indemnified Party may participate in any such
proceeding with counsel of its choice and at its expense. 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 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 of such proceeding. Neither
the Indemnitor nor the Indemnified Party may settle any such proceeding which
settlement obligates the other party to pay money, to perform obligations or to
admit liability without the consent of the other party, which consent shall not
be unreasonably withheld. 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 an 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.
SECTION 7.5. LIMITATIONS. (a) In any case in which 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 Article VII, such
Indemnified Party shall promptly pay over to the Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses reasonably
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
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Indemnitor in pursuing or defending any claim arising out of such matter.
(b) Except for remedies that cannot be waived as a matter of law,
injunctive and provisional relief and as otherwise expressly set forth herein,
if the Closing occurs, this Article VII shall be the exclusive remedy for breach
of this Agreement (including any covenant, obligation, representation or
warranty contained in this Agreement or any certificate delivered pursuant to
this Agreement) or otherwise in respect of the contribution of the Contributed
Assets contemplated hereby.
(c) Any payment by the Company or IPS under this Article VII shall be
treated by the Company and IPS as an adjustment to the Contributed Assets.
(d) To the extent of any inconsistency between this Article 7 and
Sections 5.3, 5.4 or 5.5, the provisions of Sections 5.3, 5.4 or 5.5, as the
case may be, shall control.
ARTICLE VIII
TERMINATION
SECTION 8.1. TERMINATION. Anything contained in this Agreement to
the contrary notwithstanding, this Agreement may be terminated at any time prior
to the Closing Date by the mutual consent of the Company and IPS. In the event
this Agreement shall be terminated, no party shall have any liability to any
other party hereunder.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. SURVIVAL OF OBLIGATIONS. All covenants and obligations
contained in this Agreement shall survive the consummation of the transactions
contemplated by this Agreement.
SECTION 9.2. 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 when sent by registered or certified mail
or by private courier addressed as follows:
If to the Company, to:
MoneyGram Payment Systems, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
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with a copy to:
MoneyGram Payment Systems, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to FDC or to IPS to:
First Data Corporation
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
SECTION 9.3. SUCCESSORS AND ASSIGNS. (a) The rights of either party
under this Agreement shall not be assignable by such party hereto without the
written consent of the other party, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, (i) FDC and IPS may assign all their
respective rights and delegate their respective duties and obligations hereunder
to any of their Affiliates, provided such Affiliate remains an Affiliate of FDC
and IPS after such an assignment and that notwithstanding such assignment FDC
and IPS, respectively, shall remain primarily liable for all of their respective
obligations hereunder; and (ii) subsequent to the consummation of the offering
in accordance with the Registration Statement, the Company may assign all its
rights and delegate its duties and obligations hereunder to any of its
Affiliates or to any Person who purchases substantially all of the Business,
provided the assignee agrees to be bound in writing to the terms and conditions
set forth in this Agreement, and, notwithstanding such assignment, the Company
shall remain primarily liable for all of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Except as to any
Company Group Member or IPS Group Member entitled to indemnity under Article
VII, 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 9.3 any right, remedy or claim under or by
reason of this Agreement.
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SECTION 9.4. ACCESS TO RECORDS AFTER CLOSING. (a) For a period of
six years after the Closing Date or, in the case of books and records relating
to Taxes, until the expiration of all applicable statutes of limitation and
carryback and carryforward periods, IPS, FDC and their Affiliates and their
respective representatives shall have reasonable access to all of the books and
records of the Business to the extent that such access may reasonably be
required by IPS or its Affiliates in connection with matters relating to or
affected by (i) the operations of the Business prior to the Closing Date and
(ii) Sections 5.3, 5.4, 5.5 or 5.6. Such access shall be afforded by the Company
upon receipt of reasonable advance written notice and during normal business
hours. IPS shall be solely responsible for any costs or expenses incurred by it
pursuant to this Section 9.4(a). If the Company shall desire to dispose of any
of such books and records prior to the expiration of such six-year period or
applicable statutes of limitation and carryback and carryforward periods, as the
case may be, the Company shall, prior to such disposition, give IPS a reasonable
opportunity, at IPS' expense, to segregate and remove such books and records as
IPS may select.
(b) For a period of six years after the Closing Date, or, in the case
of books and records relating to Taxes, until the expiration of all applicable
statutes of limitation, the Company and its representatives shall have
reasonable access to all of the books and records relating to the Business which
IPS or any of its Affiliates may retain after the Closing Date. Such access
shall be afforded by IPS and its Affiliates upon receipt of reasonable advance
written notice and during normal business hours. The Company shall be solely
responsible for any costs and expenses incurred by it pursuant to this Section
9.4(b). If IPS 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 or applicable
statutes of limitation, as the case may be, IPS shall, prior to such
disposition, give the Company a reasonable opportunity, at the Company's
expense, to segregate and remove such books and records as the Company may
select.
SECTION 9.5. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the
Exhibits and Schedules referred to herein and the agreements and documents
delivered pursuant hereto contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and supersede all
other prior agreements, understandings or letters of intent between or among any
of the parties hereto. Except as provided in Section 4.2, 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.
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SECTION 9.6. 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.
SECTION 9.7. 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 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 IPS and the
Company.
SECTION 9.8. FURTHER ASSURANCES. On and after the Closing Date each
party hereto shall take such other actions and execute such other documents and
instruments of conveyance and transfer as may be reasonably requested by the
other party hereto from time to time to effectuate or confirm the transfer of
the Contributed Assets to the Company and the issuance of shares of Common Stock
to IPS in accordance with the terms of this Agreement.
SECTION 9.9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflict of
laws provisions) of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
FIRST DATA CORPORATION
By _____________________________
Name:
Title:
INTEGRATED PAYMENT SYSTEMS INC.
By _____________________________
Name:
Title:
MONEYGRAM PAYMENT SYSTEMS, INC.
By _____________________________
Name:
Title:
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